FarmPolicy

February 22, 2019

Farm Bill; Budget; Ag Economy; and, Biofuels

Farm Bill

The “Washington Insider” section of DTN reported yesterday (link requires subscription) that, “Congress is on the campaign trail full time now and won’t return until after the elections. As a result, all the issues that have been passed over — and, there are many — face a tight time window in the lame duck session which could be called off, or could run for five weeks or so, with that choice depending entirely on the attitude of the lawmakers and the administration after the elections.

“The farm bill is in that bundle of undone tasks, but it is clearly lower priority than several other concerns including dealing with expiring tax cuts. As usual, the existence of ‘must pass’ legislation has stimulated some talk about stuffing the farm bill extension, long or short, into some sort of ‘grand bargain’ package. At this time, such discussions are quite muted because there are few facts to go on.”

The DTN item added that, “Many recent reviews have emphasized that programs like crop insurance and others already funded are able to continue without interruption. However, that is not the case across the board. For example, dairy producers have lost the Milk Income Loss Contract program. And, some conservation programs, including the 50 million-acre Conservation Stewardship Program, and export promotion efforts face severe restrictions. Authority for the Market Access Program export promotion program also ended.”

After further analysis, the DTN item pointed out that, “So, this is a dangerous time for agricultural policy. The pressure is growing from political insiders to move as quickly as possible this fall and pass a new bill before budgets tighten, as they are expected to do as early as next year. To approve new legislation probably would mean avoiding any fights by including almost any and every wish from a stakeholder — and, in the process, would risk creating all sorts of ‘unintended consequences,’ as happened with the 1996 ‘transition’ payments that now have become a significant embarrassment.

Of course, the biggest fight of all concerns the future role for nutrition programs. Since that issue is unlikely to go away between now and the end of the year, the prospects could be for temporary extensions only for legislation that continues under serious attack from many quarters for the foreseeable future.”

Meanwhile, Rod Boshart reported earlier this week at the Quad-City Times (Davenport, Iowa) Online that, “‘When you cut back on the food stamp program, the demand on the food banks goes up,’ said [Sen. Tom Harkin (R, Iowa)], who drew a strong affirmation from DMARC [Des Moines Area Religious Council] food bank leader Sarai Rice during a meeting with reporters.

“‘The food pantries can’t fill that gap. There’s just no possible way they can fill that gap,’ Harkin added. ‘They’re already pretty well pressed right now in making sure they can get the necessary food out to people.’

“Harkin said he expected Congress to revisit the federal farm bill that includes the funding during the ‘lame-duck’ session later this year after the Nov. 6 general election, but he doubted the impasse can be resolved if House Republicans insist on the [Congressman Paul Ryan (R., Wis)] level of cuts because ‘we just can’t make those kinds of cuts in that safety net.’”

The article added that, “[Rep. Leonard Boswell (D., Iowa)] said Congress ought to be back in Washington trying to reach a resolution now rather than waiting until after the election or until 2013.”

With respect to this theme, Pete Kasperowicz reported yesterday at The Hill’s Floor Action Blog that, “House Republicans on Tuesday morning blocked Minority Leader Nancy Pelosi (D-Calif.) from speaking, preventing her and other Democrats from protesting the seven-week break that the House is taking in the run-up to the November elections.”

The update noted that, “…[B]oth Pelosi and Minority Whip Steny Hoyer (D-Md.) repeatedly asked [Rep. Rob Woodall (R-Ga.)] for permission to speak. Rep. Hank Johnson (D-Ga.) stood near a microphone ready to speak as Woodall closed the session.”

A video replay of the brief exchange on the House Floor yesterday was included in a tweet yesterday from Rep. Pelosi.

Later yesterday, Rep. Pelosi, Rep. Hoyer, Rep. James Clyburn (D., S.C.), Assistant House Minority Leader, Rep. John B. Larson (D., Conn.), Rep. Xavier Becerra (D., Calif.), Rep. George Miller (D., Calif.), Rep. Rosa Delauro (D., Conn.), and Rep. Chris Van Hollen (D., Md.), held a press briefing with reporters.

In part, Rep. Hoyer noted that, “Farmers are experiencing some of the worst drought. They’re in trouble, and our Republican colleagues walked away without passing a Farm Bill.”

Rep. Clyburn indicated that, “It may be raining in Washington, but throughout rural America we are suffering from record droughts. America needs a good farm bill to assist these rural communities and to serve the nutrition needs of our low income citizens. The Senate passed a bipartisan Farm Bill with sound policies for rural America, as well as nutrition assistance for the most vulnerable members of our society. But the House Republican leadership walked away, and refused to allow that bipartisan bill to come to the floorThe Farm Bill expired Sunday, leaving 16 million jobs hanging in the balance.”

Later in response to a question, Rep. Clyburn noted that, “If — if my memory serves, the bill that came out of the House — the Farm Bill that came out of the committee had bipartisan support. And they wouldn’t bring that either. It was different and that’s why we have these differences so we can work them out in conference. So we wanted a bill and we didn’t get a chance to — to do either.”

Rep. Pelosi noted that, “So, perhaps I can add to that by saying that I support the discharge petition, asking the Republican leadership to bring the bill that came out of committee to the floor of the House. And then we can go to conference and resolve our differences. But the — with almost — well nothing is shocking anymore, but it was quite a surprise to many that the bipartisan bill that was worked on in committee — and again people have different views on it and — and — but we believed it should come to the floor so we could move the process forward, without whipping it one way or another.”

Recall that last week, Rep. Donna Edwards (D., Md.) also sought a request to call Congress back into session on the House floor to take up pending legislation, including the Farm Bill.

The Farm Bill issue continues to come up in political races this election year.

The AP reported yesterday on the North Dakota Congressional race where Democrat Pam Gulleson is running against Republican Kevin Cramer.  The AP article noted that in a recent debate, “Cramer said Gulleson has advocated quick approval of the U.S. Senate’s version of the farm legislation. It requires farmers to participate in soil conservation programs to qualify for crop insurance, which helps to protect farmers against losses from hailstorms, flooding and drought.

“Cramer called the provision a ‘nonstarter’ and said it is unnecessary because farmers already have an incentive to protect the soil they use to raise crops.

“‘What I hear more than anything else is, ‘Give me crop insurance and get out of my way. Don’t tell me how to farm,’’ Cramer said.”

The article noted that, “‘If (Cramer) was serious about the farm bill, he would have reached out to those leaders’ and put more emphasis on farm legislation, Gulleson said.

She said she opposes requiring farmers to take part in soil conservation programs to qualify for crop insurance. She believes the provision can be removed during House-Senate negotiations on the bill’s final version.”

(The crop insurance- conservation issue also came up recently in a Des Moines Register editorial board meeting with Rep. Leonard Boswell (D., Iowa.))

With respect to executive branch perspective on the Farm Bill, Sec. of Agriculture Tom Vilsack spoke yesterday in Madison, Wis. at the World Dairy Expo.

Sec. Vilsack held a town hall style meeting at the Expo, and also held a brief press conference with reporters– AgWired.com captured full audio of both events yesterday.

During his presentation yesterday, Sec. Vilsack talked about the status of the dairy industry and highlighted the dairy provisions contained in the Senate passed Farm Bill on this sector- audio clip (MP3- 3:11), and at the press briefing, Sec. Vilsack responded to question about potential issues of $38 milk under the 1949 permanent Farm Bill legislative mechanism- audio clip (MP3- 1:33).

Meanwhile, an update from late last month by Cornell University Professor Andrew Novakovic (“Program on Dairy Markets and Policy Information Letter- Is Reverting to the 1949 Agricultural Act Really a Possibility for Dairy Price Supports?”) provided a more detailed discussion on what the lack of Farm Bill progress means for the dairy industry.

And Ted Booker reported yesterday at The Watertown Daily Times (N.Y.) Online that, “Because legislators in Congress allowed the 2008 Farm Bill to expire Sunday, dairy farmers will now see up to 10 percent of their monthly income for milk lost, starting in October.

The Milk Income Loss Contract program — a safety net providing payments when national milk prices drop — expired along with the Farm Bill on Sunday. Though some politicians said in the national media that the lack of a bill won’t cause any harm, dairy farmers here disagree.”

Yesterday’s article added that, “Sources say Congress likely will pass an extension of the Farm Bill during the lame duck session after the election.

“Meanwhile, farmers are feeling the pain of high feed costs and low milk prices. The average dairy farmer here received $18.30 per hundredweight of milk in August, $5.20 less than a year ago, according to the New York Farm Bureau.”

Matt Lussier, president of the board of directors for Florida Dairy Farmers, indicated in a column earlier this week at the Orlando Sentinel Online that, “While it is rarely front-page news in Florida, the terrible drought that is creating heartbreak and misery for farmers in the Midwest cannot be ignored in the Sunshine State. Our more than 130 dairy farms deal daily with the consequences suffered by corn-producing states such as Nebraska, Kansas and Iowa.

Corn is a staple in most dairy cows’ diets, and we have seen the price of corn feed nearly double because of the drought. In May and June, dairy farmers — including those in Florida — lost at least 24 cents for every gallon of milk they produced because of the drought and sky-high production costs, according to the U.S. Department of Agriculture.”

In other policy related news, the AP reported yesterday that, “The president of an organization leading the fight against cramped cages for pregnant pigs said Tuesday he’s seeking a spot on Tyson Food Inc.’s board of directors to put more pressure on the nation’s second-largest pork processor to abandon the crates.

“Ending the use of so-called gestation crates has been a top priority for the Humane Society of the United States, which has helped convince companies including McDonald’s, Burger King and Safeway to pledge to move away from buying pork from farms that use the cages.”

And in news regarding crop insurance, a news release yesterday from National Crop Insurance Services (NCIS) noted that, “With the vast majority of the U.S. corn, cotton, soybean and sorghum crops yet to be harvested, crop insurance companies have already paid out nearly $2 billion in indemnities to farmers who have suffered losses this year.”

Yesterday’s update added that, “A new NCIS video offers unique insight into the direct impact of the drought, featuring testimonials from farmers and crop insurance agents who discuss the heartbreaking destruction and losses they have witnessed this year.”

 

Budget

Politico writers John Bresnahan and Jake Sherman reported yesterday that, “President Barack Obama and Mitt Romney will crisscross the country during the next month offering different visions for how to fix the country’s fiscal mess.

“But in Washington, the senators in the Gang of Six — plus two newbies — will have a secret retreat next week hosted by Sen. Mark Warner (D-Va.) to start cobbling together a plan to avoid the looming fiscal cliff.

“For this round of talks, the bipartisan group has added Sen. Lamar Alexander (R-Tenn.), a former member of Minority Leader Mitch McConnell’s (R-Ky.) leadership team, and Sen. Michael Bennet (D-Colo.), who has grown close to Obama as he tries to capture Colorado this election season… Other Gang of Six members include Sens. Dick Durbin (D-Ill.), Kent Conrad (D-N.D.), Saxby Chambliss (R-Ga.), Mike Crapo (R-Idaho) and Tom Coburn (R-Okla.).”

 

Agricultural Economy

Emiko Terazono reported yesterday at The Financial Times Online that, “Soyabean prices fell to a three-month low as the sharp rise in supplies from the newly harvested crop and better than expected yields weighed on the market.”

For a closer look at prices of corn, soybeans and wheat, see this overview of last month’s Agricultural Prices report from USDA.

Meanwhile, from an international perspective, a brief Wall Street Journal video from yesterday provided an informative look at farm sector economic issues impacting China.  The Journal video included remarks and analysis from Stan Ryan of Cargill Agricultural Supply Chain.

And a news release yesterday from USDA stated in part that, “Agriculture Secretary Tom Vilsack said today that farmer, rancher and fishery cooperatives posted record sales and income in 2011, surpassing the previous record sales year of 2008 by $10 billion while besting the old income record by $500 million. Dallas Tonsager, under secretary for Rural Development, made the announcement on the Secretary’s behalf, kicking-off National Cooperative Month. Tonsager said co-op employment levels remained strong, with cooperatives employing 184,000 full-time, part-time and seasonal workers, up slightly from 2010.”

The release added that, “USDA’s annual list of the nation’s 100 largest agricultural cooperatives, also released today, shows that they also had record sales and income in 2011.”

 

Biofuels

Zack Colman reported yesterday at The Hill’s Energy Blog that, “Automakers Chrysler, Ford and General Motors Inc. have approved use of a higher concentration of ethanol fuel in new vehicles — a significant victory for the biofuels industry.”

And Iowa State University Professor Emeritus Robert Wisner recently indicated in a newsletter (“Brazil ethanol developments & implications for the U.S. ethanol industry”) that, “Because of limited ethanol production, Brazil indicates it will keep mandated ethanol-gasoline blends at 20%, rather than the previous 25% for at least the next several monthsThis information appears to signal that Brazil will have limited ethanol exports, at least until better estimates of its next sugar cane crop become available.  This information reinforces a view that Brazil will not offer a strong increase in export competition for U.S ethanol in the next 5 or 6 months, but its competition may increase from March or April onward if weather in its south central sugar belt is favorable.   For the current U.S. corn marketing year, higher ethanol prices and possible increased Brazilian ethanol competition in the last half of the season may modestly reduce net U.S. ethanol exports and increase its imports.”

 

CFTC (Commodity Futures Trading Commission) Issue

Recall that Bloomberg news reported earlier this week that, “The U.S. Commodity Futures Trading Commission should appeal a federal judge’s decision blocking Dodd-Frank Act limits on speculation in oil, natural gas and other commodities, said Commissioner Bart Chilton.”

A transcript of the address by CFTC Commissioner Bart Chilton to the G-20 AMIS Roundtable on Public-Private Dialogue, Food and Agriculture Organization of the United Nations, Rome, Italy has been posted at the CFTC webpage and can be viewed by clicking here.

Keith Good

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