FarmPolicy

October 21, 2014

Farm Bill; Budget; and, the Ag Economy

Farm Bill Issues

David Rogers reported yesterday at Politico that, “With time running out, House and Senate farm bill leaders were still acres apart Wednesday night after an exchange of offers that only highlighted their competing visions of how to reshape commodity subsidies.

“‘It’s a quagmire,’ Minnesota Rep. Collin Peterson, the ranking Democrat on the House Agriculture Committee told POLITICO. ‘We should have been working on this for the last three months, but we didn’t.’”

Mr. Rogers explained that, “The Senate bets $29 billion on a new ‘shallow loss’ revenue insurance option that is especially popular with corn and soybean producers in the Midwest given their economic success. The House bill devotes about $9 billion to a similar revenue option but spends closer to $16 billion on more traditional price protection coverage to protect against collapsing markets.

“In the latest exchange, the Senate gives some ground, by opening the door for the first time to include rice, peanuts and wheat in a new countercyclical program that will add about $2.6 billion to the Senate baseline for these crops. Rice is the biggest player, with about $1.3 billion; followed by wheat, $950 million; and peanuts at $375 million, according to people familiar with the talks.”

Yesterday’s Politico article added that, “According to people familiar with the talks, there is no attempt to update target prices set for Texas corn growers, for example, who might also prefer an alternative to the ARC [Agricultural Risk Coverage] plan. And in trying to narrow its offer, the Senate rebuffs the House’s desire to distribute all aid according to planted acres vs. the old ‘base acre’ approach that governed the direct payment system.

“That said, the House’s own offer moves only modestly from where it had been. The argument goes that the House bill was already a compromise in that it always made room for both revenue and target price options. And Wednesday’s proposal went further to the middle by essentially offering to devote equal resources of about $14.5 billion to each.

“For example, the Senate bill had proposed a payment to cover losses from 79 percent to 89 percent of the previous five year average revenues. The House had set its band lower, from 75 percent to 85 percent — thereby insisting on deeper losses before any payment. Wednesday’s offer moved this up to 87 percent. And by making the revenue option more attractive, it brought down participation in the target price option — reducing its cost.”

Note that Red River Farm Network farm broadcaster Mike Hergert tweeted yesterday that, “MN Cong. Collin Peterson tells barley growers Ag Cm leaders agree on everything but the commodity title.”

And Senate Agriculture Committee Chairwoman Debbie Stabenow (D., Mich.) tweeted yesterday that, “It’s 12/12/12. No better time to pass the #FarmBill – cuts the deficit, cuts subsidies. Let’s get it done.”

An update yesterday at the National Sustainable Agriculture Coalition (NSAC) Blog yesterday indicated that, “Last week we tried to address what a good 2012 Farm Bill deal would look like.  This week, as last, the so-called ‘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) — are meeting on the farm bill.  These four leaders are trying to reach a deal that would bypass both the House Floor and a House-Senate Conference Committee.  It is unclear how close they are to reaching an agreement, with strong disagreements remaining on the structure of new commodity subsidies.  There are indications emerging, though, that some of the modest but important farm safety net reforms in the Senate-passed bill are being ditched or watered down as negotiations continue.”

Yesterday’s update went on to outline eight key points, reforms contained in the Senate-passed version of the Farm Bill, that NSAC argues should be included in a “minimally acceptable deal.”

Meanwhile, a news release yesterday from Sen. Kirsten Gillibrand (D., N.Y.) stated that, “[Sen. Gillibrand], along with Senator Olympia Snowe (R-ME), led a bipartisan coalition of Senators today in urging Agriculture Committee Leaders to keep a key dairy pricing reform amendment in any final Farm Bill agreement. The Snowe-Gillibrand amendment that was included in the Senate Farm Bill would jumpstart the process to bring certainty for the nation’s dairy farmers by stabilizing milk pricing, has passed the full Senate as part of the 2012 Farm Bill.”

Yesterday’s release added that, “Specifically, the amendment (S. 1481) would allow dairy industry groups to present milk pricing reforms to the U.S. Department of Agriculture (USDA) for consideration in a public hearing setting, and order the Secretary of Agriculture to release the Department’s final proposal to Congress.

“The effort to keep the Snowe-Gillibrand amendment as part of any final Farm Bill deal is supported by Senators Jeff Bingaman (D-NM), Tom Udall (D-NM), Susan Collins (R-ME), Bernie Sanders (I-VT), Sherrod Brown (D-OH), Maria Cantwell (D-WA) and Patty Murray (D-WA).”

The AP reported today that, “New York’s senators are both lobbying for dairy farmers on Capitol Hill.

“Democratic Sen. Charles Schumer is calling on the Republican-led House of Representatives to temporarily bring back a program that protected 5,400 dairy farms in upstate New York when feed costs jumped. Schumer says the House needs to take action before year’s end in order to avoid a big spike milk prices.

“Democratic Sen. Kirsten Gillibrand is among senators in both parties urging Agriculture Committee leaders to keep dairy pricing reforms in any final farm bill agreement with the House.”

Also yesterday, Sen. Jeff Merkley (D., Ore.) discussed the Farm Bill on the Senate floor, and particularly focused on disaster provisions and the lack of legislative action on the measure in the House (video replay available here).

In other developments, a news release yesterday from Senator-Elect Heidi Heitkamp (D., N.D.) indicated that, “U.S. Senator-elect Heidi Heitkamp has been appointed to the Senate Agriculture Committee and the Committee on Indian Affairs, two appointments she pledged to seek during her campaign. She will also serve on the Banking, Small Business and Homeland Security and Governmental Affairs committees.”

Sen.-elect Heitkamp will be replacing Sen. Kent Conrad, who made is farewell address on the Senate floor yesterday (article, address); although, Sen. Conrad pointed out that, “I don’t consider this my final speech because I am still hopeful we will reach an agreement on the farm bill.”

Note that in a conversation with FarmPolicy.com back in July 2011, Sen. Conrad noted that: It’s been my honor. I’ve enjoyed these years. I’ll have served 26 years in the Senate. Only about 5% of senators in history have served that long. And I have loved, loved serving on the Agriculture Committee and working hard on farm bills that I think advance the economic interests of farmers across the country and I think advance the interests of the United States. And I appreciate so much the allies I’ve had in the agriculture community from every corner of the country.

“So I’m going to miss that part of it, and I’ve certainly done my best to help get the country back on a more fiscally responsible course. And I think in agriculture we can be proud. The last farm bill completely paid for. We didn’t add a dime to the deficit. And those who now say somehow agriculture is responsible for contributing to the deficit obviously have not read the history of what the agriculture community did.”

Gary Truitt reported yesterday at Hoosier Ag Today Online that, “Indiana Senator-elect Joe Donnelly received his committee assignments for the 113th Congress on Wednesday. Donnelly will serve on the Agriculture committee, as well as the Armed Services, and Aging Committees.”

A list of all committee assignments for the 113th Congress approved yesterday by the Democratic Steering Committee, including Agriculture, can be found here.

With respect to executive branch perspective and the Farm Bill, Matt Kelley reported yesterday at RadioIowa Online that, “U.S. Agriculture Secretary Tom Vilsack is urging the U.S. House and Senate Ag Committees to get a Farm Bill ready. Once created, Vilsack says that legislation could be attached to any agreement to avoid the fall off the ‘fiscal cliff’ of automatic tax hikes and budget cuts which loom on January 1st.

“‘That would provide a vehicle for the passage of a food, farm and jobs bill,’ Vilsack says. ‘In order for that to happen, they could not be in a situation where they would ask folks to wait while they crafted and drafted whatever compromises they could reach. They need to do that work now so that when and if there’s a resolution to the fiscal cliff, the farm legislation could be attached to it without delay.’”

In other news, University of Illinois Agricultural Economist Gary Schnitkey pointed out earlier this week at the farmdoc daily Blog (“Will ACRE Pay in 2012?”) that, “ACRE, or the Average Crop Revenue Election, is a revenue based program contained in 2008 Farm Bill. In Illinois, 2012 ACRE payments for corn are possible if the Market Year Average (MYA) price for corn averages below $7.00 per bushel. In Illinois, ACRE payments are unlikely for soybeans or wheat.”

In developments regarding regulatory issues, a news release yesterday from Sen. John Boozman (R., Ark.) stated that, “U.S. Senators Mark Pryor (D-AR), [Boozman], Thad Cochran (R-MS), and Roger Wicker (R-MS) today introduced legislation to prevent the U.S. Fish and Wildlife Service (FWS) from unfairly penalizing farmers and sportsmen for rolling their fields during hunting season.

“Drought conditions this summer in Arkansas and Mississippi caused harvested rice farms to re-head, creating ‘ratoon’ or second growth crops that are often uneconomical to harvest. According to the Senators, the U.S. Fish and Wildlife Service has now decided to view these ratoon crops that have been rolled as baited fields, even though this practice was recommended by local cooperative extension services as a way to return nutrients to the soil. Inadvertent baiting of a field can level a fine of up to $15,000 or prohibit hunting on the land.”

The update added that, “The Farmer Protection Act of 2012 would allow each state’s cooperative extension service to distinguish between normal agriculture practices and baiting.”

And Mark Glover reported yesterday at the Sacramento Bee Online that, “The Humane Society of the United States has filed a motion to intervene in and dismiss a state court lawsuit challenging Proposition 2, the 2008 California voter-approved law regulating egg-laying hen cages.

“Last month, the Association of California Egg Farmers filed suit in Fresno Superior Court seeking a determination that Proposition 2 is unconstitutionally vague.

“In their suit, egg farmers contend that Proposition 2’s lack of clarity in size and density requirements prevents them from modifying their hen housing facilities in time to comply with a Jan. 1, 2015 deadline.”

 

Budget Issues

Jonathan Weisman reported yesterday at The New York Times Online that, “House Speaker John A. Boehner on Wednesday described a ‘deliberate’ conversation he had with President Obama Tuesday night, saying the two leaders remain far apart on how to address the federal deficit less than three weeks until hundreds of billions of dollars in automatic tax increases and spending cuts kick in.”

Paul Kane and Lori Montgomery reported in today’s Washington Post that, “Washington stumbled closer to the ‘fiscal cliff’ Wednesday as President Obama and congressional Republicans dug in further on their positions on taxes, even as no face-to-face negotiations took place.

“With hope fading for a deal before Christmas, House Speaker John A. Boehner (Ohio) told his Republican colleagues to prepare for a holiday season of tense negotiations in Washington.”

 

Agricultural Economy

Bloomberg writer Jim Efstathiou Jr. reported yesterday that, “Sandbars no one can remember seeing above water are visible from the wheelhouse of the Capt. Bill Stewart as it churns past Hanging Dog Bluff on the Mississippi River south of St. Louis, a warning of more treacherous conditions ahead.

“‘I’ve been out here 46 years and I’ve never seen it this bad,’ Darrell Alford, the 66-year-old captain of the tow boat, said as he steered the vessel. ‘You’re on edge all the time.’

The worst drought in 50 years has cut the river depth by two-thirds in some places, creating a low-water choke point between St. Louis and Cairo, Illinois, for the $7 billion worth of grain, coal and other commodities that typically move this time of year. Barring extra rainfall, the Army Corps of Engineers predicts the river will be too shallow in coming weeks for the tow boats that push barges down the 180-mile (290 kilometer) section of the river.”

The AP reported yesterday that, “Water levels on the drought-plagued Mississippi River are expected to keep dropping over the next several weeks, according to a new forecast Wednesday that comes amid worries that barge traffic soon could be squeezed along a key stretch of the vital shipping corridor.”

And Reuters writer Charles Abbott reported earlier this week that, “Major agricultural exporters need to urgently upgrade their networks of road, rail and waterways to prepare to feed a world population forecast to grow by one-third by mid-century, the head of global agribusiness company Bunge Ltd said on Tuesday.

Alberto Weisser, chief executive of Bunge, listed improved infrastructure and the removal of trade barriers as two concrete steps to assure adequate food availability.

Experts say farm output must also double in order to feed a more populous and wealthier world. The global population is forecast to hit 9 billion people by 2050.”

Keith Good

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