FarmPolicy

July 25, 2014

Farm Bill; and, Budget Issues

Categories: Budget /Farm Bill

Farm Bill Issues

Ron Nixon reported in today’s New York Times that, “Forget the fiscal crisis and the automatic budget cuts. Come Jan. 1, there is a threat that milk prices could rise to $6 to $8 a gallon if Congress does not pass a new farm bill that amends farm policy dating back to the Truman presidency.

“Lost in the political standoff between the Obama administration and Congressional Republicans over the budget is a virtually forgotten impasse over a farm bill that covers billions of dollars in agriculture programs. Without last-minute Congressional action, the government would have to follow an antiquated 1949 farm law that would force Washington to buy milk at wildly inflated prices, creating higher prices in the dairy case. Milk now costs an average of $3.65 a gallon.”

Mr. Nixon pointed out that, “Under the current program, the government sets a minimum price to cover dairy farmers’ production costs. If the market price drops below that, the government buys dairy products from farmers to buoy prices and increase demand. Since milk prices have remained above that minimum price in recent years, dairy farmers usually do better by selling their products commercially rather than to the government.

But if 1949 rules go into effect, the government would be required to buy dairy products at around $40 per hundredweight — roughly twice the current market price — to drive up the price of milk to cover dairy producers’ cost.

“‘It would be bad for consumer demand in the long run,’ said Chris Galen, a spokesman for the National Milk Producers Federation, which represents more than 32,000 dairy farmers.”

Brett Neely reported earlier this week at Minnesota Public Radio Online that, “[House Agriculture Committee Ranking Member Collin Peterson (D., Minn.)] expects that if milk prices start going up, public pressure could force Congress to pass a bill.”

Meanwhile, Rep. Peterson was a guest on yesterday’s AgriTalk radio program with Mike Adams where the conversation focused on the Farm Bill and budget issues (audio replay, FarmPolicy.com transcript).

In part, Mr. Adams asked: “All right, Congressman, do you basically start over on a farm bill next year if we don’t get anything done here before the end of the year? Or is there any way…can you move something? Can you take the bill you passed in the Ag Committee in the House and what they passed in the Senate and go ahead and push something through, or is it just totally tied to all this debt and fiscal cliff talk we’re hearing about?”

Rep. Peterson indicated that, “Well, it’s tied to that at this point because there’s no way to move the bill in regular order, and they haven’t changed their position, they’re not going to let us do that anyway. So the only way this would get done is if it was attached to something that got worked out on the so-called fiscal cliff.

Or the other thing that’s being considered now is attaching it to a bill to give money to people for Hurricane Sandy. That’s being talked about over in the Senate, although over here it doesn’t seem to be having any legs. So whatever would happen would have to get attached to some vehicle that’s going to pass before the 31st, and I’m not sure that there’s going to be a vehicle that’s going to be able to pass.

“And that’s part of why we haven’t been able to come to a resolution on this, because nobody wants to put their final cards on the table in the Ag Committee until we actually can see a path to get this done. So that’s precluded us from finalizing the dispute we have at the Senate over the commodity title.”

The veteran Democrat lawmaker continued, pointing out that, “So I think the most likely outcome is that we’re going to go to permanent law. I think that will get us a bill in short order. Frank has already announced that if this expires…if we don’t get anything done, we’re going to do markup on February 27th, which is kind of the first time we can do anything because of all of the lack of meetings, you know, time before that, and we’ll try to do it next year. I think if we’re into permanent law and we have to deal with this dairy situation, I think it will get us a bill sooner rather than later.

“And that’s one of the reasons I’ve opposed an extension. Plus, if they did an extension, we think that they would take the direct payments, just eliminate them, and probably cut crop insurance as well as part of the extension, which would put us in a situation where we can’t pass a bill next year even if we tried.

So we’re in a never-never land here, and we’ll have to wait. We’ll know the first of January kind of better how we’re going to proceed. And, you know, it’s anybody’s guess at this point.”

An update yesterday at the National Sustainable Agriculture Coalition (NSAC) Blog stated that, “Absent a last minute miracle, which — while welcome — frankly appears remote, there seemingly must be a Plan B for the farm bill.  The contours of that Plan B have long been known, but not frequently talked about while hope remained for finishing the new farm bill this year.”

The NSAC update noted that, “The key ingredients would likely be –An extension of the 2008 Farm Bill through some specific date in 2013, likely late spring or summer, to ensure that mandatory farm bill programs with permanent funding can continue, that discretionary farm bill programs are reauthorized for the interim, and that permanent and very antiquated law with respect to commodity programs does not come into force.

“An amount of spending cuts that the Agriculture Committees will be tasked with achieving as part of a broader deficit reduction plan as they develop the 2013 Farm Bill by whatever deadline is agreed upon.

“An agreement to provide FY 2013 funding for the innovative farm bill programs, highlighted in our recent ‘What’s At Stake’ series, that had mandatory funding in the 2008 Farm Bill and have renewed mandatory funding in either the Senate-passed or House Committee-passed version of the 2012 Farm Bill or both, but that will not have funding for 2013 unless the extension includes such funding.

“A negotiated deal on either a temporary or permanent fix for the dairy program, likely in the form of either an extension/enhancement of what was the Milk Income Loss Contract program or the start-up of the new Dairy Market Stabilization Program included, with some differences, in the Senate and House bills.”

Also yesterday, Senate Agriculture Committee Members Ben Nelson (D., Neb.) and Bob Casey (D., Pa.) addressed issues associated with the Farm Bill on the Senate floor.

In part, Sen. Nelson noted that, “I am disappointed that this is not moving forward.  The House’s inaction is causing uncertainty, a continuing uncertainty for our nation’s producers as they begin planning for the next planting year.”

Sen. Nelson indicated that, “As we seek to find commonsense solutions to the fiscal and legislative challenges before us in Congress, I urge the House to now act on a five-year Farm Bill, one that will help us achieve savings, bring needed reforms to commodity programs and provide our nation’s farmers, ranchers and rural communities the certainty they need to continue to be the world leader in agricultural production.”

Sen. Casey pointed out that, “A short-term extension wouldn’t provide the same reforms nor would a short-term extension provide the cost savings,” and he added that, “So we need to make sure that that we take steps now to prevent some of the consequences of inaction, some of the consequences of the House not moving a five-year Farm Bill through their process in the House.”

A complete video replay of the remarks yesterday from Sen. Nelson and Sen. Casey are available at FarmPolicy.com Online.

Denise Ross reported yesterday at The Daily Republic Online (Mitchell, S.D.) that, “South Dakota’s senior senator is worried about the farm bill. A new farm bill is not guaranteed in any so-called fiscal cliff agreement on Capitol Hill, said Sen. Tim Johnson, D-S.D., Wednesday. He said it’s possible that the crop insurance program would be cut if a farm bill were to be rolled into a much broader deficit-reduction agreement.

“‘I believe the baseline budget is in danger of going down,’ Johnson said. ‘I’m frustrated.’”

Separately, a news release earlier this week from Sen. Jeff Merkley (D., Ore.) noted that, “Oregon’s Senators [Merkley] and Ron Wyden today introduced an amendment to the disaster aid bill currently before the Senate to help fund recovery efforts for ranchers, fruit growers, and farmers affected by this year’s historic wildfires and drought… The Senate is currently working on a supplemental appropriations bill to address disaster relief to victims of Hurricane Sandy.  This amendment, modeled off legislation Merkley and Wyden introduced earlier this year and developed together with [Sen. Debbie Stabenow (D., Mich.)], would create a more comprehensive disaster relief package that would help Americans across the country who are dealing with the aftermath of drought and wildfire.”

A similar news item was also released this week by Sen. Claire McCaskall (D., Mo.).

And Ramsey Cox reported yesterday at The Hill’s Floor Action Blog that, “Sen. John Kerry (D-Mass.) said the emergency-spending bill for Hurricane Sandy recovery efforts won’t pass unless money for fisheries is included.”

Also with respect to the Sandy emergency bill, Erik Wasson and Bernie Becker reported yesterday at The Hill’s On the Money Blog that, “The number three Democrat in the Senate [Chuck Schumer (N.Y.)] had a warning for Republicans from disaster-prone regions like the Gulf on Thursday: fully pay for Hurricane Sandy or don’t come looking for help when your turn comes.”

In other developments, a news release yesterday from the House Ag. Committee indicated that, “Today Chairman Frank Lucas of Oklahoma named five members to serve as Subcommittee Chairmen of the House Agriculture Committee for the 113th Congress.”

The appointments were: Rep. Steve King (IA-5): Department Operations, Oversight, and Nutrition; Rep. K. Michael Conaway, (TX-11):  General Farm Commodities and Risk Management; Rep. Glenn “GT” Thompson (PA-5):  Conservation, Energy, and Forestry; Rep. Austin Scott (GA-8):  Horticulture, Research, Biotechnology, and Foreign Agriculture; and Rep. Rick Crawford (AR-1):  Livestock, Rural Development, and Credit.

A news item yesterday from the House Agriculture Committee Democrats noted that, “U.S. House Agriculture Committee Ranking Member Collin C. Peterson, D-Minn., today announced four new Democratic members appointed to the Committee for the 113th Congress.”

The appointments were: Michelle Lujan Grisham (NM-1), Ann Kuster (NH-2), Gloria McLeod (CA-35), and Filemon Vela (TX-34).

The update noted that, “Additional appointments will be announced in the coming weeks.”

Meanwhile, Sec. of Agriculture Tom Vilsack provided executive branch perspective on the Farm Bill during an interview with Mike Adams on yesterday’s AgriTalk program (audio replay, FarmPolicy.com transcript).

In part, Sec. Vilsack noted that, “I’m not going to give up until the clock strikes midnight on December 31st. We’re going to continue to articulate the need for this and hope that if something gets worked out on the fiscal cliff or a hurricane relief bill that farm legislation could be attached to it.

“In the meantime, we obviously have to be realistic. The Speaker of the House has been pretty clear about his belief that the time doesn’t allow or doesn’t permit, or it’s just not simply a priority to get this done, so we have to begin preparing for what could potentially happen.

So we are in the process of reaching out, particularly in the dairy industry, in particular, to figure out how co-ops and processors will be impacted by permanent law, and beginning the process of figuring out precisely what we can and cannot do here at USDA if permanent law is triggered. We don’t have a lot of flexibility on this, which is unfortunate.”

Sec. Vilsack also noted that, “I can’t imagine that at any point in time in the past that with all, and every major farm group being adamant about the need for a farm bill and being united in that effort, and with the Senate having passed a bill and the House Ag Committee having gotten its work done, I can’t imagine, in the past, that we wouldn’t have had some legislation by now. And so the question is why don’t we.

And I think part of the reason is that folks just don’t think it’s as important as other things that they’re spending time and attention on. And I think that’s a big mistake. Rural America is a very, very important part of America. It’s under appreciated, it’s under recognized. It’s a supplier of food, water, energy and jobs in disproportionate amount to the population.”

This exchange also took place on yesterday’s AgriTalk program, Mr. Adams: “So you’ve not heard anything that would make you believe you’re not going to be on the job for the next four years?”

Sec. Vilsack: “No. I can tell you the President, you know, he…I…He’s sent me all the right signals. Let me put it that way.”

In other policy related news, Kansas State University Professor Art Barnaby provided a brief and interesting analysis yesterday titled, “Will a Price Decline Cause a Catastrophic Reduction in Ag’s Safety Net?”

And, Bloomberg writer Stephanie Armour reported yesterday that, “Most livestock moved across state lines will have to be identified and tracked under a U.S. Department of Agriculture rule that aims to rapidly trace diseased animals to their origin.

“Cattle and other animals covered by the regulation will have to be identified by ear marks, tattoos or brands and accompanied by an interstate certificate of veterinary inspection when moved from state to state, the USDA said today in a statement. The tracing will assist investigators who need to quickly discover the origins of cattle with mad cow disease or other ailments along with their herd mates, the USDA said.”

 

Budget

Janet Hook, Naftali Bendavid and Carol E. Lee reported in today’s Wall Street Journal that, “House Speaker John Boehner, facing a rebellion in his party’s conservative ranks, abandoned his own plan to avert tax increases for most Americans Thursday night, throwing Washington’s high-stakes budget negotiations into disarray and bringing the prospect of tumbling over the fiscal cliff into sudden focus.

“After pulling his bill without taking a formal vote, Mr. Boehner unexpectedly disbanded the House until after Christmas, leaving behind uncertainty about whether Congress and President Barack Obama would be able to avoid $500 billion in spending cuts and tax increases that begin in January.

House Republicans’ refusal to go along with Mr. Boehner’s tax plan represents a rebuke to the speaker that raises questions about his ability to lead his party in further budget negotiations with Mr. Obama. Negotiations between the White House and Mr. Boehner are at a standstill. The bill that failed Thursday, which would have raised income-tax rates on income over $1 million, was designed as a backup.”

The Journal article added that, “In announcing he had canceled the vote, Mr. Boehner put the onus on the president and Senate Majority Leader Harry Reid (D., Nev.) to take the next step.”

Lori Montgomery and Rosalind S. Helderman reported in today’s Washington Post that, “No one could say late Thursday what will happen next. Just 11 days remain until the new year, when more than $500 billion in automatic tax increases and spending cuts will begin to take effect, threatening to undermine the sluggish recovery and prompt a new recession.”

“White House press secretary Jay Carney vowed that Obama would act but offered no clear path through the political mine field. The House is now out of session until after Christmas. The Senate is scheduled to meet for only a few hours on Friday afternoon before members leave town until next Thursday,” the Post article said.

And Jonathan Weisman reported in today’s New York Times that, “Just days before more than a half trillion dollars in tax increases and spending cuts kick in, a chasm now separates Congressional Republicans from the president, even though the latest deficit offers from the White House and speaker are numerically very close. With his own plan defeated, Mr. Boehner faces a grave decision. A deal with Mr. Obama would almost certainly lose a huge swath of his Republican conference, but it could pass with Democratic support. Does he make such a deal and risk a Republican revolt, or do leaders allow the nation to head into an economic situation that some say could cause a recession?”

Keith Good

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