FarmPolicy

Farm Bill Issues; Ag Economy; RFS; and, the Budget

Farm Bill: Executive Branch Perspective from President Obama

Erik Wasson reported yesterday at The Hill’s On the Money Blog that, “President Obama on Tuesday called on Congress to pass the stalled five-year farm bill and said it, more than anything else, is the best way to combat the historic drought gripping most of rural America.

“‘That’s the single best way to help rural communities both in the short term and in the long term,’ Obama said.

“Obama made the comments at a meeting with Agriculture Secretary Tom Vilsack and Small Business Administrator Karen Mills on the drought.”  (Note: A video replay of the President’s remarks can be found here – about three minutes).

Mr. Wasson indicated that, “Obama noted the ‘good bipartisan work done in the Senate,’ and said he hopes August recess will pressure Congress to finish the job.

“‘Now is the time for us to come together and go ahead and get this done. And my hope is that Congress, many of whom will be traveling back to their districts, in some cases in rural communities, and see what’s taking place there, will feel a greater sense of urgency and be prepared to get this done immediately upon their return,’ he said.”

The Hill update added that, “At the meeting, Obama announced a series of smaller emergency steps to help farmers. These included expanded small business lending and technical assistance.  [Note: Additional policy details can be found here, while a related “fact sheet” regarding yesterday’s executive branch action is available here].

“‘This has been an all hands on deck response,’ Obama said. ‘But obviously we have a lot more to do.’

“The Agriculture Department will now give $16 million in emergency funds drought-stricken farmers and livestock producers. It also will free up $14 million for conservation programs intended to keep livestock healthy by increasing preservation of, and access to, pasture land and water.”

The AP reported yesterday that, “President Barack Obama is directing the Agriculture Department to authorize an additional $30 million to help crop and livestock producers in drought-stricken areas of the U.S. The spending does not require congressional approval, and the money has already been allocated to the department.”

Bloomberg writers Roger Runningen and Kate Andersen Brower reported yesterday that, “In addition to boosting aid, Obama said his administration is working with crop insurance companies to offer a ‘grace period’ for unpaid insurance premiums and is opening up more land for haying and grazing for livestock.”

A Radio News Service item from USDA yesterday noted that, “Following a meeting of the White House Rural Council to address the current drought, Agriculture Secretary Tom Vilsack explains the importance of a multi-department, multi-agency approach to provide producers some form of relief” (USDA audio here (MP3- 0:51)).

Also yesterday, the AP reported that, “Campaign aides say President Barack Obama plans to campaign across Iowa next week, visiting at least seven cities over three days.

“It will be the Democratic president’s fifth campaign visit to Iowa this year. It’s Obama’s longest Iowa stay since taking office in 2009 and his longest visit in one state during this presidential election campaign.”

The article added that, “Republican Mitt Romney was scheduled to campaign in Iowa later Tuesday and Wednesday morning, making his fourth visit to the state since clinching the GOP nomination.”

Meanwhile, Jennifer Jacobs reported yesterday at the Iowa Politicos Blog (Des Moines Register) that, “Iowa’s rain-challenged summer was one of the first things Romney touched upon [at a fundraiser in West Des Moines, Iowa].

“‘I’m a little concerned about the drought, though, I mean how are you guys doing? Are you going to be alright?’ he said. ‘We’re hopefully going to see help here and maybe some better weather, but we’re counting on people doing their best to make it through some very difficult times.’”

Farm Bill: House and Senate Ag Committee Chairs-  August Activity

Dan Tackett reported yesterday at the Peoria Journal Star (Il.) yesterday that, “‘The most amazing mess.’

“That’s how U.S. Rep. Frank Lucas, R-Okla., describes what’s at the forefront in agriculture, not only in Washington, D.C., but also the Heartland.

“Lucas offered that description Tuesday when he was the key speaker at an agriculture summit that drew several hundred farmers and agribusiness leaders to the Lincoln College campus. The event was arranged and hosted by U.S. Rep. Aaron Schock, a Peoria Republican who represents Logan County and a large chunk of central Illinois.”

The article noted that, “‘The House has a tremendous turnover since the last farm bill’ was written in 2008, [Lucas] said. As a result, the process of writing a new five-year farm bill involves many lawmakers who have never been involved with crafting the legislation and some who weren’t even in Congress when the last bill was passed.

“Coupled with the large number of legislative rookies are concerns over the national debt and the nation’s operating budget, he said. Finally, throw in the massive drought that’s blanketed a large part of the country and that ‘amazing mess’ appears, said Lucas.”

Mr. Tackett added that, “…[F]unding the nutrition part of a new farm bill could be a major sticking point in the House. That’s the portion of the legislation dealing with food stamps, school lunches and other assistance to low-income families. And, it’s no small part of the program, ‘consuming about 80 percent of all farm bill spending,’ said Lucas.

“Under the existing farm bill, about $80 billion a year goes to the food stamp program. The Senate’s farm bill would cut $4.5 billion from that amount. Conservatives in the House, including Lucas, want deeper cuts.

“Lucas said he is not opposed to giving food stamps to Americans who truly need assistance. But over the years, he said, liberal members of Congress have greatly widened the eligibility requirements to receive food stamps.”

Karina Gonzalez reported yesterday at The Pantagraph (Bloomington-Normal, Il.) Online yesterday that, “Drought conditions affecting Central Illinois and other parts of the country might force lawmakers to focus on agriculture, U.S. Rep. Frank Lucas told a group in the Twin Cities Tuesday.

“But it still may be a while before lawmakers act on a new five-year Farm Bill, the Oklahoma Republican said.

“Lucas, chairman of the U.S. House Committee on Agriculture, was keynote speaker at the McLean County Chamber of Commerce’s 2012 Economic Summit, held at the uptown Marriott Hotel and Conference Center.”

The article noted that, “‘I did everything humanly possible, but it’s hard to get 435 members to agree,’ Lucas said. ‘Farm Bill committee members historically have not been partisan. But we bump heads by regions, by commodity, by the super-nutritionist, or those who want a one-size-fits-all (approach).’

“Now Lucas doesn’t expect Congress to take action until after the November election. Lawmakers are currently on a break from session. And they have just eight working days in September to take action before taking another break.

“‘I tell members go home, talk to producers and understand what’s going on. Let’s come back in September and pass the bill,’ Lucas said.”

Stephanie Pawlowski reported yesterday at WJBC Radio Online (Bloomington, Il.) that, “Lucas said he believes the U.S. House will take up the Farm Bill when it reconvenes in September.

“‘For the wrong reason the right thing is going to happen. This horrendous drought from here across Indiana, from here to Colorado back to the Rio Grande River will cause members, when they’re home over this five week break period, just as we are, to pay attention to what’s going on,’ Lucas said. ‘Suddenly, agriculture will matter again.’

“He said he recognized the frustration of the agriculture community over the lack of a Farm Bill, but said it just wasn’t going to happen before the August recess. He said even with floor time in September, it is not likely a new Farm Bill will pass before the current one expires Sept. 30, 2012.”

And Tim Martin reported earlier this week at MLive.com (Mich.) that, “U.S. Sen. Debbie Stabenow was in Michigan on Monday to push for passage of a new federal farm bill.”

The article indicated that, “Lawmakers are now on a five-week break. Stabenow – a Democrat and chairwoman of the Senate Committee on Agriculture, Nutrition and Forestry – said she expects members of Congress will hear about the issue when they are in their home states.

“‘They’re going to hear overwhelmingly ‘we need a farm bill’,’ Stabenow said Monday at the Michigan Corn Growers Association office near Lansing, where she appeared with Agriculture Secretary Tom Vilsack.

“Stabenow and Vilsack want the bill passed next month, saying it would provide both some immediate help for farmers affected by drought and some long-term certainty.”

A news release yesterday noted that, “[Chairwoman Stabenow] today continued her ‘Jobs of the Future’ Tour stop at Zeeland Farm Services, an innovative West Michigan bio-based company. Stabenow was joined at the event by Agriculture Secretary Tom Vilsack, where she addressed Michigan’s leadership in bio-based manufacturing. Bio-based manufacturing, using agriculture goods instead of petroleum-based plastics and other materials in manufactured goods, is an industry poised to grow and create jobs in Michigan.”

An AP article from earlier this week noted that, “Bio-based manufacturing takes crop and livestock products and weaves them into chemicals, fibers, plastics and other materials. There are more than 3,000 companies in the U.S. that produce about 25,000 products that are bio-based.”

Meanwhile, Cameron Joseph reported yesterday at The Hill’s Ballot Box Blog that, “Former Rep. Pete Hoekstra has won Michigan’s Republican Senate primary and will move on to face Sen. Debbie Stabenow (D-Mich.) in the general election.”

The update added that, “Stabenow starts off as the heavy favorite in the general election. She holds a double-digit lead in recent polls and has a big cash advantage, with more than $4.5 million in the bank to $1 million for Hoekstra as of the last campaign report filing in mid-July.

“Republicans also have enough other Senate targets that unless Obama collapses in Michigan or Stabenow slips up in a big way, the National Republican Senatorial Committee and GOP outside groups are unlikely to target her in the Democratic-leaning state.”

Farm Bill: Additional Perspectives; Crop Insurance

Ken Anderson reported yesterday at Brownfield that, “Some pundits predict that the 2012 farm bill may not be dealt with until Congress returns for its lame-duck session in November.

“But as Iowa Senator Charles Grassley points out, that would present problems for farmers in the southern U.S.

“‘The problem isn’t so much if it gets done in November or September, for us in the North,’ Grassley says. ‘But in the South, it’s very important that they know what the farm safety net is as they make plans for farming next year—and they make those plans about three months earlier than we do in the North.’”

Christy Stewart reported yesterday at The Daily Register (Harrisburg, Il) Online that, “U.S. Rep. John Shimkus made a trip to visit three Southern Illinois farms Monday afternoon to see firsthand how serious the drought situation has become for his many constituents who rely on a solid crop yield to keep their families fed and their farms afloat.”

The article noted that, “[Farmer Randy Anderson] and Shimkus also discussed the benefits of crop insurance that is partially subsidized by the federal government. Anderson asked the congressman to make sure the subsidies don’t get cut, as this experience has made him a true believer in crop insurance. Even with crop insurance, Anderson and other area farmers are getting hit hard with the financial burdens that accompany a severe drought.

“Anderson described the crop insurance as ‘supplemental income, but not enough.’

“‘People don’t understand crop insurance doesn’t provide a full solution,’ he said.”

Ms. Stewart stated that, “Just the operating costs of running a farm will be a financial burden for farmers who were that severely affected by the drought.

“Shimkus agreed, saying ‘Insurance doesn’t make producers whole.’”

More specifically with respect to crop insurance issues, University of Illinois Agricultural Economists Gary Schnitkey and Bruce Sherrick indicated yesterday at the farmdoc daily Blog (“Initial Perspectives of Crop Insurance Underwriting Losses due to the 2012 Drought”) that, “There is growing interest in understanding the magnitude of losses in the Federal crop insurance program, and how those losses are to be shared between the Federal government and the crop insurance companies and their reinsurers. At this point, it is difficult to precisely estimate the size of the eventual losses; however, it is safe to assume that losses will be relatively large. Given Federal regulation and restrictions on crop insurance companies’ retained exposure, it is highly likely that there are sufficient funds to cover 2012 losses. Additional context and perspective on 2012 losses are provided [in the update].”

After a brief but detailed analysis, yesterday’s farm doc update noted that, “Crop insurance companies will face losses in 2012. Given Federal regulations and stress testing, crop insurance companies are highly likely to have sufficient funds to cover losses. However, there may be longer run impacts of these losses for crop insurance companies. This will be the first major loss year for crop insurance since many of the larger changes in crop insurance program have been made that have resulted in larger participation. Many of the companies that provide reinsurance to crop insurance companies have not seen losses of the current size. In addition, some of the crop insurance companies are owned by public companies, who may not have realized the scope of losses that their crop insurance subsidiaries could generate. Reactions of private reinsurers and public companies to these losses could influence the profitability and number of private crop insurance companies in the future.”

Agricultural Economy

Reuters writer Sam Nelson reported yesterday that, “The worst drought in more than half a century in America’s Corn Belt has slashed the corn crop to the lowest in five years, leading to a plunge of corn supplies to the smallest in 17 years by next summer, a Reuters poll of 21 analysts showed on Monday.”

And Owen Fletcher reported yesterday at The Market Beat Blog (Wall Street Journal) that, “The U.S. Department of Agriculture on Friday is likely to cut its production forecast for the country’s drought-stricken corn crop by 15.4%, according to a Dow Jones Newswires poll of analysts.”

An editorial item from The Financial Times earlier this week stated that, “It has been four years since a lethal combination of bad harvests, misguided trade policies and poor governance combined to create a global food crisis that put millions of lives and livelihoods at risk.

“This summer’s drought in the American Midwest is threatening renewed spikes in worldwide commodity prices. It may prove an early test for the commitments made after the 2007-08 crisis – notably at a G8 summit in L’Aquila in Italy in 2009 – to improve global food security.”

Also from a global view, an update earlier this week from the United Nations Food and Agriculture Organization stated that, “Below normal monsoon rains in India are the chief cause of a 7.8 million tonnes downward revision in the forecast for global rice paddy production in 2012, although world output should still slightly surpass the excellent results achieved in 2011, according to the July 2012 issue of the Rice Market Monitor released by the Food and Agriculture Organization of the United Nations today.”

Renewable Fuel Standard

Steve Hargreaves reported yesterday at CNNMoney Online that, “The drought that’s killing crops across the Midwest and sending corn prices to record highs has revived calls to end or ease the government’s requirement that corn-based ethanol be blended with gasoline.”

A news release yesterday from the National Pork Producers Council stated that, “A bipartisan group of senators today followed the lead of 156 House lawmakers in urging the U.S. Environmental Protection Agency to help livestock and poultry farmers deal with severe drought conditions by waiving the federal mandate that requires corn-ethanol to be blended into gasoline…[T]he National Pork Producers Council applauded the 25 senators – 13 Democrats and 12 Republicans – who signed a letter to EPA Administrator Lisa Jackson, asking that she take immediate action to bring relief to farmers suffering from the worst drought in more than 50 years. House members last week sent a similar letter to Jackson.”

Bloomberg writer Whitney McFerron reported yesterday that, “Potential changes in a U.S. government mandate for ethanol are unlikely to ‘materially impact’ demand for the gasoline additive made from corn, Morgan Stanley said.”

Budget Issues

Darren Samuelsohn and Manu Raju reported yesterday at Politico that, “President Barack Obama — with a big nudge from Congress — is about to get much more specific about a touchy topic in the heat of his reelection campaign.

“Legislation Obama signed into law Tuesday will force him to detail early next month how he’d make the first phase of $1.2 trillion in spending cuts across the federal budget, from defense to education to the environment.”

The article noted that, “Sure, Obama gets to spare the likes of Social Security, Medicaid, Medicare and Pell Grants.

“But everything else could get whacked by the $109 billion in cuts set to begin in January, absent a last-minute deal with a divided Congress. The automatic reductions are a consequence of the congressional supercommittee’s failure last year to reach a deficit-slashing deal.”

Erik Wasson explained yesterday at The Hill’s On the Money Blog that, “In total, sequestration will require $1 trillion in cuts over 10 years to reduce the deficit. Roughly half of those cuts would be made to defense spending…[T]he spending sequester is part of a series of fiscal changes set for early next year that has come to be called the ‘fiscal cliff,’ since the combination of tax increases and spending cuts, if allowed to occur, would tip the economy into recession, according to the Congressional Budget Office.”

Keith Good

Posted by Keith Good • August, 8, 2012 • 4:04 am