Farm Bill Issues
An update posted on Friday at the National Sustainable Agriculture Coalition (NSAC) Blog (“Path to the 2012 Farm Bill: Farm Bill Expires on Monday — What Does It Mean and What Happens Now?”) indicated that, “We have been fielding lots of questions in the past few weeks following the congressional meltdown on the new farm bill. This is not surprising, given Congress’ failure to date to either pass a new farm bill or to enact a short-term extension of the existing farm bill before the farm bill expires at midnight, this Sunday, September 30.
“In an attempt to answer the questions we have been getting in a more public way, we are publishing this post in the form of frequently asked questions.” The NSAC update continued with cogent and detailed responses to more than a dozen pertinent questions.
Meanwhile, Raju Chebium reported on Saturday at the Montgomery Advertiser (Ala.) Online that, “Congress’ failure to pass a new farm bill before the Sunday deadline won’t immediately affect Alabama’s $5 billion agriculture industry, but a new bill needs to come soon, farm groups say.
“The state’s agriculture lobby said Congress needs to adopt a new five-year farm bill by the end of 2012 so growers will know the types and levels of federal support they can count on for the next planting season.
“Growers aren’t panicking yet because ‘anything to do with the 2012 crop will be covered under the current bill,’ said Randy Griggs, executive director of the Alabama Peanut Producers Association…‘Where the problem comes is after the first of the year,’ Griggs said.”
The article added that, “GOP Rep. Martha Roby of Montgomery, co-chairwoman of the newly reconstituted House Peanut Caucus, said she’s confident that the House will take up the new farm bill after the elections.
“‘The reason that this was postponed was due to the political season and the fact that we are in the middle of a pretty intense presidential election,’ she said in an interview.”
Reuters writer Christine Stebbins reported on Friday that, “Expiration of U.S. farm law on October 1, shutting off dairy supports and putting 2013 crop subsidies in limbo, will cause pain for some farmers and frustration for many but programs like food stamps and crop insurance will roll on, analysts said.
“Government funding is assured through March 2013 for many programs based on a July deal to extend budget authority reached by feuding Republicans and Democrats ahead of the November elections.”
Friday’s article pointed out that, “But dairy farmers will be hit financially.
“‘Immediate impact will be felt by dairy farmers because the supplemental payment many of them have been receiving, the Milk Income Loss Contract Program, expires on September 30,’ said John Blanchfield, senior vice president for agricultural and rural banking at the American Bankers Association.
“‘Since milk check payments run 30 days behind the delivery of milk, dairy farmers will notice the suspension of these payments with the November milk checks,’ he said.”
Ms. Stebbins noted that, “Dairy farmers and livestock producers have been hit hardest this year by drought. Crop losses have been covered to a great extent by insurance, supported by USDA programs. But soaring feed prices have squeezed livestock producers, prompting herd liquidations and financial failures.
“‘Congress has to got to do something in November,’ said Jackie Klippenstein, vice president of industry and legislative affairs for Dairy Farmers of America. ‘The farm bill provided a measure of hope. The fact that Congress went home without addressing it has really deflated a lot of folks out there who are struggling.’”
More specifically with respect to dairy issues, the AP reported on Saturday that, “Across California, the nation’s largest dairy state, dozens of dairy operators large and small have filed for bankruptcy in recent months and many teeter on the edge of insolvency. Others have sold their herds or sent them to slaughter and given up on the business.
“Experts say California dairymen face a double whammy: exorbitant feed costs and lower milk prices. The Midwest drought has led to corn and soybean costs increasing by more than 50 percent this summer, stressing dairymen from Wisconsin and Minnesota to Missouri. But in California, milk prices have also lagged behind those in the rest of the nation, exacerbating the crisis.
“And while milk revenues in California have soared to over $7.5 billion in 2011, making milk the top agricultural commodity, higher revenues mean little, famers say, because it costs so much more to produce the milk.”
Likewise, Whit Richardson reported on Saturday at the Bangor Daily News Online that, “A series of colliding factors, including the weather, grain speculation and antiquated federal policies, have sent Maine’s dairy farmers spinning into one of the most dire situations in recent memory.
“While consumers haven’t noticed any change in the price of a gallon of milk at the grocery store, behind the scenes the economics of milk is in disarray.”
Sen. Patrick Leahy (D., Vt.) tweeted yesterday evening that, “#dairy farmers need relief now frm rising feed costs; House leaders letting #FarmBill lapse at midnight will pile on more uncertainty.”
And Art Hovery reported on Saturday at the Lincoln (Neb.) Journal Star Online that if a Farm Bill is not passed or extended, “‘[d]airy will actually come out smelling like a rose, because we’ll go to 75 percent of parity,’” said dairyman Doug Nuttelman.
“That figures out to about $38 per hundred pounds of milk, about twice the current cash price paid to the producer,” the article said.
“That seemingly lavish treatment is part of the official fallback position, because the more permanent part of federal law says that farm policy reverts to the 1949 farm bill if there’s not an operative replacement.”
The Journal Star item added that, “But don’t hold your breath, said Brad Lubben, farm policy specialist at the University of Nebraska-Lincoln.
“‘Nobody thinks we’re going back to 1949,’ he said. ‘It’s economically inefficient or sort of irrelevant. It’s politically unacceptable, even technically unfeasible. I can’t come up with enough adjectives to describe it.’”
Recall however that in an interview with AgriTalk radio last week, House Ag Comm. Ranking Member Collin Peterson (D., Minn.) stated that, “I am for getting this [Farm] bill done, and I am okay with permanent law going in on January 1st if we don’t get it done, and I will oppose an extension if we don’t get it done. And we’ll see what happens.”
An update yesterday at CBS New York Online reported that, “The price of a gallon of milk could skyrocket if the Farm Bill is not renewed by the end of the year, according to Democratic Sen. Charles Schumer.
“Schumer held a news conference in front of a Manhattan supermarket on Sunday to urge his fellow lawmakers to act quickly on the [Farm] bill, which expires today.”
Meanwhile, Mike Dennison reported on Friday at the Independent Record (Helena, Mont.) Online that, “John Youngberg, vice president of governmental affairs for the Montana Farm Bureau Federation, also said it may be difficult for Congress to tackle the Farm Bill during this year’s last, brief session after the Nov. 6 election.
“‘I’d like to say I’m confident they can do something in a lame-duck session … but the last Farm Bill was in conference (committee) for eight weeks,’ he said.”
And Rep. Peterson noted last week on AgriTalk radio that, “But one of the things I’m concerned about is there is no real work going on. We’re just kind of waiting right now. And I’m a little bit worried about having enough time during the lame duck to get this done. We’re going to have to move this early, as soon as we get back, on the House floor in order to get it into conference and get it worked out and get it back on the floor before we adjourn for Christmas.”
From a more political perspective, Pete Kasperowicz reported on Friday at The Hill’s Floor Action Blog that, “House Democrats on Friday morning renewed their call for the House to return to work and pass legislation to fix the pending tax crisis, reduce the debt and make federal health programs more sustainable, but were again shut down by House Republicans.”
Recall that last week on the House Floor, during a pro forma session, Representative Donna Edwards (D., Md.) made a request to call Congress back into session to take up legislation Democrats wanted debated and passed, including the Farm Bill.
Moreover, Alexandra Jaffe reported on Friday at The Hill’s Ballot Box Blog that, “Democrats are using the stalled farm bill to hammer their GOP opponents in congressional races across the country.”
For more on the Farm Bill and the fall elections, see this FarmPolicy post that was updated with information Friday on the Iowa Forth Congressional District race, as well as the Montana and Missouri Senate race.
With respect to the executive branch, Ben Terris reported on Friday at National Journal Online that, “Agriculture Secretary Tom Vilsack thinks House Republicans’ excuses for not reauthorizing farm and nutrition programs before going on break just don’t cut it.
“‘The House leadership offered two reasons why they didn’t vote on the farm bill,’ Vilsack said after watching his wife, Christie, debate her opponent for the Hawkeye State’s 4th District, Rep. Steve King, in Orange City. ‘They said there wasn’t enough time and they said they didn’t have enough votes. Well, they left days early, so they had enough time. And the reality is they never really whipped it. They never really counted the votes. Because they didn’t count the votes, they didn’t realize that they had them. If they had put a farm bill up on that floor, I believe they would have gotten those 218 votes.’
“Vilsack said that Republicans, in trying to align the farm bill with the budget authored by Budget Committee chairman and vice presidential nominee, Rep. Paul Ryan of Wisconsin, are asking too much from rural America.”
In other policy related developments, the Chicago Tribune editorial board noted on Saturday that, “For more than a decade, American farmers have planted corn seed containing modified genes that resist crop disease, combat insect pests and make weedkiller more effective.
“Generations of livestock have been raised on genetically modified corn. Millions of Americans have consumed it too, in cereal, cooking oil and related products.
“If genetically modified corn posed an urgent health threat, America would know it by now. In fact, the science behind these crops not only is safe, but transformative. Agricultural biotechnology has reduced the amount of chemical pesticides and herbicides in use. It has improved yields. It is making important contributions to the relief of global hunger, especially now that advanced tools are being used to improve cassava and other foodstuffs vital to subsistence agriculture.”
Reuters writer Charles Abbott reported on Friday that, “U.S. corn and wheat stockpiles shrank far more than expected this summer, the government reported on Friday, reigniting a rally in grain prices on fears that strong demand and drought-decimated crops will keep markets tight.
“Corn futures surged nearly 6 percent on the Chicago Board of Trade after the U.S. Department of Agriculture reported corn stocks on September 1 were below 1 billion bushels for the first time in eight years. Wheat futures rose more than 5 percent, topping $9 a bushel after the data showed stockpiles were 7 percent less than forecast.
“The ending-stock figures showed that record-high corn prices during the quarter had failed to put as big a dent in demand as analysts expected, suggesting that prices may need to rise higher still in the coming months to ration demand amid heightened competition for food, livestock feed and ethanol.”
University of Illinois Agricultural Economist Darrel Good noted on Friday at the farmdoc daily Blog (“Grain Stocks Estimates Provide Surprises, but Less Information than Usual for Corn”) that, “The September 1 stocks estimate for corn, as with all quarterly stocks reports, allows for the calculation of total consumption in the previous quarter. Since domestic processing use and exports during the previous quarter are already known before the release of the report, the stocks estimate provides for a calculation of feed and residual use during the previous quarter. However, apparent feed and residual use during the final quarter of the year, and therefore during the first quarter of the next marketing year, is muddled by the availability of newly harvested corn in the last several weeks of the old crop marketing year. Since the September 1 stocks estimate is an estimate of old crop corn inventories, only the consumption of old crop corn during the final quarter of the year is revealed by the stocks estimate. Consumption of newly harvested corn during that quarter is not known. That consumption appears as consumption during the first quarter of the next marketing year and is revealed in the December 1 stocks estimate. To the extent that newly harvested corn is actually consumed in the old-crop marketing year, consumption during the final quarter of the year is understated and consumption during the first quarter of the following marketing year is overstated. The magnitude of the under and over estimates is never really known and is not a major issue if only small amounts and relatively constant amounts of new crop corn are available before September 1 each year. This year, however, the USDA estimated that nearly 1.2 billion bushels of corn were harvested before September 1, compared to 200 to 700 million in each of the previous 20 years. Much of the 1.2 billion bushels was harvested early enough so that it could have been used before September 1. Additionally, regardless of how the newly harvested corn was consumed, it shows up in the balance sheet as smaller feed and residual use of old crop corn. The bottom line is that the September 1 stocks estimate of 988 million bushels reveals less about the actual pace of feed and residual use of corn this year than in most years.”
The update added that, “The level of stocks of old corn on September 1 was likely influenced by the harvest and likely use of larger quantities of new crop corn before September 1 than is normally the case and therefore reveals less than usual about the actual pace of feed and residual use of corn this past summer. Still, the surprisingly low level of old crop stocks should be enough to bring the recent price slide to a halt. The bigger supply issue, however, is the size of the current harvest. The USDA will provide a new production forecast on October 11.”
In other news, Joe Barrett and Caroline Porter reported yesterday at The Wall Street Journal Online that, “The Midwest drought is lowering water levels in Lake Michigan and Lake Huron to near-record lows, putting pressure on the shipping industry and turning some beaches into long mud flats. It is also intensifying a debate over a decades-old dredging project near Detroit that permanently reduced the lakes’ levels by nearly two feet.”
CFTC (Commodity Futures Trading Commission)
Shahien Nasiripour reported on Saturday at The Financial Times Online that, “A US court has rejected a proposal by the Commodity Futures Trading Commission that aimed to limit speculation in commodity markets.
“The ‘position limits’ rule was to take effect in two weeks. It would have capped holdings of futures and options for 28 commodities and their derivatives, from crude oil to corn and cocoa, expanding existing limits to contracts for any delivery month.
The FT article explained that, “Robert Wilkins, a US district judge in Washington, said on Friday the CFTC failed to heed instructions from Congress requiring it to determine that its rule was ‘necessary to diminish, eliminate or prevent’ excessive speculation.
“In doing so, he agreed with arguments made by Wall Street groups seeking to overturn the proposal. The CFTC had argued that Congress simply instructed it to produce a rule, without first having to determine whether it was necessary.”