FarmPolicy

Farm Bill; Ag Economy; Budget; and, Biofuels

Farm Bill -Policy Issues, Political Notes

The AP reported yesterday that, “Maine agricultural officials are heading to Washington, D.C., to work with the state’s congressional delegation and federal officials regarding the demise of the 2008 Farm Bill.

“Commissioner Walter Whitcomb says the Farm Bill expired Sept. 30, putting Maine’s dairy producers at risk. He says other programs beneficial to Maine’s potato farmers, blueberry growers and child nutrition education efforts have also been put in limbo.”

The article noted that, “Whitcomb says dairy farmers are particularly vulnerable because the Farm Bill had a federal milk pricing program that gave protection to Maine farmers. Maine has 306 dairy farms ranging in size from 10 to 1,700 cows.”

In addition, the National Milk Producers Federation (NMPF) recently released a two page fact sheet on the Dairy Security Act (DSA) , which stated that, “In place of the current dairy program featuring direct payments and price supports, the DSA establishes a risk management program to keep farmers’ margins from shrinking dangerously. When margins fall below $4 per hundredweight, a margin protection program will make up the difference between the farm price of milk, and average feed costs, on up to 90% of a farmer’s production. To prevent steep price declines, a standby market stabilization program will help restore margin levels by encouraging farmers to reduce production for brief periods.”

The NMPF update went on to explain some key points comparing the DSA in the House and Senate farm bills, with an alternative approach being promoted by Reps. Bob Goodlatte (R., Va.) and Rep. David Scott (D., Ga.) that only features margin insurance.

The USDA’s Economic Research Service indicated yesterday in its Livestock, Dairy, and Poultry Outlook report that, “U.S. corn prices for 2012/13 were reduced slightly in October to $7.10-$8.50 per bushel, while production was lowered only slightly from September estimates. Soybean meal prices for 2012/13 were also forecast lower this month at $470-$500 per ton. Lower forecast grain and soymeal prices in 2013, along with anticipated lower alfalfa prices, will lower the feed ration price, supporting a higher milk-feed price ratio in 2013 than in 2012.

“The September Milk Production report indicated that producers were culling at a slower pace than earlier projected. An improving feed outlook along with higher milk prices may have reduced the urgency to reduce herd size” (at page 14).

In other news involving animal agriculture, Helena Bottemiller reported yesterday at Food Safety News Online that, “California Congressman Henry Waxman, a Democrat serving as Ranking Member on the Energy and Commerce Committee, on Tuesday announced he’s introducing legislation that would improve the data that the U.S. Food and Drug Administration collects on antibiotics used in animal agriculture, a practice that is increasingly under the microscope…‘We need reliable information about the use of antibiotics in agricultural operations,’ said Rep. Waxman. ‘The more we learn, the graver the threat becomes from overuse of antibiotics by industrial-scale farms.  We need this information so scientists and Congress can stop the spread of drug-resistant infections from farm animals to humans.’

“Waxman’s proposal would require drug makers to report more comprehensive information to FDA regarding how their drugs are used on farms. Recent estimates have indicated that the vast majority of antibiotics sold in the United States are given to food animals.”

In a separate perspective on the impacts of the stalled Farm Bill, Burleigh Leonard, an agriculture consultant at Prime Policy Group, opined yesterday at The Hill’s Congress Blog that, “Hollywood movie moguls and Nashville’s country music stars have a lot at stake in the omnibus farm bill currently languishing in Congress. Buried under the legislation’s arcane provisions on food stamps, farm commodity price supports and soil conservation programs lies a ticking time bomb that threatens all owners of intellectual property.

“As a result of a long-simmering dispute between Brazil and the United States over the trade-distorting effects of U.S. cotton policies, Brazilians may soon be able to pirate movies, copy music CDs, rip off patented drugs and expropriate genetically-modified seed, all with the seal of approval of the World Trade Organization (WTO).”

Yesterday’s update added that, “As the vehicle for authorizing price support programs for a host of agricultural commodities, it is the obvious candidate for making the kind of statutory changes to the cotton and export credit guarantee programs that would make them WTO-compliant. Both Brazil and the United States acknowledge that resolution of the dispute is not possible until after enactment of the 2012 farm bill when the shape of domestic cotton subsidies will be apparent.

“The problem is, Congress is not cooperating. The Senate has passed its farm bill and the House Agriculture Committee has reported its version of the legislation. However, Brazil is not happy with either bill’s changes to the cotton program. The proposed modifications ‘would leave Brazilian farmers worse off than they are now,’ says Brazil’s ambassador to the WTO.”

Meanwhile, with respect to crop insurance, Reuters writer Charles Abbott reported yesterday that, “U.S. taxpayers could pay a record $15 billion to subsidize the privately run crop insurance program this year, double the recent cost due to devastating drought in the Farm Belt, say an array of agricultural economists…[T]he government and industry said they prefer to wait until late fall, when harvest is ending, to estimate costs. As of Monday, $2.6 billion has been paid in 2012 crop indemnities.”

Mr. Abbott explained that, “Crop insurance has become the biggest U.S. farm support as soaring prices for corn, soybeans and other commodities made the traditional price-support subsidies irrelevant. So-called revenue policies that shield growers from the effects of low prices and poor yields are the most popular version.”

Yesterday’s article added that, “National Crop Insurance Services, an industry trade group, argues the program reduces taxpayers’ costs even in a disaster like this year by preventing calls for bailouts. The program is a financial safeguard against ruinous weather, it says.”

Bloomberg writer Alan Bjerga reported yesterday that, “Corn yields, measured in bushels per acre, dropped by more than a third from the average of the previous five years in Missouri, Illinois and Indiana, and the U.S. Department of Agriculture this month projected yields nationwide may decline to a 17-year low of 122 bushels an acre.”

The Bloomberg article pointed out that, “Farmers can choose to protect up to 85 percent of revenue with insurance, and ‘the coverage in most of the central Midwest states runs a little higher than the U.S. averages,’ Keith Collins, a former Agriculture Department chief economist who now works with National Crop Insurance Services, said in an e-mail.

“Of 96.9 million acres planted to corn, 67.2 million were covered by revenue protection, Collins said.”

To listen to a broader based discussion with Bloomberg’s Alan Bjerga on drought, climate change and crop insurance, see this FarmPolicy.com update from yesterday.

Portions of the nutrition section of the Farm Bill continue to garner attention.

Bloomberg writer Stephanie Armour reported earlier this week that, “Student grumbling about more fruits and vegetables on their cafeteria trays has become a welcome rallying cry for Republicans in the weeks before the Nov. 6 election.

“In the wake of high school demonstrations against a U.S. law that for the first time sets calorie caps on meals served in public schools and encourages healthier menus, conservative politicians have embraced the student movement. U.S. Representative Steve King, a Republican from Iowa, introduced legislation to repeal the calorie limits with Representative Tim Huelskamp, a Republican from Kansas, who visited with students behind a YouTube parody of school meals.

“Meantime, Tea Party websites are buzzing with comments deriding the cap on school lunch calories as an example of the type of federal government encroachment that would be curbed by Mitt Romney, the Republican Party’s presidential candidate. The Tea Party wants to cut taxes, reduce spending and limit the U.S. government’s authority.”

Briana Wipf reported yesterday at the Great Falls Tribune (Mont.) Online that, “Congressman Dennis Rehberg held a listening session with Republican South Dakota Sen. John Thune and local legislators and businessmen in Great Falls on Tuesday afternoon.”

The article stated that, “Jobs and the economy dominated most of the discussion, however. Thune and Rehberg agreed extended unemployment benefits and more funding to food stamp programs through the Farm Bill only serve to remove the incentive for people to work. Instead, removing those benefits would help people get jobs, they said.”

And in campaign developments, Christian Sheckler reported yesterday at the News-Sentinel (Fort Wayne, Ind.) Online that, “To Kevin Boyd, first-term U.S. Rep. Marlin Stutzman [R., Ind. – Ag. Comm. Member] is part of the problem.

“Boyd, the Democratic candidate for Congress in northeast Indiana’s 3rd District, says he agreed to run because he wants to change the partisan gridlock in Washington – a problem he blames largely on Stutzman and his fellow Republicans in the House of Representatives.”

The article noted that, “As an example of the partisan – some call it ‘toxic’ – atmosphere in Washington, Boyd pointed to the failure of Congress to pass a full farm bill or emergency relief for farmers who faced a devastating drought this year…[S]tutzman said he opposed the Senate farm bill because 80 percent of its funding – about $80 billion per year – would have gone toward the federal food stamp program, not farms.

“Stutzman said he supports a farm bill that would cut about $20 million annually from the food stamp program and another $20 million from farm programs. But Congress also ought to split food stamps and farm policy into separate bills to avoid wasteful spending, he said.”

Jon Mendelson reported earlier this week at the Tracy Press (Tracy, Calif.) Online that, “Two congressional candidates [Rep. Jerry McNerney (D) and his Republican challenger, Ricky Gill] looking to represent Mountain House and a slice of Tracy reiterated their campaign themes during a forum Monday, Oct. 15, at the University of the Pacific.”

The article indicated that, “Agriculture — worth $2.2 billion to San Joaquin County in 2011, according to the county agricultural commissioner in a July report — also took center stage during a discussion about free-trade agreements and the Farm Bill, a piece of legislation that includes food assistance programs as well as subsidies to farmers, ranchers and dairymen…McNerney said farmers should be offered ‘whatever support makes sense for them,’ and said the federal government has a legitimate role in providing food assistance.”

And Helmut Schmidt reported yesterday at the Grand Forks Herald (N.D.) Online that, “Candidates for Minnesota’s 7th Congressional District seat stuck to familiar campaign themes in a debate taped Tuesday for Prairie Public television and radio.”

The article added that, “[House Ag. Comm. Ranking Member Collin Peterson (D., Minn.)] said the House Agriculture Committee had a bipartisan farm bill ready that would save the nation money. The group also had the votes, 240 of them, needed for it to pass the House, but Republican leaders wanted to hold off on action until after the election, he said.

“Peterson said Speaker of the House John Boehner supports action during the lame duck session.”

Also this week, Pete Kasperowicz reported at The Hill’s Floor Action Blog that, “Conservative organizations in Tennessee are trying to build a coalition of interest groups that will ask [House Ag. Comm. Member] Rep. Scott DesJarlais (R-Tenn.) to resign from Congress.”

Meanwhile, Peter Key noted yesterday at the Philadelphia Business Journal Online that, “While his boss was getting ready to debate Mitt Romney on Tuesday, Tom Vilsack was in Philadelphia berating Congress for not passing a farm bill before taking its election break.

“The Secretary of Agriculture visited Food Export USA — Northeast, a Center City-based nonprofit that promotes the export of food and agricultural products from the Northeastern states.”

Agricultural Economy

Bloomberg writer Alan Bjerga reported yesterday that, “Farming in sub-Saharan Africa and East Asia will require more investment to meet food needs, according to a study sponsored by businesses including Monsanto Co., DuPont Co., International Business Machines Corp. and Deere & Co.

“Sub-Saharan Africa will meet only 13 percent of its own food demand by 2050 without faster productivity growth, and East Asia 74 percent, according to a report issued today by the Global Harvest Initiative, which includes companies and nonprofits. North Africa and the Middle East will provide 83 percent of their own requirements at mid-century. About $79 billion in additional agricultural investment globally is needed to spur gains, the group said.”

And a news release yesterday from the Food and Agriculture Organization of the UN (FAO) noted that, “Brazil and FAO signed a new South-South cooperation agreement today worth $20 million that aims to channel Brazilian expertise in cotton production to other developing countries.”

Budget Issues

Lori Montgomery, reported in today’s Washington Post that, “President Obama is prepared to veto legislation to block year-end tax hikes and spending cuts, collectively known as the ‘fiscal cliff,’ unless Republicans bow to his demand to raise tax rates for the wealthy, administration officials said.

“Freed from the political and economic constraints that have tied his hands in the past, Obama is ready to play hardball with Republicans, who have so far successfully resisted a deal to tame the debt that includes higher taxes, Obama’s allies say.”

Interestingly, Jake Sherman reported yesterday at Politico that, “Taxes go up on everyone at the end of the year. Pentagon spending will be slashed. The nation will reach its borrowing cap.

“And President Barack Obama and Speaker John Boehner haven’t spoken about this so-called fiscal cliff in nearly four months.”

And Niels Lesniewski reported yesterday at Roll Call Online that, “On the heels of releasing a report declaring Congress itself the biggest waste of government money, Sen. Tom Coburn (R-Okla.) remains optimistic that lawmakers will strike a deal in the upcoming lame-duck session to at least avert going off the fiscal cliff.”

Biofuels

Reuters writer David Brough reported yesterday that, “Brazil could substantially boost ethanol exports to the United States next season, depending on price trends and changes in fuel policy, participants at London Sugar Week events said on Wednesday.

“Julio Borges of Sao Paulo-based analyst JOB Economia told Reuters that total Brazilian ethanol exports could rise by up to 30 percent in 2013/14.

“The fastest growing market was the United States, after a severe drought there inflated corn costs and boosted the U.S. appetite for ethanol imports.”

And Alessandro Torello reported yesterday at The Wall Street Journal Online that, “The European Union Wednesday presented a radical shift in its biofuels policy, proposing to limit the amount of transport fuels from food crops that would count toward a 2020 renewable energy target.

“The European Commission is proposing to limit the share of energy from food crop-based biofuels to no more than 5% of the total energy used in the transport sector in 2020. That represents roughly the current amount of food crop-based biofuels used in EU transport fuels.”

Keith Good

Posted by Keith Good • October, 18, 2012 • 3:20 am