FarmPolicy

April 23, 2014

Farm Bill; Budget; Ag Economy; CFTC; and, Trade

Farm Bill Issues

David Rogers reported yesterday at Politico that, “House and Senate farm bill leaders edged closer Thursday, joined in a last ditch effort —together with Agriculture Secy. Tom Vilsackto put in place a new five-year plan before the end of this Congress.

“Vilsack played host to the gathering of the top four Republicans and Democrats on the House and Senate Agriculture Committees [related photo]. And he told reporters later that ‘absolutely’ he remained optimistic that a bill can be completed before Dec. 31 and the focus must be on that goal, not a simple extension.

“‘What I was interested in doing today was basically get all four folks who are critical to this process in the room at the same time talking to each other and we’ve accomplished that,’ Vilsack said. ‘There is a commitment to work and try to get this resolved. The countryside needs a five year farm bill, rural America needs a five year farm bill.’”

Mr. Rogers noted that, “Much as Senate Agriculture Committee Chairwoman Debbie Stabenow (D-Mich.) insists that the four have never stopped talking, Vilsack clearly felt it was ‘progress’ to have them all in the same room. And as part of the effort to get a House-Senate deal, Kansas Sen. Pat Roberts, the ranking Republican on the Senate Ag Committee, appears to be showing more flexibility in shaping the commodity title to include some form of price supports important to Southern producers—something he has strongly opposed in the past.”

Yesterday’s article noted that, “Just as Roberts may be moving, Lucas himself signaled a little more independence in reply to a question asking if he felt free to be part of the renewed talks ‘without Boehner assigning’ him to do so. ‘As chairman of my committee I always have the option and the ability to work on good policy and legislation,’ Lucas said.

“For his part, Vilsack sidestepped any question about what authority the White House might have given him to negotiate on food stamp savings in the bill—a major demand from House Republicans and likely issue in the deficit reduction talks now between Boehner and President Barack Obama.”

And, Mr. Rogers quoted Sec. Vilsack as saying: “There is just a consistent drumbeat, they meaning the countryside wants a five year farm bill…There was a commitment on the part of all four of the folks in that room today to look at a five year farm bill. That’s what to focus on, a five year farm bill. It wasn’t on an extension.”

Chairwoman Stabenow tweeted yesterday that, “Just met with @USDA Secretary Vilsack. White House supports efforts to get the #FarmBill over the finish line.”

In a separate tweet, Chairwoman Stabenow indicated that, “Looking for deficit reduction? Senate-passed ‪#FarmBill cuts spending by $23 billion. Let’s get it done. ‪#fiscalcliff.”

Tom Steever reported yesterday at Brownfield that, “South Dakota Representative Kristi Noem hopes that a meeting between the U.S. Agriculture Secretary and the four principle congressional agriculture committee leaders will bear fruit by allowing the farm bill to proceed.

“‘I think some of the conversations are [about] how could we get the farm bill completed by the end of this year and if it could be a part of any type of a larger agreement to deal with the fiscal cliff,’ said the GOP House member, during a conference call with reporters Thursday. Noem said that she sees the possibility of the farm bill being a catalyst for averting the fiscal cliff.”

Meanwhile, Ron Hays, of the Oklahoma Farm Report and Radio Oklahoma Network, spoke yesterday with House Agriculture Committee Chairman Frank Lucas (R., Okla.) prior to his meeting with other Ag. Committee leaders and Sec. Vilsack.

An audio replay and summary of the Chairman’s remarks from yesterday can be found here, while an unofficial FarmPolicy.com transcript of the conversation with Ron Hays and Chairman Lucas is available here.

Mr. Hays noted that, “Lucas said it [the Farm Bill] would most likely be accomplished as part of an offset deal as President Obama tries to come to terms with the Speaker of the House, John Boehner, in designing a grand plan to avert the federal government from falling over the edge of the so-called ‘fiscal cliff.’”

Mr. Hays indicated that, “Lucas said his goal is to get the farm bill done as part of the House’s regular order of business before the end of the year, but with the days slipping away and with lawmakers’ focus intensifying on the ‘fiscal cliff,’ there may be other opportunities for the farm bill to be passed.

“‘Right now, with what many of the pundits refer to as the fiscal cliff, the increases in tax rates for everybody that’s coming on the last day of this year, with the dramatic spending cuts coming in sequestration-disproportionately that will affect the Department of Defense-literally there’s not enough political oxygen, it seems, left in this town for anybody to do anything but focus on that fiscal cliff issue. So, in all fairness, while the candle has not gone out completely, it’s flickering rather dimly.’

“Lucas says that he’s not sure that the administration is ready to deal with what would happen if the old farm bill expires at the end of the year, however, without a new one in place. One example is that the 1949 dairy law would have to be re-implemented, and the USDA, at this point, doesn’t seem to be prepared to comply.

“‘Something has to happen in dairy policy in the next month. We cannot go back to the ’49 law.’”

National Farmers Union President Roger Johnson noted in a statement from yesterday that, “Merely extending the current law may well be more difficult than passing a new five-year bill. A short-term extension would reveal a litany of problems that will not be easily fixed when a new farm bill eventually is signed into law.  The drought this past summer left producers unprotected because livestock and crop disaster programs had expired.  Extending current law could leave farmers and ranchers in drought-stricken regions without the tools needed to recover.”

A news release this week from the International Dairy Foods Association stated in part that, “A new nationwide survey released today found that 81 percent of Americans agree that individual farmers should have the freedom to decide how much milk they produce and not have a limit set by government policy.

“The survey, which was conducted online last month among 2,094 adults by Harris Interactive on behalf of the International Dairy Foods Association, also found that 74 percent of Americans believe milk prices should be based on what consumers are willing to pay. Only nine percent think milk prices should be set by government policy.”

And, Josh Verges reported earlier this week at the Argus Leader (S.D.) Online that, “The independent research arm of Congress will study the implementation of new school lunch standards, Rep. Kristi Noem announced today.

“The new rules, which schools must follow in order to get federal reimbursements for each meal, are intended to make the meals more healthful. But students have complained that limits on calories are leaving them hungry, and school officials think requirements for more fresh fruit and vegetables are causing more food to go uneaten.”

Meanwhile, Al Kamen reported yesterday at The Washington Post Online that, “But the latest chatter is that Tom Vilsack, rather than heading west, might be staying on [as Sec. of Ag.]….”

 

 

Budget Issues

Jonathan Weisman reported in today’s New York Times that, “Treasury Secretary Timothy F. Geithner presented the House speaker, John A. Boehner, a detailed proposal on Thursday to avert the year-end fiscal crisis with $1.6 trillion in tax increases over 10 years, $50 billion in immediate stimulus spending, home mortgage refinancing and a permanent end to Congressional control over statutory borrowing limits.

The proposal, loaded with Democratic priorities and short on detailed spending cuts, met strong Republican resistance. In exchange for locking in the $1.6 trillion in added revenues, President Obama embraced the goal of finding $400 billion in savings from Medicare and other social programs to be worked out next year, with no guarantees.

He did propose some upfront cuts in programs like farm price supports, but did not specify an amount or any details. And senior Republican aides familiar with the offer said those initial spending cuts might be outweighed by spending increases, including at least $50 billion in infrastructure spending, mortgage relief, an extension of unemployment insurance and a deferral of automatic cuts to physician reimbursements under Medicare.”

The article noted that, “‘The Democrats have yet to get serious about real spending cuts,’ Mr. Boehner said after the meeting. ‘No substantive progress has been made in the talks between the White House and the House over the last two weeks.’”

The Times explained that, “Beneath the outward shows of frustration and rancor, Democrats said a deal could still be reached before hundreds of billions of dollars in automatic tax increases and spending cuts go into effect, threatening the fragile economy. Senator Charles E. Schumer, Democrat of New York, pointed to conservative Republicans who have suggested that the House quickly pass Democratic legislation in the Senate extending the expiring tax cuts for income below $250,000.

“‘All you have to do is just listen to what’s happening out there and you realize there is progress,’ he said.

“But publicly, the leaders of neither side were giving an inch. And Republican aides said the details of the White House proposal pointed to a re-elected president who believes he can bully Congress.”

Lori Montgomery and Paul Kane reported in today’s Washington Post that, “Senate Minority Leader Mitch McConnell (R-Ky.) called the proposal a ‘step backward’ from compromise — with time running out for policymakers to agree on a plan to prevent more than $500 billion in tax increases and spending cuts that could rattle the economy.”

The Post article added that, “Although the White House offer seemed to startle Republicans, it contains little that would be unfamiliar to anyone following the president’s recent public statements. The exception was his proposal on the federal debt limit. GOP aides said Obama is seeking to permanently enact procedures that were temporarily adopted in the summer of 2011 that allow the White House to unilaterally increase the debt ceiling unless two-thirds of lawmakers disapprove.”

Janet Hook, Damian Paletta and Carol E. Lee reported in today’s Wall Street Journal that, “The talks, which have weeks to go, will likely result in many twists and turns, with the White House offer a potential starting point for negotiations. It already has signaled it isn’t wedded to raising the top income-tax rates all the way back to peak Clinton-era levels. Both sides have a good sense of what concessions they are willing to offer, but neither wants to go first for fear of losing leverage.”

And, Meredith Shiner and Daniel Newhauser reported yesterday at Roll Call Online that, “Republicans said they were uncertain how to move forward after receiving a proposal from White House emissaries that GOP aides likened to a rehashing of President Barack Obama’s budget proposal. And they appeared stunned that the White House would not only ask for another stimulus measure but also request an end to Congress’ role in raising the debt ceiling.

“The disconnect between the parties was obvious, with Speaker John A. Boehner, R-Ohio, saying ‘no substantive progress’ had been made and Senate Majority Leader Harry Reid, D-Nev., saying at one point, ‘I don’t understand his brain,’ referring to the speaker.”

Meanwhile, Matt Kelley reported yesterday at RadioIowa Online that, “Iowa Senator Tom Harkin says the so-called ‘fiscal cliff’ that’s the subject of such concern lately does not exist. Harkin, a Democrat, says there is a ‘slope,’ but no daunting financial precipice upon which our national economy is teetering.

He compares the doomsday predictions about our country’s looming fiscal issues to the Y-2-K scare of a dozen years ago, something that proved completely harmless. ‘The kind of fear I sense out there now that’s being touted about this fiscal cliff is not unlike what I heard back when the millennium changed,’ Harkin says.”

 

Agricultural Economy

Bloomberg writer Brian K. Sullivan reported yesterday that, “The worst level of drought in the contiguous 48 U.S. states reached its highest point in a year as the dryness that crippled crops, narrowed shipping channels and thinned livestock herds hangs on.

“At least 6.4 percent of the region is now in the grip of ‘exceptional’ drought, the most since the 8.1 percent recorded Nov. 22, 2011, according to the U.S. Drought Monitor.

“Some level of drought now covers 62.7 percent of the 48 states, double the extent of a year ago, according to the monitor in Lincoln, Nebraska.”

The article stated that, “The drought, just about to enter its second year, has caused major economic damage from shriveled crops to stranded freight barges on the Mississippi River system to livestock lost for lack of forage…‘It’s hard to put it in historical perspective because we’re just not over it yet,’ Mark Svoboda, of the National Drought Mitigation Center, said earlier this week.”

The AP reported yesterday that, “After months of drought, companies that ship grain and other goods down the Mississippi River are being haunted by a potential nightmare: If water levels fall too low, the nation’s main inland waterway could become impassable to barges just as the harvest heads to market…The mighty Mississippi is approaching the point where it may become too shallow for barges that carry food, fuel and other commodities. If the river is closed for a lengthy period, experts say, economic losses could climb into the billions of dollars.”

The AP article added that, “Lawmakers from Mississippi River states are frustrated with the corps’ action and even requested a presidential emergency declaration to overturn it. So far, the White House has not responded.

“On Thursday, Army Assistant Secretary Jo-Ellen Darcy told Sen. Dick Durbin of Illinois and some of his colleagues from Iowa and Minnesota that the corps would consider cutting the amount of water held back from the Mississippi.

“Darcy also pledged to expedite removal of rock formations south of St. Louis, though that work would take at least two months after a contractor is hired.”

Also yesterday, Zack Colman and Ramsey Cox reported at The Hill’s Floor Action Blog that, “The Senate passed an amendment to the defense bill Thursday that would strike the prohibition on biofuel refinery construction.

“The amendment allows the Department of Defense to invest in refineries for ‘advanced’ biofuels through a joint Agriculture, Energy and Navy Departments agreement.”

 

CFTC (Commodity Futures Trading Commission) Issue

Peter Schroeder reported yesterday at The Hill’s On the Money Blog that, “A pair of House Democrats is pushing to combine two of the nation’s top financial regulators into a single entity.

“Reps. Barney Frank and Michael Capuano, both of Massachusetts, introduced a bill Thursday that would merge the Commodity Futures Trading Commission (CFTC) and Securities and Exchange Commission. Frank, retiring at the end of 2012, is the top Democrat on the House Financial Services Committee.

“Frank called the existence of the two separate regulators, which both are tapped with monitoring financial markets, ‘the single largest structural defect in our regulatory system.’ The outspoken lawmaker has long advocated combining the two regulators, but acknowledged that there are longstanding ‘cultural, economic and political factors’ keeping both agencies intact.”

 

Trade

Yesterday, USDA released its Outlook for U.S. Agricultural Trade report, which stated that, “Fiscal 2013 agricultural exports are forecast at a record $145 billion, up $1.5 billion from the August forecast and $9.2 billion above fiscal 2012 exports. Grain and feed exports are forecast down $1.9 billion mostly due to lower corn exports. Oilseed exports are up $3.3 billion on much higher volumes and record prices…U.S. imports are projected at a record $115 billion in fiscal 2013, up 11 percent from 2012’s imports of $103.4 billion, but down $2 billion from the August forecast for 2013.”

The report noted that, “The forecast trade balance for fiscal 2013 shows a surplus of $30 billion, down $2.4 billion from 2012.”

A news release yesterday from USDA indicated that, “The U.S. Department of Agriculture (USDA) today announced that Under Secretary for Farm and Foreign Agricultural Services Michael Scuse will lead a mission to promote U.S. agricultural exports to Russia, Dec. 3-7. Representatives from the states of Idaho, Missouri, North Dakota, Oklahoma and Kansas, as well as 23 American companies will attend. Two-way agricultural trade between the United States and Russia was valued at roughly $1.5 billion in fiscal year 2012, with American farm exports accounting for 97 percent of the total—a significant contribution to the U.S. agricultural trade surplus.”

And a news update yesterday from Sen. Charles Grassley (R., Iowa) stated in part that, “[Sen. Grassley] today urged the U.S. Department of Agriculture to focus on lowering Russian barriers to U.S. agricultural products including beef, pork and poultry during a trip to Russia next week.”

Keith Good

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