FarmPolicy

October 24, 2014

Farm Bill; Budget; Ag Economy; and, Biofuels

Farm Bill

Julie Harker reported yesterday at Brownfield that, “US Ag Secretary Tom Vilsack, who met recently with leaders of the House and Senate Ag Committees says they are on board to get a five-year farm bill through Congress.

“Vilsack tells Brownfield Ag News he’s still hopeful it can get done in 2012, ‘I realize the fiscal cliff discussions are tough but I wanted to ensure that the leaders of the House and Senate ag committees were in a position that when and if an agreement was reached on the fiscal cliff that a Farm Bill could be easily attached to that agreement and passed before the end of the year.’

“Vilsack says they don’t support a short term extension of the current farm bill because it’s too risky – adding there’s no certainty where the money will come from and new members of Congress unfamiliar with farm legislation are coming on board next year.”

The update added that, “In his meeting with Ag Committee leaders Stabenow, Lucas, Peterson and Roberts – Vilsack says Senator Roberts showed willingness to be flexible on the commodity title and the ag secretary says he believes the other differences in the Senate and House farm bills CAN be worked out and they’re going to be ready.”

(To listen to the Brownfield interview with Sec. Vilsack, just click here).

The AP reminded readers yesterday that, “Cutting farm subsidies and food stamps also is being eyed as an alternative to the automatic, across-the-board spending cuts in January. Members of the House and Senate Agriculture committees are struggling to reach a deal on comprehensive farm bill before the end of the year. Even if they do, the potential 10-year saving are not that great: between $23 billion and $35 billion, including $4 billion to $16 billion in food stamp cuts.”

Meanwhile, Dan Freedman reported yesterday at the San Antonio Express-News Online that, “Texas rice farmers are approaching a fiscal cliff of their own as the lame-duck Congress ponders passage of a new farm bill or the extension of the old one.”

The article noted that, “But instead of the usual quadrennial exercise of interest primarily to rural America, the farm bill this year is trapped in no man’s land as the budget-and-tax war rages on Capitol Hill.

“The conflict is producing fissures among conservative Republicans, with tea party advocates and others arguing that the farm bill ‘violates conservative (and) free market principles,’ as a letter last month from prominent conservatives — including tax-pledge architect Grover Norquist — put it.”

However, Mr. Freedman pointed out that, “‘One of the ongoing discussions I’ve had with tea party folks is you can’t get everything you want all at once,’ said Rep. Blake Farenthold, R-Corpus Christi, whose district includes a wide swath of the Texas rice belt. ‘But as long as you’re moving in the right direction, that’s a win. The farm bill moves to decrease government’s role in agriculture while not putting family farms in jeopardy.’”

Yesterday’s article also indicated that, “‘No one is realistically saying ignore the farm bill and let the chips fall where they may,’ said Rep. Michael Conaway, R-Midland, who is chairman of the House Agriculture subcommittee that oversees commodities. ‘My sense is we’ve got leverage because we save $35 billion, which is no small chunk of change. It’s good for us to be in a position of reduction in spending when that’s the name of the game.’”

On the issue of food stamps, the Express-News article stated that, “The House’s Republican leaders kept the House version off the floor because they lacked the votes to pass it. Among the major hangups: SNAP — the Supplemental Nutrition Assistance Program, better known as food stamps.

“The Senate proposed cutting it by $4.5 billion, compared with the House’s $16.5 billion cut. Hard-line House conservatives considered $16.5 billion too low.”

Note that the Sacramento Bee editorial board opined yesterday that, “Outgoing Rep. Joe Baca, D-San Bernardino, who serves on the House Agriculture Committee, should make the farm bill his swan song before he leaves office. From a district hit hard by unemployment, he knows the value of food stamps in keeping families out of poverty. He’s been a fighter against draconian cuts to the food stamp program, calling proposed House Republican cuts of $16 billion ‘unacceptable.’

Baca’s aim should be to get food stamp cuts in line with Senate levels of $4 billion.”

The Bee column added that, “Rep. John Garamendi, D-Walnut Grove, who will serve on the House Agriculture Committee when the new session begins in January, has called this one right.

“‘Do it for five years and go home,’ he told The Bee’s editorial board. ‘Why fight it more times than you need to?’ Why, indeed? The 28-day count to year’s end begins.”

Stephen Koff reported earlier this week at the Cleveland Plain Dealer Online that, “Food stamps are considered an entitlement, which means that anyone who qualifies can get them. The only way for Congress to cut them is to restrict the eligibility rules or the formulas for determining benefits.”

The article added that, “‘Let’s put in place policies that are actually conducive to economic growth, and you don’t need 47 million Americans depending on someone else for their food,’ [Rep. Jim Jordan (R., Ohio)] said. ‘When you just step back and look at it from a cultural, societal standpoint, when one in seven Americans is dependent on someone else providing their food for them, that is just not healthy for our culture.’”

The Plain Dealer item pointed out that, “But House members including Warrensville Heights Democratic Rep. Marcia Fudge say they believe SNAP could become an irresistible target in those [fiscal cliff budget] talks.

“‘I think people are at a point now where they want to try to find every dollar and dime however they can find it without worrying about the consequences,’ Fudge said.”

On a separate nutrition related issue, a news release yesterday from Sen. Kirsten Gillibrand (D., N.Y.) stated that, “After U.S. Senators Charles E. Schumer [N.Y.] and [Sen. Gillibrand] urged U.S. Department of Agriculture (USDA) Secretary Tom Vilsack to provide free school meals to New York City children as the city recovers from Hurricane Sandy, the Senators announced today that the USDA agreed to supply food relief for all school children citywide through the end of this year.”

 

Budget Issues

Janet Hook, Carol E. Lee and Damian Paletta reported in today’s Wall Street Journal that, “House Republicans on Monday made a fresh deficit-reduction proposal to the White House that calls for $800 billion in increased tax revenue, half of what President Barack Obama has proposed.

The GOP offer was immediately rejected by the White House, but it provides the most detailed statement to date of what Republicans are willing to concede for now. It comes days after the White House put forward its opening bid in the high-stakes deficit talks. With both sides now having made preliminary offers, the parameters for future negotiations between Republicans and the White House are becoming clearer.

“Monday’s proposal would make $600 billion in cuts in Medicare and other health programs over 10 years, compared with the $350 billion the president proposed. It would also slow the growth of Social Security benefits, a move most Democrats oppose. The tax-revenue figure is one Republicans say could be achieved without increasing income-tax rates, one of their core objectives.”

The Journal article noted that, “In their counteroffer, Republicans did not accept Mr. Obama’s bottom-line demand that income-tax rates increase for the top two income brackets. GOP aides describing the plan said they believed the proposed $800 billion revenue target could be met without raising rates, but by closing loopholes and deductions in a broad rewrite of the tax code.”

“The proposal did not say how the plan would fit into the two-step legislative process that leaders of both parties have tentatively embraced. That would include a small deficit-reduction package crafted and passed by year’s end, setting the stage for a broader effort next year to revamp the tax code and curb Medicare and other entitlement spending,” today’s article said.

Chris Frates reported yesterday at National Journal Online that, “In addition to the $800 billion in revenue, Boehner’s counteroffer calls for $1.4 trillion in savings, including $600 billion in changes to health programs like Medicare and Medicaid; $300 billion in cuts to mandatory programs; $200 billion in revisions to the way the consumer price index is used by the federal government to set salaries and benefits; and $300 billion in further discretionary spending cuts. And, if measured by the same standards as Obama’s plan, Boehner’s counter would provide $4.6 trillion in deficit reduction, more than the $4 trillion offered by Obama, Republican aides say.”

An update yesterday at The Fiscal Times noted that the $300 billion from mandatory spending in the GOP counteroffer includes programs such as farm subsidies.

Byron Tau reported yesterday at Politico that, “The White House rejected the House Republican counter offer on solving the fiscal cliff — leaving both sides in stalemate over tax rates.

“‘The Republican letter released today does not meet the test of balance. In fact, it actually promises to lower rates for the wealthy and sticks the middle class with the bill,’ White House communications director Dan Pfeiffer.”

 

Agricultural Economy

Mathew Shane and Mitch Morehart noted in a recent Amber Waves article (USDA, Economic Research Service) “Economic and Financial Conditions Bode Well for U.S. Agriculture,” that, “U.S. agriculture entered the most recent recession better positioned than most U.S. industries, was less affected by the recession than most other U.S. industries, and is likely to continue to do well in the years ahead.

“The farm sector was bolstered by several years of strong income growth, rising farmland values, and low dependence on debt, so both farmers and farm lenders were in a relatively strong financial position.”

University of Illinois Agricultural Economist Darrel Good penned a brief, more narrowly focused update yesterday looking at key variables impacting the U.S. corn market.  The article, which was posted at the farmdoc daily Blog, can be found here, “Continued Support for Corn Prices.”

Owen Fletcher reported yesterday at The Wall Street Journal Online that, “U.S. soybean futures rose 1% Monday, as heavy rains delayed the planting of a new soy crop in parts of Argentina.

“The delays are sparking concerns among traders that Argentina, the world’s third-largest soybean producer, after the U.S. and Brazil, may not produce as large a crop as once expected. Global soybean supplies are tight after droughts in the U.S. and South America earlier this year cut production in both regions, making a large new crop in South America particularly important for replenishing world stockpiles, analysts say.”

Andy Vance reported recently at Feedstuffs Online that, “Almost any way you slice it, the U.S. wheat crop is in sad shape. In fact, the U.S. Department of Agriculture pegged the crop as the poorest at this stage in development since the agency started tracking crop condition ratings 25 years ago…[R]atings were the worst in the hard red winter wheat-producing states, with Kansas, Texas, Nebraska, Colorado and South Dakota all recording week-over-week declines in condition ratings. A quarter of the Kansas crop is in poor or very poor condition; even so, the crop there is faring much better than in Texas or Nebraska, which scored 40% and 46%, respectively, in the poor to very poor ratings.”

In other developments, Bloomberg writer Alan Bjerga reported yesterday that, “The usual dry season, combined with the worst drought in 50 years, may push water levels so low in coming weeks it will halt traffic in a section south of St. Louis, near the [Mississippi] river’s midpoint. Shippers want President Barack Obama to declare a state of emergency…[A]t risk are more than 20,000 jobs — from dockworkers to truckers and coal miners — and $130 million in wages and benefits if the river is closed for two months, the group estimates. More than $2.3 billion of agricultural products, $1.8 billion in chemicals and $1.3 billion worth of petroleum products normally ship in December and January, the group said.”

The article noted that, “The Army Corps of Engineers is dredging downstream from the Growmark Bussen Terminal, hauling up silt to keep the channels as open as possible. Lawmakers and shippers have appealed to the agency to go further, to blast the massive limestone rock formations, known as pinnacles, that stud the riverbed near the Illinois towns of Thebes and Grand Tower and obstruct vessels at low water. They also want the limit on water released from the Missouri River to be raised to permit more to reach the Mississippi.”

Mr. Bjerga explained that, “White House spokesman Jay Carney said last week that President Barack Obama is exploring ‘all possible options’ to maintain traffic. Lawmakers including U.S. Senators Tom Harkin of Iowa and Richard Durbin of Illinois, both Democrats, have called for the administration to take action.

“Officials from states along the Missouri River wrote their own letter to Obama last week, arguing the Army Corps has no authority to increase that river’s flow to help the Mississippi.”

 

Biofuels

Bloomberg writers Brian Swint and Mark Drajem reported last week that, “An ethanol-blended gasoline approved for use in U.S. vehicles manufactured since model year 2001 may confuse consumers and lead to damaged car engines, the American Automobile Association said.”

Meanwhile, Darius Dixon reported yesterday at Politico that, “AAA and the renewable fuels industry are locking horns over ethanol.

“The clash came Friday, when the motorist advocacy group called on the Environmental Protection Agency and gas stations to stop the sale of the E15 ethanol gasoline blend until a better labeling system can be devised to protect drivers and their vehicles.”

The article noted that, “That prompted biofuels groups to return fire.

“‘If AAA weren’t so deep in the Big Oil politics, they would stop manufacturing concern about the efficacy of ethanol blend use and report enthusiastically about ethanol’s consumer gasoline price savings,’ Renewable Fuels Association President Bob Dinneen said in a statement Friday. He spoke out after AAA CEO Robert Darbelnet said the fuel blend could damage cars of unsuspecting motorists.”

Sen. James M. Inhofe (D., Okla.) noted in a column posted this week at Roll Call Online that, “While I fully support the development and use of all alternative fuels, the priority for our defense spending must be maintaining readiness.

Navy Secretary Ray Mabus’ primary focus must be on the readiness of our Navy — not taking funds needed for operations and maintenance or defense modernization to prop up the unproven biofuel industry.”

And lastly today, Alexandra Jaffe reported yesterday at The Hill Online that, “Rep. Jo Ann Emerson (R-Mo.) will retire from the House in February of next year, cutting her tenure short to become president and CEO of the National Rural Electric Cooperative Association and setting off a Republican frenzy for her seat.”

Keith Good

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