FarmPolicy

April 25, 2014

Farm Bill; Trade; Budget; and, the Ag Economy

Farm Bill- Policy Issues

A news release yesterday from the House Agriculture Committee stated that, “Today, Chairman Frank Lucas released the following statement in response to the U.S. Department of Agriculture’s announcement that enrollment for farm programs for the 2013 crop year begins next month.

“‘I want to commend Secretary Vilsack for today’s announcement that sign-up for farm programs, including direct payments, will begin on February 19th. It is vitally important that our farmers, and lenders alike, know that Congress and the Administration intend to keep the commitment made with the one-year extension of the 2008 farm bill. Short of a five-year bill, this extension provides certainty for the 2013 crop year.’”

Meanwhile, a news release yesterday from the Senate Agriculture Committee stated that, “Senator Debbie Stabenow, Chairwoman of the U.S. Senate Committee on Agriculture, Nutrition and Forestry, today applauded Majority Leader Harry Reid for his commitment to making a new Farm Bill priority legislation for the 113th Congress. Reid introduced the Senate-passed version of the Farm Bill today as one of several privileged, top priority bills, underscoring his support for and commitment to enacting a new five-year farm bill.

“‘I applaud Sen. Reid’s leadership and commitment to getting a five-year farm bill done to provide certainty to the 16 million Americans working in agriculture,’ Chairwoman Stabenow said. ‘Last year we were able to pass a farm bill with overwhelming bipartisan support, saving more than $23 billion in taxpayer money and reforming farm bill programs to be more cost-effective and market-oriented. Unfortunately, the House didn’t bring the Farm Bill to the floor. Majority Leader Reid has demonstrated that the Senate will once again make supporting our nation’s agriculture economy while cutting spending a top priority.’”

The release added that, “Chairwoman Stabenow has said she is committed to convening a Committee mark up as soon as possible, to produce an updated version of the Farm Bill, which could then be substituted for Majority Leader Reid’s placeholder bill.”

Speaking yesterday on the Senate floor, Sen. Reid stated that, “Unfortunately, a number of bipartisan bills passed by the Senate during the last Congress were never acted upon by the House of Representatives. So this year the Senate will also revisit some of the legislative priorities of the 112th Congress. We will take up the Violence Against Women Act, the farm bill, historic reforms to save the United States Postal Service and legislation to make whole the victims of Hurricane Sandy. Each of these initiatives passed the Senate on a bipartisan basis after deliberation and debate during the 112th Congress, but was left to languish by the House of Representatives.”

Newly elected Senate Ag. Comm. Member Heidi Heitkamp (D., N.D.) tweeted yesterday that, “Cosponsored my 1st bill in the #Senate today. A five-year #FarmBill will provide economic certainly to #NorthDakota’s farmers.”

Also yesterday, National Farmers Union (NFU) President Roger Johnson indicated that, “This is a positive way to begin the year and Congressional session. NFU applauds Senate leadership for its commitment to U.S. agriculture. We appreciate the continued support of Sen. Debbie Stabenow, chairwoman of the U.S. Senate Committee on Agriculture, Nutrition and Forestry, who has pledged to hold a committee markup of the bill as soon as possible.

“Farmers and ranchers are in need of certainty through a five-year farm bill and we will continue to work with members of Congress on both sides of the aisle to garner their support for a bill as soon as possible.

NFU urges Speaker of the U.S. House of Representatives John Boehner to make the same commitment to rural America so that we do not prolong this process much longer.”

Tom Steever reported yesterday at Brownfield that, “Senator Charles Grassley is confident that work on the five-year farm bill will not have to start from scratch. Grassley points out that the change in Senate Agriculture Committee Republican leadership from Roberts’s northern influence to Cochran’s southern influence might bring about debate or changes that hadn’t happen before.

“‘But I think that if we want to vote a bill out of committee, the same as we did last time, and the chairman is for doing that, and she’s not for changing a whole lot, I think we can get the job done regardless of who leads the Republicans,’ said Grassley, during a conference call with reporters Tuesday morning.”

An update yesterday from the House Committee on Agriculture Democrats noted that, “U.S. House Agriculture Committee Ranking Member Collin C. Peterson, D-Minn., today announced the Democratic Ranking Members and Subcommittee membership for the Agriculture Committee’s five Subcommittees. Peterson will serve as an ex officio member of all subcommittees.”

Tim Walz (MN-1), Marcia Fudge (OH-11), David Scott (GA-13), Kurt Schrader (OR-5), and Jim Costa (CA-16) will all serve as Subcommittee Ranking Members; the complete breakdown of the Democrat membership for each of the five Subcommittees can be viewed here.

And later this morning, the full House Agriculture Committee will hold a Business Meeting to consider organizational matters of the Committee on Agriculture for the 113th Congress.

In other news, Jens Manuel Krogstad reported in yesterday’s Des Moines Register that, “An Iowa State University economist hopes a new method to measure how food stamps affect hunger and health will influence Congress this year as lawmakers decide funding for a program used by more than 46 million people.

A study using the new technique found that the Supplemental Nutrition Assistance Program, also known as food stamps, reduces hunger among eligible children by at least 20 percent and poor health by at least 35 percent. It also found that food stamps don’t increase obesity rates, and may even decrease them.”

An update yesterday by Kevin Concannon, USDA Under Secretary for Food, Nutrition and Consumer Services, at the USDA Blog noted that, “As the Federal agency responsible for carrying out the Supplemental Nutrition Assistance Program’s mission, we are constantly taking actions to improve program integrity. In 2012, we enacted tougher financial sanctions to punish those who abuse the program; sent letters to the CEOs of Ebay, Facebook, Twitter and Craigslist to engage their help in preventing the sale or purchase of SNAP benefits online; and began requiring increased documentation for high-risk stores applying to redeem SNAP benefits. Last year, the program reached a record level of payment accuracy, and fraud has been reduced to the lowest rate in the history of the program. In 2013, we expect to do even more to ensure that taxpayer dollars are used wisely.”

In developments regarding crop insurance, an update yesterday from National Crop Insurance Services noted that, “Twelve states have loss ratios of at least 1.1 — meaning crop losses are $1.10 for every dollar received in premiums for the 2012 crop year — according to the January 21 data from the Risk Management Agency.   The highest loss ratio states are in the heartland, with the top five states including Illinois at 2.36, Missouri at 2.24, Kentucky at 2.16, Nebraska at 1.83, and Iowa at 1.66.

“To date, most of the crop losses are to corn and soybeans, with corn producers accounting for 59 percent of all indemnities paid and soybeans accounting for roughly 12 percent.  Cotton, wheat and grain sorghum make up the other top five crop losses.”

Reuters news reported yesterday that, “At its peak, drought covered two-thirds of the continental United States, including prime crop territory in the Plains and Corn Belt. Persistent drought imperils this year’s winter wheat crop and may mean a dry start for corn, soybeans and other spring-planted crops.

Crop insurance is the major federal farm support, ahead of traditional subsidies, due in part to sky-high commodity prices and the popularity of so-called revenue policies that shield growers from low prices and poor yields.”

And Art Hovey reported yesterday at the Lincoln Journal Star (Neb.) Online that, “Most of the [crop insurance] claims in Nebraska and neighboring states for 2012 are for corn, and Prague farmer Carl Sousek, chairman of the Nebraska Corn Growers, said his federally subsidized insurance coverage made a big difference on his unirrigated acres northwest of Lincoln.

Without it, ‘I would have been in trouble,’ Sousek said. ‘I like to think, with a couple of good years’ prior to 2012, ‘I could have survived again for another year. But I would have been losing equity. I would have been borrowing against last year’s equity to plant a crop.’”

Mr. Hovey noted that, “There also has been criticism from watchdog groups about the program being too generous even though it has taken the place of emergency disaster programs.”

And yesterday’s article added that, “‘On a historical basis,’ [insurance agent Ruth Gerdes] said, ‘Nebraska has been one of the states that has been highly profitable for both the government and companies. So one bad year — one catastrophic year like 2012 — is not something that should overly worry farmers.’”

In a column on the opinion page of today’s Wall Street Journal, Burleigh C.W. Leonard discussed “permanent” Farm Bill law (“embodied in the Agriculture Adjustment Act of 1938 and the Agricultural Act of 1949”) and noted that, “The 113th Congress has until Oct. 1 to do what the 112th Congress could not do—craft a new long-term farm bill. Its first step should be to repeal permanent law that governs commodity price support programs.”

Meanwhile, Ian Berry reported in today’s Wall Street Journal that, “The largest U.S. dairy cooperative has agreed to pay $158.6 million to settle an antitrust lawsuit alleging it conspired to suppress milk prices paid to dairy farmers.”

And, a news release yesterday from The Humane Society of the United States indicated that, “Marriott International is expanding its work to create a more sustainable planet by eliminating two controversial animal confinement systems from its food supply chain. According to its new policies, the Bethesda, Md.-based company will: require all of its pork suppliers to discontinue the use of gestation crates for Marriott’s supply chain by 2018; and ensure that by 2015, all eggs and egg products used by Marriott come from cage-free hens.”

 

Trade- Ambassador Ron Kirk

Jennifer Epstein reported yesterday at Politico that, “U.S. Trade Representative Ron Kirk will leave the Obama administration at the end of February, he announced Tuesday.

“Kirk had indicated late last year that he planned to return home to Texas, but he confirmed his plans with a statement Tuesday.”

“In a separate statement, President Obama thanked Kirk for ‘deliver[ing] results for the American people and for our economy.’”

 

Budget

Lori Montgomery and Rosalind S. Helderman reported in today’s Washington Post that, “House Republicans are advancing a novel plan to suspend enforcement of the federal debt limit through May 18, a move that would lift the threat of a government default and relieve the air of crisis that has surrounded their budget battle with President Obama.

“The measure — set for a vote Wednesday in the House — would not resolve the dispute over how to control the national debt. But after the traumatic ‘fiscal cliff’ episode at the end of last year, it would buy policymakers a little breathing room to continue the argument without another economy-rattling deadline just around the corner.

“The White House tacitly endorsed the proposal Tuesday, issuing a statement that said Obama ‘would not oppose’ the temporary respite. The president has called for a long-term extension of the Treasury Department’s borrowing authority, which he argues would ‘increase certainty and economic stability.’”

The Post article added that, “Senate Majority Leader Harry M. Reid (D-Nev.) also welcomed the proposal. ‘I’m glad,’ he told reporters, ‘we’re not facing crisis here in the matter of a few days.’”

 

Agricultural Economy

Reuters writer Sam Nelson reported yesterday that, “Dry weather persists in the Plains and western Midwest leading to concern about the fate of the 2013 U.S. hard red winter wheat crop and seedings of the corn and soybean crops, an agricultural meteorologist said on Tuesday.

“‘The main issue in North America is the dryness in the southern Plains,’ said John Dee, a meteorologist for Global Weather Monitoring.”

University of Illinois Agricultural Economist Darrel Good penned an update  yesterday at the farmdoc daily blog titled, “Early Focus on the Prospective Size of the 2013 U.S. Corn Crop.”

After a closer look at some production variables such as planted and harvested acres, yesterday’s analysis indicated that, “The other consideration in forming production expectations is obviously expectations for the U.S. average yield. Most base their early yield expectations on an analysis of trend yield. Trend yield analysis, however, is not straight-forward. First, average yields over any time period reflect both changing technology and variations in weather conditions. A calculation of the true technological trend in average yields requires that yield observations be ‘corrected’ for annual variations in weather conditions. Such correction requires the application of models that separately account for the yield impact of technology and weather. A failure to do so can result in a biased estimate of trend. Following three consecutive years of low corn yields, a trend calculation that does not adjust for variations in weather conditions will understate trend yield for 2013. A second issue surrounding trend yield calculations is the length of the time period used to calculate the trend. Different periods result in different trend calculations. We continue to think that 1960 through 2012 is the correct time period for calculating the 2013 trend yield.”

Yesterday’s update concluded by stating that, “While prices for the 2013 corn crop are currently about $0.70 below the peak reached in September 2012, they are well above the level that would be expected if the 2013 crop reached its full potential. Next month, the USDA will release projections for the U.S. farm sector for the next 10 years. There will be a lot of interest in the 2013 corn acreage and yield projections contained in that report.”

Meanwhile, Owen Fletcher reported in today’s Wall Street Journal that, “U.S. soybean futures rose 1.6% to a one-week high on Tuesday, buoyed by concerns that dry weather could hinder soy crops in South America.

“Traders seized on forecasts that indicate a recent pattern of drier weather could continue to threaten crops in parts of Brazil and Argentina, the world’s largest soybean producers after the U.S. Traders are particularly concerned about Argentina, where near-term forecasts project hotter and drier weather than for the affected areas in Brazil.”

Bloomberg writer Alan Bjerga reported yesterday that, “Consumption of high-fructose corn syrup, used to sweeten products from Coca-Cola Co. to HJ Heinz Co. ketchup and linked to obesity, is falling in the U.S. as health-conscious consumers drink less soda.

“The amount of corn devoted to the sweetener this year will fall to its lowest level since 1997, according to a Jan. 15 projection by the U.S. Department of Agriculture.”

And Bloomberg writers Aya Takada & Yasumasa Song reported earlier this week that, “Japan will ease restrictions on U.S. beef imports next month, boosting supplies to restaurant chains such as Yoshinoya Holdings Co., after food safety authorities said the change wouldn’t increase health risks.”

Keith Good

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