FarmPolicy

October 24, 2014

Inaugural Address- Policy Issues; Budget; and, the Ag Economy

Inaugural Address, and Other Issues (Farm Bill, Food Safety, Biofuels)

Carol E. Lee reported in today’s Wall Street Journal that, “President Barack Obama began his second term Monday by setting an agenda for the next four years built on bedrock Democratic social policies, in a provocative speech coming at a time of deep partisanship in the capital and lingering economic uncertainty across the country…[H]is priorities sent a message to Washington’s leaders that he is looking beyond the fiscal battles set to dominate the coming weeks, while signaling to the nation that he sees a large part of his legacy to be advocacy for underprivileged Americans.”

The Journal article noted that, “Mr. Obama took the ceremonial oath of office shortly before noon in front of hundreds of thousands of Americans stretching across the National Mall. In the speech that followed, he sought to reassure Democrats that he wouldn’t compromise on their core principles and to warn Republicans he planned to pursue policies that place the two parties squarely at odds.”

Richard W. Stevens and John M. Broder reported in today’s New York Times that, “President Obama made addressing climate change the most prominent policy vow of his second Inaugural Address, setting in motion what Democrats say will be a deliberately paced but aggressive campaign built around the use of his executive powers to sidestep Congressional opposition.

“‘We will respond to the threat of climate change, knowing that failure to do so would betray our children and future generations,’ Mr. Obama said on Monday at the start of eight sentences on the subject, more than he devoted to any other specific area. ‘Some may still deny the overwhelming judgment of science, but none can avoid the devastating impact of raging fires, and crippling drought, and more powerful storms.’

“The central place he gave to the subject seemed to answer the question of whether he considered it a realistic second-term priority. He devoted scant attention to it in the campaign and has delivered a mixed message about its importance since the election.”

Erica Martinson reported yesterday at Politico that, “Prospects seem bleak for getting a major climate bill through Congress: If anything, the atmosphere on Capitol Hill has grown even more toxic since Obama’s proposal for a cap-and-trade system to throttle carbon emissions died without a whimper before the 2010 midterm elections. And unless the U.S. reins in its own carbon and persuades nations like China to go along, it’s going to be difficult to bring pollution levels down as sharply as scientists say is necessary to avoid calamity.

But climate activists say Obama has tools he can wield to bypass the gridlock on the Hill — including going ahead with tough EPA regulations on coal-burning power plants, offering more incentives for green energy and, contrary to the expectations of many, killing the Keystone XL oil pipeline from Canada.”

And, Andrew Restuccia reported yesterday at Politico that, “Vice President Joe Biden reassured environmentalists Sunday night that the Obama administration would not let climate change fall by the wayside in the president’s second term.”

More broadly, Ben Goad reported yesterday at The Hill’s RegWatch Blog that, “In a nod to the ongoing debate over federal regulations, President Obama on Monday defended them as vital to the economy.

“Republicans criticized the Obama administration’s regulatory policy throughout the president’s first term, saying a cavalcade of onerous rules promulgated by federal agencies has increased the cost of doing business in America, stifled hiring and stunted economic growth. Many of the most controversial rules proposed by the administration — including those required by the Affordable Care Act and the Dodd-Frank Wall Street reform legislation — are still in the pipeline.

“But Obama, near the start of his address, said history has shown that government has a responsibility to step in and level the economic playing field.”

Jeremy Herb reported yesterday at The Hill Online that, “Republican lawmakers criticized President Obama’s inaugural address Monday, saying he failed to reach out to their party.”

On the issue of inaugural activities, Patrick O’Connor reported yesterday at the Washington Wire Blog (Wall Street Journal) that, “Inauguration Day marks one of the rare occasions when official Washington seeks to bury the hatchet with a little ritualistic bipartisanship.

“The congressional lunch that follows the president’s Inauguration speech is perhaps the best example of Republicans and Democrats trying to play nice for the cameras.”

Mr. O’Connor noted that, “But not everyone looked so comfortable mixing with members of the other party. Plenty of members from both parties awkwardly waited for the meal to begin. House Agriculture Chairman Frank Lucas (R., Okla.) stood by himself at one of the more remote tables checking emails while others mingled around him. When guests were told to sit, he sat by himself, alone at a table in the corner.”

With respect to the Farm Bill, a National Cotton Council update posted yesterday at the Southeast Farm Press Online stated that, “On several recent occasions, Agriculture Secretary Tom Vilsack has referenced the importance of resolving the longstanding Brazil WTO case through new farm policy while expressing 1) concern about Congressional failure to act on long-term policy and 2) questions about continuing to transfer funds to Brazil as part of an agreement to prevent retaliation.

“In December remarks to a conference sponsored by the U.S. Chamber of Commerce, Vilsack said, “As you may know, Brazil took the United States to the WTO on its support for cotton … and we have reached an agreement with Brazil in the interim to avoid retaliation while we encourage Congress to fix the problem. “

Yesterday’s update also quoted Sec. Vilsack as saying, “‘It is important that Congress resolve this issue with Brazil. It’s important that we reform our cotton support and subsidy system, and that we reform our export credit programs so that they are in better compliance with the WTO.

“‘We have put in place a framework that will allow us to prevent the retaliatory efforts that Brazil would be entitled to pursue. Nearly $800 million of retaliation has been stopped for the time being.’”

The update added that, “In remarks last week, he [Sec. Vilsack] said, ‘And we were also acutely aware that neither the extension, nor the failure to pass a farm bill resolves the issue with reference to Brazil and cotton, which could potentially threaten significant retaliation against not just American agriculture but other products.’”

In conclusion, the news item indicated that, “He [Sec. Vilsack] said his department and USTR are in constant contact with Brazil but he suggested ‘the issue can only be resolved through legislation — preferably a new farm bill.’”

In other policy developments, Reuters writer Charlie Dunmore reported yesterday that, “European Union politicians will scale back or ditch reforms to the farm subsidy system as they seek to mollify powerful farmers’ lobbies angry at subsidy cuts forced on them by the bloc’s debt crisis.

“With EU leaders likely to agree on a 10 percent reduction in farm spending from next year, governments and lawmakers want to water down plans to reform the 50-year-old common agricultural policy (CAP).

“The debate centres on European Commission proposals to impose new environmental requirements on farmers and share out the subsidies more fairly across the 27-country bloc.”

The Reuters article added that, “‘The proposals would increase unemployment in rural areas and risk deepening the EU’s current economic crisis,’ said Pekka Pesonen, head of EU farm lobby COPA-COGECA.

“German farm minister Ilse Aigner described the Commission’s bid to boost environmental standards by forcing farmers to leave 7 percent of their cropland fallow as ‘absurd’”.

As a side note on EU policy, see this photo that appeared in Thursday’s Los Angeles Times.  The photo depicts French farmers using their tractors to block traffic in protest against new environmental regulations.

In other news, Ben Goad reported yesterday at The Hill’s RegWatch Blog that, “Consumer advocates are finding fault with the food safety overhaul proposed by the Obama administration, arguing it does not go far enough to prevent contamination…[W]hile generally supportive of the proposals, food safety advocates fear they create too many loopholes as written. They’re also concerned that Congress might not provide the funding needed to ensure strong enforcement.”

Mr. Goad explained that, “The proposed regulations exempt certain types of farms and foodstuffs, however. Almost 80 percent of farms will not be required to comply with the new regulations, thanks to an amendment adopted during congressional consideration of the legislation.

“The amendment, sponsored by Sen. Jon Tester (D-Mont.), is meant to protect small farms and food producers from thousands of dollars in annual costs. Farms and producers that sell less than $25,000 worth of food annually, or make less than $500,000 and sell most of their product within their own state or within a 275-mile radius, would be eligible for exemptions.”

Meanwhile, Bloomberg writer Rudy Ruitenberg reported late last week that, “Biofuel production from agricultural commodities has contributed to surging world food prices in the past decade, said Nestle SA (NESN) Chairman Peter Brabeck-Letmathe.

Blaming the tripling of the price of some food products on speculation is ‘completely wrong,’ and politicians have failed to consider the link with energy markets, Brabeck-Letmathe said at the Global Forum for Food and Agriculture in Berlin.”

And Bloomberg writer Stephan Nielsen reported yesterday that, “GraalBio, a Brazilian cellulosic- ethanol maker, will get a 600 million reais ($294 million) investment from development bank Banco Nacional de Desenvolvimento Economico e Social as the biggest sugarcane growing nation struggles to meet domestic demand for the fuel.”

The article noted that, “Making fuel from discarded stalks and leaves, as GraalBio plans to do, will be 30 percent cheaper than so-called first- generation ethanol because it doesn’t require planting on new land, [GraalBio President Bernardo Gradin] said in a telephone interview. Companies aren’t building enough sugarcane mills in Brazil to meet projected demand because producing ethanol from the crop’s juice doesn’t yield sufficient returns to justify investments, he said.”

Yesterday’s article added that, “Claire Curry, an analyst with Bloomberg New Energy Finance, said it’s unlikely that GraalBio or any other company in Brazil will be able to produce ethanol from organic waste cheaper than from cane juice without subsidies.

“The high cost of enzymes and equipment necessary to break down tough crop residues into fermentable sugars makes cellulosic-ethanol production more expensive than making fuel from cane juice in Brazil or corn starch in the U.S., Curry said today in a telephone interview.”

 

Budget

Janet Hook and Damian Paletta reported in today’s Wall Street Journal that, “House Republicans on Monday moved to extend U.S. borrowing authority until May 19, setting a timeline for the next phase of budget wrangling between the White House and Congress.

“The bill to extend borrowing, which was introduced by GOP leaders Monday and is expected to be approved by the House on Wednesday, would suspend the debt ceiling until May 19, allowing the government to issue new debt to pay existing bills. At the end of that period, the debt limit would be increased to reflect the new amount of total debt incurred. Still, the deadline and other parameters for broader deficit-reduction efforts help flesh out last week’s House GOP proposal to avert another fiscal showdown.”

Erik Wasson reported yesterday at The Hill’s On the Money Blog that, “Senate Democrats have bowed to GOP demands to do a budget resolution for the first time in four years, but how detailed the plan will be and whether it moves through the regular committee process by the legal deadline remain open questions.

“The Democratic shift comes after Republicans announced last week that they will move a three-month debt-ceiling increase this week and attach a requirement that lawmakers have their pay withheld if a budget is not passed.

Democrats last passed a Senate budget resolution in April 2009.”

Alan K. Ota and David Harrison reported yesterday at Roll Call Online that, “The short-term debt limit suspension detailed Monday by House Republicans appears likely to delay one fiscal confrontation, but opinions are divided on whether it could lay the groundwork for something much bigger.”

The update added that, “The measure would delay further action on the debt limit until after Congress and President Barack Obama deal with automatic spending cuts now scheduled to begin March 1 and the March 27 expiration of the current stopgap spending law (PL 112-175).

What else the measure could lead to remains open to debate. Republicans intend for it to provide an incentive for adoption of a fiscal 2014 budget resolution. And if bipartisan agreement could be reached on a budget blueprint, that could provide a fast track for legislation implementing any fiscal agreement that the White House and lawmakers are able to negotiate.”

Yesterday’s Roll Call article also explained that, “There is some thought that restoring regular order in the congressional budget process could represent the first step toward a historic deficit reduction agreement addressing both taxes and spending. That is largely because adoption of a budget resolution would make it possible for lawmakers to use the reconciliation process.

Under reconciliation, lawmakers could instruct House and Senate committees to write legislation that would reduce the deficit by specified amounts. The committees’ proposals would be packaged for floor action with protection from a Senate filibuster.

“At this point, such a scenario remains a long shot. The House and Senate have been unable to overcome partisan differences and strike budget deals. It’s unclear whether the threat of withheld salaries will be enough to nudge them toward an agreement.”

 

Agricultural Economy

Bloomberg writer Whitney McFerron reported yesterday that, “Wheat rose in Paris on speculation global grain supplies will shrink as drought threatens to reduce crops in the U.S., the world’s biggest exporter.”

And, a news release on Saturday from the Food and Agriculture Organization of the United Nations (FAO) stated that, “The German Minister of Food, Agriculture and Consumer Protection, Ilse Aigner, and the Food and Agriculture Organization Director-General José Graziano da Silva have called for a significant increase in responsible investments in agriculture to eradicate hunger and feed a growing world population.

“Investments in agriculture are still too low in those regions where rural poverty and hunger are most severe, Aigner and Graziano da Silva stressed today after meeting ahead of the Agriculture Ministers’ Berlin Summit 2013.”

The FAO release added that, “At present, around 870 million of the world’s poorest people, or one in eight, are suffering from hunger and have inadequate access to food. Most of them live in rural areas in developing countries.”

Keith Good

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