FarmPolicy

July 24, 2014

Farm Bill; Budget; Ag Economy; and, Trade

Farm Bill Developments

David Rogers reported yesterday at Politico that, “House Agriculture Committee Chairman Frank Lucas signaled new optimism that a deal could be reached on a five-year farm bill, saying ‘great progress’ has been made on the commodity title and he is looking for a year-end budget agreement to get over the finish line.

“With just weeks left before this Congress adjourns, Lucas spelled out a process in which enactment could be delayed until early 2013 as part of a larger deficit-reduction package. But a five-year bill ‘can be done and if the powers that be determine that it will be done, it will happen,’ Lucas said.

“The Oklahoma Republican made his comments first before a Washington breakfast sponsored by the Farm Journal, and Senate Agriculture Committee Chairwoman Debbie Stabenow (D-Mich.) echoed his optimism in a speech at the same forum just hours later.”

Yesterday’s article noted that, “If anything, Stabenow was more adamant about closing the deal this month. And while Lucas discussed the need for some transition given the complexity of the changes proposed in farm policy, Stabenow resisted the notion of any extension that would distract from completing the task at hand.”

The Politico article added: “‘We have to get this right,’ Lucas said. ‘We don’t control the weather but we do decide the policy….I want to be able to walk up and down the street knowing that in my part of being chairman in my tenure in this body, I didn’t do things that would create another 1930’s another 1980’s. That’s my goal. It’s very personal. It’s very important.’

“Stabenow was sympathetic. ‘We know we have to come to the middle,’ she said, while also warning that the final commodity title can’t have so many options that ‘it looks like a five-headed cow.’

“‘It has to actually work,’ she said.”

Mr. Rogers pointed out that, “‘I would like to have all my Christmas presents on Christmas too, but it will be no simple legislative achievement,’ Lucas said. He told reporters that meeting a Jan. 1 deadline is ‘possible’ but ‘not probable.’

“This raises the question of some interim action to prevent a spike in milk prices when the current dairy program expires at year’s end. And on this point, Lucas signaled he would be prepared to compromise with [House Ag. Comm. Ranking Member Collin Peterson (D., Minn.)], and support new dairy security provisions including a controversial milk stabilization program as part of any such extension.

Peterson has adamantly opposed any extension because he wants to keep the pressure on for a five-year farm bill deal. But if an agreement were in the works, he has told POLITICO he would consider some extension if it also included his dairy security act with supply management tools to try to stabilize milk prices — a major priority for many producers, including some large dairy co-operatives, but strongly opposed by processors, such as companies like Kraft and Dean Foods.”

Reuters writer Charles Abbott reported yesterday that, “With a week left to act, agricultural leaders in Congress are still deadlocked on two major issues for a new U.S. farm bill, cuts in crop subsidies and reductions in food stamps, said two of the four key negotiators on Thursday.

“But the leaders of the House and Senate agriculture committees suggested that recent talks had yielded at least some progress.”

The Reuters article noted that, “‘I would rather have nothing’ than a farm bill that does not give farmers the option of price supports, said House Agriculture chairman Frank Lucas. ‘You need to give our producers a choice.’”

Mr. Abbott explained that, “Senate Agriculture chairwoman Debbie Stabenow said on Thursday that there were strong differences between the House and Senate versions.

“‘I would never accept what the House did’ in slashing $16 billion in funding for food stamps, the steepest cuts in a generation for a program that helps millions of lower-income Americans keep food on the table.

“The Senate bill would cut food stamps by $4 billion.”

The article also stated that, “There are some areas of agreement. Both sides would cut conservation spending by $6 billion and crop subsidies by more than $13 billion, partly by ending direct-payment subsidies now issued regardless of need.

“They also would expand the federally subsidized crop insurance system, now the largest strand in the farm safety net, and convert cotton subsidies to an insurance program, which would resolve a World Trade Organization ruling against the U.S. cotton program.”

DTN Ag Policy Editor Chris Clayton reported yesterday (link requires subscription) that, “The farm bill remains tied up in the big-picture debate on the fiscal cliff, but a final farm bill must continue to give farmers a choice when picking a safety net, House Agriculture Committee Chairman Frank Lucas told a crowd of farm-policy wonks Thursday morning.

“Lucas also told reporters the dairy policy has to be addressed before January begins, and farm policy will need a ‘transition’ or extension until at least next fall to allow rules to be created for new commodity programs. That could mean providing farmers with at least one more year of direct payments.

“Both Lucas and Senate Agriculture Committee Chairwoman Debbie Stabenow, D-Mich., spoke Thursday morning at the Farm Journal Forum. Each acknowledged how farm-bill talks remain at the mercy of whether a grand deal can be reached between the two parties before the end of the year.”

Mr. Clayton explained that, “The Senate version of the farm bill eliminates direct payments and the counter-cyclical program in creating a single revenue-protection program, the ‘Agricultural Risk Coverage’ program. The House farm bill reinstated the counter-cyclical program under a new name, the ‘Price Loss Coverage’ program. Because some crops would not benefit from the revenue program, Lucas and other key House Agriculture leaders have defended the inclusion of a target-price program.”

But the House bill gives producers the choice to decide whether a revenue or target-price program is a better option. The House bill gives farmers a chance to make a one-time decision regarding which commodity program they want to participate in. Lucas argues that a revenue program is great when commodity prices are strong, but if there is a major collapse in prices, the revenue program won’t offer a satisfactory safety net for producers,” the DTN article said.

Yesterday’s article added that, “Regardless of whether the full farm bill is part of a grand deal, Lucas said some provision will have to be passed to address dairy policy. Without new provisions, dairy policy reverts back to permanent law in January that translates into more than doubling the federal price guarantee for milk now. Lucas supports a dairy policy change in the House farm bill language crafted by committee ranking member Collin Peterson, D-Minn. Peterson has indicated he could support a farm-bill extension that includes his new dairy reforms.”

In a separate DTN article from yesterday, Mr. Clayton reported (link requires subscription) that, “Despite time running short on the calendar year and the lame-duck session, the chairwoman of the Senate Agriculture Committee won’t accept talk about extending the old farm bill.

But the chairwoman is open to the possibility of giving farmers a target-price program that the Senate thus far has rejected.”

Mr. Clayton noted that, “While Lucas indicated a potential need for a transition and the possibility of an extension of current farm policies, Stabenow said she was not accepting talk about an extension that would effectively require rewriting a new farm bill starting in January when the new Congress convenes.

“‘We’re not talking about an extension. We’re not going to do an extension. We’re not going to kick the can down the road,’ Stabenow said. ‘Farmers in America need a five-year farm bill and so does the country at-large.’”

Erik Wasson reported yesterday at The Hill’s On the Money Blog that, “Passage of a five-year farm bill in the lame-duck session appears to still be hung up on the issue of food-stamp benefit cuts.

“Senate Agriculture Committee Chairwoman Debbie Stabenow (D-Mich.) said Thursday she remains opposed to the food-stamp cuts in the House Agriculture Committee bill, although she could support cuts from new efficiencies.

“‘Not the way it was written,’ she said. ‘I am open to more savings and efficiencies or more anti-fraud efforts but not cuts to needy families.’”

Dow Jones writer Bill Tomson reported yesterday that, “Senate and House lawmakers trying to finish a new five-year farm bill in the remaining weeks of 2012 are still at odds over spending on farm subsidies and food stamps, although the two sides continue to negotiate, top agriculture lawmakers said Thursday.

The best bet for passing a farm bill this year is attaching it to hoped-for legislation addressing the fiscal cliff, a combination of $500 billion in tax increases and spending cuts scheduled to begin Jan. 1, according to Senate Agriculture Committee Chairwoman Debbie Stabenow (D., Mich.) and House Agriculture Committee Chairman Frank Lucas (R., Okla.).

But before farm bill legislation could be attached to any sort of fiscal cliff legislation, Senate and House leaders need to iron out significant differences.”

Joseph Morton reported today at The Omaha World-Herald Online that, “Sen. Mike Johanns, R-Neb., said Thursday that it now appears a five-year farm bill has no chance of moving through the House on its own, but there are reasons to believe it could be included in a broader budget deal to avoid the fiscal cliff.

“After all, the Senate and House versions both include tens of billions of dollars in deficit reduction.

“‘That’s real savings that would go to the bottom line,’ Johanns said.”

Daniel Looker reported yesterday at Agriculture Online that, “Senator Tom Harkin (D-IA) a member of the Senate Agriculture Committee said Thursday that committee leaders are working to resolve differences in commodity programs before a final farm bill is considered, if that happens this year.

“The Senate committee’s chairwoman, Debbie Stabenow, has been talking to other members of the committee, including Saxby Chambliss (R-GA), Harkin told reporters.

“‘I don’t know what kind of compromise is going to be made on peanuts and rice. That seems to be a sticking point,’ Harkin said.”

Agricultural Economist Carl Zulauf noted yesterday at the farmdoc daily Blog (“2012 Farm Bill Update”) that, “I continue to think that there is a higher probability that the 2012 Farm Bill will be passed before the end of this year than that the current farm bill will be extended. My reasons for this assessment include the broad agreement that currently exists in much of the two farm bill drafts, the concern over what a new budget baseline will mean for the farm safety net, and the potential use of the budget savings in the new farm bill to fund bi-partisan priorities. Of course, this assessment means that the House and Senate will need to compromise over the existing differences in the two draft bills.”

Meanwhile, Erik Wasson reported yesterday at The Hill’s On the Money Blog that, “In total, nine of this year’s [House Ag. Comm.] members will not be returning. Rep. Jean Schmidt (R-Ohio) lost in a primary and Rep. Tim Johnson (R-Ill.) retired. Rep. Marlin Stutzman (R-Ind.) is heading to Financial Services. Also not coming back are: Reps. Jeff Fortenberry (Neb.), Randy Hultgren (Ill.), Bobby Schilling (Ill.), Steve Fincher (Tenn.) and Renee Ellmers (N.C.)… Leadership removed conservative Rep. Tim Huelskamp (Kan.) from the committee to punish him for bucking leadership on too many votes.”

 

Budget Issues

Steven T. Dennis reported yesterday at Roll Call Online that, “The adage in Washington is that if nobody is talking about what they’re really talking about, that’s a good sign for getting a deal.

“In what may be just such a positive sign, President Barack Obama, Speaker John A. Boehner, R-Ohio, and their aides on Thursday seemed to be zipping their lips on the behind-the-scenes fiscal cliff talks after a private Wednesday phone call between the two men. Of course, both sides also continued their public relations fight over debt and taxes.

“‘Lines of communication are open,’ one House GOP leadership aide said.”

Jonathan Weisman and Peter Baker reported in today’s New York Times that, “At House Speaker John A. Boehner’s request, Senate leaders and Representative Nancy Pelosi have been excluded from talks to avert a fiscal crisis, leaving it to Mr. Boehner and President Obama alone to find a deal, Congressional aides say.

“All sides, even the parties excluded, say clearing the negotiating room improves the chance of success. It adds complexity as the two negotiators consult separately with the leaders not in the room. But it also minimizes the number of people who need to say yes to an initial agreement.

“‘This is now the speaker and the president working this through,’ said Senator Richard J. Durbin of Illinois, the Senate’s No. 2 Democrat.”

The Times article added that, “On Capitol Hill, Senator Mitch McConnell of Kentucky, the Republican leader, moved Thursday to vote on Mr. Obama’s proposal, in his broader deficit package, to permanently diminish Congress’s control over the federal government’s statutory borrowing limit, assuming that Democrats would break ranks and embarrass the president. Instead, Democratic leaders did a count, found they had 51 solid votes, and took Mr. McConnell up on what Senator Harry Reid of Nevada, the Senate majority leader, called ‘a positive development.’

Mr. McConnell then filibustered his own bill, objecting to a simple-majority vote and saying a change of such magnitude requires the assent of 60 senators.”

Janet Hook reported in today’s Wall Street Journal that, “After days of public posturing, budget talks resumed Thursday between the staff of House Speaker John Boehner and the White House.”

 

Agricultural Economy

John Eligon reported in today’s New York Times that, “Even as the summer swelter has given way to frost, nearly two-thirds of the country remains in a drought, with forest fires still burning, winter crops choking in parched soil and barges nearly scraping the mucky bottoms of sunken rivers.

More than 62 percent of the continental United States is experiencing moderate to exceptional drought, according to the weekly Drought Monitor report released on Thursday, compared with just over 29 percent at this time last year.

“Save for patches of California, Montana and Wyoming, the drought is expected to persist in most of the dry regions west of the Mississippi River over the next three months, according to the Seasonal Drought Outlook released Thursday by the National Weather Service.”

For more on weather related conditions, see this brief video released yesterday from NOAA’s Climate Watch webpage.

Bloomberg writers Brian Wingfield and Alan Bjerga reported this week that, “Barge traffic on the drought-shrunken Mississippi River may not be impeded until later this month because the water level isn’t falling as fast as projected, according to a U.S. estimate.

“The National Weather Service now says that without significant precipitation, the river at St. Louis may drop to about nine feet by Dec. 26, according to Mark Fuchs, a hydrologist with the agency. That’s the level at which officials have said barge traffic could be restricted.”

Meanwhile, the AP reported yesterday that, “A United Nations agency says prices of basic foods fell by 1.5 percent last month, with the international prices of all commodities except dairy products dropping.

“The Rome-based Food and Agriculture Organization said Thursday that the decline puts the value of its November index nearly 3 percent below a year ago.”

And, Bloomberg writer Rudy Ruitenberg reported yesterday that, “Wheat may take over from corn as the driver of grain prices next year because of potential production setbacks, said Abdolreza Abbassian, an economist at the United Nation’s Food & Agriculture Organization.

“‘People are perhaps a little bit underestimating the problems we could have with wheat,’ Abbassian said by phone today from Rome. ‘We could end up in a situation where we see wheat leading and others follow if we see a problem in the Black Sea putting pressure on U.S. supplies.’”

 

Trade

Sudeep Reddy reported yesterday at The Wall Street Journal Online that, “Congress overturned long-standing trade restrictions with Russia on Thursday, achieving a top priority for U.S. businesses, but slapped Moscow over human-rights abuses as a rift between the two governments widened.

“The Senate voted 92-4 to grant Russia permanent normal trade relations, following widespread House support for the measure in November. President Barack Obama plans to sign the bill.”

The American Soybean Association applauded the legislative action in a news release yesterday.

Keith Good

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