FarmPolicy

October 30, 2014

Ag Economy; Biofuels; and Farm Bill- Policy Issues

Agricultural Economy

Emiko Terazono and Jack Farchy reported yesterday at The Financial Times Online that, “Corn prices jumped sharply on Thursday after official US forecasts for this year’s harvest were cut, reviving fears over the supply of basic foods following one of the worst droughts in half a century.

“Grains and oilseed prices rallied strongly, with CBOT December corn futures gaining as much as 5 per cent to a high of $7.74¼ a bushel. Wheat and soyabeans also rose after the US Department of Agriculture’s closely watched monthly report.

“The USDA lowered its forecast for the corn harvest in the US, the world’s largest exporter, to 10.71bn bushels, down from last month’s forecast of 10.73bn bushels and 13 per cent lower than last year.”

(A recap of yesterday’s USDA reports, including graphs and charts, has been posted at FarmPolicy.com).

Ron Nixon reported in today’s New York Times that, “Although the Agriculture Department crop estimates brought a measure of good news for farmers, the lower corn figures will most certainly add to the debate over ethanol production.

“The Renewable Fuel Standard, passed into law in 2005 and expanded in 2007, requires that 13.2 billion gallons of corn-based biofuel be produced in 2012.”

Mr. Nixon noted that, “The goal of the standard is to reduce greenhouse-gas emissions and the nation’s dependence on foreign oil. But livestock producers, hard hit by the rise in feed prices, have called on the Obama administration to waive the requirement until the drought is over.

“In November, the Environmental Protection Agency will rule on a request for a waiver of the mandate, meant to reduce pressures on domestic corn supplies.”

And, Owen Fletcher and Bill Tomson reported yesterday at The Wall Street Journal Online that, “The government cut its estimate of global corn stockpiles next year by 5.4%, to 117.27 million metric tons. Arlan Suderman, senior market analyst for farm-advisory firm Water Street Solutions, said the government’s world stockpile projection would leave a 50-day supply of corn based on current usage rates, the tightest level in 39 years.”

 

Biofuels

A news release yesterday from the National Pork Producers Council stated in part that, “In comments submitted today to the U.S. Environmental Protection Agency, the National Pork Producers Council said EPA should grant a waiver of the federal requirement for the production of corn ethanol because the mandate, coupled with a summer drought that has reduced yields and pushed up prices of feed grains, is causing severe economic harm to pork producers.”

Also, Ramsey Cox reported yesterday at The Hill’s Floor Action Blog that, “Sen. Orrin Hatch (R-Utah) urged the Environmental Protection Agency (EPA) on Wednesday to waive the corn-ethanol requirements as part of the Renewable Fuel Standards (RFS) because of the difficult farming season.

“‘In the face of corn shortages and escalating prices brought on by wide-spread droughts throughout the United States, I urge you to exercise your waiver authority to modify the corn-ethanol requirements for the Renewable Fuel Standards,’ Hatch wrote in a letter to EPA administrator Lisa Jackson.

“Hatch said she should waive the mandate that says 13.2 billion gallons of biofuels have to be produced in 2012, in order to help farmers and ranchers in his home state.”

 

Farm Bill –Policy Issues

A news release Wednesday from Rep. Robert Aderholt (R. Ala.) indicated that, “[Congressman Aderholt], today welcomed House Agriculture Committee Chairman Frank Lucas (OK-03) to Stone Bridge Farms in Cullman, Alabama for a lunch discussion about every-day agriculture issues in the state of Alabama and the future of the farm bill.”

An update on Wednesday at the Alabama Farmers Federation Online noted that, “[Rep. Aderholt] and [Chairman Lucas], addressed a crowded room of farmers and legislators today during a farm bill discussion at Stone Bridge Farms in Cullman.”

The update noted that, “Lucas said fixing the problems with the food stamps program is a requirement before consensus will be achieved.

“‘The farm bill has to compete with tax code issues and the food stamp and welfare programs,’ he added. ‘We want to help those who need help, but let’s first make sure the people who are receiving this help actually qualify for it. The language in the bill needs to reflect that before we pass a bill that will negatively impact who it’s supposed to protect. Farm bills should be crafted in ways that benefit those who are included in the bill, and I believe the House has the power to enforce that standard.’”

Wednesday’s update added that, “When asked how the results of the 2012 presidential election will affect the status of the farm bill, Lucas said its certainly a concern for the agricultural sector and House Agriculture Committee members alike.

“‘The current administration doesn’t seem too shaken up about protecting rural America,’ answered Lucas. ‘To be honest, I’m a little worried about where we are in their attention span. But, the quicker we get it done, the better chance we have to get it on the books regardless of which candidate wins.’”

Meanwhile, Senate Budget Committee Chairman Kent Conrad (D., N.D.) penned an update yesterday at the Grand Forks Herald (N.D.) Online noting that, “Even though the full Senate and the House Agriculture Committee approved bipartisan versions of a new Farm Bill months ago, House Republican leaders would not allow either bill to be voted on by the full House.

“House members who say they wanted to enact a new Farm Bill before the current one expired failed to secure a vote to do so. House leaders say they may get to it after the election but have offered no firm commitment to do so.”

Chairman Conrad indicated that, “And even more troubling is the red flag raised by the House’s insistence on putting off a vote on a new Farm Bill until after the election.

“The House already has passed a blueprint for farm policy that would pull the rug out from under family farmers, ranchers and rural communities. That blueprint is the budget put forward by House Budget Committee Chairman Paul Ryan, R-Wis., now the Republican vice presidential nominee.

“It proposes massive cuts of $179 billion over 10 years in the federal farm program. The Senate Farm Bill more reasonably proposes $23 billion in cuts over the same period.”

“No one suggests farm programs should be exempt from belt tightening. But I don’t know anyone who thinks arbitrarily cutting one of every five dollars from important farm programs makes sense — except those who voted for the Ryan budget and the House leaders who won’t even consider scheduling a vote on a new Farm Bill until after the election,” Chairman Conrad noted.

Also yesterday, Josh Nelson reported at The Springfield News-Leader (Mo.) Online that, “Surrogates of Republican presidential contender Mitt Romney are turning to Missouri’s agriculture producers to ensure the state’s electoral votes go to him in November.

“Missouri Sen. Roy Blunt announced a new coalition of farmers and ranchers Thursday during an event at Hiland Dairy Foods in Springfield.

Blunt and other speakers argued President Obama’s policies have made it harder to earn a profit in farming by not providing a stable regulatory or tax environment.”

And, the Milwaukee Journal Sentinel editorial board opined yesterday that, “Congress left town to campaign for re-election without passing a new farm bill, the massive five-year collection of agricultural subsidies and incentives that includes everything from price supports for milk to food stamps.”

The editorial stated that, “Both bills [Senate passed Farm Bill, and House Ag Comm. passed Farm Bill] cut far too much out of conservation programs, which help rebuild the land so that farming is sustainable. Some conservatives argue that paying farmers to conserve land is a boondoggle. But when farmers have incentives to plant fence post to fence post even on land that should not be planted, the risk of pollution from soil erosion grows. The land is the worse for it, and, in time, so are farmers and the natural environment that Wisconsin is famous for.”

Yesterday’s opinion item noted that, “Another concern is food stamps. Long a part of the farm bill, the House bill would cut $16.1 billion out of the program while the Senate version would cut $4 billion. Any program can be tightened, but big cuts to food stamps make no sense with so many people still out of work.

Any new bill needs some sort of support system for small dairy farmers. In Wisconsin, about 12,000 dairy farmers rely on the MILC program. They probably can hold on without MILC for awhile; prices are relatively high. But MILC or some similar program is needed if the government still believes, as it should, that there is value in family farms.”

Also in the Milwaukee Journal Sentinel this week, Rick Barrett reported that, “A government program that provided a limited safety net for dairy farmers when milk prices fell has expired, leaving some farms vulnerable should market conditions take a turn for the worse.

“The Milk Income Loss Contract program expired this month and might not return as Congress weighs alternatives in upcoming farm legislation that covers a plethora of agriculture policies.

“The program compensated dairy producers when farm milk prices fell below a specified level. It was aimed at smaller farms especially to help them cover operating expenses until prices returned to higher levels.”

The article did note that, “Currently, milk prices are high enough that farmers wouldn’t get payments from the program even if it hadn’t expired. That can quickly change, however, as it did in 2009 when the average Wisconsin dairy farm lost about $100 per cow each month – $4 million a day for the state’s dairy industry.”

Mr. Barrett explained that, “The MILC program expired when Congress failed to pass a farm bill before adjourning until after the November elections. That legislation will probably resurface by the end of the year, but the dairy policy reforms might not include the traditional safety nets that some farms counted on.

“Instead, legislators are considering an insurance-like program in which farmers would decide, individually, how much risk they want to assume in milk prices.

“Federal support would kick in when profit margins were squeezed, and the government could order temporary cuts in milk production to curb steep price declines.”

Matt Kelley reported yesterday at Radio Iowa Online that, “Federal crop insurance and other programs are making the lack of a farm bill painless for many farmers, but there’s trouble in the dairy industry. When the farm bill expired last month, so did the milk income loss contract (MILC) program.”

In a closer look at nutrition issues, Richard Simon reported yesterday at the Los Angeles Times Online that, “Lawmakers and government officials are again engaged in a food fight, this time with Republican lawmakers hungry to lift new federal limits on the calories of school lunches served to 32 million students… [R]eps. Steve King (R-Iowa) and Tim Huelskamp (R-Kan.), sponsors of the ‘No Hungry Kids Act,’ portray the standards — which grew out of legislation passed in 2010 in the closing days of the Democratic-controlled Congress — as another symbol of Washington’s regulatory excess.”

Pete Kasperowicz reported yesterday at The Hill’s Floor Action Blog that, “Rep. Tim Huelskamp (R-Kan.) joined Kansas high school students on Wednesday who were protesting the Department of Agriculture’s calorie-restriction guidelines for taxpayer-subsidized school lunches, and said kids affected by these guidelines are learning firsthand the meaning of excessive government control.

“‘I am so honored and proud to represent Sharon Springs students and their teachers in Congress,’ Huelskamp said, according to WIBW in Kansas.”

And Bridget Huber reported in the October 29, 2012 edition of The Nation that, “But three and a half years since the ground was broken on the White House garden, many of those who’d had high hopes say the first lady has logged only modest successes. Experts credit Mrs. Obama for her instrumental role in reforming school lunches, limiting TV watching and increasing healthy food at childcare centers—and, perhaps most important, using her bully pulpit to bring issues of food and nutrition to national attention. But, they say, reversing the childhood obesity epidemic in a generation requires more of the bold action that Mrs. Obama hinted at in her address to the Grocery Manufacturers Association.

“From that inspiring moment in March 2010, the administration’s strategy appears to have shifted. Or perhaps its resolve has eroded, for it remained mute during a bitter fight to limit junk-food marketing to kids. It has also forged controversial—some say compromising—partnerships with food manufacturers.”

In other policy news, Reuters writer Carey Gillam reported yesterday that, “With California set to vote in November on labeling of food made from genetically modified crops, pressure is mounting on the U.S. federal government to tighten regulation of these crops and the foods they become.

“The ‘Right to Know’ measure on California’s ballot Nov. 6 would require labeling of any food sold in the state containing ingredients made from genetically modified crops (GMOs). If the measure passes, it would be the first such U.S. labeling law, and so far polls have shown strong support for the measure.”

Keith Good

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