FarmPolicy

April 17, 2014

Farm Bill; Budget; Food Safety; and, the Ag Economy

Farm Bill Issues

DTN Political Correspondent Jerry Hagstrom reported yesterday that, “The continuing battle between the North and the South over the commodity title in the farm bill broke out again this past weekend as a coalition of 33 senators called for the inclusion of the Senate-passed farm bill in an end-of-the-year legislative package.

“One southern commodity group created a map showing that the senators who signed the letter were all from northern states and declared the Senate bill to be unfair to the South.”

Mr. Hagstrom noted that, “The Senate letter inflamed regional passions. On Saturday, The Rice Advocate, a publication of the U.S. Rice Producers Association, included a map of the United States that showed the states whose senators signed the letter and whose did not. An article about the situation was headlined, ‘The Senate Farm Bill: A Picture is Worth a Thousand Words.’

“‘It is no secret that many Southern producers believe that the Senate bill is tilted toward ‘Northern interests’ at the expense of rice, peanut, and other farmers in the South,’ the rice producers wrote.”

The DTN article explained that, “The Senate-passed bill’s Agricultural Risk Coverage program would pay farmers for ‘shallow losses’ not covered by crop insurance and would end target prices as triggers for government payments. The House Agriculture Committee-passed bill would give farmers the option between the Agricultural Risk Coverage program and a Price Loss Program that would continue and raise target prices.

“The central issue appears to be whether a way can be found to encourage a level of rice production, particularly in Texas, that will sustain the rice industry’s milling infrastructure.

“One way to do that is to tie payments to current production rather than historical production, which the House bill does. But Northerners say that tying payments to current production could skew planting decisions toward crops that have higher target prices relative to market prices, and might also encourage growers in other countries to file cases in the World Trade Organization charging that the U.S. farm program violates WTO rules against encouraging production of specific crops.”

Meanwhile, a news release yesterday from Sen. Charles Schumer (D., N.Y.) stated that, “Today, [Sen. Schumer] visited Battenkill Creamery in Washington County and warned that the deadline is fast-approaching for the House of Representatives to take action and pass the bipartisan Senate Farm Bill, in order to avoid the ‘dairy cliff’, which would have a devastating impact on dairy producers.”

The release added that, “‘The ‘dairy cliff’ is fast approaching, and without a House Farm Bill before year’s end, it will be dairy producers and consumers alike that go over the edge,’ said Schumer… Schumer said that the easy way out of this problem is for the House of Representatives to pass the Farm Bill that was passed by a large bipartisan majority in the Senate.”

Andrew Weeks reported late last week at The Times-News (Twin Falls, Idaho) Online that, “Bob Naerebout, executive director of the Idaho Dairyman’s Association, said he believes Congress would extend the deadline before letting the 1949 law take effect…He said, however, that support programs under the current farm bill are antiquated for today’s needs and something should be done as soon as possible to correct the problem.

“The National Milk Producers Federation, established in 1916 in Arlington, Va., which does fear a dairy cliff, echoed similar sentiments, saying it wants a new farm bill, ‘not an extension of current programs that don’t really serve dairy farmers,’ President and CEO Jerry Kozak said in a prepared news release. ‘A one-year extension only gives new life to programs that we are seeking to replace with the new Dairy Security Act.’”

In a separate update yesterday, Meghan Grebner reported at Brownfield that, “Indiana Congressman Joe Donnelly is headed to the Senate and the Senate Ag Committee after the first of the year. As he wraps up his term in the House of Representatives – he says he wishes the Farm Bill was closer to completion.

“But, unfortunately, he says it isn’t that simple. ‘Some of the proposals that we see would actually reduce the federal deficit from the number we see now by $20-25 billion,’ he says. ‘As we go forward with discussions on taxes or discussions on reducing the deficit, I think the Farm Bill has to be a critical part of that.’”

And, Sen. Claire McCaskill (D., Mo.) tweeted yesterday that, “Claire: ‘Our farmers & ranchers need strong farm policies so they can continue to provide our nation with a safe and reliable food source’”

Mary Kay Thatcher, the Senior Director of Congressional Relations at the American Farm Bureau Federation, was a guest on yesterday’s AgriTalk radio program with Mike Adams, where the conversation focused on the Farm Bill (audio replay, FarmPolicy.com transcript).

The conversation included the following exchange, Mr. Adams: “Are we going to have a farm bill by Christmas?

Ms. Thatcher: “I don’t think we are. I still think, unfortunately, we’re going to have an extension. But it isn’t out of the realm of possibility. I mean, if Mr. Boehner, Mr. Reid, the President decided that we were going to, indeed, do this fiscal cliff and they decided that they wanted to drop the farm bill in there, it could still be done. I mean, are we running out of time? Absolutely.

“But I don’t think this is really, the chairman and ranking member of the House and Senate Ag Committees, it’s not in their hands right now. It’s in the leadership hands to decide whether they’re going to force an extension, whether they’re going to do a farm bill, or whether they’re going to let the whole thing expire and revert to permanent law. I really can’t see that last option happening, but it’s an option.”

Ms. Thatcher added that, “For the commodity title, certainly the four principals have met several times and the staff has met more often than that. They are not to an agreement now, but I don’t think that’s surprising, because it’s doubtful that either side wants to put their last card on the table until they know that, indeed, a compromise is going to be doable…But if they got the word that we could finish this farm bill this year in the fiscal cliff, I think they could come to some agreement fairly quickly.”

Later in the AgriTalk interview, Mike Adams asked, “Secretary Vilsack’s been talking about concerns over agriculture, rural America losing its political clout, the lack of a farm bill as an example of that. Do you agree with that?”  [Note- related transcript of Sec. Vilsack’s remarks from Dec. 6].

Ms. Thatcher: “I don’t agree with that. I think we still have plenty of political clout, but I don’t think, all in all, we’ve done very well in utilizing that political clout this year. I think you and I have talked before, Mike, about the fact that we just haven’t had the input from farmers and ranchers about the need to get this thing done. And pretty much all of us inside the Beltway are scratching our heads saying, what is the reason for this?”

Also on the issue of Sec. Vilsack’s remarks, a recent update at the Quad City Times (Davenport, Iowa) indicated that, “Iowa Gov. Terry Branstad appeared most animated when Times Editorial Board community member John Wetzel asked about Agriculture Secretary Tom Vilsack’s lament about the declining clout of rural America.”

The update noted that Gov. Branstad said: “I couldn’t disagree more. Rural America is a strength of this country today. I was governor in the 1980s when agriculture was the weakest part of economy. The reason why Iowa is doing so well is because of the strength of our farmers. Some of the new jobs we’re getting, like the new fertilizer plants, are to serve the needs of farmers. And we’re adding value to what we produce. All of these food processing and bio science facilities being built across the state.

“I don’t know where the secretary of agriculture came up with that agriculture is not as relevant.”

Yesterday, USDA hosted an #AskUSDA chat at its Twitter page, click here to review yesterday’s chat, which covered a variety of issues.

Also yesterday, an audio report from USDA’s Radio News Service (“The Fiscal Cliff and Farmers”) noted that, “Farmers would be affected, along with everyone else, if no fiscal cliff agreement were to be reached.”  The one minute report included comments from USDA Chief Economist Joe Glauber.

 

Budget Issues

Lori Montgomery and Paul Kane reported in today’s Washington Post that, “President Obama and House Speaker John A. Boehner moved close to agreement Monday on a plan to avert the year-end ‘fiscal cliff,’ but they had yet to clear several critical hurdles, including winning the support of wary House Republicans.

“Obama and Boehner (R-Ohio) huddled at the White House for 45 minutes Monday morning for their third conversation in the past five days. Later, Boehner met for an hour at the Capitol with his leadership team in advance of a briefing Tuesday morning for the entire House GOP that could be a crucial test of Boehner’s ability to sell the deal.”

The Post writers explained that, “Behind the scenes, administration officials and senior Republican aides continued to make progress. Obama laid out a counteroffer that included significant concessions on taxes, reducing the amount of new revenue he is seeking to $1.2 trillion over the next decade and limiting the hike in tax rates to households earning more than $400,000 a year. Obama had previously sought $1.4 trillion in new revenue, with tax increases on income over $250,000.

“Obama also gave ground on a key Republican demand — applying a less-generous measure of inflation across the federal government. That change would save about $225 billion over the next decade, with more than half the savings coming from smaller cost-of-living increases for Social Security beneficiaries.

“In addition, Obama increased his overall offer on spending cuts and dropped his demand for extending the payroll tax holiday, which has benefited virtually every worker for the past two years. But he is still seeking $80 billion in new spending on infrastructure and unemployment benefits and an increase in the federal government’s borrowing limit large enough to avert any new fight over the issue for two years.”

Carol E. Lee, Janet Hook and Damian Paletta reported in today’s Wall Street Journal that, “After weeks of public sniping, negotiations have intensified in recent days, with both sides making significant concessions. Obstacles still remain, especially the reaction of lawmakers on both extremes, but the movement suggests negotiators could reach a compromise and pass by the end of the year a deal to avert a series of spending cuts and tax increases set to take effect in January.”

Jonathan Weisman indicated in today’s New York Times that, “The two sides are now dickering over price, not philosophical differences, and the numbers are very close.”

 

Food Safety

Christopher Doering reported on the front page of yesterday’s Des Moines Register that, “Congress and the White House moved aggressively to bring food safety into the 21st century after thousands of Americans fell ill from a series of high-profile outbreaks several years ago involving staples such as lettuce, peppers, peanuts and eggs.

“But two years after President Barack Obama signed a sweeping food safety bill into law, the rules at the heart of the largest food safety overhaul in more than 70 years have yet to be put in place, blocked by their sheer length, growing complexity and a White House that critics contend has delayed their implementation for political gain.

“At the same time, the U.S. Food and Drug Administration, the government agency charged with implementing the new law, has been the victim of a push in Washington to rein in spending and some Republicans in Congress have questioned the necessity and cost of the regulations.”

The Register article noted that, “Rep. Kristi Noem, R-S.D., a member of the House Agriculture Committee, was sympathetic to the complexity of the rule-making process required to implement the new regulations. A host of factors must be considered such as if the measures are needed, how much they will cost and the degree to which they will impact food delivery and safety. Still, she said: ‘Two years … is too long not to come forward with rules and regulations especially when it is as important as food safety.’”

 

Agricultural Economy

The AP reported yesterday that, “Barge operators along a key stretch of the Mississippi River braced Monday for months of restricted shipping as crews prepared to begin blasting large rock formations that are impeding navigation on the drought-plagued waterway.

“Contractors from Iowa and Ohio could begin drilling holes into the troublesome Mississippi River bedrock south of St. Louis and detonating explosives inserted inside as early as Tuesday, the Army Corps of Engineers said. They expect to remove enough rock to fill about 50 dump trucks, possibly more.”

In a statement yesterday, Sen. Claire McCaskill (D., Mo.) indicated that, “The expedited timeline for rock removal is a step in the right direction, and I’m pleased that the Corps is responding to my concerns. But success won’t come with the completion of the project-it will come with the continued ability to commercially navigate the Mississippi River, and I’ll continue to fight for the actions necessary to keep our barge traffic moving.”

Reuters writer Tom Polansek reported yesterday that, “The U.S. Army Corps of Engineers projects no ‘significant interruption in navigation’ on the Mississippi River due to low water levels, U.S. Senator Dick Durbin said on Monday.

However, shippers remained nervous about the potential for crippling restrictions.

“The Army Corps briefed Durbin, the No. 2 Democrat in the Senate; other elected officials; and members of the agricultural industry in East Alton, Illinois, on Monday on its efforts to keep the river open following the worst U.S. drought in more than 50 years.”

With a focus on Brazil, Juan Forero reported in today’s Washington Post that, “A landholder and power broker in the country’s capital, Katia Abreu has heard all the warnings about ranches and soybean farms carving up Brazilian forests.

“But as she rides a chestnut mare across fields of sorghum and corn — her 12,355-acre spread here in the soft hills of north-central Brazil — Abreu insists Brazilian farmers should be commended, not demonized. Big Agro has transformed this country into a breadbasket to the world, she said, one that’s poised to feed billions.

“‘We are not ashamed of anything,’ Abreu said. ‘What’s important is that Brazil increase production.’”

The Post article noted that, “Agribusiness already accounts for nearly 40 percent of the country’s exports and provides 37 percent of jobs in Brazil.

“Abreu wants to see those numbers expand. But she believes it can be done on the same amount of land now dedicated to farming in Brazil, 28 percent of the country’s territory. That will happen through the application of agro-technology to improve yields.”

“Many in Brazil, though, are not convinced that Abreu’s modern-sounding projections for farm production line up with what Big Agro really wants. Environmentalists and experts on land use in Brazil say there is a latent threat, noting that deforestation rose fast this year in some regions, including Abreu’s home state,” the Post article said.

Alexandra Wexler reported yesterday at The Wall Street Journal Online that, “Commodities investors increasingly are betting that rising U.S. demand for sugar-based ethanol will reduce supplies of the sweetener and curb a decline in prices, which recently have fallen to 28-month lows.

Imports from Brazil, which distills most of its ethanol from sugar cane, have risen nearly ninefold this year through October, compared with the same period in 2011, according to the U.S. Department of Agriculture. U.S. demand for foreign-made ethanol jumped after an import tariff that had been on the books for three decades expired in January. U.S. ethanol imports are expected to surge again next year, with the vast majority coming from Brazil.

“The sugar market is starting to feel the effects. Both sugar ethanol and corn ethanol, which is produced mainly in the U.S., have a similar chemical composition and are blended with other fuels to create cleaner-burning gasoline used in cars.”

The Journal article noted that, “Commodities investors, analysts and ethanol producers say the opening of America’s ethanol market and rising demand for sugar-based ethanol in the U.S. and Brazil could end the recent slide in sugar prices. Futures prices have fallen 17% this year because many traders are expecting a big sugar crop out of Brazil next year.”

Analysts and investors say the latest ramp-up in ethanol imports is likely to be sustained. Ethanol output in the U.S. is declining, and federal regulations require that gasoline manufacturers boost their use of a category of renewable fuel that includes sugar ethanol but excludes its corn counterpart,” the Journal article said.

Lastly today, Zack Colman reported yesterday at The Hill’s Energy Blog that, “The Environmental Protection Agency’s (EPA) internal watchdog is looking into whether the agency uses separate internal email accounts to conduct government affairs.

“Its office of the inspector general wants to know whether the agency’s email practices comply with federal laws. The concern is whether correspondence through internal accounts would show up in a search for federal records.”

Keith Good

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