FarmPolicy

November 27, 2014

Farm Bill (Political Notes); and, the Ag Economy

Political Notes –Snapshot, Farm Bill Issues

Peter Nicholas and Carol E. Lee reported in today’s Wall Street Journal that, “President Barack Obama won re-election Tuesday in a closely fought race, overcoming the doubts of a nation ravaged by a prolonged economic downturn and setting up a test of whether he can forge a productive second term in a divided political system.”

Meanwhile, the U.S. Senate remained in Democrat control, while the GOP retained its edge in the House of Representatives.

Today’s Journal article noted that, “After the election, Washington remained aligned exactly as it was Tuesday morning, despite $6 billion in spending and 1.2 million political ads in the presidential race alone.”

Julie Harker reported yesterday at Brownfield that, “[Pat Westhoff, the director of the Food and Agricultural Policy Research Institute at the University of Missouri] tells Brownfield Ag News, ‘If there’s no change in the balance of power in Washington, there’s less of a reason to put off major choices that have to be made, not just about the Farm Bill but about many other things.’  Westhoff says farm bill passage during the lame duck session of Congress appears more likely under an Obama win.”

Senate Agriculture Committee Chairwoman Debbie Stabenow (D., Mich.) won a third term yesterday, while House Agriculture Committee Chairman Frank Lucas (R., Okla.) was elected to an eleventh term.  House Agriculture Committee Ranking Member Collin Peterson (D., Minn.) also won re-election yesterday.

More specifically in the House, Rep. Steve Latham (R., Iowa) defeated Rep. Leonard Boswell (D., Iowa- Ag. Comm.), while Rep. Steve King (R., Iowa- Ag. Comm.) edged out his Democratic opponent, Christie Vilsack, yesterday.

The Rockford Register Star reported yesterday that Freshman GOP Ag. Committee Member Bobby Schilling was defeated by Democrat Cheri Bustos.  Freshman Ag. Committee Member Kristi Noem (R., S.D.) “defeated Democratic challenger Matt Varilek on Tuesday to win a second term as South Dakota’s lone member of the U.S. House,” the AP reported.

House Ag Committee Members Bill Owens (D., N.Y.) and Christopher Gibson (R., N.Y.) won re-election; while, Ag Committee Member Larry Kissell (D., N.C.) was defeated.  Rep. Mike McIntrye (D., N.C.- Ag. Comm.) was holding on to a slim lead last night, but “wasn’t ready to call the race,” a news report indicated.

On the Senate side, both Bob Casey (D., Pa.- Ag. Comm.) and Sherrod Brown (D., Ohio- Ag. Comm.) won re-election yesterday.

And, Reuters news reported yesterday that, “Rancher Deb Fischer defeated former Governor Bob Kerrey in a Nebraska U.S. Senate race – a Republican pickup of a seat in the upper chamber.” Also, Democratic Rep. Tammy Baldwin beat former Governor Tommy Thompson yesterday in Wisconsin’s U.S. Senate race.

Amy Harder reported today at National Journal Online that, “In what’s poised to be an upset victory, Democrat Heidi Heitkamp holds a small but sturdy lead against Rep. Rick Berg, R-N.D., for the open North Dakota Senate seat being vacated by retiring Democrat Kent Conrad.

“With only 0.5% of precincts left to report vote totals and most of the state’s Republican bastions in, Heitkamp’s 1.2-point lead appeared unassailable, at least based on the votes left to count early Wednesday morning.”

The Montana Senate race, between U.S. Sen. Jon Tester (D) and U.S. Rep. Denny Rehberg (R), remains to close to call.

In other political news, Marc Lifsher reported last night at the Los Angeles Times Online that, “Proposition 37, the genetically engineered food labeling initiative, was trailing badly late on election dayWith just over a fifth of the statewide votes counted, the measure was losing with 42.7% yes to 57.3% no.”

Meanwhile, an update yesterday at National Journal Online stated that, “‘National Journal reported last month’ that Sen. Kent Conrad (D-ND) ‘is among the front-runners to serve as’ secretary of agriculture if Obama is re-elected and current Ag. Sec. Tom Vilsack ‘doesn’t come back – speculation that Conrad said he doesn’t agree with.’ Conrad: ‘I think it’s extremely remote that I would be asked to serve.’ Still, ‘Conrad said the article might not be too far off with’ ex-Sen. Byron Dorgan (D-ND), ‘who’s said to be a leading candidate for’ Energy Sec. Steven Chu’s post in the event that Chu does not return. Conrad: ‘I think it is possible that Sen. Dorgan might be asked to be secretary of energy, and I would be strongly supportive. That would be great for our state; it would be good for the country.’

“‘Conrad said if a president were to ask him to join the Cabinet as agriculture secretary, it’s something he’d have to give ‘strong consideration.’’ Conrad: ‘But, honestly, it’s not something I’m eager to do.’”

George E. Condon Jr. reported today at National Journal Online that, “With much of the country in severe drought, and with the farm bill stalled in Congress, Secretary Tom Vilsack’s job has taken on a higher profile than normal, and the administration doesn’t seem to be afraid to put him front and center. Vilsack spoke at the Democratic National Convention in August. ‘President Obama has a detailed plan for a new rural economy: more support for small businesses making, creating, and innovating; more investment in the production of biofuels and other biomaterials; more trade and more markets,’ Vilsack declared. There’s more than a good chance that Vilsack will be sticking around for this ‘detailed plan,’ but lobbyists are trading rumors that perhaps the administration might want someone with more of a congressional background. After all, the president has had a less-than-perfect relationship with Capitol Hill. Possibilities would then include lawmakers past and present. One certainly in contention would be former Democratic Sen. Blanche Lincoln of Arkansas. She was the first woman to chair the Senate Agriculture Committee and was a key player in the passage of the 2008 farm bill, before losing her seat to Republican John Boozman in 2010. Retiring Sen. Kent Conrad of North Dakota, a Democrat who sits on the Ag Committee, is a name that pops up. Conrad has been known to work with members across the aisle, most notably Saxby Chambliss of Georgia, in an effort to pass farm bills. Another wild-card possibility, depending on how his election goes, would be Democratic Sen. Jon Tester of Montana, who is locked in one of the closest senatorial elections in the country and is the only working farmer in the chamber.”

In more specific Farm Bill news, Daniel Looker reported yesterday at Agriculture Online that, “House Agriculture Committee Chairman Frank Lucas (R-OK) still wants to pass a farm bill in the lame duck session of Congress after the election, but it could be pushed into 2013, he said shortly before voting began. If that happens, he expects deeper cuts.

“‘It still comes down to the election whether we have several weeks after the election or a few weeks,’ Lucas told Agriculture.com Monday evening in Stillwater, Oklahoma, where Lucas was at Oklahoma State University for an advance screening of a new Ken Burns public television documentary, The Dust Bowl.”

Mr. Looker noted that, “If the lame duck session of Congress decides to pass a short-term extension of Bush era tax cuts, the farm bill is likely to be rolled into 2013, [Lucas] said…‘Peterson (Representative Collin Peterson, his committee’s ranking Democrat) and I both agree, this needs to be done,’ Lucas said.

If the farm bill is pushed into 2013, Lucas said greater cuts in its spending are possible.”

Ron Hays reported yesterday at The Oklahoma Farm Report Online that, “Conservation was the topic of the evening in Stillwater Monday at a preview of the latest Ken Burns documentary on the Dust Bowl. Oklahoma Congressman and House Agriculture Committee Chairman Frank Lucas was in attendance and participated in a roundtable discussion following the screening.

“In an interview with the Oklahoma Farm Report, Lucas said the prospect of drought continuing into a third year is on the minds of a lot of producers in western Oklahoma. He said he believes conservation practices already in place will go a long way toward preventing a recurrence of the Dust Bowl, but he said farmers are far more concerned with the political climate. He said the delay in passing the 2012 farm bill will, eventually, result in some damage to conservation programs, but farmers are having a difficult time with management decisions that need to be made now. He said need to get a new farm bill passed following the general election is crucial.

“‘Different provisions of the 2008 farm bill expire at different rates. Most of the conservation programs, essentially, are OK, but we need to get it done. We need the certainty. We need to be able for producers to whether it’s going into the local NRCS office to discuss practices or planning at home at the dinner table next year’s farming or ranching operation. They need some certainty to know where they’re headed.’”

Mr. Hays added that, “Lucas said he doesn’t have much certainty on the future of the 2012 farm bill, but he does have his preferences.

“‘The short answer is this: I would prefer, I would hope, we would be able to do this farm bill, finish it in lame duck. If not, then at the very least, we need a one-year extension to provide some certainty in all these areas. Because, remember, when the new Congress comes in in January just as a new president or a second-term president is inaugurated, all the legislative matters have to start over from scratch. I’ve had a lot of fun and put a lot of effort in the last two years and I’d like to complete this as opposed to start all over again.’”

Yesterday’s update also quoted Chairman Lucas as saying: “There are windows of opportunity because you’ve got the tax code issues that have to be addressed. The 2001 and 2003 tax relief all expires at the end of December. That means everybody’s income tax rates, capital gains, death tax rates, all go up. There are the automatic cuts referred to commonly as sequestration to the Department of Defense that take place at the end of the year. All those things are going to happen unless something happens. So, we will be a part of that overall equation, but I believe it will be general election night that will determine if it’s an extended lame duck where real legislation is done or it’s a short-term lame duck where things are put off for six months or a year. We just won’t know until all the polls are in on general election night.”

In other news, an update yesterday from National Crop Insurance Services indicated that, “As the claims come in from one of the worst droughts in decades, farmers and ranchers across the country are receiving indemnity payments for the losses they have incurred. To date, more than $3.5 billion has been sent to farmers. And while crop insurance can be purchased to protect 128 different crops, the top five crops that suffered the most damage from the 2012 drought are corn, wheat, cotton, soybeans and Pasture Rangeland and Forage.”

In addition, University of Illinois Agricultural Economist Gary Schnitkey penned an update related to crop insurance yesterday at the farmdoc daily Blog (“2013 Crop Revenue Risk: Waiting for Projected Prices”), which can be found here.

And with respect to nutrition issues, Reena Singh reported earlier this week at The Watertown Daily Times (N.Y.) Online that, “Refried beans, carrot sticks and three-bean salads are leaving students hungry.

“Those are some of the new, healthier menu offerings students are throwing away at Evans Mills Primary School and at schools throughout the north country to express their distaste for U.S. Department of Agriculture-mandated school lunches.

With every rejected menu item, parents’ hard-earned dollars are being chucked into the garbage.”

And the Arkansas Democrat-Gazette reported earlier this week (Nov. 4) that, “Schools across the country continue to make the transition to meet federal regulations that went into effect in July as a result of the Healthy, Hunger-Free Kids Act of 2010. The regulations create calorie ranges for children and aim to gradually reduce the sodium content of meals.

“Fayetteville cafeterias have cut back on the serving sizes of breads and entrees to ensure that meals fit within the new calorie ranges and meet the required amounts of fruits, vegetables and milk, said Adam Simmons, child nutrition director.

He’s concerned that too many fruits and vegetables end up in trash cans instead of hungry bellies.”

The article noted that, “‘They’re used to a larger piece of pizza,’ Simmons said of students. ‘They’re used to more chicken nuggets, a bigger burrito. If they’re just eating their entree, they’re going home hungry. There’s more food on the plate than ever before. It’s just getting them to eat the food on the plate.’”

 

Agricultural Economy

Bloomberg writer Jeff Wilson reported yesterday that, “Chinese farmers are reaping a third record corn harvest even after a typhoon wiped out some of the crop, easing demand for imports at a time when the U.S. drought is driving sales from the biggest exporter to a four-decade low.

“The harvest rose 3.6 percent to 199.74 million metric tons, according to a survey of farmers in China’s seven biggest producing provinces by Geneva-based SGS SA (SGSN) for Bloomberg. The country’s stockpiles last month were at a nine-year high, and the U.S. Department of Agriculture expects a 64 percent drop in imports. The agency will raise its estimate for U.S. reserves by 2.4 percent when it reports Nov. 9, the average of 29 analyst estimates compiled by Bloomberg shows.”

The article noted that, “China became a net corn importer in 2010 for the first time since 1996. As per-capita income more than doubled since 2000, pork consumption gained 23 percent and dairy use advanced 38 percent, according to the USDA. Corn acreage exceeded rice for the first time ever in 2007 and expanded another 16 percent since then, USDA data show.”

An article earlier this week at The Australian Online (Nov. 5) reported that, “New Zealand producer-owned dairy giant Fonterra has signed a partnership agreement to develop two more huge dairy farms in China.

“The two farms, 120km east of Beijing on an 80ha double site, will each include 3350 milking cows, together producing 65 million litres of milk a year, when fully operational.

“The agreement with Yutian County completes development of Fonterra’s ‘hub’ of five large-scale dairy farms in Hebei province, as part of its strategy to build a high-quality, sustainable fresh local milk supply in China.”

Javier Blas reported yesterday at The Financial Times Online that, “The US government has shocked the commodities trade industry. It has just commended Ukraine for showing restraint and not imposing an export ban on grains. But Washington is well aware that Kiev is indeed restricting exports, even if Ukraine has decided to keep its decision under the radar.”

The FT article added that, “Grain traders report that on top of the clear message from the government to reduce exports significantly, Kiev has also started to use administrative means to make sure the grain flows stop. The government is using sanitary and quality inspections to block shipments, and slow down approval of paper work.

“The impact of the de facto export restriction will be felt by US companies such as ADM, Bunge and Cargill – among the world’s largest traders of agricultural commodities – and consumers, particularly in the Middle East and North Africa region, which usually buy the bulk of their needs from Ukraine and Russia. Other large trading houses, including Louis Dreyfus Commodities and Glencore, would also suffer the forced decline in wheat exports from Ukraine.”

Domestically, Kim Severson reported in today’s New York Times that, “Amid worries over climate change, farm bill politics and a recent peanut butter recall comes some good news from the peanut fields of the South: the crop is great this year.

“In Georgia, where nearly half of the nation’s peanuts are grown, the annual fall harvest has yielded a record amount of big, shell-filling kernels that farmers say taste better than average.”

Keith Good

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