FarmPolicy

November 23, 2014

Policy Issues; Budget; Ag Economy; and, Trade

Policy Issues: Farm Bill, Estate Tax, Wind Tax Credit, Senate Ag. Comm. Developments, and RFS

Daniel Looker reported yesterday at Agriculture Online that, “Senator Chuck Grassley [R., Iowa- Ag. Comm.], one of few members of Congress to actively farm, sized up the election results for agriculture Tuesday, saying the voters’ choice of president had little effect on the farm bill debate, but it will affect estate taxes, the regulatory environment, and energy policy.

“Neither President Barack Obama nor Governor Mitt Romney talked much about the farm bill during the campaign, Grassley told reporters Tuesday. He expects Congress to either pass a five-year farm bill before the end of the year or it will pass a one-year extension of the current law. Grassley favors finishing the farm bill this year, but he said he’s not betting on it.”

Mr. Looker noted that, “During his campaign, Romney pledged to end the estate tax. At the end of this year it would revert to $1 million, the level before the Bush tax cuts were enacted.

“‘I believe it will not go back to $1 million,’ Grassley said. Those who favor keeping the current level of $5 million will have to fight for it, he said. Grassley said it could go back to $3.5 million (the level of 2009), with the rate rising from 35% to 45%.”

A news release yesterday from the National Cattlemen’s Beef Association (NCBA) stated in part that, “The [NCBA] today joins more than 30 groups representing the agriculture industry in sending letters to the United States House of Representatives and the United States Senate urging them to provide farmers and ranchers with permanent and meaningful relief from the estate tax. Current estate tax relief is set to expire at the end of 2012 with exemption levels dropping to $1 million per individual and the tax rate increasing to 55 percent.”

With respect to Sen. Grassley’s conference Tuesday (audio replay available at Brownfield) Chris Clayton reported yesterday at the DTN Ag Policy Blog that, “He will advocate for the full five-year bill, but opposition within his own party remains.

“‘On the part of conservatives in both the House and the Senate, if you get into next year after March 1 you will have a lower baseline to deal with so you would save more money,’ Grassley said. ‘There is some opposition to having any farm bill whatsoever. That would come from probably the same group of people. And then you have got city people who don’t know anything about the farm bill anyway, but they want the food-stamp part of it.’”

Zack Colman reported yesterday at The Hill’s Energy Blog that, “Sen. Chuck Grassley (R-Iowa) said the Senate would wait to move on a $205 billion tax extenders package while President Obama and congressional leadership work on a ‘fiscal cliff’ bargain.

That means the immediate fate of a one-year extension for a wind power production credit will remain uncertain. That credit is wrapped into the larger package, though some conservatives want to vote on that provision separately in order to defeat it.”

Mr. Colman also pointed out yesterday that, “Republican governors are putting pressure on GOP lawmakers from their states to support the renewal of a tax incentive for the wind industry.”

Meanwhile, J.T. Rushing noted this week at The Gazette (Cedar Rapids, Iowa) Online that, “An aide to Democratic Rep. Bruce Braley [Iowa], for one, said he plans to resume the petition drive he launched this summer to force a House vote on the [Farm] bill. The petition has been on hold while Congress has been in recess.

“Democratic Sen. Tom Harkin, a past chairman and current member of the Senate Agriculture Committee, said changing budget and cost estimates will make it more difficult to write a new bill in 2013. Like others, he also noted that much of the work has already been done on a bipartisan basis.

“‘In a new Congress the farm bill writing has to start over, which doesn’t mean everything has to be redone from scratch, but delaying to a new Congress necessitates a good deal more time and uncertainty for markups, floor action, and hearings,’ Harkin told The Gazette.”

Rep. Randy Neugebauer (R., Tex.- Ag. Comm.) indicated yesterday that, “We must also focus on passing a Farm Bill. The 2008 Farm Bill expired in September, and farmers and ranchers in West Texas need new policy in place as soon as possible.  The House Agriculture Committee passed a Farm Bill that made real reforms and reduced spending while still ensuring our farmers have a safety net to carry them through bad seasons.  We found $35 billion in savings, eliminated or consolidated 100 programs, and moved it to a more efficient, market-based system of crop support. Now it is time to pass a new Farm Bill, and I’ll continue to push for long-term legislation that gives our producers the certainty they need.”

An update yesterday at WCAX-TV (Burlington, Vt.) noted that, “The old [Farm] bill expired, leaving Vermont dairy farmers without the Milk Income Loss Contract. It compensated dairy producers when domestic milk prices fell below a certain level.

“‘So they continue to be under enormous amount of pressure and the dairy farmers no longer have the MILC program as a safety net,’ said [Rep. Peter Welch (D., Vt.- Ag. Comm.)].  ‘The Farm Bill contains the new dairy stabilization program that was championed by Vermont dairy farmers that passed on a bipartisan basis in the House Agriculture Committee.’”

And, Pete Kasperowicz reported yesterday at The Hill’s Floor Action Blog that, “Senate Budget Committee ranking member Jeff Sessions (R-Ala.) said Tuesday that Congress should look at ways to cut spending on means-tested welfare programs as a way of surviving the looming ‘fiscal cliff,’ rather than pushing the burden to Medicare and defense spending.

“‘Based on data from the Congressional Research Service [CRS], we know that we are now spending more on means-tested federal welfare — such as food stamps, public housing, and cash aid — than on Medicare, Social Security, or defense,’ Sessions said. ‘The nation spends enough on federal poverty programs to send every household beneath the poverty line a yearly check for $60,000.’”

The update added that, “[Sen. Sessions] has pointedly called on the Department of Agriculture to curtail what he said are attempts to lure Mexican citizens to the United States with the promise that they could benefit from the Supplemental Nutrition Assistance Program (SNAP).”

Interestingly, in an article earlier this week at Politico, David Rogers reported that, “In the case of food stamps, Obama bears responsibility for having turned a nutrition program into an economic stimulus machine. And reforms here could also make it easier to advance a long-delayed farm bill that promises billions in additional savings by ending an outdated system of direct cash payments to producers.

“The House Agriculture Committee leadership got little credit for trying, but a bipartisan plan was developed that would have set a new national standard for food stamps to replace the patchwork quilt that has developed as cash-strapped governors bent the rules to help low-income families — all at federal expense.”

Mr. Rogers explained that, “Included was a Texas-style change in the outdated 1980s asset test. But the compromise fell apart because the proposed gross income cap — 140 percent of poverty — was judged too high for some conservatives even though it was lower than current policy in 26 states including Texas.

A compromise at 135 percent could be worth exploring now together with a 5 percent increase in crop insurance premium payments by producers. The free ride enjoyed under the catastrophic crop coverage program would also end under the same changes. Having already lost at least one Senate seat because of the farm bill impasse, Boehner’s Republicans might see the merits to acting.”

And, Don Davis reported yesterday at the DL-Online (Detroit Lakes, Minn.) that, “Jennifer Duffy of The Cook Political Report said Tuesday that an overall budget-debt deal needs to happen before Congress can pass new federal farm policy.

“‘I don’t know how they pass anything that deals with revenue without dealing with the fiscal cliff,’ Duffy said, using a term in vogue about federal government budget problems due after Dec. 31 unless Congress and President Barack Obama reach an agreement.

“In an interview after speaking to the Minnesota Agri-Growth Council’s annual meeting, Duffy said, however, that ‘we are in very uncharted waters’ so anything is possible.”

In addition, David Rogers reported yesterday at Politico that, “Mississippi Sen. Thad Cochran is looking seriously at reclaiming the post of top Republican on the Senate Agriculture Committee—setting up a challenge to Kansas Sen. Pat Roberts, who has been a thorn in the side of Southern producers because of his resistance to price supports.

“Cochran, who outranks Roberts in years of seniority, has yet to commit himself publicly. ‘I’ve been looking at what the options are but I haven’t made any decisions,’ he said initially when asked by POLITICO Tuesday. But when told that Roberts had said flatly that he ‘intends’ to remain the ranking Republican, the always-gentle Cochran bristled a bit.”

Mr. Rogers pointed out that, “Midwest corn and soybean producers stand to benefit the most from a proposed new shallow loss subsidy structure in the Senate bill to replace the outdated system of direct cash payments to farmers. But Southern peanut, rice, and wheat producers argue that they are left vulnerable by the failure to include even modest price supports to protect against falling markets.

“The House Agriculture Committee in July approved its own five year bill more sympathetic with Southern interests, but that measure was stymied when Speaker John Boehner (R-Ohio) refused to allow it to come to the floor before the elections.

Boehner’s stand may have cost Republicans at least one if not two Senate seats that the GOP had hoped to win in Great Plains states. And Roberts argued Tuesday that the leadership must take a second look now at the farm bill and its promised savings –a precious commodity given the fiscal pressures at the end of the year.”

A news release yesterday from the National Milk Producers Federation (NMPF) stated that, “The [NMPF] today joined more than 230 other farm, agriculture and food groups in urging Congress to pass a new, five-year farm bill in the upcoming lame duck congressional session expected to begin this week.

The letter, which was directed at the Republican and Democratic leaders of the House of Representatives, noted that there is still ample time for the House to complete its work on a new farm bill, and reconcile any differences with the already-adopted farm bill approved last summer by the Senate.”

An update yesterday at the National Sustainable Agriculture Coalition (NSAC) Blog indicated that, “On Monday, November 12, NSAC and 42 other organizations sent a letter to House Speaker John Boehner (R-OH) urging the House to work with the Senate to complete a full five-year Farm Bill this year — one that, among other things, sustains the effectiveness of the Conservation Title of the bill in continuing what is a longstanding and successful partnership between the federal government and America’s farmers and ranchers to protect our nation’s exceptional soil, water and wildlife resources.”

And a separate letter from yesterday, signed by over 160 groups and sent to Senate and House Agriculture Committee leadership, highlighted farm bill issues for beginning farmers.

Also yesterday, Reuters news reported that, “The U.S. Environmental Protection Agency said on Tuesday that it will soon have a decision on whether to waive the mandate that requires blending billions of gallons of corn-based ethanol into the national gas supply each year.

“‘EPA is completing its review and analysis of the RFS waiver requests and the agency plans to reach a decision shortly,’ an agency spokeswoman said, referring to the ethanol mandate or Renewable Fuel Standards.”

 

Budget Issues

Zachary A. Goldfarb and Lori Montgomery reported in today’s Washington Post that, “President Obama is taking a hard line with congressional Republicans heading into negotiations over the year-end fiscal cliff, making no opening concessions and calling for far more in new taxes than Republicans have so far been willing to consider.

“Obama plans to open talks using his most recent budget proposal, which sought to raise taxes on corporations and the wealthy by $1.6 trillion over the next decade, White House press secretary Jay Carney said Tuesday. That’s double the sum that House Speaker John A. Boehner (R-Ohio) offered Obama during secret debt negotiations in 2011.”

The Post article noted that, “Democrats said Obama is likely to maintain a tough stance Friday, when Boehner and other congressional leaders are due to gather at the White House for their first face-to-face discussions about how to avoid the fiscal cliff. Fresh off a resounding electoral victory in which they kept the White House and picked up seats in the House and Senate, Democrats said there is no reason to compromise now on a central plank of the president’s platform.”

“Though Republicans have offered fresh revenue in a deal to avoid the cliff, they have not proposed a specific target. Boehner suggested that negotiations resume on terms discussed in 2011, when he offered to raise $800 billion over the next decade through a rewrite of the tax code. Senate Minority Leader Mitch McConnell (R-Ky.) endorsed that general idea Tuesday but warned Obama not to overplay his hand, noting that the president’s $1.6 trillion tax request failed to receive a single vote in Congress in the spring,” today’s Washington Post article said.

Ramsey Cox reported yesterday at The Hill Online that, “Senate Majority Leader Harry Reid (D-Nev.) and Senate Minority Leader Mitch McConnell (R-Ky.) made it clear that they will stick to their ground Tuesday in the first floor speeches since the election.

“Reid called for a ‘balanced approach’ to dealing with the ‘fiscal cliff’ that would include tax hikes on wealthy Americans.”

The update added that, “But McConnell said President Obama needs to propose a plan that can pass in the Republican House and a divided Senate.”

 

Agricultural Economy

A DTN article from yesterday reported (link requires subscription) that, “As far as USDA’s weekly Crop Progress report is concerned, the nation’s corn harvest and rice harvest are complete and no longer included on the weekly tables.

Soybean harvest is 96% complete as of Nov. 11, compared to 95% last year and a 93% five-year average.

Winter wheat planting is nearly finished at 95%, compared to 95% last year and a 94% average.”

Reuters news reported yesterday that, “Coming off the worst drought in more than half a century, farmers in the United States are scrambling to get their hands on the best corn seed this year to ensure they plant a bumper crop next spring. Their success could be pivotal in keeping food prices stable across the globe.

“Two of the nation’s leading seed companies saw the risk of a shortage coming and boosted seed imports by up to 20 percent to guarantee supplies.”

 

Trade

Vicki Needham reported yesterday at The Hill’s On the Money Blog that, “The House will vote later this week on a long-delayed Russian trade bill.

“The House Rules Committee approved a closed rule on Tuesday that paves the way for permanent normal trade relations (PNTR) with Russia, nearly three months after Moscow joined the World Trade Organization (WTO).

The House will consider the bill either Thursday or Friday, sending it to the Senate.”

A separate Hill update from yesterday reported that, “House Rules Committee Chairman David Dreier (R-Calif.), who will retire at the end of the 112th Congress, called on his colleagues Tuesday to support a Russia trade bill up this week even though Russian President Vladimir Putin is ‘not a good guy.’”

Keith Good

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