FarmPolicy

October 26, 2014

Farm Bill; Budget; and, the Ag Economy

Farm Bill–Policy Issues, Political Notes

Joanie Stiers reported yesterday at The Register-Mail (Galesburg, Il.) Online that, “Farmers fertilize fields and order seed for the next growing season, while uncertain of the agricultural policies in their toolbox.

“Congress failed to pass a new farm bill before the Food, Conservation and Energy Act of 2008 expired Sept. 30. The inaction disappoints farmers and some legislators alike.

“‘Mostly it’s the uncertainty of not knowing what tools we’ll have to plan with,’ said Deb Moore, a Roseville cattle, corn and soybean farmer.”

The article noted that, “‘One thing that the country is missing is certainty, whether it be through Washington, D.C., or Springfield,’ [Rep. Bobby Schilling (R., Il. – Ag. Comm.)] said.

“Primarily, the absence of a current farm bill generates uncertainty with the components of the government’s agriculture programs. The immediate impacts generally limit themselves to programs with specific expiration dates, such as dairy price supports and new sign-ups for conservation programs.

Schilling expressed his frustration and said inaction only adds uncertainty to the economy.”

Yesterday’s article pointed out that, “‘My hopes are that when we go back that the farm bill will be taken care of in the lame-duck session,’ [Rep. Schilling] said.

“Congress reconvenes by mid-November and stays in session until nearly Christmas.

“‘I am going to push for the five-year bill,’ Schilling said. ‘If it came down to nothing or an extension, I would give the extension full consideration. It would be better than nothing.’”

James Q. Lynch reported on Sunday at The Gazette (Cedar Rapids, Iowa) Online that, “[Rep. Bruce Braley (D., Iowa)] also defended congressional spending on farm programs, including subsidized crop insurance. It’s a good trade-off, Braley said, eliminating direct payments to farmers without over-burdening taxpayers.

“‘Everybody who farms in Iowa knows they are one bad year away or one change in policy away from seeing prices fall, profit margins disappear and farm sales start to appear the way we saw them in the 1980s,’ he said.”

In news regarding Farm Bill nutrition issues, Jane E. Brody reported yesterday at the Well Blog (New York Times) that, “Nutritionists and health-conscious parents applauded when last year the Department of Agriculture finally set new standards for the nation’s school lunches in an effort to foster good health and counter the epidemic of obesity afflicting youngsters…[B]ut the new school lunch menu, it seems, is not going down well with many school-age diners, who are tossing the mandated fruits and vegetables into the garbage or refusing school lunch altogether. Instead, they are choosing competitive foods sold in the cafeteria or buying lunch from vending machines and snack bars in school or from outside purveyors, where the typical choices include chips, candy, cookies, pizza, hot dogs, burgers, fries and sugary soft drinks.”

The update noted that, “In a 2010 study, published in what was then called The Journal of the American Dietetic Association, researchers at the Centers for Disease Control and Prevention found that among a representative sample of 4,322 students in 73 Florida middle schools, 18 percent bought a snack or beverage from a vending machine two or more times a week instead of school lunch.”

Elisabeth Hulette reported on Sunday at The Virginian-Pilot (Norfolk, Va.) Online that, “Virginia Beach isn’t the only division serving up new foods this fall. School cafeterias across the country are wrangling with the federal Healthy, Hunger-Free Kids Act of 2010, which requires schools that want certain federal funds to serve smaller lunches with more fruits and vegetables and less protein and carbohydrates.

“It’s a nationwide attempt to get children to eat their veggies, which any parent knows is no small task. Serving healthier food is one thing. Getting children to eat it is another.

Not surprisingly, the effort has hit some roadblocks.”

Colleen Kottke indicated on Friday at The Reporter (Fond du Lac, Wis.) Online that, “New lunch standards aimed at raising nutritional standards and lowering childhood obesity rates have been met with mixed reviews…[S]tudents in the Mukwonago School District in southeast Wisconsin were so incensed at the reduced portion sizes that they boycotted the school lunch program. Beth Ann Abraham, registered dietitian with ARAMARK Food Service said battling the ‘super-size’ mentality of students regarding portion size is a challenge.

“‘Learning what a correct portion size is will be a learning experience for many students,’ Abraham said. ‘That mentality is hard to battle especially when kids can leave campus and go out to lunch at any fast food restaurant and buy those super-sized items.’”

The article pointed out that, “[ARAMARK Food Service Director Jim Ronayne] said the fight against childhood obesity needs to start somewhere, and why not in school lunchrooms?

“‘The government can control the schools where they have the funding. If we don’t start it in the schools, where do we start?’ Ronayne said. ‘Will it make a difference? Time will tell, but you don’t know until you try.’”

Meanwhile, Sam Allen reported in yesterday’s  Los Angeles Times that, “El Monte Mayor Andre Quintero thought he had a winner on his hands when he placed a measure ["Measure H"] on the November ballot to tax sugary drinks…[B]ut then the beverage industry converged on El Monte, turning the race into the most expensive campaign in the city’s history — and giving it an increasingly David-versus-Goliath feel.

The beverage industry forces are open about their desire to not just kill El Monte’s proposal but to make the sugary drinks tax politically unfeasible to other cities. They’ve brought together consultants from across the country, including the firm of a Washington, D.C., political strategist whose famous ‘Harry and Louise’ advertisements helped derail the Clinton administration’s healthcare legislation in the early 1990s.”

The LA Times article noted that, “Driving around El Monte last week, Quintero seemed overwhelmed by the opposition. The ‘No on H’ committee has spent close to $1.3 million, compared to his side’s $57,000.”

On the California Proposition 37 issue (GMO food labeling), Karin Klein noted yesterday at the Los Angeles Times Online that, “But there’s another phrase in Proposition 37, which would require labeling of bioengineered food, that has received almost no attention even though it strikes more closely at whether the initiative would achieve its objectives should it pass next week…It says that genetically engineered foods would be considered mislabeled unless:

“‘In the case of any processed food, in clear and conspicuous language on the front or back of the package of such food, with the words ‘Partially Produced with Genetic Engineering’ or ‘May be Partially Produced with Genetic Engineering.’’”

Mr. Klein explained that, “If food companies can cover themselves by using the latter wording — that the food may have been partially produced with genetic engineering — the consumer is still left to guess whether there are bioengineered ingredients. There’s no rule that foods without such ingredients have to say so; it would probably be easier and cheaper for food companies to label all their products that way.

But if that happened, the main argument for Proposition 37 — that it’s the consumer’s right to know — would be undermined.”

In a separate policy issue regarding the federal tax credit for wind production, Diane Cardwell reported on Sunday at The Green Blog (New York Times) that, “The wind industry, fighting to hold onto a generous tax credit set to expire in December, has been arguing that it does not need the support forever – just a little while longer, until it can compete with fossil fuels on its own.

“The tax break subsidizes wind power by 2.2 cents a kilowatt hour to bring its cost closer to that of conventional fuels, and it has periodically been renewed by Congress with support from both parties. But like other subsidies for alternative energy, it has been tarred in some people’s eyes by the government’s investment in the failed solar company Solyndra and has become a wedge issue in the presidential contest. President Obama wants the credit extended, while Mitt Romney has urged that it expire as scheduled.

“But while campaigning on Friday in Iowa, a state with a lot of wind business, Mr. Romney seemed to be opening the door to a different position — or at least allowing himself some wiggle room should a compromise be found. ‘We will support nuclear and renewables but phase out subsidies once an industry is on its feet,’ he said, without offering more specifics.”

And, Perry Beeman reported on the front page of yesterday’s Des Moines Register that, “In the next month or so, Iowa’s natural resources and agriculture departments will release a long-awaited report detailing plans to reduce fertilizer runoff as well as nitrate and phosphorus pollution from sewage treatment plants.

“Environmental watchdogs hope the plan will lead not only to cleaner lakes and streams in Iowa, but also address the state’s role as the nation’s second-leading source of nitrates entering the Gulf.”

The Register article stated that, “Decades of voluntary actions by farmers to save soil and prevent fertilizer runoff have failed to significantly improve water quality in Iowa or the Gulf, environmentalists say. Some groups are calling for tougher state and federal regulations to limit how much fertilizer can be applied to fields — and when.

Farmers and their organizations insist such a strategy is unworkable, in part because farms, cropping techniques, soil and even climate vary from county to county.”

Mr. Beeman added that, “Farmers insist it would be hard to write regulations that fit every farm, and the laws almost certainly would invite long court battles.

“‘Instead of being tied up in court for years, let’s get something done on the land,’ said Iowa Agriculture Secretary Bill Northey, a member of the team drafting the state’s plan to reduce nitrate runoff. ‘We need to focus on what’s good for our farmers.’

The Iowa Farm Bureau Federation has taken a similar stand, noting that farmers have taken steps to reduce erosion and are beginning to use technology such as GPS systems and yield monitors to help them more precisely apply fertilizer.”

 

Budget Issues

Matt Vasilogambros reported yesterday at National Journal Online that, “President Obama said if he wins reelection, it will give him a ‘mandate’ to work with Congress to address some of the more difficult issues facing the country, such as the pending tax increases and mandatory budget cuts that will kick in at the end of the year if Congress does not act.

“‘And after the election, I think that both Democrats and Republicans have to step back and say, ‘You know what, this is something that the country wants to solve,’’ Obama said on MSNBC’s Morning Joe. ‘If I’ve won, then I believe that’s a mandate for doing it in a balanced way.’”

House Minority Leader Nancy Pelosi (D., Calif.) was a guest on the Charlie Rose Show (PBS) on October 25 and was asked about the fiscal cliff and budget issues; in part, Rep. Pelosi indicated that, “[B]ut again you can`t — everybody can`t have it their own way and so what we have is to say, ok, this is going to take some time, you`re not going to do it in two weeks between the election and Thanksgiving and the break for Christmas, say four working weeks if they ever work that long, they haven`t lately.”

Rep. Pelsoi also noted that, “sequestration would be devastating.”

And Damian Paletta reported yesterday at The Wall Street Journal Online that, “Lawmakers, CEOs, business groups and charities are scrambling to shape the debate over tax and spending policy after the November elections, staking out negotiating positions for what could be a fast-paced brawl.

“The jockeying is intensifying as Election Day approaches, despite a halt in talks between party leaders about how to avoid a total of $500 billion in annual tax increases and federal spending cuts set to begin in January, a double-whammy known as the fiscal cliff.

“Party leaders are waiting to see who holds more leverage after the elections.”

 

Agricultural Economy

Reuters news reported yesterday that, “The devastating U.S. drought and ensuing crop disease are upending traditional grain movement patterns, with dozens of trains and barges shipping North Dakota or Mississippi corn into the Corn Belt rather than out to the coasts.

“Processors and ethanol producers in No. 2 corn state Illinois, where the average corn yield was the lowest in nearly 25 years, are ‘importing’ millions of bushels of the grain – an unprecedented volume – from North Dakota, which produced a record crop this year, trade sources said. Northern corn is even reaching key livestock states such as Texas and Oklahoma.

“Some southern states, which were also spared the worst of the most extensive drought in half a century this year, are shipping barges of corn up the Mississippi River to the interior, reversing the normal trade flow, traders say.”

University of Illinois Agricultural Economist Darrel Good penned an interesting analysis yesterday at the farmdoc daily Blog (“Monitoring Corn Consumption”).  After an examination of data and variables on market activity, yesterday’s update concluding by noting that, “Corn consumption is clearly slowing, but the pace may not yet be sufficiently slow to ration the available supplies. This suggests that, while higher prices are not likely needed, current price levels will be maintained a while longer.”

Reuters news reported yesterday that, “The Andersons, a diversified agricultural company with the nation’s seventh largest grain storage capacity, will buy 12 grain elevators from Green Plains Renewable Energy for $133.1 million, the companies said on Monday… [I]t is the largest acquisition in The Andersons’ 65-year history, and comes at a time of accelerating consolidation in the grain industry.”

And, Matthew Wilde reported yesterday at The Courier (Waterloo, Iowa) Online that, “Farmland rental rates shot up a record 20 percent in Iowa this year, according to recent U.S. Department of Agriculture findings.”

Recall that The Des Moines Register recently reported that some Iowa cropland had sold for nearly $22,000 per acre.

Amy Hoak reported yesterday at The Wall Street Journal Online that, “After a drought year like this one, investors who had been thinking about buying farmland may be getting cold feet. But passing up the opportunity could be a mistake.

“For one thing, this year’s drought underscored just how reliant the world is on U.S. crops, says John Taylor, national farm and ranch executive for U.S. Trust, a private bank that is part of Bank of America Corp. ‘We may be at the point where the demand [for U.S. crops] is increasing past supply,’ he says.”

Meanwhile, Kim Severson reported in today’s New York Times that, “All across the country, small farmers have figured out the same formula. The hundreds of corn mazes that rise up each autumn can be more lucrative than agriculture itself.”

And an editorial posted yesterday at The Wall Street Journal Online indicated that, “This summer’s once-in-a-half-century Midwestern drought caused global prices for staple food products to soar by 10%—and corn in particular to jump by 25%, according to the World Bank. The food shortages across Africa, the Middle East and South America are the worst since the 1980s and have produced hunger and political instability, according to the United Nations.

So perhaps this emergency is the time to relax the U.S. ethanol mandate, which diverts four of every 10 domestic bushels of corn into gas tanks. That’s equal to 15% of international corn production, burned in internal combustion engines that could run on another fuel. But this obvious solution is evidently not obvious to the Environmental Protection Agency, which, despite studying the question for more than a year, says it needs more time.”

Keith Good

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