FarmPolicy

April 23, 2014

Farm Bill; Budget; Ag Economy; and Regulations

Farm Bill Issues

An update last week from Rep. Adrian Smith (R., Neb.) indicated that, “When Congress returns to Washington after the election, we have a long list of items to address before the end of the year.  One of the biggest priorities, especially for Nebraska producers, will be passing a responsible Farm Bill to prevent a lapse in policy.  Congress also must act to prevent the largest tax hike in American history before the current rates expire on January 1, 2013.

“The Farm Bill expired on September 30, and Congress has not yet passed a new bill or an extension.  It is important to note while the bill expired, there has not been an immediate lapse in most farm programs.  The Continuing Resolution passed by Congress in September funds most Farm Bill provisions through the end of March 2013, including the crop insurance program.  While some programs do need to be reauthorized, commodity programs are not immediately impacted because the 2008 Farm Bill covers these programs through the 2012 crop year.

The urgency to pass a Farm Bill does not mean Congress should rush through an irresponsible bill.  The Supplemental Nutrition Assistance Program (food stamps) accounts for 80 percent of the cost of the Farm Bill, and would result in nearly $1 trillion in spending over the next ten years.  At a time when Americans are demanding reforms to reduce spending, it is reasonable to make modest changes to the nutrition title to cut costs without affecting families in need.  The House should pass amendments to reduce spending on the nutrition title before sending a bill to a conference committee where a compromise with the Senate can take place.”

More specifically on nutrition issues, Bloomberg writer Frank Bass noted earlier this week that, “More than 16 million additional people have gone on food stamps in the last four years, according to the USDA. The $80 billion program has grown from an initial 2.9 million beneficiaries in 1969 to 46.7 million at the end of July, the latest month for which figures are available.

“It now provides food to one in every five U.S. households, largely as a result of 2009 economic-stimulus legislation backed by Obama that waived limits on program benefits and opened food- stamp participation to people without children.”

The Bloomberg item noted that, “The increase in food-stamp recipients also was pronounced in Republican bastions such as Collin County, Texas, which registered a 128 percent increase to 47,102 households in 2011, and Gwinnett County, Georgia, where usage climbed 117 percent to 101,815 households. Collin County, a Dallas suburb, gave McCain 62 percent of its 2008 vote. Gwinnett, part of the Atlanta metro area, supported the Republican with 55 percent of its ballots.”

Meanwhile, Dan Friedman reported yesterday at National Journal Online that, “Whatever happens Tuesday, Congress will return to a long lame duck agenda. In addition to big-ticket questions like averting sequestration and addressing expiring tax cuts, there are plenty of low-profile items.

“Below is a list [which includes the Farm Bill] of unfinished legislative items created by staff in the office of Senate Majority Leader Harry Reid, D-Nev. The length of the list ensures many items will not be completed in this Congress.”

A news release yesterday from the Coalition to Promote U.S. Agricultural Exports stated that, “To avoid an unnecessary funding crisis for America’s long-­‐standing and successful public support for agricultural exports, members of the Coalition to Promote U.S. Agricultural Exports strongly urged U.S. House of Representatives leadership to take action this year on a new five-year Farm Bill in a letter dated Nov. 2, 2012.

“‘With the expiration of the 2008 Farm Bill on Sept. 30, USDA’s Foreign Agricultural Service currently has no authority to run market promotion and development programs including the Market Access Program (MAP) and the Foreign Market Development (FMD) for FY 13,’ the organizations said in their letter to Speaker of the House John Boehner (R-Ohio) and House Minority Leader Nancy Pelosi (D-Calif.).

The farm families and small to medium size businesses that foot the bill for 60 percent of export development depend on MAP and FMD to conduct export activities they cannot do by themselves. And with a forecast value in FY 12 of $136.5 billion, agricultural exports are a vital part of the U.S. economic engine. However, federal funds for these programs will end early in 2013 for many organizations that have already started cancelling or reducing activities.”

James Haggerty reported earlier this week at The Scranton Times Tribune (Pa.) Online that, “Dairy farmers recently lost an important financial cushion protecting them from an imbalance in milk prices and production expenses.

“The termination of the federal farm bill at the end of September due to Congressional inaction also ceased the Milk Income Loss Contract program, which paid farmers when prices fell below a certain level.”

The article noted that, “Regional dairy farmers who had a poor harvest in 2011 resulting from wet weather and flooding found themselves battered by high fuel and feed costs this year. A drought parching much of the Midwest and South drove corn and other agricultural commodity prices to near-record highs this summer.

“Milk prices slumped in the spring and early summer but rebounded in August and September.

Feed costs, though, are up at least 30 percent from January 2011, said James Dunn, Ph.D., an agricultural economist at Penn State University. The average income-over-feed margin at Pennsylvania dairy farms is the lowest since 2009 – when the industry was in crisis from a price collapse, Dr. Dunn said.”

Separately on the dairy issue, Lee Mielke reported late last week that, “Hurricane Sandy dominated the news this week as it wreaked havoc on the Eastern Seaboard. New York and the New York Stock Exchange were shut down for the first time since 1888 due to weather, according to FC Stone’s Oct. 30 eDairy Insider Opening Bell. Market analyst Ryan Cox warned that ‘dairy will be affected by the storm. The upstate New York ‘dairyshed’ is an issue but we don’t know how badly it will be affected yet.’

“Their Nov. 1 issue reported that millions of homes and business remain without power. FC Stone dairy economist Bill Brooks said ‘for dairy companies in New York City and New Jersey, it could be a while before they get back online. While those plants might not be able to process milk, demand from consumers who are unable to leave their homes has also come to a near standstill.’

The Oct. 29 Daily Dairy Report pointed out that almost 20 percent of U.S. milk production is located along the East Coast and more than 45 percent is consumed in the fluid bottle. It added that ‘a storm of this magnitude could wreak havoc on the milk supply chain. Areas hardest hit by damaging winds and floodwaters are likely to struggle to pick up farm milk, and power outages could prevent dairy processors from running plants at capacity. The net impact is a lot of dumped milk and stronger milk and dairy product prices in the near term.’”

In other hurricane related news, the AP reported yesterday that, “The Agriculture Department is sending food aid to victims of Superstorm Sandy.

USDA announced Monday that the department is working with the state of New York and local food banks to distribute 1.1 million pounds of food to victims in New York City, Long Island, and Westchester and Rockland counties. USDA worked with New Jersey and local organizations last week to produce meals for victims in shelters there.”

 

Budget Issues

Niels Lesniewski reported yesterday at Roll Call Online that, “The Senate’s top disaster relief appropriator thinks it is clear Congress will have to approve additional spending to pay for the recovery from Hurricane Sandy.

“‘There needs to be a supplemental appropriations bill to deal with the aftermath of Hurricane Sandy,’ an aide to Sen. Mary Landrieu (D-La.) said in a statement to Roll Call…[T]he Landrieu aide pointed out that the current continuing resolution funding the government until March 2013 does not provide extra money for the Agriculture, Transportation, or Housing and Urban Development departments or the Army Corps of Engineers. All of those agencies are involved in the disaster response and recovery efforts under way along the East Coast.”

Erik Wasson reported yesterday at The Hill’s On the Money Blog that, “Most members of the New York, New Jersey and Connecticut delegations penned a letter Monday urging House leaders to provide more financial support for Hurricane Sandy victims, should the money be necessary.

“The bipartisan letter does not say money will definitely be needed and does not delve into the thorny issue of whether disaster assistance needs to be offset by spending cuts elsewhere in the budget.”

And, Reid Wilson reported earlier this week at National Journal Online that, “House Speaker John Boehner doesn’t expect a grand bargain avoiding the fiscal cliff to materialize in a lame duck session of Congress, but that doesn’t mean the country is headed over the edge. Instead, Boehner said Sunday, he thinks Congress and the White House will find a way to punt the looming deadlines on the debt ceiling, the Bush tax cuts and the budget sequester into 2013.

“‘Lame ducks aren’t noted for doing big things. And frankly I’m not sure that lame ducks should do big things. So the most likely outcome would be some type of a bridge,’ Boehner said in an interview with National Journal Sunday, aboard a campaign bus taking him around Ohio in a final sprint before Election Day. ‘But the impact of the election is certainly going to have an impact on how this plays out.’”

The article noted that, “Boehner said he still has hope for some kind of grand bargain, even if Congress has to punt it to the 113th session that begins in January. He said he maintains a ‘solid’ relationship with both Democratic leaders and with President Obama. But he said the ball is in Democrats’ court.”

Jake Sherman reported yesterday at Politico that, “‘We’re not raising taxes on small-business people,’ Boehner told POLITICO during an interview in an Italian restaurant here [Columbus, Ohio]. ‘Ernst and Young has made this clear: It’s going to cost our economy 700,000 jobs. Why in the world would we want to do that?’

“Boehner’s strong comments on the eve of the election show just how tough a time President Barack Obama, if he is reelected, will have keeping his campaign promise to increase taxes on individuals earning more than $250,000 per year.

“Tuesday’s congressional elections are certain to give Boehner a stronger hand — at least on Capitol Hill — as Republicans are expected to lose only a handful of seats and maintain an iron hold on the House majority. Boehner sees this election as a validation of his no-tax-hike approach — and doesn’t view an Obama victory as a mandate to raise taxes on upper-income Americans.”

Interestingly, a Roll Call article from today noted that: “Bills that were routine in sessions pastthe farm and highway reauthorizations, to name two — were stalled last year amid conservative opposition. With all leaders promising to take up extraordinary issues next year, it remains to be seen how and whether Boehner and his leadership team can lure Members into taking tough votes on big issues in the post-earmark era.”

Damian Paletta reported in today’s Wall Street Journal that, “If the winner of the presidential election wants to tackle America’s groaning debt load, he will probably have to break a campaign promise or two…‘It’s an extraordinarily dangerous situation,’ said former Federal Reserve Chairman Alan Greenspan, describing the growth of the nation’s debt and a lack of consensus about how to address it. ‘I believe we underestimate the size of current financial imbalances and how difficult it will be to resolve them. We’re trying to do this without pain. There’s just no credible scenario in which that happens.’”

And, the AP reported yesterday that, “Meeting in Mexico City one day before the U.S. elections, the G-20 finance ministers issued a statement saying the United States faces ‘a potential sharp fiscal tightening’…‘Whoever is going to be elected or re-elected tomorrow (in the United States) will be faced with that challenge, and will have to tackle that issue upfront, very shortly,’ said International Monetary Fund Managing Director Christine Lagarde.

“‘First and foremost the U.S. leadership needs to address quickly the so-called fiscal cliff and the debt ceiling, those two risks … are clearly factors of uncertainty, not only for the U.S. economy but also for the global economy.’”

 

Agricultural Economy

An article posted yesterday at DTN (link requires subscription) reported that, “After an early start, the harvest season is winding down, although the pace remains well ahead of average, according to USDA’s weekly Crop Progress report.

Ninety-three percent of the nation’s soybeans are in the bin, compared to 91% at this time last year and an 86% five-year average.

Ninety-five percent of the nation’s corn crop is harvested, compared to 85% at this time last year and a 71% five-year average.”

The DTN item noted that, “Winter wheat planting is slightly ahead of an average pace at 92% completed as of Sunday, Nov. 4. Emergence is slightly behind normal at 73%. Winter wheat condition worsened somewhat from last week, moving from 15% poor to very poor to 19% poor to very poor, but condition ratings at this point in the growing cycle have little to no correlation to final crop yield or size, according to DTN analysts.”

Jason Henderson, the vice president and Omaha Branch executive with the Federal Reserve Bank of Kansas City, was a guest on yesterday’s AgriTalk radio program with Mike Adams where their conversation focused on particular aspects of the agricultural economy.

To listen to a brief portion of their discussion yesterday that highlighted specific variables impacting the livestock sector, just click here (MP3- 1:58).

 

Regulations

Coral Davenport and Margot Sanger-Katz reported recently at National Journal Online that, “The Obama administration roared into office four years ago with an openly ambitious regulatory agenda, releasing a higher-than-usual number of major regulations in the first two years. In 2012, the number of new regulations has plummeted in a year in which the president’s regulatory policies have emerged as a major campaign theme.

Federal agencies are sitting on a pile of major health, environmental, and financial regulations that lobbyists, congressional staffers, and former administration officials say are being held back to avoid providing ammunition to Mitt Romney and other Republican critics.”

The article, which included this graph, pointed out that, “The administration has also failed to release a required regulatory outlook document, describing its regulatory agenda. Such documents are supposed to be published every six months; the most recent one was published in January, making this the longest lag between outlooks since the deadline schedule was created in 1994.”

As 2011 drew to a close, EPA staffers continued to finalize major environmental rules—but not to submit them to OMB for review. Industry lobbyists and environmental lawyers estimate that the EPA is currently sitting on about a dozen new major regulations, completed, and ready to roll out the door, but on hold until after the election. Nearly all of them will have a significant impact on the coal and oil industry,” the National Journal article said.

Meanwhile, Reuters writer Nate Raymond reported yesterday that, “Former customers of MF Global Holdings Ltd’s broker-dealer have added accounting firm PricewaterhouseCoopers LLP as a defendant in a lawsuit stemming from the collapse of the brokerage.

“In an amended complaint filed in U.S. District Court in Manhattan on Monday, the customers of MF Global Inc accused PwC of failing to adequately audit MF Global’s internal controls over customer funds.”

And The Wall Street Journal editorial board published an opinion item today titled, “Dodd-Frank’s Financial Outsourcing.”

***

Also yesterday, a news release from Mercaris indicated that, “Today marks the launch of Mercaris, a new company to provide critical market information and infrastructure for organic and non-GMO agricultural commodity crops.  Mercaris will allow subscribers to access key market data on certified or identity-preserved crops, as well as utilize an on-line trading platform to buy or sell physical commodities.  Mercaris is backed by seed funding from a group of investors, led by the Ulupono Initiative of the Omidyar Group and Kapor Capital.

“‘We’re excited to provide a unique set of information tools to help the sustainable agricultural sector grow’, said Founder and CEO Kellee JamesAs the organic and non-GMO agricultural sectors have expanded, the need for fundamental market data on supply and demand has become more critical. Mercaris aims to support the increase of market transparency and efficiency across the sector.”

Keith Good

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