FarmPolicy

Farm Bill; Ag Economy; Trade; and, Biofuels

Farm Bill Issues

Vicki Needham and Bernie Becker reported yesterday at The Hill’s One the Money Blog that, “So Congress is out of session on Tuesday but will come back with a bang on Wednesday — with the Senate set to clear a six-month bill to keep the government running.

“Congress is expected to send the bill to President Obama’s desk with plenty of cushion before the Oct. 1 start of the 2013 fiscal year. The legislation, essentially, holds the federal government to 2012 spending levels and doesn’t give the agencies much, if any, wiggle room on their programs.”

Yesterday’s update added that, “Lawmakers are loathe to take votes on items of much substance before the presidential election — or for that matter, any elections — for fear it will hurt their campaigns. Thusly, there is an eight-day session with the CR as the major piece of legislation zipping through the chambers.”

David Rogers reported yesterday at Politico that, “Milk and mayhem are the rule this week as the House farm bill debate spirals downward and Republicans prepare to go home Friday without acting on the bipartisan five-year plan reported in July.

“To save face, the GOP leadership is toying with a three-month extension of the current 2008 farm law due to expire Sept. 30. As now drafted, the same bill would include livestock disaster aid as well as new assistance for dairy farmers.

“House Agriculture Committee Chairman Frank Lucas is going along in hopes of building momentum for action after the November elections. But the Oklahoma Republican told POLITICO Monday that he has no explicit promise yet of even getting floor time in the lame duck for his five-year bill. And the extension itself is in serious doubt given resistance from Democrats and a GOP whip count showing continued divisions among Republicans.”

Mr. Rogers noted that, “Dairy interests are most in a pickle because their Milk Income Loss Contract (MILC) expires with the current law at the end of this month. But producers are still reluctant to sign onto any extension if it jeopardizes the chances for the greater security promised in the five-year bill.”

Yesterday’s Politico article pointed out that, “Minnesota Rep. Collin Peterson, the ranking Democrat on the House Agriculture Committee, told a North Dakota radio station Monday that any three-month extension is ‘strictly nonsense’ and he intends to begin his own whip operation this week for the five year bill.

“‘Maybe I’ll publish the names of all these Republicans who are against it,’ Peterson told his host, Joel Heitkamp, a former state legislator whose sister, Heidi Heitkamp, is running as the Democratic candidate for the Senate.”

(Note that yesterday’s full discussion between Rep. Peterson and Mr. Heitkamp is available here.  A portion of yesterday’s interview, in which Rep. Peterson highlighted potential issues with the dairy section of the Farm Bill, can be heard here (MP3- 2:45).  In the clip, Rep. Peterson also provides some observations on the Farm Bill and Speaker Boehner, Majority Leader Eric Cantor and former Ag Committee Chairman Bob Goodlatte.  Ranking member Peterson noted that the food stamp portion of the Farm Bill is not the biggest hurdle, but rather the commodity title remains the larger issue of concern.)

The Politico article noted that, “The tensions may be greatest with Majority Leader Eric Cantor (R-Va.), who intervened this past summer to delay Lucas’ markup of his five year bill. The situation is not helped by the fact that, Rep. Bob Goodlatte—the ranking Republican on the House Ag panel and a fellow Virginian with Cantor—has seemed to work actively against Lucas since then.

“At a GOP whip meeting last week, when Lucas argued for moving forward with the farm bill this year, Goodlatte took the opposing view that it better to wait until a new Congress shaped by potential GOP gains in November.”

Meanwhile, a news release yesterday from the National Farmers Union (NFU) indicated in part that, “[NFU] President Roger Johnson issued the following statement following U.S. House of Representatives Majority Leader Eric Cantor’s announcement of the remaining votes in the House, which does not include the 2012 Farm Bill:

“‘The 2008 Farm Bill expires on Sept. 30. Congress is well aware of its expiration, and sadly leadership has succumbed to political pressure and will leave with unfinished business. Aside from politics, there is no reason that the House doesn’t bring the farm bill to a floor vote. Leadership has chosen to cancel all votes in October.’”

Erik Wasson reported yesterday at The Hill’s On the Money Blog that, “The conservative pressure group Club for Growth on Monday said it will key-vote support for the farm bill discharge petition currently available for signatures in the House… A House member’s signature on this discharge petition, or any similar petition, will count heavily as an anti-growth action on the Club for Growth’s 2012 Congressional Scorecard.”

An update yesterday at the National Sustainable Agriculture Coalition (NSAC) Blog took a closer look at the potential sequester cuts and the possible impacts on agriculture (recall that the sequester was discussed in detail in Monday’s FarmPolicy.com update).

The NSAC update noted that, “OMB’s [Office of Management and Budget] sequestration report gives us our first official glimpse at what the impact of sequestration would be for the annual appropriations process and for the farm bill.  Before Friday, many observers believed, based on informal congressional and administrative estimates, that sequestration would result in automatic cuts of roughly $15-$16 billion to farm bill programs over the course of the next decade.

“Our analysis of the sequestration report makes it clear that the actual size of the cut would be much smaller, about $8 billion, including $4.6 billion from commodity programs (excluding the commodity loan programs, which the report lists as exempt) and $2.8 billion from conservation programs (excluding the Conservation Reserve Program, which is exempt), with the remainder primarily in very small amounts from food purchasing and nutrition programs.”

Yesterday’s update explained that, “The big difference between previous estimates and the final figures from OMB is crop insurance subsidies.  While the sequestration statute exempts ‘prior legal obligations’ of the Federal Crop Insurance Corporation from sequestration, OMB opts to exempt nearly all crop insurance subsidies from automatic cuts, reducing the total hit on the farm bill by at least $6 billion or quite likely more than that.”

Moreover, the NSAC blog update stated that, “In comparison with the pending 5-year farm bills, the size of the automatic cuts under sequestration pale in comparison to those in the Senate-passed bill and House Committee-passed bills.  The Senate farm bill would cut $23 billion in total over the next decade.  Even after subtracting the cuts to food stamps and the CRP (since they are exempt under sequestration) and adding in the new spending proposed for crop insurance and other titles of the farm bill, the Senate bill would still slice off $15 billion, or almost twice the level of the automatic cuts.  The House farm bill would cut $35 billion, but again on an apples to apples comparison with sequestration, its cut would also be $15 billion.

“It has long been assumed that if a long-term farm bill were to pass and become law while sequestration was still the law of the land, the final farm bill would contain a provision to exempt farm bill accounts from sequestration, having gone further in terms of total savings than required by the automatic cuts.”

With respect to opinion items and the Farm Bill, the Chicago Tribune editorial board opined yesterday that, “Neither the Senate nor the House measures come close to adequately reforming America’s system of down-home country giveaways. Both versions of the bill should be scrapped — and we suspect they will be, if the debate over farm policy is postponed. This could be a rare instance where Washington gridlock, which otherwise has created damaging uncertainty and poisoned America’s business climate, could work to the nation’s advantage.”

Similarly, The Wall Street Journal editorial board noted today that, “Congressional inaction has it merits, and this week’s case in point is the $957 billion farm bill stuck in the House. Taxpayers should hope that Republicans keep this boondoggle buried.”

In separate developments regarding nutrition issues, Pete Kasperowicz reported yesterday at The Hill’s Floor Action Blog that, “Rep. Steve King (R-Iowa) has introduced legislation that would repeal a U.S. Department of Agriculture rule that puts a cap on the number of calories in school lunches served to children.

“King’s No Hungry Kids Act, H.R. 6418, would eliminate new USDA guidelines that say children in kindergarten through fifth grade can be served meals containing up to 650 calories, while meals for sixth through eighth graders can have 700 calories, and meals for high schoolers can have 850 calories.”

Jacqui Fatka reported on Friday at Feedstuffs Online that, “Today USDA announced $5.2 million in 18 States and one territory to help support schools as they ‘strive to serve healthy food, provide nutrition education, and create an environment focused on healthy eating and physical activity,’ a statement from USDA noted.

“In a press call Agriculture Deputy Under Secretary for Food, Nutrition and Consumer Services Janey Thornton said right now schools are in the ‘painful process’ of implementing new guidelines and there is a lot of ‘uncertainty’ and schools are trying to do their best to navigate within the new guidelines. But Thornton said they aren’t hearing a lot of pushback from schools about the rules.”

Some recent articles on this issue have included the following headlines:  “Healthier lunches leaving students hungry,” “Newburyport students unhappy over government-mandated ‘healthy lunch,’” “Healthy food policy at school jumpstarts chocolate syrup trade,” and “Mixed grades for new, healthy school lunch rules.”

In other news, Robyn Gautschy reported yesterday at the Southeast Missourian (Cape Girardeau) Online that, “Last year’s flooding, coupled with this year’s extreme drought, have made crop insurance more important than ever to Missouri farmers.

“‘Crop insurance is a completely different industry than it was a few years ago. It has gone from being something producers buy in order to receive their disaster payments to something they consistently rely on,’ says Amanda Hurley, a licensed crop insurance agent with C&H Insurance Services LLC in Charleston, Mo. The industry has responded by offering several more insurance options, says Hurley, including additional replant and prevented plant options.”

Agricultural Economy

Ricardo Lopez reported yesterday on the front page of the Los Angeles Times that, “The worst U.S. drought in half a century is withering the nation’s corn crop, but it’s a fertile opportunity for makers of genetically modified crops.

“Agricultural biotechnology companies have been pouring hundreds of millions of dollars into developing plants that can withstand the effects of a prolonged dry spell. Monsanto Co., based in St. Louis, has received regulatory approval for DroughtGard, a corn variety that contains the first genetically modified trait for drought resistance.”

The article noted that, “Seed makers, such as Pioneer Hi-Bred International Inc. of Johnston, Iowa, and Swiss company Syngenta, are already selling drought-tolerant corn varieties, conceived through conventional breeding.

“At stake: a $12-billion U.S. seed market, with corn comprising the bulk of sales. The grain is used in such things as animal feed, ethanol and food. The push is also on to develop soybean, cotton and wheat that can thrive in a world that’s getting hotter and drier.”

Mr. Lopez pointed out that, “Their efforts come amid concerns about genetically modified organisms, or GMOs, and the unforeseen consequences of this genetic tinkering. Californians in November will vote on Proposition 37, which would require foods to carry labels if they were genetically modified. The majority of corn seed sold is modified to resist pests and reap higher yields.

“Opponents say the label would unnecessarily dampen further development that is intended to feed a growing global population dependent on the U.S., the largest exporter of corn and soybean.”

Meanwhile, Neela Banerjee reported on Sunday at the LA Times Online that, “Depending on whom you ask, Georgia is doing fine, or it’s suffering from historic drought.

“Georgians have gotten a swift education: Since 1999, the state has spent more years in drought than in normal conditions. Federal maps show that more than half of Georgia is now in extreme or exceptional drought, at a time when 70% of the country is experiencing abnormal aridity.

“But the state’s relentless experience with drought has created ambivalence among residents and policymakers about how to cope with it, hinting at problems other states may have to face if their droughts drag on or recur with troubling regularity.”

And, Gregory Meyer reported yesterday at The Financial Times Online that, “Grain markets sank on Monday, with soyabeans hitting the exchange-imposed limit, as a speedy harvest by US farmers offset its disappointing size… The government said late Monday that 26 per cent of the US corn crop has been harvested, three times more quickly than the average rate.”

(Note, see this interesting graph that was included in this month’s Feed Outlook report from USDA’s Economic Research Service, see also, “Early Corn Harvest and September 1 Stocks,” by University of Illinois Agricultural Economist Darrel Good, which was posted yesterday at the farmdoc daily blog).

Trade

Julian Pecquet reported yesterday at The Hill’s Global Affairs Blog that, “The U.S. ambassador to Russia on Monday latched onto the Obama administration’s suit against Chinese auto subsidies to make the case for a trade pact with Russia.

“Russia joined the World Trade Organization (WTO) last month, but U.S. exporters can’t benefit from lower tariffs and legal certainty until the United States establishes permanent normal trade relations (PNTR) with Russia. Legislation to do so is stuck in Congress, where lawmakers have raised concerns over Russia’s human-rights record and support for President Bashar Assad’s regime in Syria.

“In a tweet Monday, Ambassador Michael McFaul, who regularly upsets Russian authorities by meeting with opposition figures, said Obama’s action against China is a prime example of what the United States could do to protect U.S. companies doing business in Russia, the world’s ninth largest economy.”

For more on the U.S.- Russian trade legislation see, “The Russia Trade Bill Soap Opera,” which was posted yesterday at National Journal Online.

Biofuels

Joshua Chaffin and Jack Farchy reported yesterday at The Financial Times Online that, “The European Commission is to overhaul rules encouraging the use of biofuels amid concerns that the policies may have contributed to deforestation and a surge in global food prices.

“The new changes, to be proposed as early as next month, will cap the amount of transport fuels made from food crops that member states can use to achieve binding EU targets.”

Keith Good

Posted by Keith Good • September, 18, 2012 • 3:23 am