FarmPolicy

April 24, 2014

Farm Bill; Ag Economy; Regulations; Senate; and, CFTC

Farm Bill

Gannett writer Christopher Doering reported earlier this week that, “The House Agriculture Committee has not decided when it will begin the arduous task of crafting a new farm bill, the head of the panel said Wednesday.

“Rep. Frank Lucas, R- Okla., said there are a lot of moving parts that are delaying action by the committee.”

Collin Peterson of Minnesota, the top Democrat on the House Agriculture Committee, said lawmakers representing rural areas need to first see how they fare in the budget discussions,” the article said.

Mr. Doering noted that, “Peterson said the divide over the scope of cuts to nutrition programs, widely blamed last year for derailing hopes of passing a new farm law, was overblown. Republicans, he said, merely used it as a reason to give the public to explain why the bill was being delayed… [F]or now, Peterson said the committee is looking for guidance from House and Senate leaders as to how big the cuts to nutrition programs should be. ‘We have a list of changes that can be made to reduce the food stamp budget, so all we need is a number,’ said Peterson.”

Senator Chuck Grassley (R., Iowa) was a guest on yesterday’s AgriTalk radio program where he addressed Farm Bill issues.

AgriTalk producer John Herath asked Sen. Grassley about potential changes that could be made to the Farm Bill that passed the Senate last year (audio clip (MP3- 0:54)); and also on yesterday’s program, Sen. Grassley indicated how important the crop insurance program was to producers in Iowa (audio clip (MP3- 0:30)).

In a tele-conference with reporters yesterday, Senator Mike Johanns (R., Neb.) was asked about crop insurance and provided this perspective and explanation with respect to the program:  “I took over as Secretary of Agriculture at a time when we had a philosophy of farm policy that was basically based on subsidy and if you were below a target price, you got paid a certain level of — of money because of that.

“I can remember during Hurricane Katrina when the price dropped. We paid out about $4 billion almost overnight. I can point to the year 2000 where that farm policy paid out about $30 billion.

“We have moved away from that with our new farm bill. We have moved more to a market based approach and a risk management approach. And the reality is, across the entire Corn Belt, we had very, very dry conditions last year and it had an impact and so you’re going to have payments made under the crop insurance program.”

Sen. Johanns pointed out that, “But I will tell you that was — that is a far better situation than what we saw, you know, ten, 12 years ago when the payments were just astronomical. We are headed in the right direction here and I just firmly believe that we need to get a farm bill passed because the other piece of this that will disappear with the new farm bill is the direct payments and that is a significant savings over time.

“The other thing I would mention about the bill that Senator Reid introduced, number one, it sends a positive signal that he’s open to looking at another farm bill and giving it the floor time necessary to get it passed.

“I believe we can get a farm bill out of the Senate and I do believe that at end of the day, that farm bill is going to save somewhere around $25 billion. I believe the House version will save somewhere in that vicinity, maybe more.”

In other Farm Bill news, the AP reported yesterday (unable to determine specific author) that, “An upstate New York school district is opting out of the National School Lunch Program as students throw out fruits and vegetables required under new nutritional guidelines.

“The Niskayuna Central School District near Albany plans to opt out April 1. Officials in the suburban district say the number of students buying lunch dropped significantly this year and the program is running a $70,000 deficit.

“The U.S. Department of Agriculture guidelines this school year set limits on calories, phase in more whole grains and require schools to serve vegetables or fruit. Praised by anti-obesity activists, they’ve been panned by some students and some other schools across the country have dropped out.”

And in budget related developments and the Farm Bill, an update yesterday at the National Sustainable Agriculture Coalition (NSAC) Blog noted in part that, “Then there is the matter of the looming $85 billion in automatic budget cuts scheduled to trigger on March 1.  In the past few days, as the new reality of a postponed debt ceiling showdown – with or without a joint budget resolution – has taken hold, many prominent members of Congress on both sides of the aisle have started talking about the inevitability of the automatic sequestration cuts actually being allowed to kick inThree schools of thought seemed to be emerging – some would try to stop it, some would allow the cuts to go into effect from March through May (ultimately to be replaced by a new budget deal), and some would allow the cuts to go into effect permanently.  It may take weeks before this precarious situation begins to sort itself out.

“As we have reported previously, the sequester, if allowed to occur, would take a roughly $4 billion bite out of the farm bill commodity title baseline and a roughly $2 billion bite out of the farm bill conservation title baseline, with SNAP and crop insurance, the two biggest farm bill spending items, spared from any cuts.  A five-year farm bill written after sequestration takes effect would thus start over $6 billion in the hole on the two major titles of the bill where significant cuts were already assumed in the farm bills that were pending last year.”

Yesterday’s NSAC update also pointed out that, “While all these interrelated budget dramas play themselves out, it is probably safe to assume that any real action on either a new five-year farm bill or on the Fiscal Year 2014 agricultural appropriations act is now effectively off until sometime after the May budget resolution and debt ceiling showdown.

“On a potentially positive note, with major congressional action on budget matters on tap for February (sequestration bill) and March (spending bill), the leaders of the Agriculture Committees could lead the charge to use one of these legislative vehicles to correct the farm bill extension slapped together without their participation during the last two days of 2012.”

Meanwhile, Daniel Looker reported yesterday at Agriculture Online that, “Just when it seems that some of President Barack Obama’s Cabinet members are leaving, exhausted or frustrated, Secretary of Agriculture Tom Vilsack welcomes staying on for a second term, undaunted by the challenges of running one of the federal government’s largest departments with a 12% smaller budget and a Congress still stymied over the farm bill.

“In an interview with Agriculture.com Thursday, Vilsack sounded optimistic about chances to offer better service to farmers and to re-energize a rural America that is losing influence in Congress and understanding with the public. Like a latter day Horace Greeley, the former small town Iowa lawyer who became the state’s governor urges young people not to go West, but rural.

“‘Too often the message that we convey to our young people is how difficult and challenging things are in rural America,’ Vilsack said, ‘and certainly they are, but there is unlimited future in rural America to meet the moral challenge of our time, to feed not only hungry Americans but those who hunger around the world. It’s the opportunity for us to respond to a more severe weather conditions and climate change. Most of that’s going to be done in rural America in terms of absorbing carbon and doing our part. It’s about meeting the enormous opportunities that the biobased economy creates where we literally can make virtually everything we need in an economy — from chemicals and fuels and energy to plastics to fibers to fabrics from what we grow, what we raise. It just opens up a whole new vista if you will, for opportunity in rural areas.’”

Mr. Looker also noted that, “Vilsack had hoped that a farm bill could be included with the fiscal cliff legislation what was passed on January 1. Instead, Senate Minority Leader Mitch McConnell, who negotiated with Vice President Joe Biden over the bill, extended the 2008 Farm Bill. In the final hours, Stabenow and other ag committee leaders tried to at least get disaster assistance for livestock producers and tree crop producers some energy and expiring conservation programs included in an extension, as well as a new dairy program. McConnell rejected that approach.

When asked if he had a chance to weigh in with Biden over the last minute deal, Vilsack said Thursday:

“‘At the end of the day, decisions are made, but if the question is, did we encourage the Congress and the White House to look at this as an opportunity to get the farm bill done? Absolutely, but recognizing the difficulties when the Speaker of the House [John Beohner] was not interested in having it included in the package, there’s not a whole lot you can do, right?  And especially when you’re facing milk prices potentially doubling or tripling for consumers, there was, I think, a real desire to avoid that very unfortunate consequence of inaction. Now would I have preferred to have specialty crops and disaster assistance, absolutely, but the speaker was not interested in a full blown farm bill being attached to the fiscal cliff resolution, temporary resolution. Fair enough. That’s done. Can’t cry over spilled milk here, we’ve got to focus on 2013 and we’ve got to work with our friends in Congress and get this done.’”

 

Agricultural Economy

A news release yesterday from Purdue University indicated that, “Turbulence that has shaken the dairy industry the past few years could subside in the second half of this year if feed prices fall or at least stabilize, a Purdue Extension dairy specialist says.

“Although the first part of 2013 likely will be stressful for producers, Mike Schutz said those who hold on should benefit from a relatively neutral economic outlook for the remainder of the year.”

Yesterday’s update noted that, “‘The dairy industry is highly dependent on what happens with feed prices,’ he said. ‘We’re hopeful that feed prices will be reduced or stabilize with the planting of the 2013 crop, which will also hopefully help producers get back to approaching at least break-even or somewhat profitable prices.’

The 2012 drought hit the dairy industry hard by decreasing availability of feed while also increasing feed prices. Most dairy producers grow their own forages, but with drought-induced short supplies, many had to buy expensive forage from other growers.”

Meanwhile, Bloomberg writer Brian Wingfield reported earlier this week that, “A section of the Mississippi River shrunken by the worst U.S. drought in 70 years will remain navigable through Feb. 20, with the channel near St. Louis at least 10 feet deep, according to the National Weather Service.”

In other news, Vicki Needham reported yesterday at The Hill’s On the Money Blog that, “Facing an ambitious trade agenda, lawmakers and businesses leaders are once again pressing Congress to renew trade promotion authority before the end of the year.

“The U.S. Chamber of Commerce and several senators on Thursday said talks must get started to restore the White House’s authority to negotiate free-trade agreements so Congress can pass them quickly.”

And, a news release yesterday from Sen. Chuck Grassley (R., Iowa) stated that, “Senators Chuck Grassley, Pat Roberts, Mike Enzi and John Thune are working to make agriculture a priority in discussions between the United States and European Union trade negotiators.

In a letter to Senate Finance Chairman Max Baucus, the senators asked for a hearing with U.S. trade negotiators to better understand their working-group efforts with European Union officials.”

 

Regulations

Pete Kasperowicz reported yesterday at The Hill’s Floor Action Blog that, “Rep. Todd Young (R-Ind.) and more than 100 other House Republicans want another shot at giving Congress a say over major Executive Branch regulations that have a $100 million impact on the economy.

“These members proposed a new version of the Regulations from the Executive In Need of Scrutiny (REINS) Act on Wednesday. The REINS Act was one of the GOP leadership’s high-priority bills in the last Congress, and it passed in a December 2011 vote that saw every Republican support it along with four Democrats.”

The Hill update added that, “Under the bill, H.R. 367, any rule with an economic impact of more than $100 million would be designated a major rule, and would have to be approved by Congress.

“But just as it was in the last Congress, the obstacle the bill faces in the 113th is the Senate. After the House approved the REINS Act in late 2011, the Senate never considered it on the floor, and never held a hearing on it.”

Ben Goad reported earlier this week at The Hill’s RegWatch Blog that, “Sen. David Vitter on Wednesday accused the White House of concealing the president’s regulatory agenda, and demanded information from the Obama administration’s Environmental Protection Agency (EPA.)

“Vitter (La.), the top Republican on the Senate Environment and Public Works Committee, issued a scathing statement, along with a missive to outgoing EPA Administrator Lisa Jackson questioning whether the agency missed deadlines for submitting its rulemaking plans.”

And Ben Geman reported yesterday at The Hill’s Energy Blog that, “House Republicans are threatening ‘formal action’ against the Environmental Protection Agency unless the agency hands over records about Administrator Lisa Jackson’s use of a secondary government email account.”

 

Senate- Filibuster Modification

Paul Kane reported in today’s Washington Post that, “The Senate approved a deal Thursday that will keep the chamber’s long-standing 60-vote threshold for halting a filibuster but streamline some of the chamber’s more cumbersome procedures.

“Senate Majority Leader Harry M. Reid (D-Nev.) and Minority Leader Mitch McConnell (R-Ky.), largely accepting the recommendations from a bipartisan team of senior senators, won broad bipartisan support for a package of reforms that will streamline operations but leave intact rules that give the minority more rights than any other legislative body in the world.”

Mr. Kane noted that, “‘I’m not personally, at this stage, ready to get rid of the 60-vote threshold,’ Reid said in an interview Thursday with The Washington Post’s Wonkblog. ‘With the history of the Senate, we have to understand the Senate isn’t and shouldn’t be like the House.’

“The compromise averted the Democratic majority’s threat to change the Senate’s substantive rules on a party-line vote, an action that would have broken new ground, as the chamber’s long-standing precedents call for a two-thirds majority to change the rules. Republicans warned that such a move by Reid, which they called a ‘nuclear option,’ would have soured bipartisan talks on pending budget and debt legislation. The proposal passed on two separate votes — 78 to 16 and 86 to 9 — that implemented the new rules.”

 

CFTC – Commodity Futures Trading Commission

Bloomberg writer Silla Brush reported yesterday that, “Jill E. Sommers, one of two Republican members of the U.S. Commodity Futures Trading Commission, plans to resign from the country’s top derivatives regulator after the first quarter of this year.

“‘I’ve come to this decision after thinking about it and internally struggling about it for months,’ Sommers, who has been a CFTC commissioner for five years, said yesterday in a telephone interview. ‘This has not been an abrupt decision.’

“The five-member CFTC has spent more than two years writing Dodd-Frank Act rules to bolster oversight of the $639 trillion swaps market and the futures industry after a shortfall in customer funds at failed brokerage MF Global Holdings Ltd.  The agency is preparing to complete rules governing trading platforms after finishing rules for data reporting and reducing risk by having trades guaranteed at clearinghouses.”

Keith Good

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