FarmPolicy

October 22, 2014

Trade; Farm Bill; Budget; and, the Ag Economy

Trade Developments- Panama FTA

Vicki Needham reported yesterday at The Hill’s On the Money Blog that, “A free trade agreement between the United States and Panama will go into effect at the end of the month, the last of three deals passed a year ago.

“U.S. Trade Representative Ron Kirk and Ricardo Quijano, Panama’s minister of Commerce and Industry, exchanged letters on Monday locking in Oct. 31 for implementation of the FTA.

“‘Under this comprehensive agreement, Panama will eliminate tariffs and other barriers to U.S. exports, which will promote economic growth, and expand trade between our two countries,’ Kirk said Monday.”

Senate Finance Committee Chairman Max Baucus (D., Mont.) indicated yesterday that, “‘Free trade agreements like the Panama FTA will give the U.S. economy a much-needed boost and create new jobs for American workers here at home,’ Senator Baucus said. ‘Enhancing and expanding access to rapidly growing foreign markets like Panama is an opportunity for American workers, farmers, ranchers and businesses.’”

House Ways and Means Chairman Dave Camp (R., Mich.) and Trade Subcommittee Chairman Kevin Brady (R., Tex.) also welcomed the trade news yesterday.

And, Sec. of  Ag. Tom Vilsack indicted yesterday that; “Panama is an important market for America’s farmers and ranchers. In 2011, the United States exported more than $504 million of agricultural products to Panama, one of the fastest growing economies in Latin America. Next week, nearly half of current U.S. farm exports to Panama will become duty free immediately and most of the remaining tariffs will be eliminated within 15 years.”

An update yesterday from The National Cattlemen’s Beef Association (NCBA) noted that, “‘The cattle industry has been waiting on implementation of this agreement for a long time and we’re looking forward to increased trade opportunities with Panama,’ said Bob McCan, NCBA vice president and a Texas cattleman. ‘The U.S.-Panama Free Trade Agreement immediately eliminates the 30 percent tariff on prime and choice beef cuts and all other duties will be phased out over the next 15 years. This is a positive step forward for American cattlemen and women.’”

 

Farm Bill –Policy Issues, Political Notes

The “Washington Insider” section of DTN reported yesterday that (link requires subscription), “When Congress reconvenes during the lame duck session after the November elections, nutrition programs included in the farm bill must be up for negotiation or the whole bill will be delayed until next year, says Rep. Jack Kingston, R-Ga., chairman of the House Agriculture Appropriations Subcommittee.

“Speaking at the recent annual meeting of the National Chicken Council, Kingston noted that ‘there are more people on food stamps in America than there ever have been in history, and the cost of it has gone from $39 billion in ’08 to $80 billion today.’  He told the press that funding for nutrition programs, including food stamps and other federal programs, like school meals, must be up for negotiation when Congress returns in the lame-duck session, if a farm bill is to be passed.”

The DTN item added that, “‘Really, [funding for the nutrition components within the farm bill] is so high right now that members are saying, unless you reform the welfare component as much as you reform the commodities, they won’t support it,’ [Rep. Kingston] said.

“Given the wide differences of opinion regarding federal nutrition programs that are held by various House members, it will be remarkable if action on the farm bill is not postponed into 2013.”

Gannett writer Jennifer Shutt reported this week that, “Earlier this month after failing to reach a consensus on the Farm Bill, members of Congress left Washington without an agreement on the future of the legislation.”

The article noted that, “‘My major concern was that the house bill included way too much spending on food stamps going forward and didn’t require work requirements for food stamp recipients,’ said Rep. Andy Harris, R-Md-1st. ‘In the form it was in, with the amount of spending it had on food stamps going forward, I don’t think I would have supported the bill.’

“Harris said about $1 trillion, or nearly 80 percent of the farm bill, has been dedicated to funding food assistance programs throughout the United States. He said while there is a possibility the House would take up the farm bill before the new year, there has been discussion about holding it over until 2013 if Republican presidential candidate Mitt Romney wins the election.”

Rob Moritz reported yesterday at Arkansas News Online that, “[Rep. Rick Crawford (R., Ark.)] is a member of the House Agriculture Committee and owns a farm broadcasting news service.

“As the congressman works the room, it’s apparent that he is in his element among voters with a vested interest in agriculture, the economic engine of Stuttgart and eastern Arkansas.

“Predictably, his speech centers on the subject, specifically the Farm Bill that is languishing in Congress.”

The article indicated that, “During his 20 minute speech, Crawford talks about his friendship with the U.S. Rep. Frank Lucas, R-Okla., who is chairman of the House Agriculture Committee, and the importance of direct payments to rice producers.

“‘We didn’t prevail on the direct payment, and you know that, but what we did succeed in doing is recognizing that there had to be a mechanism in place with respect to rice production,’ he said. ‘Rice is more sensitive to these things than any other crop and (Lucas) was committed and I was committed to making sure they didn’t just jerk the rug out from under rice producers, that there was a policy in place that allows a level of support without just saying, ‘go forth and get crop insurance.’”

The Arkansas Democrat Gazette reported on Sunday that, “[Democrat Scott Ellington, 49, who is running against Rep. Crawford] said Crawford bears some responsibility for Congress’ inability to pass a Farm Bill. The incumbent’s signing of a discharge petition – a legislative maneuver to force a vote on a bill – was political cover, Ellington said. ‘If he were serious about the issue, he should have taken a leadership position on that petition and gone around collecting signatures. His party’s leaders gave him a pass so that he could come back to Arkansas and say he signed it,’ said Ellington, prosecuting attorney for the 2nd Judicial District, which includes seven northeastern counties.

Crawford said the food stamp provision of the Farm Bill is the main stumbling block. He predicted that the differences could be ironed out after the election.”

The AP reported yesterday that, “[Neb. GOP] Reps. Jeff Fortenberry (House Ag. Comm. Member) and Adrian Smith (former House Ag. Comm. Member) are big favorites to win re-election on Nov. 6, reflecting their overwhelming victories in the past and the Republican dominance in their districts, which cover most of the state.

“The vote will likely be closer in the 2nd Congressional District, where seven-term Rep. Lee Terry faces Douglas County Treasurer John Ewing.”

The AP reported yesterday that, “As a House freshman in a redrawn district, [House Ag. Comm. Member Vicky Hartzler (R)] is considered the most vulnerable of the seven congressional incumbents seeking re-election in Missouri.”

Rep. Hartzler’s Democratic challenger, Teresa Hensley, “holds up several Hartzler votes or stances of the Republican-controlled House of Representatives as evidence of her opponent’s obstructionist approach, including a failure by Congress to renew the federal farm bill,” the AP article said.

Meanwhile, Jennifer Jacobs reported yesterday at The Des Moines Register Online that, “House Minority Whip Steny Hoyer will campaign for fellow Democratic U.S. Rep. Leonard Boswell (House Ag. Comm. Member) in Iowa this week.”

And earlier this week, The Peoria Journal Star endorsed House Ag. Comm. Member Bobby Schilling (R., Il 17 Congressional District) for re-election.

With respect to executive branch perspective, Kaitlin Durbin reported yesterday at The Bucyrus Telegraph-Forum (Ohio) Online that, “[Sec. of Agriculture Tom Vilsack] credited better marketing for the increase in Ohio exports and ‘record incomes’ for farmers.

“Under the expired farm bill, Ohio growers were connected to buyers in foreign markets through the Market Access Program. MAP provided money to small businesses — employing fewer than 100 people — to help them sell products overseas.”

The article noted that, “The program has helped more than 1,000 companies sell their products abroad, Vilsack said. On-site sales totaled more than $473 million and 12-month projected sales reported by exhibitors were estimated more than $4.1 billion.

But when the farm bill expired, so did the MAP program.”

Meanwhile, William Petroski reported yesterday at The Des Moines Register Online that, “U.S. Agriculture Secretary Tom Vilsack said Monday he believes President Barack Obama will have more success in pursuing a legislative agenda with Republicans in Congress during a second term in the White House.

“The major political goal of Republicans during Obama’s first term – which was to prevent the Democratic president’s reelection – will have been erased, Vilsack told Des Moines Register editors and reporters.  Secondly, members of Congress will face reelection again in two years, which means they will be more interested in their own future than Obama’s, he added.”

The Register article pointed out that, “Shawn McCoy, Romney’s campaign spokesman in Iowa, issued a rebuttal to Vilsack’s remarks, saying Obama promised four years ago to bring people together and break the infighting in Washington, D.C.”

In other Farm Bill news, Michael Pearce reported on Sunday at The Wichita Eagle Online that, “As National Wildlife Federation program director, Julie Sibbing knows the importance of the Conservation Reserve Program, which she says is the largest wildlife habitat project in history…[B]ut the program’s future is uncertain and will soon expire. Congress, which funds CRP, hasn’t acted on a new farm bill.

Dale Hall, Ducks Unlimited chief executive officer, said every major conservation group fears what might happen if the new bill isn’t quickly passed so funding can continue.”

The article added that, “Hall fears time taken for Thanksgiving and Christmas holidays, plus a backload of other bills, could leave little time for the farm bill. The longer the bill lingers, Hall and [Rob Manes, Nature Conservancy of Kansas director] say, the greater the chances even more cuts might come.”

Meanwhile, the AP reported yesterday that, “The stalled farm bill may cost small dairy farmers in the state [South Dakota] hundreds of thousands of dollars in lost government subsidy payments, and it could double the cost of a gallon of milk in stores.”

In other policy developments, the AP reported last week that, “Seven years after Katrina flood waters inundated most of New Orleans, the store’s barren insides are emblematic of a problem that neighborhood activists say was exacerbated by the catastrophe: In a city known for its food, fresh produce and affordable groceries are hard to come by in some neighborhoods…[C]ity officials are trying to increase access to fresh, high quality food with a program called Fresh Food Retailer Initiative, which includes a low-interest loan program for supermarkets, grocery stores and other fresh food retailers and the use of federal economic development block grants.

“‘One, it improves the health of our citizens. Two, it creates jobs,’ said Aimee Quirk, an economic adviser to Mayor Mitch Landrieu. They hope successful grocery stores can play a role in bringing people back to the city.”

And a separate AP article from yesterday reported that, “Parents who want to reduce their kids’ exposure to pesticides may seek out organic fruits and vegetables, but they aren’t necessarily safer or more nutritious than conventional foods, the nation’s leading pediatricians group says in its first advice on organics.”

Also yesterday, Reuters writer Tom Polansek reported that, “The U.S. Department of Agriculture on Monday defended its practice of giving journalists early access to market-moving crop reports after facing questions about the security of the data.

“Officials said at an annual meeting for users of USDA data that they were comfortable with the practice because reporters cannot publish information from crop reports until they are available to the general public.”

 

Budget

Philip Ewing reported today at Politico that, “President Barack Obama startled Washington during Monday night’s foreign policy debate when he said billions in automatic Pentagon cuts ‘will not happen’ — a line that could weaken his bargaining power during an epic spending and tax fight expected when Congress returns.

“Obama was responding to criticism from Republican rival Mitt Romney that American national security is at risk if the defense cuts are triggered in early January.

“‘First of all, the sequester is not something I proposed, it’s something that Congress proposed,’ Obama said. ‘It will not happen.’”

The article noted that, “The remark stakes new ground for the president, who has said he wants to avert the sequester cuts by taking a ‘balanced’ approach to solving the budget debacle — meaning he will not sign off on a deal that cuts spending, but doesn’t increase revenues. His strongest bargaining chip: the sequester cuts, which he may have just taken off the table.

“After the debate, White House senior adviser David Plouffe toned down the president’s remarks, saying that ‘everyone in Washington agrees that sequester ‘should not happen.’’”

 

Agricultural Economy

Ron Nixon and John Eligon reported in today’s New York Times that, “Across the nation’s Corn Belt, even as the worst drought in more than 50 years has destroyed what was expected to be a record corn crop and reduced yields to their lowest level in 17 years, farmland prices have continued to rise. From Nebraska to Illinois, farmers seeking more land to plant and outside investors looking for a better long-term investment than stocks and bonds continue to buy farmland, taking advantage of low interest rates.

“And despite a few warnings from bankers, the farmland boom shows no signs of slowing. Almost every year since 2005, except during the start of the recession in 2008, agriculture land prices have posted double-digit gains. In the same period, the Standard & Poor’s 500-stock index has had double-digit gains in only three of those years.”

Purdue University Agricultural Economist Chris Hurt indicated yesterday at the farmdoc daily Blog (“Cattle Prices Will Continue to Rise”) that, “The impacts of the 2012 drought continue to play out in a beef industry discouraged by high feed prices and large cattle feeding losses. In the latest Cattle On Feed report, the USDA confirmed that placements into feed lots dropped sharply in September following substantial declines in July and August. As a result, on-feed numbers are now down nearly three percent as the beef industry is doing its part to reduce corn and other feed usage.

Drought has been particularly cruel to the beef cattle industry. A multiple year drought in the Southern Plains has been followed by a devastating Midwestern drought in 2012 that is now forecast to continue into 2013. Brood cows remain the last major livestock industry that is land extensive. So, when dryness causes wide stretches of land to be unable to support cow grazing, producers have to buy feed or send the cows to town.”

An update yesterday at DTN (link requires subscription) reported that, “This drought year’s speedy harvest pace continued in the week ended Oct. 21, according to USDA’s weekly Crop Progress report.

Corn harvest is 87% complete, compared to 60% last year and a 49% five-year average. Soybean harvest is 80% complete, compared to 77% last year and a 69% five-year average.”

Georgina Gustin reported earlier this week at the St. Louis Post-Dispatch Online that, “In St. Louis and around the country, the appetite for grass-fed beef has shot up in recent years. While still a small percentage of the beef consumed in the U.S. — about 3 percent — advocates, consumers and producers predict the number will keep rising. One study put demand growth at 20 percent a year.”

Keith Good

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