FarmPolicy

October 25, 2014

Policy- Farm Bill; Budget (Estate Tax); Ag Economy; and, Trade

Policy- Farm Bill Issues

The AP reported on Saturday that, “Agriculture Secretary Tom Vilsack has some harsh words for rural America: It’s ‘becoming less and less relevant,’ he says.

“A month after an election that Democrats won even as rural parts of the country voted overwhelmingly Republican, the former Democratic governor of Iowa told farm belt leaders this past week that he’s frustrated with their internecine squabbles and says they need to be more strategic in picking their political fights.

“‘It’s time for us to have an adult conversation with folks in rural America,’ Vilsack said in a speech at a forum sponsored by the Farm Journal. ‘It’s time for a different thought process here, in my view.’”

The AP article indicated that, “‘Why is it that we don’t have a farm bill?’ said Vilsack. ‘It isn’t just the differences of policy. It’s the fact that rural America with a shrinking population is becoming less and less relevant to the politics of this country, and we had better recognize that and we better begin to reverse it.’

“For the first time in recent memory, farm-state lawmakers were not able to push a farm bill through Congress in an election year, evidence of lost clout in farm states.”

Saturday’s article added that, “In his Washington speech, he also cited criticism of a proposed Labor Department regulation, later dropped, that was intended to keep younger children away from the most dangerous farm jobs, and criticism of egg producers for dealing with the Humane Society on increasing the space that hens have in their coops. Livestock producers fearing they will be the next target of animal rights advocates have tried to undo that agreement.”

And Christopher Doering reported late last week at The Des Moines Register Online that, “Agriculture Secretary Tom Vilsack warned on Thursday one reason a new farm bill has not been completed is because rural America is becoming less and less relevant in the national landscape.

“Vilsack, the former Iowa governor, said rural parts of the country are continuing to lose residents. Currently, only 16 percent of America’s population lives in rural areas, and those who remain are getting older and decreasing in number.

“‘Unless we respond and react the capacity of rural America and its power and its reach will continue to decline,’ Vilsack said at the Farm Journal Forum in Washington.”

Also, in a column published over the weekend in The Des Moines Register, Sec. Vilsack stated that, “Recent articles in The Des Moines Register have highlighted our need to protect the natural resources we all hold dear. However, the articles have also suggested that voluntary conservation programs on our nation’s farms and ranches have a negligible impact to reduce pollution and that more regulation of farmers is needed to reverse this trend.

“While we all agree that protecting our soil and cleaning our water are critically important, it’s essential to understand that voluntary conservation does make a difference.”

Sec. Vilsack added that, “As Register reporter Perry Beeman’s articles point out, a wide variety of factors affect conservation efforts. But in the past 10 years, the voluntary efforts of farmers and ranchers have had a positive affect. They voluntarily reduced soil erosion on more than 140 million acres of land and restored 1.6 million acres of wetlands nationwide.”

Meanwhile, an update on Friday from KFSN-TV (Fresno, Calif.) Online, reported that, “Valley dairy farmers are urging lawmakers to get to work and pass the farm bill.

“Congressman Jim Costa [D., Calif.] and top house agriculture democrat, Congressman Collin Peterson [Minn.], met with Valley dairy farmers on Thursday. They discussed the latest efforts to get a five year farm bill passed before the end of the year.”

Likewise, an update on Friday at The Business Journal (Fresno, Calif.) Online reported that, “Rep. Jim Costa (D-Fresno) is urging Congress to approve the new Farm Bill this month, not just to update the program to better serve the nation’s farmers, but also to provide a safety net for California’s struggling dairy industry.

“A ‘profit’ insurance program for dairy farmers is included in the House bill. Costa was in Fresno along with Rep. Collin Peterson, a Minnesota democrat and ranking member of the House Agriculture Committee, on Thursday to meet with dairy farmers in a roundtable discussion.

“A growing number of dairy farmers have declared bankruptcy or are in the red financially because of high feed costs that are not covered by the current price of milk. ‘There will be 100 bankruptcies by the end of the year,’ Costa said.”

Friday’s update added that, “It has been reported that the food stamp program is another stumbling block. However, Peterson said food stamps are not holding up the bill.

“He added that House leader John Boehner (R-8th District, Ohio) is not holding up the bill nearly as much as Rep. Eric Cantor (R-7th District, Virginia). The Tea-Party faction has also slowed progress, Peterson said.”

Rep. Costa tweeted on Thursday that, “Top House Ag Dem, Collin Peterson, joined me in ‪#Fresno to hear CA dairy challenges. It’s clear, we need a ‪#FarmBill ‪pic.twitter.com/xpjUwOkq

A recent update at The Economist Online noted that, “The fiscal cliff may get all the attention along Pennsylvania Avenue these days but, almost unheeded, America’s agriculture is facing a cliff of its own. For the dairy business, it will arrive at the same time as the more famous version, at the end of the year…[A]t the moment negotiations over the fiscal cliff are consuming all the political air. From soil conservation to price supports to trade, American farm policies are all on hold. The expiry of the latest bill means several conservation programmes have been frozen, as have export loan guarantees.”

The item added that, “Frank Lucas, the Republican chairman of the House agriculture committee, says that ‘reverting back to an antiquated system…is not responsible,’ while Debbie Stabenow, the Democratic chairman of the Senate agriculture committee, is confident that a deal will be reached before the end of the year.”

Harold Reutter reported on Saturday at the Grand Island Independent (Neb.) Online that, “[Sen. Ben Nelson (D., Neb.)] reminded everyone that one-third of Nebraska’s jobs are tied to agriculture. Consequently, Nelson is upset at the failure to pass a Farm Bill. He said that without knowing the status of federal crop insurance and a whole range of other programs within the Farm Bill, ranchers and farmers cannot plan for 2013 and beyond.

If the Farm Bill was brought to a vote of the full House of Representatives, Nelson said it would pass easily. He blamed the stalemate on the most conservative Republicans in the House of Representatives, especially those who identify themselves as being members of the Tea Party.

“He said some people in Washington, D.C., have an ideology that makes them believe that there should be no Farm Bill at all; or that they don’t like the part of the Farm Bill that provides nutrition for children, or the portion that provides nutrition assistance to families living in poverty.”

Note that an article over the weekend at the Minneapolis Star-Tribune Online (“Collin Peterson faces struggle for relevance”) elaborated on the decline of “Blue Dog” moderate Democrats- “Just two years removed from being one of Capitol Hill’s most powerful voting blocs, centrist Democrats like U.S. Rep. Collin Peterson are now something of an afterthought…[P]olitical forces have decimated their ranks and influence, leaving just 15 members of a pack that once stood more than 50 strong.”

The Star-Tribune article explained that, “Peterson also has earned the respect of Republicans in Washington. The National Republican Congressional Committee, which works to elect candidates to the House, has not backed a Peterson opponent in at least a decade.  Peterson, 68, is one of just 10 Minnesotans who have served 20 years in Congress. With no immediate plans to retire, he intends to press on, even though the Blue Dogs have become an increasingly rare breed.”

Susan Meeker reported on Friday at the Sun-Herald (Colusa, Calif.) Online that, “[Rep. John Garamendi (D., Calif.)], who met with farmers, hunters and conservationists at the Sacramento National Wildlife Refuge near Willows on Friday, joined the House Agriculture Committee on Nov. 27 to be a part of the final negotiations for the five-year farm bill.

“The congressman, along with Minnesota Rep. Collin Peterson were invited by Ducks Unlimited to hear the concerns of those who will be impacted by legislation, particularly the more than $30 billion in proposed cuts to farm subsidies, conservation and nutrition programs.”

The article noted that, “Garamendi and Peterson’s meeting at the refuge ran about two hours. Both legislators said they plan to take the information back to Washington where the new Farm Bill is to be decided by Dec. 31.”

A news release on Thursday from Sen. Al Franken (D., Minn.) stated that, “Sen. Franken, in a phone call with [Ag. Sec. Tom] Vilsack this week, pressed the Secretary to continue to work with key Congressional leaders to have a five-year Farm Bill included in the current ‘fiscal cliff’ budget negotiations so that farmers and ranchers in Minnesota and across the country have the critical certainty they need to plan for the future.”

Josh Moniz reported on Friday at The Journal (New Ulm, Minn.) Online that, “Farm Bill reductions might become a component of the ‘fiscal cliff’ cost reductions, [Rep. Tim Walz (D., Minn.)] said. However, he would be very wary of this approach not only for concerns that important components could be pulled out as bargaining chips but also for concerns it could get weighed down in the overall inaction on a ‘fiscal cliff’ deal.

“‘We won these compromises and cuts over two years. I think we should pass it on so it gets done and farmers can know how to plan,’ said Walz.”

In other developments, the AP reported on Saturday that, “The Agriculture Department is responding to criticism over new school lunch rules by allowing more grains and meat in kids’ meals.

“Agriculture Secretary Tom Vilsack told members of Congress in a letter Friday that the department will do away with daily and weekly limits of meats and grains. Several lawmakers wrote the department after the new rules went into effect in September saying kids aren’t getting enough to eat.”

Kevin Bogardus reported on Saturday at The Hill Online that, “In a statement Saturday, Senator John Hoeven’s (R-N.D.) office said USDA informed him in a letter on Friday that it lifted its limitations on intake of grains, starches and protein.

“‘I’m grateful to [Agriculture] Secretary [Tom] Vilsack for recognizing that the rules need to allow for individual differences among children and the prerogatives of local school districts, and resources available to them,’ Hoeven said in a statement.”

Meanwhile, Dan Piller reported in yesterday’s Des Moines Register (front page of the Business Section, PDF reproduction here) that, “Crop insurance payments to farmers through early December indicate that the 2012 drought is not proving to be the economic calamity many feared during the summer.”

The Register article pointed out that, “While this year’s percentage of losses to premiums is higher than the 29 percent loss-to-premium ratio in 2011 and the 54 percent average loss ratio in the 24 years from 1989 to this year, it still is below the 88 percent loss-to-premium ratio in the flood year of 2008.

“And 2008 pales beside the ‘mother of all floods’ in Iowa, the 1993 epic that generated 465 percent more damage payments to farmers than premiums paid that year [related graph].”

Mr. Piller added that, “One closely watched indicator this fall has been land prices, which have continued their four-year boom despite the ongoing drought.

“The annual Iowa State University land price survey to be released Tuesday is expected to show another bump above last year’s record average of $6,708 per acre.”

Congressman-elect Rodney Davis (R., Il), who will be serving on the Ag. Comm., was quoted in a recent “Q and A” formatted article in the Decatur Herald-Review (Il.) Online as saying: “Our farmers are willing to give up direct payments just so they know they have that safety net — the crop insurance program. And I think that has to be the centerpiece of a comprehensive Farm Bill: the strength in crop insurance program.”

 

Budget (Estate Tax)

Christopher Doering reported in yesterday’s Des Moines Register that, “At 22, [Rep. Kristi Noem (R., S.D.)] was married and almost eight months pregnant with her first child. Her father had died in a farming accident, forcing Noem to leave college to join her brother and sister in taking over the family’s farm and ranch operation.

“But his unexpected passing stuck Noem and her siblings with a large estate tax bill — one they had to take out a loan to pay — so they could keep the several thousand acres the family operated.

“It was a challenge, Noem said, ‘taking over an operation that obviously you weren’t prepared to take over, and then to have an additional loan and more debt right off the bat.’”

The Register article explained that, “Noem, now 41, said people today planning to pass a farm operation on to a family member are in ‘a much worse position than we were back then’ because of the increase in land values.

“When Noem’s dad died in 1994, an acre of land in Hamlin County in the eastern part of the state sold for $650 to $800 an acre.

Today, some of the same land is fetching $7,000 an acre.”

Last week on the Senate floor, both John Barrasso (R., Wy.) and Roy Blunt (R., Mo.) highlighted the importance of estate tax issues (transcripts and video replays available here).

More broadly on the budget, Michael A. Memoli reported in Saturday’s Los Angeles Times that, “Hoping to prod Democrats to offer new concessions on spending and taxes, House Speaker John Boehner on Friday accused President Obama of an effort to ‘slow-walk’ negotiations on the ‘fiscal cliff’ in his zeal to raise taxes;” while, The Washington Post reported on Saturday that, “Federal agencies are sharpening their plans to carry out drastic, automatic spending cuts starting Jan. 2 if the Obama administration and Congress cannot agree on a deficit reduction strategy in the coming days.”

Lori Montgomery and Paul Kane reported in today’s Washington Post that, “The contours of a deal to avert the year-end fiscal cliff are becoming increasingly clear. But progress has been slow, and time is running out for leaders to seal an agreement and sell it to restless lawmakers who so far have been given little information.

“With hope still alive for a resolution by Christmas, President Obama and House Speaker John A. Boehner (R-Ohio) met Sunday at the White House, their first face-to-face meeting in nearly a month and their first one-on-one session since July 2011, when they last tried to forge a far-reaching compromise to tame the national debt.

“Neither side would provide details, but White House spokeswoman Amy Brundage and Boehner spokesman Michael Steel released identical statements saying ‘the lines of communication remain open.’”

The article added that, “If Obama and Boehner can agree on substance, Senate Finance Committee Chairman Max Baucus (D-Mont.) and House Ways and Means Committee Chairman Dave Camp (R-Mich.) are already at work on a legislative structure.

“‘We’re trying to get ahead of the curve here . . . to answer a lot of these technical questions about frameworks, guidelines — for both tax and entitlements,’ Baucus said.”

 

Agricultural Economy

Brian Bennett reported in Saturday’s Los Angeles Times that, “As soon as the confrontation over fiscal policy winds down, the Obama administration will begin an all-out drive for comprehensive immigration reform, including seeking a path to citizenship for 11 million illegal immigrants, according to officials briefed on the plans.”

In addition, Peter Wallsten and Zachary A. Goldfarb reported in yesterday’s Washington Post that, “Allies expect Obama to harness the combined political capital of his reelection and the outcome of the tax fight for an aggressive push to legalize millions of illegal immigrants in what could be a signature domestic achievement.”

Meanwhile, Mike Hughlett reported on Saturday at the Minneapolis Star-Tribune Online that, “For the most part, Minnesota hog producers are losing about $20 to $25 per pig right now. The state’s turkey growers are losing about a buck a bird. And business isn’t much better for dairy farmers and cattle growers.

“This year’s big run-up in corn and soybean prices — courtesy of a searing U.S. drought — has put the state’s and the nation’s livestock industry on its heels. The reason is that feed is the primary cost in raising animals, and it’s made mostly from corn and soybeans.”

The article pointed out that, “But federal insurance for livestock growers is almost nonexistent. And even though corn and soybean prices have come down some this fall, they are still historically high, with corn around $7.50 per bushel and soybeans at nearly $15.”

And, the AP reported on Friday that, “The Army Corps of Engineers has turned back requests by federal lawmakers and the barge operators to release more water from the Missouri River, believing the drought-starved Mississippi River it feeds still will remain open to shipping. The industry, however, warns that the situation is growing increasingly dire.

“Army Assistant Secretary Jo-Ellen Darcy, in a Thursday letter obtained by The Associated Press, told lawmakers from Mississippi River states she doesn’t consider it necessary to boost Missouri River flows into the Mississippi – something the politicians urgently had sought.”

 

Trade

Ellen Barry reported in yesterday’s New York Times that, “Russian health regulators announced formidable new barriers to the import of meat from the United States late on Friday, in a move some analysts saw as retaliation for American legislation punishing Russian officials linked to human rights violations.”

Keith Good

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