FarmPolicy

September 2, 2014

Farm Bill; Budget; Ag Economy; and, Immigration

Farm Bill- Policy Issues

Mitch Lies reported last earlier this week [Jan. 28.] at the Capital Press (Salem, Ore.) Online that, “House Speaker John Boehner refused to bring the farm bill to a vote last year because he disagreed with the bill’s dairy policy, Rep. Kurt Schrader, D-Ore., said.

“‘That’s the real story,’ Schrader said.

“And whether a new farm bill passes any time soon hinges on a resolution of the differences in dairy policy preferences between Boehner and House Agriculture Committee Ranking Member Collin Peterson, D-Minn., Schrader said.”

The Capital Press article noted that, “‘If the speaker and the ranking member can resolve that and allow something to move forward, we’ve got a farm bill,’ said Schrader, who serves on the Agriculture Committee.

“‘It is all about the dairy program at the end of the day,’ Schrader said. ‘The speaker does not like the ranking member’s dairy program.’”

Additionally, the article pointed out that, “‘The speaker has a right to disagree,’ Schrader said. ‘But he’s not on the committee, and it’s not his province to thwart the will of his own committee chairman and a bipartisan vote of the committee.’”

Jim Dickrell, in a column from late last week at AgWeb Online, pointed out that, “A Texas food policy analyst says the No. 1 reason we don’t have a farm bill is John Boehner’s absolute opposition to supply management.”

After additional analysis, the column noted that, “And yet dairy remains the key reason the 2012 farm bill didn’t come to the floor of the House of Representatives last year, says Joe Outlaw, co-director of the Agriculture Food Policy Center at Texas A&M. ‘Dairy is the reason the farm bill has been held up,’ he says. Outlaw spoke at the Southern Dairy Policy Conference in Atlanta last week.”

The AgWeb item added that, “‘The No. 1 reason we don’t have a farm bill is Congressman John Boehner (R-Ohio), who has publicly stated his absolute opposition to supply management,’ says Outlaw. As Speaker of the House of Representatives, Boehner is in a pretty good position to decide if the farm bill moves forward—or not. ‘It’s not about the money involved, but the philosophy,’ says Outlaw.

“So what will happen? Congress still has two choices. The first would be to pass the 2013 farm bill with the current version of the Dairy Security Act that includes market stabilization for those producers who sign up for the margin insurance program. The second option is to pass the Goodlatte-Scott amendment that reduces the amount of production covered by margin insurance but also strips out the market stabilization component.”

Meanwhile, the “Washington Insider” section of DTN reported yesterday (link requires subscription) that, “Direct payments that landowners have been receiving over the past 16 years are almost certain to disappear when Congress writes the next farm bill.”

Nonetheless, the DTN item indicated that, “Direct payments do have the benefit of being considered a ‘non-trade-distorting’ government subsidy under the rules of the World Trade Organization. This is because payments are made regardless of price or the crop being grown, meaning that direct payments are de-coupled from market forces and thus should have no effect on which crops are grown or the number of acres planted.

“As the House and Senate Agriculture committees consider terminating direct payments and re-programming the funds to subsidized crop and income insurance, observers, especially in Europe, have raised the question of whether this scheme would run afoul of WTO rules. Their reasoning is that a larger government subsidy for crop and income insurance would result in less risk for the farmer and increase the likelihood that future plantings would reflect the insurance benefit, rather than the rewards being offered by the market. This is one of the definitions of a trade-distorting government subsidy, and one that the European Union would likely challenge at the WTO.”

In other policy developments, Rod Smith reported yesterday at Feedstuffs Online that, “The Humane Society of the United States (HSUS) and United Egg Producers (UEP) expect legislation to be introduced in Congress soon to establish a national standard for hen housing, UEP president Chad Gregory announced at UEP’s animal welfare committee meeting Jan. 28.

“The legislation will take the form of an amendment to the Egg Products Inspection Act of 1970, and Gregory said Rep. Kurt Schrader (D., Ore.) and Sen. Diane Feinstein (D., Cal.) are expected to sponsor the legislation in the House and Senate. Both had sponsored similar legislation in the two chambers last year, but their bills died at the end of the last congressional session.

“The legislation would be the consequence of an agreement between HSUS and UEP two years ago to transition the egg industry away from conventional cage housing to enriched colony cage housing. The agreement was negotiated by the two organizations and represents compromises by both of them that would end years of a combatant relationship over animal welfare for layers.”

Mr. Smith added that, “Gregory said HSUS and UEP representatives met Jan. 16 and made a few revisions to the pact, but for the most part, the original terms continue in place. He said the new legislation will specify that the national standard is for hen housing and will have no impact on beef, pork or other poultry producers.

“He said Schrader and Feinstein are preparing to introduce their new bills in about a month, and HSUS and UEP have set Sept. 30 as a target date for the legislation to be passed by Congress.”

In news regarding food safety, Bill Tomson reported yesterday at The Wall Street Journal Online that, “Lettuce and other leafy vegetables are healthy for you, but they are also the largest source of food-borne contamination in the U.S., according to a new government report.

“About 2.2 million people get sick annually from eating contaminated leafy vegetables. That represents about 23% of the 9.6 million cases of food-borne illness each year, a study released Tuesday by the Centers for Disease Control and Prevention shows.”

The Journal article noted that, “An FDA spokeswoman said the CDC report will help the agency as it targets specific foods for disease prevention. The findings provide ‘foundation for priority setting for food-safety interventions, policy development, research, and analyses,’ the spokeswoman said.”

In addition, AP writer Mike Stobbe reported yesterday that, “‘Most meals are safe,’ said Dr. Patricia Griffin, a government researcher and one of the study’s authors who said the finding shouldn’t discourage people from eating produce. Experts repeated often-heard advice: Be sure to wash those foods or cook them thoroughly.

While more people may have gotten sick from plants, more died from contaminated poultry, the study also found.”

 

Budget

Ginger Gibson reported yesterday at Politico that, “The Senate will vote later this week on the House-passed legislation to raise the debt ceiling until mid-May, Majority Leader Harry Reid said Tuesday afternoon…The bill also would require the Senate to pass a budget in order for senators to receive their pay.”

And Lori Montgomery reported in today’s Washington Post that, “Less than a month after averting one fiscal crisis, Washington began bracing Tuesday for another, as lawmakers in both parties predicted that deep, across-the-board spending cuts would probably hit the Pentagon and other federal agencies on March 1.

“An array of proposals are in the works to delay or replace the cuts. But party leaders say they see no clear path to compromise, particularly given a growing sentiment among Republicans to pocket the cuts and move on to larger battles over health and retirement spending.

“Adding to the sense of inevitability is the belief that the cuts, known as the sequester, would improve the government’s bottom line without devastating the broader economy.”

 

Agricultural Economy- Biofuels- CME Trading- MF Global

Bloomberg writer Alan Bjerga reported yesterday that, “Almost 800 barges are backed up in the southern portion of the Mississippi River while an oil spill is cleaned up, the U.S. Coast Guard said.

“Traffic has been halted at Vicksburg, Mississippi, since Jan. 27 when a towboat with two barges ran into a railroad bridge, spilling oil from a tank containing 80,000 gallons of light crude.”

Meanwhile, the Oklahoma Crop Weather report (USDA) from earlier this week stated that, “Another month of below normal precipitation added to the ongoing drought in Oklahoma…[T]he U.S. Drought Monitor continues to report that the entire state is in a severe to exceptional drought, with just under 40 percent of the state in an exceptional drought, the worst classification. The result of the continuing drought has been poor conditions for all fall planted crops and limited grazing of small grains. Livestock producers are low on water and hay supplies in addition to the lack of grazing.”

The Kansas Crop Progress & Condition report (USDA) from this week stated that, “Limited moisture in most areas caused the condition of the winter wheat to decline during January. The condition of the crop was rated 14 percent very poor, 25 percent poor, 41 percent fair, 19 percent good, and 1 percent excellent…[T]he range and pasture condition was rated 55 percent very poor, 30 percent poor, 13 percent fair, and 2 percent good.”

With respect to biofuels, Ben Goad reported yesterday at The Hill’s RegWatch Blog that, “A high-ethanol fuel blend approved for use in some late model autos could damage millions of vehicles, according to research released Tuesday by a major oil industry group.

“The American Petroleum Institute (API) said its testing showed E15 — gasoline with 15 percent ethanol, rather than the standard 10–percent blend — could cause millions of car engines to stop working.”

However, the Hill update pointed out that, “The research prompted immediate blowback from representatives of the biofuels industry, who called the research biased and misleading… ‘Oil companies are desperate to prevent the use of higher blends of renewable fuels,’ [Growth Energy CEO Tom Buis] said. ‘They have erected every regulatory and legal roadblock imaginable to prevent our nation from reducing our dependence on oil. For Big Oil, this is about market share.’”

And Zack Colman reported yesterday at The Hill’s Energy Blog that, “The American Petroleum Institute (API) is ‘strongly considering’ asking the U.S. Supreme Court to hear a case regarding sales of a high-ethanol fuel blend, API Group Downstream Director Bob Greco said Tuesday.

“The Supreme Court move would represent another escalation in API’s campaign to roll back rules and court decisions vital to the biofuels industry. Greco said API would need to file a petition for a rehearing by mid-April.”

In other news, Reuters writer Tom Polansek reported yesterday that, “CME Group said on Tuesday it will reduce the nearly non-stop trading cycle for its U.S. grain and oilseed markets, and supported a trading halt at all exchanges during the release of major agricultural reports.

“CME, which owns the Chicago Board of Trade, said it had not yet determined exactly what its new trading hours will be.”

And on the MF Global issue, Ben Protess reported in today’s New York Times that, “When Mahesh Desai checked his MF Global account 15 months ago, his $580,000 nest egg was gone.

“Like thousands of investors and farmers who had their savings with MF Global, Mr. Desai lost his money in the brokerage firm’s chaotic final days. Regulators discovered that $1.6 billion was trapped in a web of improper wire transfers, a stunning breach that sent federal investigators scrambling to build a case.”

The article added that, “On Thursday, a bankruptcy court will review a proposal that would return 93 percent of the missing money to customers like Mr. Desai. And the trustee who has submitted the proposal, James W. Giddens, has quietly identified a way that, if sent to the judge and approved, could plug the remaining shortfall for customers in the United States, according to people involved in the case.

The broad push to make MF Global customers nearly whole, a goal now surprisingly within reach, is a remarkable turnaround from the firm’s 2011 bankruptcy filing when such a recovery seemed impossible.”

 

Immigration

Bloomberg writer Alan Bjerga reported yesterday that, “Labor shortages that left crops rotting in fields have farm organizations backing a U.S. Senate immigration proposal that would treat workers in agriculture ‘differently’ than in other industries.

“The American Farm Bureau Federation, the United Farm Workers as well as fresh-produce groups representing companies including Kroger Co., Chiquita Brands International Inc. and Sunkist Growers Inc. say they’re involved in discussions with lawmakers in the first serious attempt to revamp immigration law since 2007.”

The Bloomberg article noted that, “The Senate plan acknowledges the need to maintain an adequate food supply and offers a path to citizenship for some of the nation’s 11 million undocumented immigrants, including workers in agriculture, which relies on illegal labor more than any other industry. About 25 percent of the farm workforce is unauthorized, according to a 2009 study by the Pew Hispanic Center, with heavy concentrations in the fruit and vegetable sector.”

Mr. Bjerga pointed out that, “A California Farm Bureau study last year found that 71 percent of tree-fruit growers and almost 80 percent of raisin and berry growers couldn’t find enough workers to prune trees or vines or pick the crops. The situation has prompted food companies to turn for their supplies to Brazil, Mexico and other countries where the labor force is more reliable, said Ken Barbic, a spokesman with the Western Growers Association, which represents fruit and vegetable producers.”

Brad Plumer, writing yesterday at the WonkBlog (Washington Post), indicated that, “For years, one of the groups pushing hardest for immigration reform has been the U.S. food industry. Farmers have long grumbled about a shortage of labor, and they’ve asked for policies that make it easier to hire foreign workers from places like Mexico.

“But looser immigration laws may not be able to keep our food cheap forever. A recent study suggests that U.S. farms could well face a shortage of low-cost labor in the years ahead no matter what Congress does on immigration. That’s because Mexico is getting richer and can no longer supply as many rural farm workers to the United States. And it won’t be nearly as easy to import low-wage agricultural workers from elsewhere.”

Yesterday’s WonkBlog update added that, “But a new paper from U.C. Davis offers up a simpler explanation for the labor shortage. Mexico is getting richer. And, when a country gets richer, its pool of rural agricultural labor shrinks. Not only are Mexican workers shifting into other sectors like construction, but Mexico’s own farms are increasing wages. That means U.S. farms will have to pay higher and higher wages to attract a dwindling pool of available Mexican farm workers.”

Zachary A. Goldfarb and Rosalind Helderman reported in today’s Washington Post that, “President Obama on Tuesday put the weight of his administration behind efforts to pass legislation allowing many of the nation’s 11 million illegal immigrants to earn citizenship, seeking to build on a rapidly shifting political consensus around the issue.

“Obama dedicated the first trip of his second term to calling for an overhaul of immigration laws, making clear that it is one of his top domestic priorities. The president — who has said that not passing an overhaul in his first term was his biggest failure — also suggested he has little patience for Congress and would demand that lawmakers vote on his more permissive plan if they do not swiftly pass their own.”

And, Ezra Klein penned an interesting update yesterday at the WonkBlog (Washington Post) titled, “Immigration reform: Five places where Obama and the Senate agree.”

Keith Good

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