FarmPolicy

Farm Bill; Budget; Ag Economy; and, CFTC Issues

Farm Bill

Erik Wasson reported today yesterday at The Hill’s On the Money Blog that, “Democrats sought to blame House Republican leaders for the farm bill’s official expiration on Monday.

“Senate Agriculture Committee Chairwoman Debbie Stabenow (D-Mich.) demanded the House take up a new five-year farm bill on the first day of the November lame-duck session.”

The article quoted from a statement released yesterday by Chairwoman Stabenow, which noted in part that, “It is unbelievable that we’re in this position now where the Farm Bill will expire and create so much uncertainty for farmers, ranchers, and small businesses. The Senate came together in a bipartisan way and we passed the Farm Bill. The House Agriculture Committee came together in a bipartisan way to pass a Farm Bill. It’s absolutely unacceptable that the House Republican leadership couldn’t devote just one day to rural America and the 16 million jobs across the country that rely on agriculture.”

Meanwhile, House Minority Leader Nancy Pelosi (D., Calif.) tweeted yesterday that, “Because #DoNothingGOP allowed Farm Bill to expire yesterday, many farmers now can’t access disaster assistance, get loans + plan for future.”  (A full statement from Rep. Pelosi yesterday on the Farm Bill is available here).

House Minority Whip Steny Hoyer (D., Md.) tweeted yesterday that, “Yesterday the #FarmBill expired after House GOP left town. Congress should return to work to provide assistance to our nation’s farmers.”

And House Ag Comm. Member Jim McGovern (D., Mass.) tweeted yesterday that, “#DoNothingGOP let #FarmBill expire, leaving farmers out in the cold. Bad policy, bad idea.”

However, Mr. Wasson noted in his Hill article from yesterday that, “House Republicans shot back that Stabenow is responsible for blocking farm disaster relief, while other provisions in farm law such as food stamp delivery will not be affected by a temporary lapse.”

The Hill article added that, “‘The House acted quickly to pass urgent disaster aid for livestock producers and it’s disappointing that Senator Stabenow and other Senate Democrats chose to ignore this bipartisan bill,’ Boehner spokesman Kevin Smith said. He pointed out that in 2007, when Democrats controlled all of Congress, the farm bill also lapsed temporarily.”

Meanwhile, Sen. Chuck Grassley (R., Iowa) was a guest on yesterday’s AgriTalk radio program with Mike Adams where he discussed the current Farm Bill situation in greater detail, a replay of this discussion from yesterday’s AgriTalk program can be heard here (MP3- 5:32).

Nebraska GOP Senator Mike Johanns also discussed the Farm Bill last week in some detail, offering his observations on the House dynamics on the ag legislation.  He noted that some work still remains to reconcile differences between the House and Senate version of the Farm Bill on the commodity title, even after the House gets a bill passed.  The former Sec. of Agriculture also pointed out that there remain issues to be resolved on the nutrition title.

In addition, Ken Anderson reported yesterday at Brownfield that, “But Nebraska Senator Mike Johanns doesn’t think the Republicans deserve all of the blame [for the stalled Farm Bill].

“‘It’s not lost on the Democrats—i.e. Nancy Pelosi, who leads the Democrats in the House—that the more heat they can put on the Republicans, the better it’s going to be for them,’ Johanns says. ‘So I really suspect that Nancy Pelosi has said to her members, ‘stand down on this—let the Republicans take the heat until after the election.’”

House Ag. Comm. Member Randy Neugebauer (R., Tex.) noted yesterday that, “I’m very disappointed that the Farm Bill is expiring without a new five-year Farm Bill in place.  Our farmers keep America fed and clothed while risking the uncertainties of weather, droughts, and rising input costs.  Now, they will also have to deal with uncertain policy when they make their planting decisions for next season.  I’ll continue to push for long-term policy to give our farmers and ranchers a measure of predictability in a risky industry.”

And House Ag. Comm. member Jeff Fortenberry (R., Neb.) indicated recently that, “Although the current uncertainty about the bill is not preferable for planning purposes, Congress has a few more months to pass a new Farm Bill. Clearly, it is better to act on a five-year bill. Congress may also choose to extend the current Farm Bill, but then the reforms and budget savings achieved in the new proposal will be lost.”

And from the executive branch, Sec. of Agriculture Tom Vilsack noted in part yesterday that, “Without action by the House of Representatives on a multi-year Food, Farm and Jobs bill, rural communities are today being asked to shoulder additional burdens and additional uncertainty in a tough time.”

Several farm and commodity groups released an update yesterday on the expiration of the 2008 Farm Bill, as did National Farmers Union President Roger Johnson; and Chuck Conner, president and CEO of the National Council of Farmers Cooperatives, issued a statement on this issue last week.

A National Milk Producers Federation (NMPF) update from yesterday indicated that, “‘Dairy is among the first sectors in agriculture to feel the impact of Congress’s inability to reach accord on most anything, including a new Farm Bill,’ said Jerry Kozak, President and CEO of NMPF. ‘Had the House leadership brought the bipartisan farm bill to the floor, I believe we could have passed a bill containing the Dairy Security Act. Instead, we are in uncharted waters, and one of our life rafts has disappeared.’”

Bloomberg writer Alan Bjerga reported yesterday that, “Call it the farm fiscal cliff.

“Congress’s failure to pass an agriculture law this year means U.S. farm policy officially reverts to rules dating to 1949 that would raise prices of commodities from cotton to wheat next year at taxpayer expense. Futures traders are betting lawmakers will act to prevent that.

“The BGOV Barometer shows that applying the 63-year-old law would force up the price farmers get for wheat by more than half, with government funds propping up the market. Milk and cotton would almost double, and rice would rise 41 percent. Futures contracts in those commodities point to prices next year still well below the level the 1949 law would mandate.”

The Bloomberg article pointed out that, “Lawmakers will be challenged to pass a new farm bill while dealing with other issues, [Sec.] Vilsack said. Typically, lawmakers pass short-term extensions of the law until spring planting begins and farmer groups demand legislation to help with planting decisions. When the law expired in September 2007, the policy lapsed and a new measure wasn’t passed until June 18, 2008.”

On Sunday, Politico provided a closer look at key U.S. Senate races, and this FarmPolicy post was updated yesterday with additional information on the North Dakota, Missouri and Ohio U.S. Senate contests.  For additional information on the North Dakota U.S. Senate race and the Farm Bill, listen to this brief clip (MP3- 1:10) from Friday’s Agriculture Today radio program (Red River Farm Network).  The report from Don Wick includes remarks on the ag legislation from both of the North Dakota Senate candidates.

And, Senate Ag. Comm. Chairwoman Stabenow recently turned attention to agriculture in a recent political ad for her re-election campaign.

Chris Clayton reported yesterday at the DTN Ag Policy Blog that, “Do you think [House Majority Leader Eric Cantor (R., Va.)] would face some accountability from his rank-and-file members if Democrats hold the Senate because of a couple of key races in which the farm bill played a factor?”

While outlining some of the impacts of the Farm Bill expiration, Mr. Clayton pointed out that, “Two of the biggest, most expensive programs in the farm bill, food stamps and crop insurance, continue on without the authorization of a new bill. The Supplemental Nutrition Assistance Program, (food stamps) was addressed in the continuing resolution Congress passed to keep funding the government until next March. Crop insurance is covered through its own stand-alone legislation.”

In other Farm Bill related news, Caroline May reported yesterday at the Daily Caller that, “Department of Agriculture personnel in the Obama administration have met with Mexican Government officials dozens of times since the president took office to promote nutrition assistance programs — notably food stamps — among Mexican Americans, Mexican nationals and migrant communities in America.

“Writing in response to Alabama Republican Sen. Jeff Sessions’ July request for information about the USDA’s little known partnership with the Mexican government to educate citizen and noncitizen immigrants from Mexico about the availability of food stamps and other nutrition assistance programs, Agriculture Secretary Tom Vilsack defended the partnership as a way to curb hunger in America — and the continuation of a program formed under the Bush administration in 2004.”

Budget

Jonathan Weisman reported in today’s New York Times that, “Senate leaders are closing in on a path for dealing with the ‘fiscal cliff’ facing the country in January, opting to try to use a postelection session of Congress to reach agreement on a comprehensive deficit reduction deal rather than a short-term solution.

“Senate Democrats and Republicans remain far apart on the details, and House Republicans continue to resist any discussion of tax increases. But lawmakers and aides say that a bipartisan group of senators is coalescing around an ambitious three-step process to avert a series of automatic tax increases and deep spending cuts.”

The Times article explained that, “First, senators would come to an agreement on a deficit reduction target — likely to be around $4 trillion over 10 years — to be reached through revenue raised by an overhaul of the tax code, savings from changes to social programs like Medicare and Social Security, and cuts to federal programs. Once the framework is approved, lawmakers would vote on expedited instructions to relevant Congressional committees to draft the details over six months to a year.

“If those efforts failed, another plan would take effect, probably a close derivative of the proposal by President Obama’s fiscal commission led by Erskine B. Bowles, the Clinton White House chief of staff, and former Senator Alan K. Simpson of Wyoming, a Republican. Those recommendations included changes to Social Security, broad cuts in federal programs and actions that would lower tax rates over all but eliminate or pare enough deductions and credits to yield as much as $2 trillion in additional revenue.

“Finally, they would vote to put off the automatic spending cuts, known as sequestration, and tax increases scheduled to hit all at once in January — but with some deficit reduction down payment to signal how serious Congress is.”

Agricultural Economy

Purdue University Agricultural Economist Chris Hurt noted yesterday at the farmdoc daily Blog (“Large Losses Still Loom for Pork Industry”) that, “Pork producers are expected to continue to suffer very large losses in the next six months after already operating in the red for the last six months. These large losses have been brought on by the extreme feed prices due to the drought. There is little producers can do to change the overall situation for the industry since the pigs that will represent these large losses are already on-feed. The pigs that are here today represent producers’ plans earlier this year when they were hopeful for $5 corn prices.”

The AP reported last week that, “It might not be such great news for those who pour it on cereal, but recent increases in milk prices have offered some relief for dairy producers struggling to keep their heads above water.

“Experts – along with local dairymen, some of whom are just now recovering from the ‘Great Dairy Recession’ of 2009 – and today face historically high feed costs – say those increases must continue to create a break-even scenario for dairies.”

The article noted that, “While many agree that current trends suggest milk prices will continue rising, they wonder if prices will get as high as they need for dairymen to make a profit.

“The price that dairymen get for their milk has gone up from about $16 per hundredweight this past spring to about $18-$19 recently. However, Colorado State University Extension dairy specialist Bill Wailes says milk prices will need to hit the $22-$22.50 range in upcoming months for dairymen to make some money, since feed costs are expected to stay high.”

Meanwhile, Bloomberg writer Luzi Ann Javier reported today that, “About 41 percent of the soybean crop in the U.S., the largest grower last year, was harvested as of Sept. 30, compared with 15 percent a year earlier and 19 percent, on average, from 2007 to 2011, the Department of Agriculture said yesterday. Fifty-four percent of the corn crop was collected, up from 18 percent a year earlier and an average of 20 percent for the previous five years, it said. The harvest pace is the fastest since the USDA began collecting the data in 1981.”

CFTC (Commodity Futures Trading Commission) Issues

Jack Farchy and Javier Blas reported yesterday at The Financial Times Online that, “The US commodities regulator is mapping out a strategy to impose restrictions on large traders in spite of a judge’s move to block proposed ‘position limits.’”

The article stated that, “Bart Chilton, one of the CFTC’s five commissioners, will on Tuesday call for the regulator to push ahead with position limits, notwithstanding the judge’s ruling.

“In a speech to be delivered to a new G20-backed group of food officials in Rome, Mr Chilton will argue that the CFTC should first seek a stay of proceedings, allowing the position limits rule to go into effect while the regulator appeals against the judge’s ruling. People close to the discussions concede that such a request is unlikely to be successful, however.”

And last week at Politico, Zachary Warmbrodt reported that, “Federal regulators have spent the past two years writing rules to rein in the derivatives markets that were at the heart of the 2007 to 2009 financial crisis.

“Now they’re juggling a task no less fraught with complications, both political and technical: making sure companies can actually comply with the new policies.

“A slate of derivatives reforms is set to take effect in October that will command the attention of regulators and the interest of lawmakers over the coming weeks, leaving a number of major unfinished Dodd-Frank Act rules under the Commodity Futures Trading Commission purview out of the spotlight until late this year or early next.”

The September 26 article noted that, “Last week, House Agriculture Committee Chairman Frank Lucas (R-Okla.) sent a letter to CFTC Chairman Gary Gensler, asking how the agency is responding to concerns municipal utilities have about a rule targeting derivatives dealers. The not-for-profit municipalities have warned Congress and the CFTC that the rule would limit their ability to hedge energy price fluctuations.”

Keith Good

Posted by Keith Good • October, 2, 2012 • 3:35 am