FarmPolicy

September 24, 2014

Farm Bill; Ag Economy; Renewable Energy; Budget

Farm Bill, Policy Issues

David Rogers reported yesterday at Politico that, “The four top House and Senate players on the farm bill are scheduled to meet Thursday with Agriculture Secy. Tom Vilsack, a luncheon which has taken on added importance given the growing pressure for some resolution before the end of next month.

“Consumers are threatened by a potential doubling in milk prices January 1, absent some action by Congress. And Vilsack and the Agriculture Committees must soon decide if they have any real shot of wrapping a five-year farm bill into whatever deficit reduction package emerges from talks now between the White House and Congress.

“Kansas Sen. Pat Roberts, the ranking Republican on the Senate panel, told POLITICO Tuesday that he felt encouraged by the administration to pursue this strategy. And Sen. Debbie Stabenow (D-Mich.), the committee’s chairwoman, has signaled that this is very much the direction she is taking as well.”

Mr. Rogers added that, “Lucas’s staff downplayed the Thursday session. ‘This is not a new development,’ said Tamara Hinton, communications director. ‘It’s lunch with the secretary that’s been scheduled for weeks.’

“But [House Ag. Comm. Ranking Member Collin Peterson (D., Minn.)], who met himself with the secretary after the election, was more bullish. And it is possible that that what began as a Vilsack-Lucas lunch has been expanded to include all of the players, who haven’t been all together in one such meeting for months, Peterson said.”

Yesterday’s Politico article explained that, “The chairman said any House-Senate farm bill deal will come down to two big issues: first, the level of savings required from nutrition programs and second, will the Senate agree to restore some price support option to the commodity title. ‘Those are the two tough ones,’ Lucas told POLITICO, and whatever happens Thursday, the chairman signaled that the real answer depends on talks between Boehner and President Barack Obama.

“‘I believe the big decisions on a variety of things will be made by the president and the speaker,’ Lucas said. ‘Once the big decisions are made, all the other things fall into place. I consider the farm bill to be a big matter but in the eyes of many in this place, it is a $23 billion or $35 billion piggybank that fits into everything else.’

Asked about the chairman’s read of the speaker’s role in the farm bill framework, Boehner—who once served on the House Agriculture Committee—left himself plenty of room but didn’t reject it outright. ‘You never know,’ Boehner told POLITICO.”

As the potential for a “dairy cliff” approaches, Gregory B. Hladky reported earlier this week at The Hartford Advocate (Conn.) Online that, “Without some sort of action on that legislation, milk prices could rocket to unheard of heights. ‘The price of a gallon of milk starting in January could potentially go as high as $7 if we don’t restore and reauthorize the system of price supports that we have in our dairy industry,’ U.S. Rep. Joe Courtney, D-2, warned during a speech on the House floor earlier this month.

“‘I can’t imagine that happening,’ Wayne Kasacek says of the possibility that Congress will continue to do nothing about the farm bill. ‘It would be catastrophic.’

“Kasacek is assistant director of the state Agriculture Department unit assigned to regulate and inspect Connecticut’s billion-dollar-plus dairy industry. He believes the least Congress will do is to approve a temporary fix so Connecticut dairy farmers could keep hobbling along under the existing dysfunctional system.”

Meanwhile, Bob Stallman, president, of the American Farm Bureau Federation, indicated yesterday at The Hill’s Congress Blog that, “From my perspective, passage of a five-year comprehensive bill would be much easier than only attempting an extension of current law. An extension bill only raises more questions than it answers. Like, will farmers and their lenders continue to have the same assurances for the coming year as they have had the last five years or do they need to plan for changes? Will those changes look like what Congress and farmers have been working on for the last several years or just reductions in what has been in place? For our nation’s dairy farmers, will they have to continue without the Milk Income Loss Contract program, as they are now? What about all of the livestock farmers that were devastated by the drought and have not been eligible for any disaster assistance?”

In other news, Tim Vandenack reported yesterday at The Elkhart Truth (Ind.) Online that, “It’s time to reform the farm bill, take the food stamps program out of it, U.S. Rep. Marlin Stutzman thinks.

“‘The farm bill is no longer a farm bill. It’s really a food bill and it’s more about food stamps,’ he said Tuesday, addressing a gathering of farmers and farm leaders here.”

The article noted that, “‘It’s now so out of balance that I feel like we need to separate it, we need to get it under control, we need to reform it,’ Stutzman said, speaking long distance from Washington, D.C. via a video feed to the group at the Matterhorn Conference Center.”

Reuters writer Charles Abbott reported yesterday that, “The U.S. government has ordered crop insurers to charge lower premiums to soybean growers for the second year in a row as part of rate revisions for six major crops, even as many farmers collect on claims following this year’s severe drought.

“The changes are part of an Agriculture Department project to improve the actuarial soundness of the crop insurance program, which is federally subsidized but privately run.”

Mr. Abbott noted that, “Lenders often require insurance or other collateral to be pledged by farmers to assure repayment of farm operating loans. USDA pays 62 cents of each $1 in premiums, which totaled $11 billion this year.

“USDA’s Risk Management Agency on Wednesday said that the revised rates are not expected to affect planting decisions among various crops in 2013.”

Yesterday’s article added that, “RMA administrator Bill Murphy said the revisions, which are based on decades of actuarial data, are intended to assure rates are appropriate and fair.

Among other things, the revisions put more weight on the experience of recent growing seasons and refine premiums to reflect conditions within specific weather districts, rather than state-wide or regionally.”

And Dan Wheat reported earlier this week at The Capital Press Online that, “United Egg Producers may want to continue its campaign for federal egg-laying hen standards next year, but the Humane Society of the United States is not saying what it will do.

“‘We’ll make a judgment when the Congress adjourns for this year,’ HSUS president Wayne Pacelle said.

“After years of battling each other, HSUS and United Egg Producers, an industry group, reached an agreement in 2011 that ended HSUS initiative efforts in Washington and Oregon to mandate cage-free facilities. Both sides have been working for passage of companion House and Senate bills that would require egg producers throughout the country to switch to larger cages for egg-laying hens over 15 to 18 years at a cost UEP has estimated at $4 billion. The bills would supersede state laws regulating egg production.”

The article pointed out that, “The House bill, HR3798, was introduced last January by Rep. Kurt Schrader, D-Ore., at the urging of Northwest egg producers. The Senate bill was introduced in May by Sen. Dianne Feinstein, D-Calif.”

 

Agricultural Economy

Yesterday, the Federal Reserve Board released its Summary of Commentary on Current Economic Conditions.  Commonly referred to as the “Beige Book,” the report included observations with respect to the U.S. agricultural economy which have been briefly summarized here, at FarmPolicy.com Online.

Note that a few of the Districts focused particular attention on high feed costs for livestock producers.

Jonathan Knutson reported earlier this week at the Grand Forks Herald Online that, “In a normal year, Philip, S.D., cattle producer Bill Slovek makes several thousand big bales of hay. This summer, he didn’t even hook up his haying equipment. Drought, a late-spring freeze and a summer hailstorm combined to ruin his hay crop. His pastures also were devastated by bad weather, and he’s had to rent pasture in Watertown, S.D., 290 miles away.

The cost of buying hay and renting pasture mounts quickly, says 57-year-old Slovek, who’s been ranching all his life.

“‘This cattle deal is kind of scary right now,’ he says. ‘If we don’t get rain this spring, things could really get bad.’”

And, Reuters writer Christine Stebbins reported this week that, “Soaring farm operating costs, not record high land values feared by economists of possibly causing a repeat of the 1980s farm crisis, pose the greatest risk to U.S. farmers, the head of the country’s largest farm management company said on Tuesday.

“CEO of Farmers National Company, Jim Farrell, told Reuters steep increases in cost of fertilizer, seed, fuel and machinery are the main concerns for farmers.”

With respect to land prices, the Reuters article noted that, “Farmland fetched as much as $15,000 to $16,000 an acre in the Plains this fall, despite the worst drought to hit the United States, the world’s top food exporter, in more than 50 years. In Iowa, the biggest crop state, an 80-acre parcel of crop land in northwestern portion of the state sold for a record $21,900 an acre in October.”

Farm broadcaster Mike Hergert, of the Red River Farm Network, tweeted yesterday that, “158-acre farm tract sold for $13,000 per acre in Brown County, South Dakota.”

In separate news, Bloomberg writers Alan Bjerga & Jeff Plungis reported yesterday that, “Shippers and lawmakers are pressuring President Barack Obama to declare a federal emergency along the Mississippi River, citing potential ‘catastrophic consequences’ in the Midwest if barge traffic is curtailed by low water on the nation’s busiest waterway.

“Lawmakers, including Senator Tom Harkin of Iowa, and the National Association of Manufacturers, the U.S. Chamber of Commerce and the American Petroleum Institute urged Obama to tell the U.S. Army Corps of Engineers to hasten the planned removal of submerged rocks near Cairo, Illinois, that may impede barge traffic at low water levels. The Corps also should stop its seasonal restriction on the flow of Missouri River water into the Mississippi, which it began last week, the groups said.”

The Bloomberg article noted that, “White House spokesman Jay Carney said yesterday the administration has sought drought relief for farmers and referred questions about the emergency declaration request to the Corps of Engineers.”

A news release yesterday from the American Farm Bureau Federation [AFBF] noted that, “The [AFBF] has urged President Barack Obama to issue a presidential declaration of emergency for the Mississippi River. In a letter this week to the president and top administration officials, AFBF, and nearly 20 other national organizations, said there could be an economic catastrophe in America’s heartland as soon as mid-December if the administration does not take emergency action to ensure that water levels do not fall below the level needed to support commercial navigation.”

In today’s Wall Street Journal, Ron Winslow reported that, “Scientists analyzing the complex genome of bread wheat say they have identified characteristics that could help them make the crucial food crop more productive, nutritious and resistant to drought.

“The research, published in the journal Nature, used a new strategy that compared wheat genome sequences to known grass genes, including rice and barley.”

 

Renewable Energy Issues

Zack Colman and Ramsey Cox reported yesterday at The Hill’s Floor Action Blog that, “The Senate approved an amendment to the defense authorization bill Wednesday that would restore the military’s ability to invest in biofuels.

“Sen. Mark Udall’s (D-Colo.) amendment, 2985, strikes Section 313 of the National Defense Authorization Act, S. 3254, which bars the military from purchasing biofuels that cost more than petroleum and from spending money to scale up biofuel refineries.”

Meanwhile, DTN writer George Orwel reported yesterday (link requires subscription) that, “Pro-biofuels groups blasted a report by the food industry that blames ethanol for rising food prices, with the Renewable Fuels Association saying a campaign being rolled out Wednesday against the nation’s Renewable Fuel Standard was based on ‘scare tactics and half-truths.’

“A report released Wednesday by the National Council of Chain Restaurants and a Wall Street Journal guest opinion article by Rob Green suggest the RFS is responsible for rising food prices.”

The DTN article added that, “RFA President Bob Dinneen accused the food industry of ‘playing fast and loose’ with facts about the impact of RFS on food prices.”

And, a news release yesterday from Rep. Earl Blumenauer (D., Ore.) stated in part that, “Members of the Congressional Progressive Caucus (CPC) Energy & Environment Task Force announced today that the CPC is endorsing The American Renewable Energy Production Tax Credit Extension Act of 2011( H.R. 3307).

“This bipartisan bill, cosponsored by CPC member [Rep. Blumenauer], would extend the Production Tax Credit (PTC) for renewable energy through 2016. PTC provides incentives to invest in wind, geothermal, hydropower and other energy projects. The current law is set to expire on January 1, 2013, and without the extension renewable energy projects could soon be at a standstill. Thousands of jobs are already threatened by the looming deadline.”

A statement yesterday from Rep. Steve King (R., Iowa) indicated that, “‘I was pleased to join Senator Grassley , Senator Udall, and Congressman McNerney today to highlight the importance of the wind PTC, because Congress and the taxpayers have made an investment in wind,’ said King. ‘Now is the time to offer predictability to this vibrant industry. Government has to be engaged in wind energy to provide the market access that all other renewable fuels received when first entering the marketplace. Until wind gets market access, there is no competition for cost. Government must provide the incentive for people to risk capital until the wind industry can provide it on its own.’”

 

Budget

Damian Paletta and Carol E. Lee reported in today’s Wall Street Journal that, “President Barack Obama signaled he wouldn’t insist tax rates on upper-income Americans rise to Clinton-era peaks as part of a deficit-reduction deal, showing new flexibility as he tries to accelerate talks with congressional Republicans.

“The new clarity of the White House position marks a potentially important moment in Washington’s effort to figure out how to handle tax rates that are due to snap higher next year, one of the thorniest elements of the so-called fiscal cliff.”

Russell Berman, Bernie Becker and Erik Wasson reported yesterday at The Hill Online that, “Republicans complained that for all of the president’s talk about coming up with a ‘balanced’ budget plan that includes new tax revenue, spending cuts and entitlement reforms, he has made little effort to identify specific proposals beyond increasing taxes on the wealthy.”

“Boehner and other House Republican leaders will meet on Thursday with Treasury Secretary Tim Geithner and the White House’s chief congressional liaison, Rob Nabors, to discuss the fiscal cliff. But Boehner spokesman Michael Steel made clear that the Speaker expected specifics from the two men,” the article said.

Rosalind S. Helderman reported yesterday at the 2Chambers Blog (Washington Post) that, “Erskine Bowles, the former Democratic White House chief of staff who has returned to Washington this week to act as something of an informal envoy between Republicans and the White House in negotiations over a deficit reduction deal, said Wednesday that he believes there is only a one-in-three chance of an agreement before the nation goes over the so-called ‘fiscal cliff’ at the end of December.”

Lastly today, Joshua Miller reported yesterday at Roll Call Online that, “After a recount in North Carolina’s 7th District that left Republican candidate David Rouzer trailing by hundreds of votes, he has conceded to Democratic Rep. Mike McIntyre.”

The article noted that, “McIntyre, a conservative Democrat who ran an expert campaign in a Republican district, will begin his 9th term in January.

“The decennial redistricting process in the Tar Heel State drew McIntyre’s home out of his district and made the 7th significantly more Republican. But despite the uphill climb he faced, McIntyre managed to squeak out a close victory.”

Keith Good

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