FarmPolicy

August 1, 2014

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

Farm Bill and Policy Issues

Ted Booker reported yesterday at The Watertown Daily Times (N.Y.) Online that, “The lull in Congress before the new year may be called the ‘lame duck’ session, but Rep. William L. Owens, D-Plattsburgh [Ag. Comm. Member], says legislators will have to get to work in a hurry to pass a five-year farm bill before the session ends…[S]ome lawmakers have pushed for a short-term extension of the bill, but Mr. Owens has opposed that idea, saying he does not want to see the full bill scrapped.

“Approving an extension ‘would be more complicated than one might think,’ he said. ‘We need to make sure we’re covering all aspects of the plan, and an extension would take just as much time to get done as passing the bill.’”

The article added that, “And if the bill isn’t passed by the end of the year, it will mean more painful cuts to federal programs for farmers. Dairy farmers in the north country already are suffering from the discontinuation of the Milk Income Loss Contract program with the expiration of the bill. The federal safety net reimbursed farmers when national milk prices dropped, said Steve Ammerman, manager of public affairs for the New York Farm Bureau. If the revamped farm bill is passed, farmers would have the option to join a new margin insurance program, which will calculate reimbursements based on the gap between feed and milk costs.”

Mike Mulcahy reported earlier this week at Minnesota Public Radio Online that, “As President Barack Obama and congressional leaders begin to negotiate over the series of automatic spending cuts and tax hikes known as the fiscal cliff, some members of Congress say a bill to extend food stamps and farm subsidy programs could help bridge the impasse.”

The update noted that, “But the House Agriculture Committee approved a bill that cuts spending by more than $30 billion over the next decade.

“U.S. Rep. Tim Walz, D-Minn. [Ag. Comm. Member], said he wants to see the farm bill completed in the lame-duck session of Congress.  ‘The farm bill was a huge component of my race, one on the policy but two on the idea that why can’t you can’t get something that simple done?’ Walz said. ‘So I’m all for it. Let’s put it in the negotiations on this.’”

An update yesterday at the Red River Farm Network Online reported that, “The Agriculture Committee has been on the wish-list for North Dakota Senator-elect Heidi Heitkamp. After spending time in Washington, DC, Heitkamp is fairly confident that will happen. Heitkamp met with Senate Agriculture Committee Chair Debbie Stabenow and House Agriculture Committee Ranking Member Collin Peterson about the farm bill. ‘I think they are both doing some heavy lifting, pushing toward the farm bill. Hopefully Speaker Boehner will fulfill his committment and his pledge to bring it up before the end of the year,’ Heitkamp said. ‘We are very interested in what’s happening. I wouldn’t say encouraged yet, but I’m more optimistic this week than I was last week.’”

An Inside U.S. Trade article on Friday noted in part that, “Congress is unlikely to pass a five-year farm bill either by itself or as part of a larger package in the lame-duck session, opening the possibility that there will be less money available for agricultural subsidy programs when lawmakers finally do act on the legislation next year, Farm Bureau President Bob Stallman said last week.

“Instead, Stallman said, he expects lawmakers will include a short-term extension of selected farm bill programs as part of whatever legislation Congress passes to deal with the tax provisions and spending cuts that make up the so-called ‘fiscal cliff.’”

The Billings Gazette editorial board opined earlier this week that, “Dale Moore, a top lobbyist for the American Farm Bureau, was in Billings this week for the Montana Farm Bureau convention. Moore saw little chance of a five-year farm bill passing this year. He’s probably right, but a six-month or one-year bill falls far short of responsible legislation. If the new farm bill is being used as part of deficit reduction projected over 10 years, the law ought to be in effect for the full five years that has been the term of previous farm bills.”

Recall also that House Ag. Comm. Ranking Member Collin Peterson (D., Minn.) recently indicated that, “Well, I am absolutely 110% against a one-year extension, and I will do everything in my power to stop it, including making the Ag Committee partisan for the first time, if that’s what it takes. That is a bad idea that was floated a couple times before the election. I was able to stop it both times that it came up before. I don’t know if I can stop it, but I think I can because I have considerable Republican support against an extension, and I’m hoping to have Democratic support against an extension, so I am… If they’re going to dilly-dally around and not get this thing done, I am ready for permanent law, and I am ready for $38 milk January 1st, and so are the National Milk Producers. I talked to them yesterday. They do not want an extension.”

Meanwhile, Elahe Izadi reported yesterday at National Journal Online that, “Big Sugar and Big Candy are continuing their lobbying beef over the federal government’s sugar program, and now some sweet — and snarky — gifts are being offered as part of the fight.

“Sugar farmers and the candy industry disagree over how much sugar is available in the U.S. and its affordability, with big sugar taking issue with big candy’s characterization of there being a sugar shortage, citing USDA estimates of surplus sugar in the American market.

“And so to highlight their point, United Sugars Corporation farmers have dispatched a truck containing 20 tons of sugar to remain on standby for delivery to top candy lobbyist Larry Graham.”

With respect to nutrition issues, Jeff Tyler reported yesterday at Marketplace Online that, “Four years ago, about 32 million people received benefits from the program. Now, SNAP covers 47 million Americans. The program costs the government a total of $40 billion a year. Congressman Jim Jordan of Ohio is critical of the program’s expansion, and what he calls the ‘learned helplessness’ that such programs instill in recipients:

“‘One in seven Americans now rely on the tax payers to take care of their nutrition needs. That is not healthy for our culture. Not healthy for our country. That needs to change,’ says Jordan.  Jordan and fellow Republican Congressman Tim Huelskamp would like to weed out those recipients who collect benefits even though they make too much income.”

And, a news release yesterday from Sen. Mark Pryor (D., Ark.) stated that, “[Sen. Pryor] and John Hoeven (R-ND) today asked U.S. Agriculture (USDA) Secretary Tom Vilsack to consider providing school districts with greater flexibility in implementing new rules for the National School Lunch Program and School Breakfast Program. The senators have received numerous correspondences from parents, school board members, superintendents, and other concerned community members expressing their frustration as the new rule is rolled out. The rule became effective in March and implementation began this fall with the new school year.

“Pryor and Hoeven made their case in a letter to Secretary Vilsack, asking him to address their concerns regarding strict calorie limits, protein sufficiency, increased costs, and lack of flexibility to adapt the program to the individual needs of some students.”

The release added that, “Other senators who signed on to the letter include: Sens. James Inhofe (R-OK), Kent Conrad (D-ND), Mike Enzi (R-WY), John Tester (D-MT), John Thune (R-SD), John Barrasso (R-WY), Jerry Moran (R-KS), Dan Coats (R-IN), and Tim Johnson (D-SD).”

Also on the new federal school lunch rules, Molly Walsh reported recently at the Burlington Free Press (Vt.) Online that, “Shortly after school began, her phone started to ring with complaints about small portions and changes in the food program. ‘I was being absolutely inundated with calls from concerned parents wanting to know what’s going on,’ [Brigid Scheffert, superintendent of the Washington West Supervisory Union, which includes Harwood and six other public schools] said.”

In other policy related news, Rick Barrett reported on Sunday at the Milwaukee Journal Sentinel Online that, “Thirsty for milk, and the money that comes with it, South Dakota has ramped up efforts to recruit dairy farmers from other states and countries, including England, Ireland and The Netherlands.

“It was noticeable this fall at the World Dairy Expo in Madison, where representatives from the Mount Rushmore state made pitches to dairy farmers about why they should relocate.

“South Dakota isn’t alone in the recruitment game, as North Dakota, Kansas, Iowa, Texas and other states attempt to prove they are the dairy industry’s next frontier.”

And, Stacy Finz reported on Monday at the San Francisco Chronicle Online that, “California’s egg farmers filed a lawsuit against the state late last week, arguing yet again that new standards for confining egg-laying hens under Proposition 2 are too vague to be enforced. They’re asking that the law, which goes into effect in January 2015, be abolished.

“The lawsuit marks the third legal challenge to Prop. 2 since its passage in 2008. The two previous suits failed.

“The latest lawsuit, filed in Fresno Superior Court by the Association of California Egg Farmers, claims the organization has ‘exhausted all available avenues for seeking clarification’ on the state initiative.”

Jayson Lusk, a professor of agricultural economics at Oklahoma State University, penned an Op-Ed published in today’s Wall Street Journal titled, “The Food Police Are Routed at the Ballot Box.”  The subtitle of the piece noted that, “Americans like farmers markets and exotic flavors but not a ‘food movement’ that imposes the natural and wholesome by regulatory fiat.

 

Agricultural Economy

The latest Livestock, Dairy, and Poultry Outlook from USDA’s Economic Research Service (ERS) noted on Friday that, “USDA lowered its pork production forecast for the fourth quarter of 2012 and for all quarters of 2013, as hog producers are likely to market animals at lower weights than initially expected. Feeding margins are expected to tighten compared with last year, pressuring producer returns and encouraging producers to market hogs as rapidly as feasible.”

The ERS update added that, “Feed price forecasts continue to decline, based on the most recent World Agricultural Supply and Demand Estimates report. The forecast corn price for 2012/13 was lowered to $6.95-$8.25 a bushel in November from October. Slightly higher expected production and an increase in imports support the lower price forecast. Similarly, the soybean meal price was lowered in November to $455-$485 a ton.”

Dairy feed ration prices will likely be lower in 2013 than this year, but will remain high by historic standards,” the update said.

Purdue University Agricultural Economist Chris Hurt noted yesterday at the farmdoc daily Blog (“Pork Producers Did Not Panic”) that, “Now that the damage from the 2012 drought is better known, those [pork producers] who did not panic are facing much smaller losses than was feared at the height of the crisis. Feed prices tend to reach peak prices around, or slightly after, the peak of the drought and then move irregularly lower through the marketing year. That pattern has been evident this year with December corn futures now near $7.40 per bushel and December soybean meal closer to $425 per ton. Lowering corn prices by $1 a bushel and meal by $100 per ton lowers hog production costs by about $12 per head.”

Yesterday’s update noted that, “While pork producers are beginning to feel that the worst is behind them, the 2012 losses will leave an imprint in the form of reduced equity. Estimated losses for 2012 are about $17 per head. The most severe losses of nearly $30 per head came in the last-half of the year as drought drove feed prices upward and weakened hog prices. Pork producers who entered the drought in weak financial condition have had to rely on cash infusions from lenders. To their credit, lenders have generally supplied that capital and recognized that his downturn would be intense, but short.”

A Purdue University news release from yesterday indicated that, “The United States remains the world’s corn export king, although its empire is shrinking, says a Purdue University agricultural economist.

“Foreign nations that previously relied on the U.S. for corn are growing more of their own or buying from other producing countries, said Philip Abbott. He predicted the trend will continue even if market conditions improve and U.S. corn production increases.”

The release added that, “‘The U.S. has historically been a very important part of the international corn market,’ Abbott said. ‘Prior to the 2007-08 food crisis and spike in commodity prices, the U.S. exported well over half the amount of corn that entered international markets. Since then, the high prices have caused the rest of the world to expand their production and become more self-sufficient.

“‘Even if we get bigger corn crops in the future, it’s likely that the demand in foreign markets will not soon recover to the level that it once reached.’”

An article yesterday at DTN reported (link requires subscription) that, “Winter wheat condition declined again during the week ended Nov. 18, according to USDA’s weekly Crop Progress report.

“With corn and soybean harvest virtually complete nationwide, and cotton harvest 84% done and sorghum harvest 95% done, winter wheat is nearly all that remains on the weekly report.

“Emergence is reported at 84%, compared to 79% last week and a five-year average of 86%. Winter wheat condition was reported at 24% poor to very poor, compared to 22% last week.”

 

Budget Issues

Gerald F. Seib noted in a column in today’s Wall Street Journal that, “The problem the GOP faces is relatively simple: In the aftermath of the election, the leverage in this [budget] negotiation has shifted, slightly but perceptibly, toward the president.”

Meanwhile, an update yesterday at the Speaker’s webpage noted that, “But now that Republicans have put new revenue on the table, the question is: what spending cuts are the president and congressional Democrats willing to make?”

Naftali Bendavid and Janet Hook reported in today’s Wall Street Journal that, “With deficit talks kicking off in earnest, Democrats are divided on the magnitude of changes they would accept when it comes to overhauling Medicare and other safety-net programs.

“The party is split between those who would agree to major adjustments, including increasing premiums for wealthier beneficiaries and raising Medicare’s eligibility age, and those who rule out such moves altogether. In the middle is a group that would tolerate some cuts as long as they didn’t hit beneficiaries directly.”

More broadly, Jonathan Cheng reported in today’s Wall Street Journal that, “Hopes that lawmakers in Washington will reach an agreement on taxes and spending gave investors new confidence and drove stock indexes to their best day in two months…[P]resident Barack Obama said he was ‘confident’ an accord could be reached with lawmakers, and congressional leaders have said they are making progress.”

 

Trade

Emily Cadei reported yesterday at Roll Call Online that, “Legislation to normalize trade relations with Russia faces one more hurdle before it can become law. The bill, which the House passed overwhelmingly last week, still lacks a clear path in the Senate, due to a disagreement over accompanying human rights language.

“The legislation includes provisions, inspired by the death of attorney and anti-corruption activist Sergei Magnitsky at the hands of Russian jailers, to sanction human rights abusers, including those responsible for Magnitsky’s death. It would require the president to generate a list of human rights violators, whose assets would be frozen and U.S. visas revoked.”

The article explained that, “The House version (HR 6156), however, is limited only to Russia, while the Senate measure (S 3406) would apply the sanctions to human rights abusers anywhere in the world.

“Sen. Benjamin L. Cardin, D-Md., the author and lead champion of the original Magnitsky bill, has been adamant that the final legislation should be global in application. His support, and that of other co-sponsors of his Magnitsky bill, is key to Senate passage of the broader legislation.”

Lastly today, Mario Trujillo reported yesterday at The Hill Online that, “One of the few remaining Blue Dog democrats, Rep. Mike McIntyre [Ag. Comm. Member], is claiming a narrow victory in the 7th congressional district of North Carolina –— but still faces a possible recount.

“McIntyre held a 655-vote lead — 168,697 votes to 168,042 — over his Republican opponent, David Rouzer, after the final vote tally on Friday.”

Keith Good

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