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Policy Issues; Budget; Ag Economy; MF Global; and, Trade

Policy Issues: Farm Bill, Tax Policy

DTN Ag Policy Editor Chris Clayton reported yesterday that, “Congress will send a message about the importance of rural America in the way lawmakers treat the farm bill, Agriculture Secretary Tom Vilsack said Wednesday.

“Vilsack also said he will continue his current job as long as President Barack Obama wants him to do so. So far, Vilsack said he hasn’t heard anything official about the president wanting to make a change.”

The DTN article noted that, “Vilsack is picking up where he left off earlier this fall in pushing the House to pass the farm bill. The bill is part of the president’s agenda of what needs to be accomplished in the lame-duck session of Congress.”

Mr. Clayton explained that, “Right now, the farm bill isn’t on the House agenda this week. Due to the Thanksgiving break, the earliest that lawmakers would now consider a piece of legislation such as the farm bill would be the week of Nov. 27. That again dims the possibility the five-year bill would be considered. Groups have begun to send out letters on the farm bill. More than 230 groups signed a letter Tuesday to House leaders calling for them to pass a five-year farm bill now.

“Vilsack challenged farm groups to reach out and establish ‘a higher level of accountability’ for inaction. ‘It’s not enough send a petition or sign a letter,’ he said. ‘It’s up to farm groups to understand they have an obligation to not just talk to their members or talk to rural lawmakers, but talk to the rest of the country and to reinforce this message on the importance of rural America. I don’t know how cognizant they are of that.’”

Yesterday’s article added that, “Vilsack has lined up a meeting with House Agriculture Committee Ranking Member Collin Peterson, D-Minn., and has been trying to do the same with Chairman Frank Lucas, R-Okla. Peterson, however, told a Washington reporter he had not spoken with Lucas since lawmakers began a congressional break nearly two months ago. ‘That is not a good sign,’ Peterson told a Roll Call reporter.

“Lucas has yet to comment on the farm bill or what he expects to happen in the lame-duck session.”

Tom Steever reported yesterday at Brownfield that, “By finishing the farm bill, Congress can send a message to the rest of the country about the importance of rural America, according to U.S. Agriculture Secretary Tom Vilsack. Rural America, along with U.S. farm policy, provides the nation with more than food, Vilsack told Brownfield Ag News, during an interview on Wednesday” (audio replay of the Brownfield interview available here).

Tom Lutey reported this week at The Billings Gazette (Mont.) Online that, “Dale Moore, deputy executive director of public policy for the American Farm Bureau Federation, gives Congress a 15 percent chance of passing a farm bill during its lame-duck session, which began Tuesday…[M]ore likely, a three-month or one-year farm bill will be offered to address needs like farm planning and to enable farmers to secure operating loans on favorable terms. A short-term solution would allow lawmakers more time to craft a long-term, five-year bill expected to cost roughly $500 billion.”

Sen. Patrick Leahy (D., Vt. –Ag. Comm.) addressed Farm Bill issues in a recent floor speech ; in part, Sen. Leahy noted that, “I have been here nearly 38 years. I have served on the Senate Agriculture Committee all that time. I have never seen a case where the House Agriculture Committee—whether it is led by Democrats or by Republicans—passed a bipartisan farm bill only to see it blocked from a final vote by its own leadership…[T]he elections are over. We know who has won or lost. We hope our friends in the other body, in the House of Representatives, will set aside their obstructionism and pass this bill.”

A news release this week from Sen. Michael Bennet (D., Colo.- Ag. Comm.) stated that, “With Congress resuming its work in Washington this week, [Sen. Bennet] today urged the House of Representatives to take up and pass the 2012 Farm Bill.”

Sen. Chuck Grassley (R., Iowa- Ag. Comm.) was a guest on yesterday’s AgriTalk radio program with Mike Adams, where in part the discussion turned to the Farm Bill; to listen to a portion of this conversation from the AgriTalk program, just click here (MP3- 1:40).

And, Sen.-elect Heidi Heitkamp (D., N.D.) indicated in an opinion item posted this week at The Hill Online that, “As the next senator from North Dakota, my No. 1 job is to see a farm bill finally passed and signed into law. Agriculture is still king in North Dakota, and a farm bill means our farmers and ranchers will have a stable crop insurance program they can rely on heading into next season…[I] will work hard to ensure that we get a bill that includes crop insurance provisions that are critical for our farmers.”

Rep. Steve King (R., Iowa) noted in a news release from yesterday that, “I will continue to work with [House Ag. Comm.] Chairman Lucas, my colleagues on the Agriculture Committee and House Leadership to push for a vote on the version of the Farm Bill passed back in July by the House Agriculture Committee…[W]hile it is not uncommon for Farm Bills to be extended several times before a new Farm Bill is passed, it is my hope that we can avoid extensions and pass the House Farm Bill in the Lame Duck session.”

Meanwhile, The Des Moines Register editorial board opined yesterday that, “Among other things, the farm bill protects Midwest grain farmers from weather disaster and market downturns. The government has tied this taxpayer support to requirements that farmers comply with conservation requirements. The Senate version of the farm bill keeps that conservation tie-in in place. Unfortunately that tie was removed from the House version of the bill, which stalled before the election. The tie should be in the final bill. Farmers who already practice good conservation have nothing to fear. Those who aren’t should not expect taxpayers to subsidize degradation of the soil and water.”

In a recent update at Hoosier Ag Today, Cayla McLeland quoted former USDA Chief Economist Keith Collins, who is now a consultant to National Crop Insurance Services, as saying: “This year in the Midwest, we’ve seen the drought that’s affected corn and soybeans.  The result of these natural disasters is just a stark reminder to everyone in agriculture that farmers are exposed, production agriculture is exposed, processors, bankers, input suppliers are exposed to financial loss and hardship. The best way to prevent those repercussions is to have crop insurance. When you make a claim and you get paid, you can pay off your bank or your seed dealer. You can pay off your loans on your tractor, you can buy yourself out of any forward contracts you might have had. So crop insurance imparts a stability to production agriculture. It transcends not just to production agriculture, it goes into the whole distribution system, as well. But ultimately, probably the most important thing is, it allows the farmer to get back on their feet and plant a crop the next year.”

Speaking yesterday at a Farm Foundation Forum (“What the 2012 Elections Mean for Agriculture, Food and Rural Policies”) in Washington, D.C., Dr. Craig Jagger of  Legis Consulting, provided an interesting perspective and analysis on crop insurance and disaster assistance; a replay of a portion of his remarks on this topic from yesterday can be heard here (MP3- 3:17).

In news on tax policy, an update yesterday from the California Farm Bureau indicated that, “Unless Congress acts before the end of the year, for example, the exemption level on federal estate taxes will drop from the current $5 million to $1 million, and the tax rate will increase to 55 percent.  Farm Bureau will urge the lame-duck Congress to extend current tax policies at least temporarily, [Josh Rolph] said, and will seek broader tax reform in the next Congress.”

During his AgriTalk interview yesterday, Sen. Grassley also highlighted the estate tax issue- related audio (MP3- 1:10).

Although long a policy concern of American farmers, estate tax issues have garnered additional urgency and attention as U.S. farmland values have risen over the past decade.

And, Dr. Jagger also alluded to the importance of tax policy issues to the U.S. agricultural sector yesterday at the Farm Foundation Forumrelated audio  (MP3- 1:15).

In other policy developments, an update this week at the Los Angeles Times Online reported that, “[T]he Los Angeles school board voted Tuesday to implement one of the largest and most comprehensive food procurement polices of any school district.  The policy calls for using the $100 million the Los Angeles School District spends annually on food as leverage to ensure that food service providers comply with fair workers’ rights, provide organic and sustainable farming, and protect animal welfare.”

Also, Zack Colman reported yesterday at The Hill’s Energy Blog that, “Sen. Lamar Alexander (R-Tenn.) on Wednesday said the nation’s fiscal situation has become so dire that the government can no longer afford to maintain a wind power production credit that has been in place since in 1992.”

Meanwhile, Dave White, Chief of USDA’s Natural Resources Conservation Services, announced his retirement yesterday.  Rep. Glenn ‘GT’ Thompson (R., Pa. –Ag. Comm.) stated yesterday that, “Chief White has spent his career helping the nation fulfill its commitment to soil and water resource conservation working tirelessly to improve land management policies and practices. Having served as an indispensible resource of information and organizational leadership, Dave will be missed by the agriculture community. I want to thank Chief White for his dedicated service of nearly four decades and wish him and his family the very best.”


Budget Issues

Carol E. Lee, Janet Hook and Damian Paletta reported in today’s Wall Street Journal that, “President Barack Obama said Wednesday he will push for a deal to resolve the year-end fiscal crisis by raising tax rates on upper-income Americans, while leaving enough wiggle room to suggest to Republicans that the two sides could still compromise.

“‘With respect to the tax rates, I just want to emphasize: I am open to new ideas,’ he said during a news conference. ‘If the Republican counterparts or some Democrats have a great idea for us to raise revenue, maintain progressivity, make sure the middle class isn’t getting hit, reduces our deficit, encourages growth, I’m not going to just slam the door in their face.’

“Congress and the White House are set to begin talks Friday on a budget deal that would avert the ‘fiscal cliff,’ which economists predict could send the country back into a recession.”

The Journal article explained that, “Both sides have spent the week since the election sending signals of their willingness to compromise. Senior congressional Republicans said Wednesday they remained optimistic about the prospects for negotiations because Mr. Obama didn’t explicitly draw a red line on raising income-tax rates, which they oppose. They maintained that view despite the president’s decision to start talks by requesting $1.56 trillion in net tax increases, double what GOP leaders have been open to accepting in the past.”

Steven T. Dennis and Ben Weyl reported yesterday at Roll Call Online that, “President Barack Obama’s pitch for $1.6 trillion in new tax revenue from the wealthy has Republican leaders demanding major entitlement cuts even as they face the potential for a revolt among conservatives.

“A defiant group of conservative GOP lawmakers said Wednesday that it would oppose raising revenue in a deal to avert the fiscal cliff unless it came from economic growth.

“So any deal will likely come from the unknown quantity of Republicans in both chambers who have expressed a willingness to negotiate — and they’re demanding steep cuts to Medicare and other entitlements.”

Mark Landler reported in today’s New York Times that, “Looking beyond the immediate fiscal challenges, Mr. Obama expressed optimism about one major goalimmigration legislation — and caution about another, climate change.”


Agricultural Economy

Bloomberg writer Tony C. Dreibus reported this week that, “The worst crop conditions for U.S. winter wheat in at least 27 years are compounding feed costs for cattle producers in the Great Plains already reeling from a drought that sent corn prices to a record in August.”

The Bloomberg article explained that, “Cattle often graze on dormant wheat leaves before snow covers the crop. Once plants resume their growth and leaves start to regenerate, ranchers send livestock into the fields to feed again before the animals are sent to feedlots to be fattened on corn. When wheat yields are expected to be low, as they are this year, ranchers don’t let cattle into the fields, [Keith Kisling, 65, who normally has 1,500 animals grazing his wheat fields near Burlington, Oklahoma] said.”

Bloomberg writer Jack Kaskey reported yesterday that, “Rootworms, the most costly pest affecting the U.S. Corn Belt, are showing signs of resistance to Syngenta AG (SYNN)’s genetically modified corn just as they do with crops developed by Monsanto Co., researchers said at a conference…[L]aboratory experiments show Syngenta’s Agrisure corn may have ‘cross-resistance’ with Monsanto’s YieldGard corn, meaning the crop is vulnerable to the same rootworms that are no longer killed by Monsanto’s toxin, said Sarah N. Zukoff, a doctoral candidate at the University of Missouri, and Bruce E. Hibbard, a research entomologist with the U.S. Department of Agriculture. They spoke yesterday in a presentation at the annual meeting of the Entomological Society of America in Knoxville, Tennessee.”

And, Matthew L. Wald reported in yesterday’s New York Times that, “Officials at two companies that have built multimillion-dollar factories say they are very close to beginning large-scale, commercial production of these so-called cellulosic biofuels, and others are predicting success in the months to come.”

The Times article noted that, “Government policy has anticipated far more technical progress than the industry has made. Congress set a goal of 250 million gallons of cellulosic biofuel for 2011 and 500 million gallons for this year, but the Environmental Protection Agency cut the requirement to six million gallons for 2012 because of the lack of commercial production.

“Six governors, oil refiners and companies hurt by high corn prices have asked the agency to waive its requirements for ethanol and other renewable fuels. Some single out the corn ethanol mandate, but others want the quota for cellulosic fuels waived, too, partly because there is no actual production.

The cellulosic biofuel industry has asked the E.P.A. to keep all the rules intact.”


MF Global Report

Peter Schroeder reported yesterday at The Hill’s On the Money Blog that, “The high-profile collapse of the investment firm MF Global largely lays at the feet of its former head, Jon Corzine, according to a new congressional report.

“According to the investigatory subcommittee of the House Financial Services Committee, the former New Jersey governor and senator exhibited a ‘dereliction of duty’ in managing the firm, rapidly expanding it into risky investments while failing to heed warnings and checks that could have saved the futures merchant.

“The panel’s findings will be officially released Thursday, but portions unveiled by committee Republicans on Wednesday largely blame Corzine for the firm’s collapse, which led to a slew of congressional hearings as roughly $1.6 billion in customer funds went missing in the firm’s final days.”



A Statement of Administration Policy (SAP) on H.R. 6156 – Russia and Moldova Jackson-Vanik Repeal Act of 2012, was posted earlier this week at The White House webpage, “The Administration strongly supports H.R. 6156, which would extend Permanent Normal Trade Relations (PNTR) treatment to the products of the Russian Federation and the Republic of Moldova,” the SAP said.

Yesterday, an American Farm Bureau Federation (AFBF) news item said: “The [AFBF] this week urged the House of Representatives to pass legislation granting Permanent Normal Trade Relations with Russia. The House is scheduled to vote on Russia PNTR this week.”

Keith Good