FarmPolicy

September 22, 2014

Policy Issues; Budget, Ag Economy; and, Immigration

Farm Bill and Policy Issues

A news release yesterday from USDA’s Farm Service Agency (FSA) indicated that, “[USDA- FSA] Administrator Juan Garcia today announced that beginning Feb. 5, USDA will issue payments to dairy farmers enrolled in the Milk Income Loss Contract (MILC) program for the September 2012 marketings. The American Taxpayer Relief Act of 2012 extended the authorization of the Food, Conservation, and Energy Act of 2008 (the 2008 Farm Bill) through 2013 for many programs administered by FSA, including MILC. The 2008 Farm Bill extension provides for a continuation of the MILC program through Sept. 30, 2013.”

The release added that, “The payment rate for September 2012 is approximately $0.59 per hundredweight. The payment rate for October 2012 marketings is approximately $0.02 per hundredweight. The payment rate for November 2012 marketings is zero.”

A recent editorial at Hoard’s Dairyman Online noted that, “As far as dairy is concerned, 2013 will be much of the same with renewal of the MILC program (Milk Income Loss Contract), Dairy Export Incentive Program (DEIP) and dairy product price supports. Unfortunately, DEIP and the dairy price support program represent outdated safety net initiatives that offer no peace of mind for dairy producers nor does it account for the escalating price of feed. That being the case, neither will generate stability under current market conditions. While MILC was renewed with a $7.35 ration adjuster at 45 percent of production, it too offers no projected support based on current futures contracts. Plus, not all milk production is eligible due to its production caps.

“In light of the legislative stalemate, the Dairy Security Act (DSA) was kicked to the wayside. While it didn’t receive praise from many processors and a few producer groups due to production controls during periods of high milk supply, it did offer margin protection or insurance based on a balanced approach of milk prices and feed costs. The DSA also represented the broadest and most public dairy producer led policy discussion our industry has seen in some time.”

Meanwhile, Jim Dickrell noted on Tuesday at AgWeb Online that, “If the farm bill is ever to pass, it will have to go through a more normal legislative process, say lobbyists who have worked on Capitol Hill for years.

It cannot be wedged into larger budget bills that get rammed through Congress without debate.”

The update added that, “‘If this bill is going to see the President’s desk, it has to pass through the House [of Representatives] floor, including through the amendment process where all members have an opportunity to have input,’ says Tyson Redpath, senior vice president of government affairs for The Russell Group, Inc. Redpath lobbies on behalf of dairy processors and the International Dairy Foods Association. ‘We will have to let this process unfold.’

“Redpath and several lobbyists spoke this morning at Dairy Forum 2013 here in Orlando, Fla.”

Mr. Dickrell pointed out that, “‘Only half a dozen House members understand dairy policy, and only a couple serve on the agriculture committee,’ adds Harry Katrichis, of counsel , for The Advocacy Group, who lobbies for California Dairy, Inc.  ‘And it’s rarer and rarer to have rural Democrats serve on the ag committees. Those Democrats that do are there because of feeding programs, such as SNAP (Supplemental Nutritional Assistance Program).’

“As a result, lobbyists for farm and dairy policy must continue efforts to educate members of Congress and their staff.”

In other news, Mark Weiner reported yesterday at the Syracuse Post-Standard Online that, “The U.S. Department of Agriculture has agreed to set up a pilot program that could bring Greek yogurt into school lunchrooms nationwide by April, U.S. Sen. Charles Schumer said today.

“Schumer, D-N.Y., said the decision could provide a big boost to the New York economy, where several Greek yogurt manufacturers have thrived in recent years, along with the dairy farms that supply them with milk.”

Also yesterday, a news release from Senator Mark Pryor (D., Ark.) indicated that, “[Sen. Pryor] today announced that he will chair the Senate Appropriations Subcommittee on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies. As Chairman, Pryor will be responsible for funding federal programs that benefit Arkansas farmers, producers, and rural communities.

“‘Whether it’s rice, cotton, or poultry, there’s no question that agriculture is critical to our state’s economy,’ Pryor said. ‘As Chairman of the Subcommittee on Agriculture Appropriations, I’ll fight to ensure that Arkansas receives its fair share of federal dollars so we can keep our agricultural sector strong.’”

In policy developments regarding regulatory issues, a news release yesterday from Sen. Mike Johanns (R., Neb.) stated that, “U.S. Sens. [Johanns] and Pat Roberts (R-Kan.) have introduced legislation to eliminate a burdensome, costly and redundant Environmental Protection Agency (EPA) permit requirement for applications of pesticides.

“‘Not only is EPA pursuing regulations that are economically crippling, they are also pursuing regulations that are clearly duplicative,’ Johanns said.”

The release explained that, “At issue is the January 2009, Sixth Circuit Court of Appeals opinion in National Cotton Council v. U.S. Environmental Protection Agency, that requires pesticide applications to be permitted under the Clean Water Act. This National Pollutant Discharge Elimination System (NPDES) permit is now in addition to any label requirements or restrictions already placed on the use of a pesticide under the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA).”

For more background on the National Cotton Council case from 2009, see this FarmPolicy.com update from April of 2009.

And while President Obama has yet to announce a replacement for EPA Administrator Lisa Jackson, Ben Geman reported yesterday at The Hill’s Energy Blog that, “Current EPA chief Lisa Jackson is stepping down soon, and the White House has not named a nominee to replace her after a tenure that generally won praise from environmentalists and many Democrats.

“‘The EPA nominee must … build on Administrator Lisa Jackson’s critical work to protect the air we breathe and the water we drink. We know that pollution can cause asthma attacks, heart and lung disease, cancer, damage to the reproductive system, strokes, and premature death,’ states a new letter to Obama from 16 senators spearheaded by Senate Environment and Public Works Committee Chairwoman Barbara Boxer (D-Calif.).”

Senate Agriculture Committee Chairwoman Debbie Stabenow (D., Mich.) was one of the sixteen Senators who signed the letter to the President.

In news on EU farm policy issues, an update yesterday at the Bridges Weekly Trade Digest (“EU: Weaker Farm Subsidy ‘Greening,’ Re-coupling Proposed”) stated that, “European parliamentarians voted last week to water down proposals to ‘green’ EU farm subsidy payments, and have called for some payments to be re-coupled to production.

“The move relaxes greening plans tabled by the European Commission for the bloc’s post-2013 farm policy, under which all farmers would have to diversify crops, maintain permanent grassland, and protect ecological focus areas as a condition for receiving direct payments.”

The Bridges update explained that, “The new proposals would also allow EU member states to spend up to 15 percent of the money allocated to them by the Commission on ‘coupled’ payments that link support to production, in a move that could reverse earlier efforts to make EU support less trade-distorting.”

 

Budget

Vicki Needham and Bernie Becker reported yesterday at The Hill’s On the Money Blog that, “The Senate agreed on Wednesday night to vote Thursday on a bill that will give the nation enough breathing room to delay breaching the debt-ceiling until May 19.

“The measure also requires each chamber to approve budgets by April 15 or members face the loss of their paychecks. So far, leaders in both chambers are vowing to move forward on nonbinding budget blueprints this spring.”

Sean Lengell reported yesterday at The Washington Times Online that, “Congressional Republicans are preparing to let $85 billion in automatic spending cuts begin to bite March 1, saying they have become convinced that letting the ‘sequesters’ take effect is the only way they will be able to wrangle real spending cuts from President Obama.

“House Speaker John A. Boehner, Budget Committee Chairman Paul Ryan and other Republicans are talking increasingly tough about the sequesters, saying they are willing to accept the deep cuts to military and domestic spending in order to force Mr. Obama to come up with his own counteroffer.”

 

Agricultural Economy- Trade- Biofuels

Bloomberg writer Brian K. Sullivan reported earlier this week that, “Spring will start cool and then heat up in the U.S. Northeast amid scant relief from drought conditions in the Great Plains, according to AccuWeather Inc.’s latest forecast for March, April and May.”

The article pointed out that, “As of last week, 58 percent of the area in the 48 contiguous U.S. states was afflicted by drought, according to the U.S. Drought Monitor in Lincoln, Nebraska. About 6.4 percent of the area had the worst of the drought.”

O. Kay Henderson reported today at RadioIowa Online that, “The head of Iowa State University Extension says state officials should consider a ‘public awareness campaign’ to prepare Iowans for water shortages this summer.

“‘Unlike something like a hurricane or the floods that we’re used to in the state of Iowa…a drought is a really different kind of disaster in that I think of it as a super slow motion disaster,’ says Cathann Kress, ISU’s vice president for Extension & Outreach. ‘It happens over a really long period of time. Other news starts to take the headlines…and people start to forget about the drought really quickly.’”

It’s likely to be ‘another tough year’ for livestock producers, too, [Kress] said.”

A brief video from USDA yesterday pointed out that, “A USDA economist says the persistent drought in the Midwest will lead to higher than normal food price inflation for the rest of the year.”

And Own Fletcher noted yesterday at The Wall Street Journal Online that, “U.S. soybean futures settled at a six-week high, boosted by a drier weather forecast for crops in Argentina.

“Chicago Board of Trade March soybeans settled up 27 cents, or 1.9%, at $14.78 3/4 a bushel, the highest settlement for the front-month contract since Dec. 17.”

Also, AP writer Jim Salter reported yesterday that, “Some drought-starved Midwestern rivers that had been near record low levels were on the verge of flooding Wednesday, after storms dumped up to 3 inches of rain on some parts of the region.

“Forecasters said rivers would see a dramatic, if temporary, rise over the next few days, with some waterways expected to swell by as much as 15 feet. Even the Mississippi River is expected to rise by up to 10 feet in areas between St. Louis and Cairo, Ill. Although the Mississippi will remain far below flood stage, several smaller rivers are expected to spill over their banks.”

Mr. Salter added that, “The January downpour brought welcome relief for bigger rivers, including the middle Mississippi, where barge traffic has been threatened for nearly three months because the river is so low.”

However, Reuters writer Karl Plume reported yesterday that, “More than 1,000 barges were backed up on the Mississippi River near Vicksburg, Mississippi, on Wednesday after a weekend barge accident and oil spill forced the closure of the major shipping artery, the U.S. Coast Guard said.”

In a closer look at trade issues, the “Washington Insider” section of DTN reported yesterday (link requires subscription) that, “European Union Trade Commissioner Karel De Gucht says that he expects free trade talks between the EU and United States to be ‘difficult,’ especially when it comes to agricultural issues. De Gucht will be in Washington next week to finalize an EU-U.S. report on a possible free trade deal between the two economic superpowers that combined account for almost two-thirds of world trade.

“De Gucht has said previously that an EU bilateral free trade agreement with the United States should come as close as possible to removing tariffs on agricultural as well as industrial goods. Speculation has mounted that free trade talks with the United States will begin this spring, although it remains unclear to what extent agriculture will be included in negotiations.”

With respect to biofuels, Ryan Tracy reported yesterday at The Wall Street Journal Online that, “The U.S. corn-ethanol industry is urging the Obama administration to cut down on imports of a different type of ethanol from Brazil, in a bid to reduce competition and improve its bottom line.

“The push involves an unusual request for the industry: asking the Environmental Protection Agency to reduce part of the U.S. renewable-fuel mandate, which is normally backed by the industry as a way to underpin demand.

“The new strategy comes as U.S. ethanol-refinery shutdowns are on the rise.”

The Journal article explained that, “In addition to competition from imports, U.S. producers are selling into a smaller market as Americans drive more fuel-efficient cars and ethanol makers’ efforts to increase the amount of their product blended into gasoline haven’t caught on.

A 2007 law sets mandates for annual U.S. use of alternative fuels. The number is supposed to keep rising, with the EPA deciding the exact targets each year.”

Yesterday’s article pointed out that, “But Congress limited the amount of corn starch-based fuels that can count toward the annual quota, to leave room for ‘advanced’ biofuels. The EPA has determined that ethanol from Brazilian sugarcane qualifies as advanced whereas ethanol from Midwestern corn doesn’t.

“While U.S. ethanol makers have criticized those categories, they haven’t previously suggested reducing any of the mandates. Now, however, in discussions with the White House Office of Information and Regulatory Affairs earlier this month, industry representatives have made clear that they believe the U.S. mandate encourages imports of ethanol made from Brazilian sugarcane at the expense of U.S. producers, according to people familiar with the meetings.”

The Journal article noted that, “The Brazilian fuel is in demand in part because domestically produced advanced fuels—from corn stalks or wood chips, for instance—haven’t become available in large quantities, as lawmakers had hoped…[I]f the EPA were to reduce the amount of ‘advanced’ fuel required in the U.S., it would effectively limit the market for the Brazilian imports.”

 

Immigration

Zachary A. Goldfarb reported in today’s Washington Post that, “President Obama said Wednesday that he wants Congress to pass an overhaul of immigration law in the first half of the year, suggesting that if lawmakers cannot produce a detailed plan within a few months, he would probably intervene with his own legislation.

“In interviews with Hispanic television networks, Obama, for the first time, gave a rough timetable for an overhaul of immigration policy. He told interviewers at Telemundo and Univision that he thought a March deadline for a plan was sensible.”

Meanwhile, Lois Romano reported yesterday at Politico that, “As a group of Senate stars tries to sell a new immigration proposal, their House counterparts are secretly toiling under the radar to craft their own plan in the next few weeks.”

Yesterday’s article noted that, “The eight-person immigration House team — which includes four Republicans and four Democrats — had hoped to put forth a statement of principles as early as Friday, but sources say that is unlikely. Now, they are hoping to announce something closer to Feb. 12, the day of the State of the Union.

“According to sources, the House working group includes Democrats Zoe Lofgren and Xavier Becerra of California, Luis Gutierrez of Illinois and John Yarmuth of Kentucky. Negotiating for the Republicans are Mario Diaz-Balart of Florida, Sam Johnson and John Carter of Texas and Raul Labrador of Idaho.”

And Sarah Kliff pointed out earlier this week at the WonkBlog (Washington Post) that, “Congress and the White House have just begun exploring policies that would revamp the country’s immigration laws. A bipartisan group of senators have proposed a new pathway to citizenship Monday and, later Tuesday, President Obama is expected to unveil his own reform plan.

Those are all ideas for the future – but what does our immigration system look like right now? A few years ago, Immigration Road put together this flowchart on how to gain a green card.”

Ms. Kliff noted that, “While this likely does not make understanding our immigration system any easier, it does give a sense of how complicated the process is right now.”

Keith Good

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