September 22, 2018

Farm Bill; Budget Issues; and, the Ag Economy

Farm Bill

Christopher Doering reported in yesterday’s Des Moines Register that, “Congress gave farmers a brief reprieve with a nine-month farm bill extension as part of the recent ‘fiscal cliff’ negotiations, but the relief could be short-lived if the fights looming in Washington on spending force deeper cuts in agriculture programs.

“The bare-bones extension keeps many of the existing farm programs in place, including direct payments and crop insurance. But Congress must now work on crafting a new five-year $500 billion farm bill, a task complicated by growing calls in Washington to reduce spending. In the next few months, Congress will have to address increasing the country’s debt ceiling along with the looming sequestration, the name given to the series of automatic spending cuts that would take place on March 1 unless Washington acts.”

The Register article noted that, “The challenges that loom are casting a pall over the farm bill, including whether Congress will be able to meet the new September deadline, and if lawmakers do, how deep the cuts to farm programs should be. Farm groups, Agriculture Secretary Tom Vilsack and others have expressed concern that when Washington does cut spending, agriculture could be asked to pay more than its fair share.”

Mr. Doering pointed out that, “The fear among some lawmakers and those in the agricultural sector is that if Congress has not enacted a farm bill by September, they could be forced to put in place another extension. ‘There is no good reason not to enact a farm bill,’ said Sen. Tom Harkin, D-Ia. ‘Continuing these short-term extensions is a huge missed opportunity and failure of responsibility.’”

In a broad discussion on yesterday’s AgriTalk radio program with Mike Adams, American Farm Bureau Federation President Bob Stallman addressed the Farm Bill, and pointed out that “the budget issue could be a concern.”  (A related audio clip from yesterday’s AgriTalk program is available here (MP3- 1:48)).

And an article posted yesterday evening at Roll Call Online indicated that, “Leaders of the House and Senate Agriculture committees say finishing a five-year farm bill is their priority, but they face a more difficult budget situation this year with legislation carrying a multiyear price tag of several hundred billion dollars. The committees also face antipathy in the House and divisions among major commodity groups on changes to farm support programs.

“Congress included a renewal and extension of selected farm programs in the fiscal cliff tax package. There’s already speculation that lawmakers will extend the temporary authorization past its Sept. 30 expiration.”

Meanwhile, Devin Henry reported yesterday at the MinnPost (Minneapolis) Online that, “Of all the lawmakers disappointed about the final fiscal cliff deal Congress passed two weeks ago, Rep. Collin Peterson was among the most vocal.

“Peterson was the only Minnesota Democrat to vote against the final deal, in large part because of the way it funded agriculture programs, extending current policy for nine months in lieu of a five-year farm bill most agriculturally-inclined lawmakers supported. Such a long-term plan, which Peterson, the ranking Democrat on the House Agriculture committee helped craft, would have ended direct subsidies to farmers and saved $35 billion over 10 years, and it included a novel dairy-support program Peterson wrote himself. None of that was included in the fiscal cliff bill, and Congress effectively has until the end of the year to either pass a long-term bill or extend current policy yet again.”

Yesterday’s update continued in a “Q and A” format based on a discussion with Rep. Peterson from last week; the article included these remarks by Rep. Peterson: “When the thing started to break finally — must have been the Friday after Christmas — I think I probably got five calls that day from Nancy Pelosi, asking me questions related to what was being discussed. I also had some discussions that day and the day before with [Sen. Debbie] Stabenow and Pat Leahy, but the only avenue I had into the talks was Nancy Pelosi, and she was our biggest ally in this whole thing. I think she was the only leadership person the whole room who was actually trying to help us.

“There were people in there trying to hurt us, and people who didn’t care. The president didn’t care. … At the end of the day, when [Joe] Biden made the deal with [Mitch] McConnell, the White House basically said, ‘We don’t care what you do, just don’t let the milk prices go up.’”

Mr. Henry’s MinnPost item from yesterday also included these remarks from Rep. Peterson: “This is exactly what I was afraid of and why I pushed so hard before the election to get this done. I knew there was going to be no outcome in this endgame that was going to be good for us because we weren’t going to be in the room, and you basically have no one at the table who had any idea what’s going on. As I said, Nancy Pelosi called me numerous times because she wanted to understand what the situation was. But [John] Boehner was hostile because he never liked any farm programs and he’s very much against the dairy stuff we were trying to do. I think McConnell didn’t really care, and Stabenow, she over-played her hand, in my opinion.

“As this thing went down, she was insisting on funding these so-called ‘orphan programs.’ … Her trying to attach that subjected the deal to a point of order in the Senate. [Note: In this case, the ‘orphan programs’ were unfunded, and since bills appropriating funds need to originate in the House, it couldn’t move forward in the Senate]. And that was the objection from McConnell and [Pat] Roberts, that they couldn’t have something that was going to be a potential point of order. The dairy part of it was not subject to any point of order, so all that would have had to happen was, if Obama would have said, put the dairy stuff in, it would have been done. And if Stabenow would have dropped her orphan programs and said, do the dairy stuff in a one-year extension, that would have carried some weight. But that gave McConnell an excuse to basically take it away from her and basically write it in their shop.”

Meanwhile, in his weekly column from yesterday, Nebraska GOP Senator Mike Johanns noted in part that, “The one-year extension has no impact on the existing crop insurance program, which is quickly becoming farmers’ favorite method of managing risks…Now, Congress must refocus its efforts, building upon momentum generated last year to finally pass a five-year reform-minded farm bill that provides for better risk management and improved trade opportunities while at the same time, reducing the deficit.”

In other developments, AP writer Mary Clare Jalonick reported yesterday that, “Agriculture Secretary Tom Vilsack will keep his job in President Obama’s second term.”

A related statement on this development from Sec. Vilsack is available here.

And Bloomberg writer Alan Bjerga pointed out yesterday that, “During his first four years in office, Vilsack, 62, pushed for expanded export markets as U.S. farmers earned near record profits and enjoyed the highest land values ever. Should he serve until 2017, Vilsack would be the first person to head the Department of Agriculture for two terms since Orville Freeman led the agency under presidents John Kennedy and Lyndon Johnson in the 1960s.”

In a column posted yesterday at The Tennessean (Nashville) Online, Sec. Vilsack stated that, “I am excited for the future, but to build up this prosperity, I am concerned that all Americans must gain an understanding for the importance and potential of rural areas. It’s a message I’m sharing around the country with groups that aren’t a traditional audience for the Secretary of Agriculture – most recently at a very positive meeting with the U.S. Chamber of Commerce in December. Today I’ll encourage our agriculture leaders at the Farm Bureau to help me share this story.”

DTN Ag Policy Editor Chris Clayton reported yesterday (link requires subscription) that, “Agriculture Secretary Tom Vilsack pitched a speech to members of the American Farm Bureau Federation about opportunities in rural America, but he stressed the limitations facing rural America by Congress’ failing to act on a five-year farm bill.

“‘We need a five-year bill and we need it now,’ Vilsack told Farm Bureau members as a repeated theme throughout his speech Monday.”

(Note that an audio replay of Sec. Vilsack’s speech is available here, while an overview of the speech is available here.  A full transcript of the Secretary’s presentation yesterday can be found here).

Mr. Clayton added that, “Vilsack reiterated his discussion on the decision by United Egg Producers to work with the Humane Society of the United States, noting ‘I know there are not too many fans of the Humane Society in this room.’ That alliance to create a national standard for cage sizes at major egg-laying drew a lot of criticism from agricultural circles. Still, Vilsack said the egg producers chose not to fight political battles in every state, but worked to reach an agreement everyone could manage.

“‘They sat down with folks and reached common ground,’ Vilsack said. ‘After all, isn’t that what we are asking our Congress to do? … I think the egg producers have the right idea.’”

Reuters writer Charles Abbott reported yesterday that, “Congress should reform U.S. farm subsidies, and end a $5 billion a year ‘direct payment’,  as part of delivering an overdue overhaul of the farm program this year, Agriculture Secretary Tom Vilsack said on Monday.

In a speech to the largest U.S. farm group, Vilsack said the farm safety net should be built on the federally subsidized crop insurance system. It also should encourage soil and water conservation and support agricultural research to help feed the rapidly growing world population, he said.”

Mr. Abbott noted that, “USDA will give growers the option of leaving the Average Crop Revenue Election program, the first subsidy to shield farmers from low prices and poor yields. ACRE, which has not lived up to expectations, was due to expire with the 2008 law.”

Daniel Looker reported yesterday at Agriculture Online that, “Speaking at Farm Bureau’s annual meeting, Vilsack, who was bitterly disappointed that Congress failed to pass a new five-year farm bill in 2012, offered clarity on one farm program. There has been confusion about how the extension of the 2008 law in the fiscal cliff legislation affects ACRE, or the Average Crop Revenue Election.

“‘We will provide an opportunity for people to opt in, or to opt out if they became disenchanted with the program,’ Vilsack said of ACRE.”

“Still, he said he’s disappointed that the extension doesn’t offer any disaster help for livestock producers hit by last year’s drought, even as his Department has already declared more than 500 counties disaster areas this year as dry conditions persist in much of the country,” Mr. Looker noted.

At a press conference after his presentation yesterday (full audio replay here), Sec. Vilsack elaborated on crop insurance and direct paymentsaudio clip (MP3- 1:23); and, on the uncertainties facing agricultural producers.  Sec. Vilsack also noted that Rep. Peterson’s request regarding floor action on a House Ag Committee passed bill was a “legitimate ask.” (Audio clip (MP3- 2:03)).


Budget Issues

Carol E. Lee and Janet Hook reported in today’s Wall Street Journal that, “President Barack Obama, facing a battle over raising the U.S. borrowing limit, made clear Monday that he sees no alternative to Congress voting for an increase and said that not doing so would be ‘irresponsible’ and ‘absurd.’

“Mr. Obama’s confrontational message—that a debate over the debt limit was already harming the economy and could push the U.S. into a recession—was primarily aimed at Republicans, who plan to use the debt-limit vote as leverage to extract cuts in federal spending. But it also served as a warning to Democrats who have pressed him to increase the borrowing limit unilaterally by invoking executive powers.”

The Journal writers noted that, “Mr. Obama’s tone suggested that battle lines already have hardened ahead of the next budget fight. Republicans showed no signs of backing away from their push to reduce the federal deficit. ‘The president and his allies need to get serious about spending, and the debt-limit debate is the perfect time for it,’ said Senate Republican Leader Mitch McConnell (R., Ky.).”

Today’s article added that, “Federal Reserve Chairman Ben Bernanke urged Congress on Monday to raise the debt ceiling.”

Jackie Calmes and Jonathan Weisman reported in today’s New York Times that, “With each side claiming popular support, President Obama and Congress’s Republican leaders on Monday dug in on their conflicting positions about raising the nation’s debt limit, indicating that the president’s second term will open with a potentially perilous budget showdown.”

Kathleen Hennessey, Lisa Mascaro and Christi Parsons reported yesterday at the Los Angeles Times Online that, “Treasury Secretary Timothy F. Geithner notified Congress on Monday that the government would reach that point between ‘mid-February and early March.’”

And, Daniel Newhauser reported last night at Roll Call Online that, “With the administration’s debt ceiling deadline fast approaching, House Republican leaders are considering a four-year debt limit increase that would take the issue off the table for the rest of President Barack Obama’s presidency.

“The plan would, however, come at no easy price for Obama, who pledged as recently as Monday morning not to negotiate with Republicans on a debt ceiling hike. Republicans would demand major tax and entitlement changes — the latter of which has been anathema to many Democrats — and they could also ask for movement on the sequester and an expiring continuing resolution that must be dealt with in the next three months.”

Meanwhile, Erik Wasson reported yesterday at The Hill’s On the Money Blog that, “The White House has informed House Budget Committee Chairman Paul Ryan (R-Wis.) that it will miss the legal deadline for sending a budget to Congress.

“Acting Budget Director Jeff Zients told Ryan in a letter delivered Friday that the budget will not be delivered by Feb. 4, as required by law.”


Agricultural Economy

Bloomberg writer Oliver Renick reported yesterday that, “Orange growers in California, the largest U.S. producer after Florida, may see some fruit damage from a five-day cold spell that is forecast to end tomorrow, according to a farmer group.”

Also yesterday, Reuters writers Tom Polansek and P.J. Huffstutter reported that, “Vessels on the Mississippi River were gearing up on Monday for the shipping superhighway to fully reopen within weeks after being crippled by a severe drought as heavy rains at the weekend and an earlier-than-expected finish to the rock removal improved prospects for shippers.”

And a news release yesterday from the American Farm Bureau Federation indicated that, “Drought and high feed costs could continue to restrict livestock markets in 2013 if conditions do not improve, according to Dr. David Anderson, professor and economist in Livestock and Food Products Marketing with the Texas A&M AgriLife Extension Service. Anderson addressed livestock producers from across the country today during an issues conference at the American Farm Bureau Federation’s 94th Annual Meeting.

“‘Underlying everything we talk about in terms of livestock markets, everything starts with where we are with drought and pasture conditions,’ Anderson said. ‘Where we go in terms of costs, particularly, will be based on what happens with the drought in the coming year.’”

Keith Good

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