FarmPolicy

September 21, 2014

Farm Bill; Ag Economy; Budget Issues; and, Regulations

Farm Bill–Policy Issues, Political Notes

Mike Corn reported on Wednesday at The Hays Daily News (Kan.) Online that, “There’s plenty left to be done when Congress returns after Tuesday’s presidential election, Sen. Pat Roberts told a small gathering of people in the Rush County Courthouse.”

The article noted that, “Today, the crisis stems from congressional failure to pass a federal farm bill.

“‘We will probably see that voted on right away,’ Roberts said of the farm bill, a version of which already has been passed in the Senate.”

Mr. Corn indicated that, “In the House, Roberts said, the measure didn’t make it to the floor, only because there’s not enough votes to pass it.

“‘We’ve got a food stamp program that is out of control,’ Roberts said, and tightening rules and regulations likely could have increased the savings to approximately $50 billion.

“But it was untouchable, Roberts said, just as the measure’s crop insurance program was out of reach.”

The Daily News article pointed out that, “‘We will get a farm bill,’ he said. ‘We will get it done.’

But Congress still must deal with the fiscal cliff it’s approaching, both in terms of the deficit and the sequestration that’s rapidly approaching.”

Robert Barron reported on Wednesday at the Enid News and Eagle (Okla.) Online that, “The big challenge in 2013, starting the lame duck session of Congress, will be how to handle the budget deficit and national debt, no matter who wins the presidential election or which party has a congressional majority. [House Ag. Comm. Chairman Frank Lucas (R., Okla.)] said the nation cannot continue with a $1 trillion dollar deficit and no new money.

“[Chairman Lucas] said work on a new farm bill will be finished either in the lame duck session or in 2013.”

The article added that, “[Chairman Lucas] said the bill still provides a basic safety net for production agriculture. Lucas, a Roger Mills County farmer and rancher, said the bill must make sure there is enough food and fiber no matter what the weather or the international market.

“The bill requires everyone to prove they meet the income and asset levels to receive food stamps. Some of the programs are automatic and standards vary by state.

“‘It won’t take one calorie off one plate of needy Americans, but they must prove they qualify,’ he said.”

An update earlier this week at Nebraska-TV (ABC, Kearney, Neb.) Online indicated that, “Failure by the U.S. House of Representatives to pass a five-year farm bill before adjourning last month may mark the beginnings of a drought on U.S. agricultural exports, according to a letter from the Nebraska Corn Board.”

The update explained that, “In part, what is at stake by not passing a farm bill is the type of promotional efforts farmers use to expand trade and defend markets of all agricultural goods, from corn and soybeans to beef and pork…[B]ecause the farm bill did not pass in the House, as it already has in the Senate, FMD [Foreign Market Development] program funding ended Oct. 1 and Market Access Program (MAP) funding, another foreign market development tool, will end Dec. 31.”

University of Illinois Agricultural Economist Gary Schnitkey noted in an update posted yesterday at the farmdoc daily Blog (“2012 Harvest Prices for Corn and Soybeans: Implications for Crop Insurance Payments”) that, “The 2012 crop insurance harvest prices will be $7.50 per bushel for corn and $15.39 per bushel for soybeans (As of this writing, the Risk Management Agency has not officially released these prices).”

After additional analysis and illustrations, yesterday’s update noted that, “Low yields across much of the Illinois will result in crop insurance payments. These payments will cover revenue losses caused by low yields from the drought. With the release of harvest prices, more accurate estimates of crop insurance payments can be obtained.”

Also yesterday, Ken Anderson reported at Brownfield that, “Kansas State University ag economist Art Barnaby says earlier estimates of up to 40 billion dollars in crop insurance underwriting losses were wildly off the mark.

“Barnaby continues to stick by his earlier estimate of less than 15 billion dollars.  But he says that number is dropping every day and could end up closer to ten billion dollars due to better than expected crop yields, a drop in prices and other factors.”

The Brownfield update, which included an audio replay of an interview with Dr. Barnaby, added that, “Some politicians and others have expressed concern over the large crop insurance indemnities that will be paid out to some farmers because of this year’s drought.  But Barnaby points out that many of those farmers have been paying premiums for the past ten years without ever filing a claim.”

From a political perspective, Larry Sabato’s Crystal Ball noted yesterday that, “Earlier we called the House for the Republicans. Now we are willing to call the Senate for the Democrats — as long as the presidential race doesn’t break heavily for Romney in the last days. Our current Senate projection is 52 Democrats to 46 Republicans, with two leftover toss-ups: Arizona and Wisconsin.”

Kyle Trygstad reported yesterday at Roll Call Online that, “In the final days of the dead-even Montana Senate race, Sen. Jon Tester (D) and Rep. Denny Rehberg (R) are storming the state in last-ditch efforts to gain an edge in a contest likely to finish as close as any in the country.”

The article noted that, “The Tester campaign has branded the incumbent Senator as a Montana farmer who is taking on a Washington politician — one of us versus one of them. Backed up all summer by a string of TV ads that often featured Tester working on his farm, the strategy has been effective and has helped keep the Democrat within striking distance.”

Humberto Sanchez reported yesterday at Roll Call Online that, “Republicans are dismissing any talk that former Sen. Bob Kerrey (D) has found his footing in the Nebraska Senate race, but that hasn’t stopped the GOP from redoubling its efforts for state Sen. Deb Fischer (R).”

And, the AP reported yesterday that, “Democratic U.S. Rep. Peter Welch is seemingly cruising to re-election to his fourth term in Washington, yet he is still working to let Vermonters know he remains committed to promoting their interests and thinks Congress could take some lessons from the state…[W]elch, who is on the U.S. House committees on Agriculture and Oversight and Government Reform, says he’s been a voice of pragmatic problem solving in Washington working across the aisle on a price stabilization provision for dairy farms in the farm bill, which passed the House Agriculture Committee but wasn’t voted on before the election recess.”

Roll Call also reported yesterday that House Ag. Comm. Member Scott DesJarlais (R., Tenn.) is facing “big trouble” with respect to his re-election prospects.

 

Agricultural Economy: Biofuels, Hurricane Issues

Reuters news reported yesterday that, “Brazil’s trade ministry said the country’s exports of corn and ethanol rose in October as foreign buyers turned to Brazil after the worst drought in 50 years ravaged U.S. crops…[E]thanol exports from Brazil were also responding to the strong demand for the biofuel created by the U.S. drought over the corn crop, the main feedstock for North American ethanol.

“Brazilian ethanol shipments reached 492.2 million liters in the past month, up from the 452.7 million in September and 247 million liters in October a year ago, the ministry said in a monthly report on the country’s main commodities exports.”

Dan Piller reported in yesterday’s Des Moines Register that, “Ethanol producers are reporting losses, caught between high prices for corn and low prices for the fuel.

“Valero Energy of San Antonio said Wednesday that it lost $73 million at its 10 ethanol plants in the third quarter, compared with operating income of $107 million for ethanol in the same quarter last year.”

Mr. Piller explained that, “Valero’s problems are industrywide. The price of ethanol has veered from more than $3 per gallon last year to as low as $2.20 per gallon this year, and ethanol refineries have had to pay as much as 12 percent more for corn in 2012 than a year earlier.”

In other news regarding renewable energy, Ben Geman reported yesterday at The Hill’s Energy Blog that, “Critics of tax credits for wind energy projects are intensifying their push to kill the incentive with a study that calls it ‘rent seeking’ by an established industry that doesn’t need the subsidy.

“The conservative American Energy Alliance (AEA) unveiled the study Thursday as wind power companies — joined by allies including President Obama — are pushing Congress to renew credits that are scheduled to lapse at year’s end.”

With respect to Hurricane Sandy, the AP reported yesterday that, “Superstorm Sandy provided little relief to key Midwest farming states vexed by the stubborn drought that climate experts suggested Thursday could press on for months, complicating winter wheat crops and next spring’s corn and soybean plantings in the moisture-starved soil.

“The weekly U.S. Drought Monitor update released Thursday showed that 60 percent of the land in the lower 48 states still was experiencing some degree of drought as of Tuesday.”

Debra J. Groom reported yesterday at The Post-Standard (Syracuse, N.Y.) Online that, “Farms in the Hudson Valley and on Long Island suffered some damage in Superstorm Sandy.

But a New York Farm Bureau official said it is nothing compared to what happened during Hurricane Irene and Tropical Storm Lee last year.”

Ms. Groom noted that, “Julie Suarez, Farm Bureau director of public policy, said some farmers in the Hudson Valley still are recovering from massive flooding from the August 2011 storms. This week during Superstorm Sandy, most of the vegetable and fruit farmers on Long Island had finished harvesting so there was no damage to crops.

“But she said the long-term challenge in the area is the salt deposited from ocean salt water flooding fields. ‘They don’t know the long-term impact of the high salinity in the soil,’ she said.”

A news release this week from USDA indicated that, “The U.S. Department of Agriculture (USDA) is taking steps in coordination with the Federal Emergency Management Agency (FEMA) to assist those affected by Hurricane Sandy. In addition to working with FEMA and other departments, agencies, state and local governments, USDA is also reaching out to farmers and ranchers in states affected by recent extreme weather.”

As cost estimates of the storm’s damage climb, and now top $50 billion, Seung Min Kim reported yesterday at Politico that, “Lawmakers on the front lines of the Hurricane Sandy disaster recovery have a message for their colleagues in Congress: We’re going to need a lot more money.

“Even though FEMA’s coffers are relatively flush now, lawmakers who have spent the last several days seeing the sheer scope of the disaster — flooded homes, destroyed boardwalks and torn up public transit systems — say the $7.8 billion in FEMA reserve funds won’t be enough. Many predict Congress will ultimately have to take up emergency funding bills due to the massive storm that wrecked much of the Eastern Seaboard.”

The article noted that, “Hurricane aid could complicate what is already a jam-packed post election lame-duck session on Capitol Hill. Lawmakers are already confronting a one-two punch of tax increases and automatic spending cuts slated to take effect in 2013 that could shove the country back into a recession.”

 

Budget Issues

More specifically on budget issues, The Wall Street Journal recently produced an excellent video that provided a short, but informative look at the “fiscal cliff.”  The video features the Journal’s David Wessel and can be viewed here.

The Hill reported yesterday that, “The financial industry is warning that the fiscal cliff is already dragging down the economy, and Washington needs to deal with it as soon as possible to minimize harm.”

And, Meredith Shiner reported today at Roll Call Online that, “If GOP candidate Mitt Romney wins the White House, he is likely to face as much of a challenge as President Barack Obama did in persuading conservative Republicans to raise the debt ceiling and avoid a government default.

“The Treasury Department reiterated earlier this week that the government will hit its current debt limit before the end of the year but can use the same ‘extraordinary measures’ it employed in the protracted debt ceiling fight in 2011 to postpone potential default until early next year. With some House Republicans resisting a push to deal with the debt limit during the lame-duck session, the window for action will be small for whoever is inaugurated Jan. 20.

“Despite being the leader of his party, a President Romney could face just as much resistance from House conservatives as did Obama two summers ago.”

 

Regulations

Ted Booker reported earlier this week at the Watertown Daily Times (N.Y.) Online that, “Carthage dairy farmer Lee W. Bach has wanted to expand his herd size from 185 to 250 cattle for years at the family-owned farm he co-owns with brother Justin W. and father John W. But he hasn’t, because doing so would mean complying with costly state regulations to properly dispose of manure.

But those requirements — which affect farms with 200 or more cattle — are tentatively slated to be relaxed by Gov. Andrew M. Cuomo to entice farmers like Mr. Bach to grow their operations. The governor plans to change the enrollment criteria by raising the number of cattle farmers can own before they enroll as Concentrated Animal Feeding Operations, which require them to develop plans for controlling runoff from manure that can pose a risk to the environment. The threshold at which regulations would kick in would be increased from 200 to 299 cattle under the plan, which was introduced by the governor at the state yogurt summit in August as a way to buoy milk production statewide.”

A news release yesterday from the Environment and Public Works Committee noted that, “Senator James Inhofe (R-Okla.), Ranking Member of the Senate Committee on Environment and Public Works, today blasted the Obama administration for its failure to comply with the law by not releasing its regulatory agenda by the statutory deadline, which was yesterday, October 31, 2012.

“The Regulatory Flexibility Act (5 U.S.C. § 602) requires that every administration publish its regulatory agenda every six months in the Federal Register.  Yet, the Obama administration has failed to comply with this law twice over the past year.”

A related column on this development by The Wall Street Journal’s Kimberly Strassel is available here.

And, in a separate issue involving regulatory issues, a news release yesterday from Sen. Jerry Moran (R., Kan.) indicated that, “[Sen. Moran], a member of the U.S. Senate Committee on Banking, Housing and Urban Affairs, issued the following statement today on the occasion of the one year anniversary of the collapse of MF Global. Segregated customer accounts are protected by law and the events surrounding MF Global cast doubts on the strength of our market protections as well as the ability of the designated federal regulators to prevent violations of the trust of account holders.

“‘One year ago, farmers and ranchers across Kansas and the United States awoke to the stark realization that the integrity of our markets can be easily compromised by a bad player like MF Global,’ Sen. Moran said. ‘The disregard for the rules established to protect customer accounts on the part of MF Global as well as the failure of federal oversight to enforce these rules will continue to erode confidence in our markets until the accounts are made whole and the perpetrators are held accountable.’”

Keith Good

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