FarmPolicy

November 26, 2014

Farm Bill; Budget; Ag Economy; and, Trade

Farm Bill

Ron Nixon reported in today’s New York Times that, “As President Obama and Republican leaders try to avoid automatic spending cuts and tax increases beginning in the new year, several lawmakers say a stalled farm bill that reshapes nutrition and agriculture programs could contribute billions of dollars in savings.

“Senator Debbie Stabenow, Democrat of Michigan and chairwoman of the Senate Agriculture Committee, and Representative Frank D. Lucas, Republican of Oklahoma and chairman of the House Agriculture Committee, are trying to persuade administration and Congressional leaders to include the measure in negotiations that are seeking to avoid more than $500 billion in tax increases and more than $100 billion in automatic spending cuts that would go into effect next year.”

The article noted that, “‘The Farm Bill is the only bipartisan deficit reduction bill that passed the Senate this year. It’s only natural it should be part of a larger deficit reduction agreement,’ said Ms. Stabenow, who along with other leaders of the House and Senate agriculture committees, met last week with Agriculture Secretary Tom Vilsack to discuss including a new five-year bill in any deal between the White House and Congress.”

Mr. Nixon explained that, “Mr. Lucas said the bill’s only real chance for passage is if lawmakers decide to use its savings as part of the debt negotiations.

“‘The House Ag Committee has demonstrated $35 billion in real cash savings — it’s got to make us important to somebody in this process,’ he said last week after the meeting with the agriculture secretary.

“Representative Eric Cantor, the House majority leader, said last month that the Republican leadership would deal with the farm bill in some form before the end of the year [video, transcript here].

“Mr. Cantor did not say if that meant an extension of the 2008 bill or whether the latest bill might be rolled into any fiscal deal. He did say that the bill that passed in the Agriculture Committee did not have enough votes to pass in the House.”

The AP reported yesterday that, “The Democratic chairwoman of the Senate Agriculture Committee says she is willing to consider higher cuts to the food stamp program in an effort to include a massive five-year farm bill in negotiations on the so-called fiscal cliff.

“Sen. Debbie Stabenow, D-Mich., said that cuts to the food stamp program beyond the $4 billion over 10 years included in a Senate-passed farm bill ‘are something I am willing to talk about.’ A farm bill passed by the House Agriculture Committee would include $16 billion in cuts over the same amount of time.

“Both amounts are relatively small in relation to the program’s total estimated cost — almost $800 billion over the next decade — but Stabenow’s willingness to move on an issue long sacred to Democrats shows progress in negotiations as farm-state leaders scramble to get the bill done before the end of the year. Stabenow and House Agriculture Chairman Frank Lucas, R-Okla., met this week in hopes of reconciling their two versions of the bill.”

Yesterday’s article noted that, “While willing to compromise, Stabenow said there is ‘no way’ she will agree to the level of food stamp cuts in the House bill. Unlike the Senate bill, the proposed House cuts would target practices by many states of waiving food stamp asset and income limits for people receiving other welfare benefits. More than 47 million people now receive food stamps, and money to pay for that program makes up 80 percent of the farm bill’s cost.”

“A deal on the fiscal cliff is far from set, however, and the farm leaders must wait for the White House and Republicans in Congress to agree on larger details before they know if farm policy will be involved. The agriculture committees must also resolve significant differences in how farm subsidies would be cut,” the article said.

House Majority Leader Eric Cantor (R., Va.) and Democratic Whip Steny Hoyer (Md.) briefly discussed the Farm Bill on the House Floor yesterday (related video here); Rep. Cantor generally noted that the Farm Bill is “something we are focused on and know we have to deal with the issue prior to the end of the year.”

A news release yesterday from the American Soybean Association (ASA) stated that, “[ASA] President Steve Wellman and Vice President Richard Wilkins joined fellow farmer-leaders from the American Farm Bureau Federation, National Milk Producers Federation, National Corn Growers Association and the National Association of Wheat Growers in a meeting today with House Minority Whip Steny Hoyer (D-Md.) to reiterate the critical importance of finishing a new, five-year farm bill before the 112th Congress adjourns.”

A news release yesterday from Rep. Hoyer noted that, “I’m disappointed that House Republicans have not passed a bill to provide certainty to the farming community and American consumers. Not only have they refused to bring their own Farm Bill to the Floor, but they will not take up the Senate’s bill, which reauthorizes the Farm Bill for five years and passed the Senate in June with a strong bipartisan vote. I will continue to urge my colleagues to work together to pass this bipartisan bill, and thank these organizations for their input today.”

Ramsey Cox reported yesterday at The Hill’s Floor Action Blog that, “Sen. Amy Klobuchar (D-Minn.) called on the House to pass a farm bill before the end of the year.

“‘I’m here to speak on the need for action on five-year farm bill,’ Klobuchar said on the floor Wednesday. ‘We wait, and we wait, and we wait for the House to act.’”

A video replay of Sen. Klobuchar’s remarks from yesterday can be found here, at FarmPolicy.com Online.

A news release this week from Sen. Mark Udall (D., Colo.) indicated that, “[Sen. Udall] called on the U.S. House of Representatives today to pass the 2012 Farm Bill, which passed the U.S. Senate with broad bipartisan support, as a show of its seriousness about deficit reduction and common-sense reforms to government spending.

“‘Passing the 2012 Farm Bill should be a no-brainer, especially with congressional leadership working to strike a deficit compromise,’ Udall said.”

A report earlier this week at WIUM 91.3 (Macomb, Il.) Online noted that Rep. Aaron Schock (R., Il.) “expects an agreement on the long delayed farm-bill will come out of the fiscal cliff talks.”

A tweet yesterday from the Texas Farm Bureau noted that Rep. Mike Conaway (R., Tex.), the Chairman of the General Farm Commodities and Risk Management Agriculture Subcommittee, addressed Farm Bill issues recently at the Texas Farm Bureau Annual Meeting.  The tweet contained a link to an audio interview with Rep. Conaway, which can be heard here (MP3- 3:59).

An update posted yesterday at National Sustainable Agriculture Coalition (NSAC) Blog (“Path to the 2012 Farm Bill: Is a Deal Possible and What Would A Good Deal Look Like?”) noted in part that, “Last week we tried to briefly summarize the options remaining for Congress on the farm bill.  Since then, there have been some new signs of progress on getting a full five-year bill finished this month, though also signs of continuing confusion and uncertainty.  Last week we rated that option as possible, but did not give it great odds, with a modified short term farm bill extension as the option with perhaps the higher odds.

“However, the agriculture ‘gang of four’ — Senate Agriculture Chair and Ranking Member Debbie Stabenow (D-MI) and Pat Roberts (R-KS) and House Agriculture Chair and Ranking Member Frank Lucas (R-OK) and Collin Peterson (D-MN) — have been meeting this week and, according to news reports, are said to be making progress and to be focused particularly on finding a compromise between the Senate-passed and House Committee-passed commodity titles.”

The NSAC update indicated that, “Meanwhile, there has been no signal at all from the House Speaker or Majority Leader that a full five-year farm bill deal is on the docket.  That is not to say it could not be, but only to say that to date they exhibit no enthusiasm at all for heading in that direction, especially since it would mean bypassing House floor action on the new farm bill, denying the ‘people’s house’ a chance to work its will.

“Instead, they strongly hint that an extension of the old farm bill, with direction to the Agriculture Committees to save a given amount of money and report a new bill that achieves that size cut by a date certain in 2013, is the more likely path forward.  In that type of extension context, we have previously noted what the key modifications – all of which start with the letter “D” — are that will be necessary for an acceptable outcome.”

An update yesterday at the National Public Radio Salt Blog noted that, “There’s more than one cliff drawing controversy this month. The federal farm bill is one of many items caught in congressional gridlock. The bill resets U.S. agriculture policy every four years, and most farmers are still covered by crop insurance and other programs until next planting season. But there’s one exception: dairy.

“Dairy farmers now have no safety net if milk prices fall. And with feed prices soaring, many feel they’re falling off a cliff of their own.”

Meanwhile, a news release yesterday from the House Ag Committee indicated that, “Today, House Agriculture Committee Chairman Frank Lucas announced the new Republican Members who are expected to serve on the Committee in the 113th Congress.”  The news release included this list of the new GOP Members: Dan Benishek (MI-1), Chris Collins (NY-27), Rodney Davis (IL-13), Jeff Denham (CA-19), Richard Hudson (NC-8), Doug LaMalfa (CA-1), Ted Yoho (FL-3), and one Vacancy.

Budget Issues

Orlan Love reported yesterday at The Gazette (Cedar Rapids, Iowa) Online that, “Farmers could stand to lose as much as any segment of the economy if political leaders don’t avert the fast-approaching ‘fiscal cliff.’

“The impact on farmers of potential changes to the estate tax is ‘extremely dramatic,’ compared with other fiscal cliff effects, which include income and payroll tax rate increases, said Dave Miller, director of research for the Iowa Farm Bureau Federation.

“If leaders cannot agree on a fix before the end of the year, the estate tax rate will increase from 35 percent to 55 percent, and the exemption will drop from $5 million to $1 million. “

The article stated that, “Those changes, coupled with the rapid recent run-up in farmland values, could force farmers with even modest acreage to sell part of their land just to pay the taxes, said Trudy Wastweet, the Iowa Farm Bureau’s national policy adviser.

“‘The reality is, land prices have tripled during the past decade,’ greatly increasing the percentage of Iowa farm families subject to the estate tax, Miller said.

Whereas once it might have been a ‘big farm’ issue, it is now a ‘farm’ issue, he said.”

Lori Montgomery and Rosalind S. Helderman reported in today’s Washington Post that, “A growing chorus of Republicans is urging House leaders to abandon their staunch opposition to higher tax rates for the wealthy with the aim of clearing the way for a broad deal that would also rein in the cost of federal health and retirement programs.

“With less than a month before the ‘fiscal cliff’ deadline, President Obama remains adamant about allowing tax rates to rise for the wealthiest 2 percent of taxpayers. Without such a deal, he is ‘absolutely’ ready to go over the cliff, Treasury Secretary Timothy F. Geithner said Wednesday on CNBC.”

Damian Paletta and Naftali Bendavid reported in today’s Wall Street Journal that, “The White House hardened its position that Congress should raise the U.S.’s borrowing limit without preconditions, adding an unpredictable new element into the high-stakes budget talks.

“In a Wednesday speech to top corporate chiefs, President Barack Obama said he wouldn’t negotiate with Republicans on this issue as he did in 2011.”

The article added that, “Mr. Obama was responding in part to an idea floated by some congressional Republicans to give the president the tax increases he has requested and thereby defer bigger arguments about the budget until next year. Republicans feel they would have more leverage then because the debt ceiling will need to be increased.”

Russell Berman reported yesterday at The Hill’s On the Money Blog that, “President Obama and Speaker John Boehner (R-Ohio) spoke by phone Wednesday afternoon amid a stalemate in the fiscal cliff negotiations, the Speaker’s office said.  A Boehner spokesman would not give any further information on the call.”

 

Agricultural Economy

Robert Wright and Gregory Meyer reported yesterday at The Financial Times Online that, “Grain and petrochemicals worth billions of dollars risk being marooned far from market, barge operators and grain exporters have warned, as falling Mississippi water levels threaten to close the river to navigation.

“Operators of river barges, which move down the vast river in huge ‘tows’ of 30 or more lashed barges, have joined with agriculture groups to demand that US President Barack Obama take action to maintain navigation on a crucial, shallow stretch 200 miles long between St Louis and Cairo, Illinois.”

The FT article explained that, “At the heart of the problems is a trade-off between water users upriver in the Missouri and the Mississippi’s navigational needs. The corps of engineers reduces the flow of water through the Missouri dams starting in November each year to build up water supplies for irrigation and generating hydroelectric power.

“While the reduced flow normally leaves ample water for the Mississippi’s tens of thousands of barges to carry Midwestern commodities to the coast, this year’s drought has reduced the river’s ability to withstand the operation.”

Bloomberg writer Alan Bjerga reported yesterday that, “The Missouri River has blessed and cursed Kevin Schmidt, alternately nourishing or overrunning his farmland. This year its water saved his cows, and it may do so again next year if a lack of rain dries out his soil.

The river sustains farmers and ranchers in its upper basin, 1,000 miles from where shippers are pushing to have more of its water released into the drought-depleted Mississippi River to avert a suspension of barge traffic on the nation’s busiest waterway later this month.”

Meanwhile, an Iowa State University Extension update this week from Elwynn Taylor noted that, “Drought in 2011 was much like the drought in the mid-1950s: developing in the south central United States with rain becoming scant in the Corn Belt after early July.  Midwest crops depleted the subsoil moisture to the extent of rooting depth, and over winter precipitation did not bring full recharge to western Corn Belt soils.  Rooting conditions in 2012 were near ideal and observed corn and soybean roots to depths greater than 8 feet were reported in numerous locations. Deep rooting provided sufficient water to enable a greater than anticipated crop yield in numerous Corn Belt locations, but resulted in about 8 feet of moisture depleted soil and a resultant requirement of 16+ inches of moisture needed to replenish subsoil moisture. It is not likely that subsoil moisture will be fully replenished by the beginning of the 2013 planting season.

Moisture deficit in the subsoil increases the risk of crop yields being below trend and prevents the recovery of river, pond and well water to normal levels.”

 

Trade

Erik Wasson reported yesterday at The Hill’s On the Money Blog that, “A bill granting normal trade relations to Russia is likely headed to President Obama’s desk for his signature after key objections have been dropped in the Senate.

“The Senate is on course to vote on granting Russian permanent normal trade relations (PNTR) on Thursday. The bill also contains human rights provisions aimed at punishing those accused of murdering lawyer Sergei Magnitsky and other human rights violations.”

The American Farm Bureau Federation urged passage of the trade measure in a news release yesterday, and remarks delivered yesterday by Senate Finance Committee Chairman Max Baucus (D., Mont.) on the legislation can be viewed here.

Keith Good

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