FarmPolicy

Farm Bill; Ag Economy; and, CFTC Issue

Farm Bill

House Agriculture Committee Chairman Frank Lucas (R., Okla.) spoke yesterday at the Southwest Agricultural Issues Summit in Austin, Texas; a full replay of his remarks can be heard here.

Going back to the joint effort from the House and Senate Agriculture Committees during the supercommittee process, Chairman Lucas discussed the development of the current Farm Bill including: Differences in the functionality of the Senate and House, some technical aspects of the SNAP (food stamps) enrollment process that differ among states, and the philosophical perspective of designing long-term U.S. farm policy for the potential bad times, as opposed to the good years. He also acknowledged that the Farm Bill is currently competing for time with other legislative priorities including budget issues, sequestration, and taxes.

Near the conclusion of his remarks, Chairman Lucas outlined the possible options to pass a Farm Bill; this portion of his remarks can be heard here (MP3- 4:00).

An update at AllAgNews.com noted that, “He [Chairman Lucas] explained why Direct Payments are being eliminated and what the options are for a farm bill this year. ‘I do know this. The best way to get President Obama to sign a farm bill is to get it on his desk before the election’ he said. ‘I don’t know when there will be a farm bill – I’m just not sure when and how yet. And I will tell you as Chairman it will be a farm bill that we can all participate in.’”

Meanwhile, the AP reported yesterday that, “Congress returned to Washington on Monday for an abbreviated pre-election session in which it appears likely to do the bare minimum: making sure that the government doesn’t shut down.”

Yesterday’s article indicated that, “The Senate has passed a five-year farm bill to overhaul crop safety net programs while funding food stamps for more than 46 million people. But the food and farm legislation has bedeviled House leaders because many GOP conservatives want deeper cuts to food stamps than Democrats, whose votes are needed to pass the measure, are willing to support.

“House Majority Whip Kevin McCarthy, R-Calif., said Monday that GOP leaders intend to bring the measure to the floor before the election, though the measure has yet to appear on any floor schedule. Probably more likely is an attempt to temporarily extend the old bill, including drought aid for livestock producers whose assistance programs expired last year.”

Lauren Fox noted yesterday at U.S. News Online that, “But against the backdrop of a stalled farm bill, no budget for the next fiscal year and looming across-the-board cuts to key government agencies, lawmakers have instead scheduled a series of hot-button hearings and votes making this short session more about votes than the voters.”

With respect to legislation that is expected to move forward, a news release yesterday from the House Appropriations Committee indicated that, “House Appropriations Chairman Hal Rogers today introduced a temporary funding measure – known as a Continuing Resolution (CR) – to prevent a government shutdown and fund federal programs until March 27, 2013 (H.J.Res 117).  While the House Appropriations Committee has acted on all 12 annual spending bills – with the full House approving seven – the Senate has failed to approve a single bill. Because of the Senate’s inaction, a CR is necessary to continue federal programs and services until final legislation can be negotiated and approved.”

More specifically, Meredith Shiner reported today at Roll Call Online that, “Sources close to both the House and Senate appropriations process said today that the plan was for the House to move forward with as clean of a six-month continuing resolution as possible.”

The Roll Call article added that, “And even if the spending bill is completed swiftly, lawmakers still have to grapple with an emergency drought aid package – which sources said would not be included in the CR deal. The farm bill is likely the last hurdle left before Congress goes on a semi-permanent break for the campaign and could pit Members’ conservative interests against their parochial ones, with more than 80 percent of the country suffering from drought at one point this summer.

“Farm programs are set to expire at the end of the month, and across the Dome, Senate Democratic leaders are relying on Agriculture Chairwoman Debbie Stabenow (Mich.) to chart a path forward and avoid an abrupt cutoff of federal farm aid. Though she will continue to press for a five-year authorization bill, aides said she might settle for an extension of current law to avoid disruption in key farm programs.”

Additionally on the CR, Elahe Izadi reported yesterday at National Journal Online that, “My colleague Katy O’Donnell reports that Senate Majority Leader Harry Reid has promised no policy riders this go-around, and the CR raises current spending levels by $8 billion:

“‘Rumors that defense authorization or the farm bill would be tacked onto the must-pass funding measure circulated last week, much to the chagrin of appropriators.

“‘It’s hard for me to say definitively one way or the other’ whether another bill would be attached, said House Appropriations GOP press secretary Jen Hing, ‘but my chairman has always said we need to do a clean CR.’”

And David Rogers reported yesterday at Politico that, “A six-month stop-gap spending bill took final shape in Congress Monday, as House and Senate negotiators agreed to a formula that will raise most appropriations accounts by about 0.6 percent to meet the $1.047 trillion spending target set for the new fiscal year that begins Oct. 1.

“The House Rules Committee posted the 29-page continuing resolution, or CR, on its website in the evening with the expectation that the measure could come to a House floor vote as early as Thursday.”

Mr. Rogers noted that, “What’s out of the bill then can be as important as what is in.

“For example, no attempt was made to insert disaster aid for drought stricken farmers.”

Meanwhile, Ramsey Cox reported yesterday at The Hill’s Floor Action Blog that, “Senate Majority Leader Harry Reid (D-Nev.) on Monday suggested the Senate won’t be in Washington too long this fall.

“Reid said the Senate will have a ‘short and compact’ schedule this fall, but that it can conclude a lot of work in that time frame.”

Yesterday’s update explained that, “He [Reid] spoke amid speculation that the Senate could finish its work next week to allow senators to return to their home districts to campaign for the rest of the fall.

“The House is scheduled to be in session this week and next week. But it is also is expected to vote Thursday on a measure to keep the government funded for the next six months. That continuing resolution is the only must-pass legislation left on the agenda, and once the House and Senate complete it there would be little pressure to stay at work.”

Also yesterday, Secretary of Agriculture Tom Vilsack offered executive branch perspective on the Farm Bill process.

Bloomberg writer Alan Bjerga reported yesterday that, “U.S. farmers need a new agriculture law passed by the end of the month or they may face deeper cuts to programs after the election than are now under consideration, Agriculture Secretary Tom Vilsack said.

“Republicans who are calling for steep reductions to the food-stamp program — differences in the size of proposed cuts are complicating efforts to forge a new law — are ‘deflecting your attention on poor folks,’ Vilsack said today at a Washington meeting of the National Farmers Union. Their real goals are reducing ‘your safety net, protecting the Defense Department’ and ‘making sure there is enough left for tax cuts for really wealthy Americans,’ he said.

“‘They don’t want you to focus on that,’ Vilsack, a former Democratic governor of Iowa, told the country’s second-biggest farmer organization.”

Mr. Bjerga added that, “House Majority Whip Kevin McCarthy told reporters today he hopes members will approve the Agriculture Committee plan this month. If time runs out, ‘then we’ll have to deal with that issue,’ the California Republican said, declining to specify what short-term options might be available.”

A news release yesterday from the National Farmers Union stated that, “Members of National Farmers Union will be on hand at the ‘Farm Bill Now!’ rally as legislative representatives, agricultural leaders and hundreds of farmers and ranchers come together in chorus on U.S. Capitol grounds Sept. 12 to encourage Congress to pass a new, comprehensive, five-year farm bill before current farm programs expire at the end of September.”

The release noted that, “Legislative members slated to speak at the rally include Sen. Debbie Stabenow, D-Mich., chairwoman of the Agriculture, Nutrition and Forestry Committee; Sen. Jerry Moran, R-Kan.; Rep. Collin Peterson, D-Minn., ranking member of the Committee on Agriculture; and Rep. Kristi Noem, R-S.D.”

And an update yesterday from the American Soybean Association (ASA) stated that, “As Congress returns from recess this week, the [ASA] announces the launch of the Soy Action Center, a grassroots communications portal through which ASA’s 21,000 farmer members can connect with their members of Congress, administration and federal agency officials, and state and local offices.”

In more detail on nutrition issues, Alan Rappeport reported earlier this week at The Financial Times Online that, “Proposals to impose deep cuts on the $75bn US food stamp programme could eat into profits at food companies that rely on low-income customers stocking up on snacks and drinks.

“Tony Vernon, incoming chief executive of Kraft, the US food company, said that the high US poverty level is the biggest challenge he faces and that he opposes cutbacks to food stamp funding, known as the Supplemental Nutrition Assistance Programme.”

Agricultural Economy

Bloomberg writer Jeff Wilson reported yesterday that, “U.S. farmers accelerated harvesting of the corn crop last week as warmer, drier weather firmed muddy fields for heavy machinery. Soybean conditions improved.

“About 15 percent of the corn was harvested as of yesterday, compared with 10 percent a week earlier, the U.S. Department of Agriculture said today in a report.”

The Bloomberg article noted that, “About 32 percent of the nation’s soybeans were rated good or excellent as of yesterday, up from 30 percent a week earlier, the USDA said. Approximately 4 percent of the crop was harvested.”

DTN writer Todd Neeley reported yesterday (link requires subscription) that, “Southeastern Kansas farmers are learning there could be something worse than drought-diminished corn yields. As harvest wrapped up near Hartford last week, producers hauling in average yields of 30 to 35 bushels an acre were often met with more devastating news: Much of that corn contained aflatoxin.

“Aflatoxin is a set of toxic chemicals produced by two different molds on corn, brought on by drought, heat and plant damage. At certain levels, aflatoxin is unsafe for some livestock.

“As if drought isn’t enough to worry about, elevators increasingly are docking farmers for aflatoxin-ridden corn as more farmers hit the fields.”

Bloomberg writers Jeff Wilson and Tony C. Dreibus also reported yesterday that, “The smallest U.S. soybean harvest in nine years will leave inventories in the world’s largest exporting nation at the lowest in four decades.

“U.S. farmers will reap 13 percent less than a year earlier after the worst Midwest drought in 76 years, according to the average of 34 analyst estimates compiled by Bloomberg. Reserves will be the lowest since 1973 by March, estimates INTL FCStone Inc., which handled $75 billion of physical commodities in 2011. Futures will advance 16 percent to an all-time high of $20 a bushel in three months, Goldman Sachs Group Inc. predicts.”

The article stated that, “Feedlots lost about $316 a head in July fattening cattle for slaughter, said Ron Plain, a livestock economist at the University of Missouri. U.S. beef output will drop 3.9 percent to 24.575 billion pounds next year, the lowest since 2004, the USDA estimates. Retail prices will rise 5 percent, outpacing other food groups, according to the agency.”

University of Illinois Agricultural Economist Darrel Good noted yesterday at the farmdoc daily blog (“Renewed Focus on U.S. Crop Exports”) that, “Crop markets continue to be heavily influenced by the prospective size of the U.S. corn and soybean crops, with the USDA’s September 12 Crop Production report to provide an important update on prospective crop sizes. With prospects for very small crops, the potential strength of export demand for wheat, corn, and soybeans is of increasing importance as crop problems have also been experienced in other parts of the world.”

Yesterday’s update stated that, “The export demand for corn and wheat is important for prices of those commodities, but the impact is somewhat muted since corn exports are now a relatively small percentage of the total consumption of U.S. corn and domestic wheat supplies are relatively more abundant. The soybean production shortfalls experienced in 2012, in combination with continued large purchases by China, make the soybean export situation more dicey. The large South American soybean crop expected in 2013 will be needed to avoid a severe rationing situation next spring and summer.”

In additional news regarding production and exports, Biman Mukherji reported yesterday at The Wall Street Journal Online that, “India is unlikely to stop exporting wheat any time soon, despite fears of a drought during the summer, as late monsoon rains have brightened prospects for the winter-sown crop, trade executives and a government official said Monday.”

Louise Lucas and Gregory Meyer reported yesterday at The Financial Times Online that, “The traditional British bacon and egg fry-up could become a rarer treat as the rising cost of animal feed forces a growing number of farmers to join an international exodus from pig production.

“Output could fall by up to 20 per cent by Christmas as British farmers consider quitting the business rather than face mounting losses with every hog sold, according to a survey by the National Pig Association. Some 8,000 breeding sows have been culled since beginning of the year.”

The FT article pointed out that, “Chris Hurt, economist at Purdue University in Indiana, estimates the US pork industry will suffer as much as $4bn in losses in the coming year. European farmers will from next year face the added costs of complying with welfare regulations governing animals’ living conditions.

“‘This is not a UK problem, it’s a worldwide one,’ says farmer Mike Sheldon, warning of growing evidence of producers worldwide liquidating their stock.”

And Reuters writer Charlie Dunmore reported yesterday that, “The European Union will impose a limit on the use of crop-based biofuels over fears they are less climate-friendly than initially thought and compete with food production, draft EU legislation seen by Reuters showed.

“The draft rules, which will need the approval of EU governments and lawmakers, represent a major shift in Europe’s much-criticized biofuel policy and a tacit admission by policymakers that the EU’s 2020 biofuel target was flawed from the outset.”

Meanwhile, David M. Herszenhorn reported in Friday’s New York Times that, “President Vladimir V. Putin of Russia is seizing on the Asia-Pacific economic summit conference being held here this weekend to turn assertively to the Far East, hoping to strengthen ties with the Pacific Rim and pursuing ambitious development in Russia itself, starting with this formerly secret naval fortress turned shipping hub on the Sea of Japan.”

The article indicated that, “Although energy is Russia’s largest sector, it is not the only area of opportunity in Asia. As host, Russia set the meeting agenda, and Mr. Putin chose food security as a top issue — a recognition of Russia’s large, and growing, role in feeding the developing world with grain exports, and wider concerns about price spikes and social unrest.

“Food exports also represent a potential windfall and closer bonds with Asia. ‘Russian agriculture is the opportunity of the century,’ said Charles Robertson, global chief economist of Renaissance Capital, an investment bank that focuses on Russia.”

Commodity Futures Trading Commission (CFTC) Issue

Ben Protess reported in yesterday’s New York Times that, “Financial regulators may face a new obstacle in their efforts to police Wall Street.

“Lawmakers are pushing a bill that could curb the influence of the Securities and Exchange Commission, the Commodity Futures Trading Commission and other regulators, according to Congressional staff members and government watchdog groups.

“The measure, which a Senate committee is planning to debate this month, aims to empower the president in the rule-writing process. The proposal would allow the White House to second-guess major rules and mandate that agencies carefully study the economic effects of new regulation. The change could, in effect, delay a number of rules for the financial industry.”

Keith Good

Posted by Keith Good • September, 11, 2012 • 3:48 am