FarmPolicy

July 23, 2014

Farm Bill; Ag Economy; Regulations; and, Immigration

Farm Bill: Staff, and Crop Insurance Issues

A news release Friday from Senate Agriculture Committee Ranking Member Thad Cochran (R., Miss.) stated that, “[Sen. Cochran] today announced staff changes related to committee and personal staff, including the appointment of his chief of staff T.A. Hawks as Republican staff director for the Senate Committee on Agriculture, Nutrition and Forestry.

“In appointing Hawks, Cochran also named as his new personal office chief of staff Bruce Evans, the Republican staff director for the Senate Appropriations Committee since 2006.”

Friday’s update added that, “Cochran also indicated today that Steven Wall, his legislative director and counsel, has been named general counsel for the Republican staff of the Agriculture Committee.”

House Agriculture Committee Member Rick Crawford (R., Ark.) noted in a news release Friday that, “Today, Congressman [Rep. Crawford] and Congressman Sanford Bishop, (D-GA), announced members of the bipartisan Congressional Chicken Caucus in the 113th Congress. Crawford and Bishop founded the Chicken Caucus in 2012 and will continue serving as co-chairs of the caucus in the 113th Congress.”

And Rep. Emanuel Cleaver (D., Mo.) indicated in an update Friday at the Marshall Democrat-News (Mo. ) Online that, “I am very disappointed that Congress could not come together to reauthorize the Farm Bill in 2012. I am hopeful, with the passage of H.R. 8, the American Taxpayer Relief Act of 2012, that the scene is set for more productive efforts on this issue.

“Hardworking families in Missouri’s Fifth District deserve this — and I will continue to fight for it. Right now, for instance, disaster assistance programs continue to be unfunded, as we enter the second year of an already devastating drought. And farmers continue to face uncertainty about programs in the coming years.”

Amanda Fries reported late last week at the Observer-Dispatch (Utica, N.Y.) Online that, “‘As far as I’m concerned, all the government did was kick the can down the road,’ Remsen dairy farmer Ben Simons said. ‘We are just as much on the edge of uncertainty as we were back in November and December waiting for them to come back with a new Farm Bill.’”

Meanwhile, Steve Young reported on Friday at the Argus Leader (S.D.) Online that, “Questioned [at a town hall meeting on Thursday in Sioux Falls] on what Congress will do if drought continues to devastate the Northern Plains this year, [Rep. Kristi Noem (R., S.D.)] said it was imperative to put a five-year farm bill in place as a safety net to producers.

“‘I’ve had conversations with some people in the House that aren’t fans of crop insurance, who don’t want to support it and want to eliminate it,’ she said. ‘But if you eliminate crop insurance, you’re setting up a situation where you will have a disaster bill for agriculture somewhere in this country every year.

“‘If we look at federal budgets and how disaster funding happens, it’s never paid for, it’s an add-on and usually is deficit spending every year. Crop insurance prevents that.’”

In a recent “Q and A” update posted at Ducks Unlimited Online (“Sportsmen’s legislative priorities in 2013”), Ducks Unlimited’s Director of Government Affairs Gary Taylor noted in part that, “Reauthorization of a comprehensive Farm Bill must be accomplished in the 113th Congress in order to continue the vital conservation programs that not only provide wildlife habitat on agricultural land, but also are vital to production agriculture by providing affordable food and fiber delivered for our citizens in environmentally sustainable ways. The Farm Bill delivers more on-the-ground conservation on private lands than any other program. DU’s priority remains the achievement of a robust portfolio of conservation programs including re-coupling conservation with crop insurance, and the creation of a national Sodsaver program. There will be less money overall for the Farm Bill in the 113th Congress, so we will be challenged to secure adequate funding for conservation.”

More specifically on the issue of crop insurance, University of Illinois Agricultural Economists Bruce Sherrick and Gary Schnitkey noted in an update Friday at the farmdoc daily blog (“2013 Crop Insurance Projected Prices, Volatilities, and Harvest Price Impacts”) that, “The Risk Management Agency (RMA) ‘resets’ various features of the crop insurance programs annually to reflect the market’s estimate of the value of crops intended for production in the current year. Among the most important factors are (1) projected prices, (2) volatility factors, and (3) harvest prices. Projected prices directly determine the insurable value of production, and thus impact premiums as well. The volatility factor is a measure of the price risk the market associates with potential price changes in the production year, and thus directly impacts the calculated costs of insurance. Finally, the harvest price has the potential to increase the amount of insurance coverage in effect if prices increase between the end of the projected price discovery period and the harvest price determination period. The purpose of this article is to describe the processes used to establish each of these features and to discuss important implications for crop insurance in 2013.”

 

Farm Bill: Nutrition Issues, and, Trade

With respect to nutrition issues, the largest component of Farm Bill spending, O. Kay Henderson reported on Saturday at RadioIowa Online that, “Republican Congressman Steve King plans to use a new leadership position to press for a reduction in food stamps or ‘Supplemental Nutrition Assistance Program’ benefits.

“‘These benefits, call them that — nutrition benefits, are for people that need them, that are needy,’ King says, ‘and they’re not for anyone else.’

Saturday’s update noted that, “The monthly benefit for a single food stamp recipient is just under $134.

King is the new chairman of a House subcommittee that oversees operations of the USDA, including the food stamp program. King won reelection in November by defeating Christie Vilsack, wife of U.S. Agriculture Secretary Tom Vilsack — the chief of the USDA. King says he’s worked with Vilsack before when the two were serving in the Iowa Senate and when Vilsack was governor and will be able to do so again.”

Ms. Henderson pointed out in her RadioIowa report that, “‘The Department of Agriculture has been advocating to push more and more SNAP benefits out and, in doing so, the argument that came from the secretary was for every dollar’s worth of food stamps you hand out, you get $1.84 in economic activity,’ King says. ‘I completely reject that economic philosophy.’

According to King, fraud in the food stamp program needs to be addressed.”

For more background on this issue, see this USDA Economic Research Service (ERS) report, “The Food Assistance National Input-Output Multiplier (FANIOM) Model and Stimulus Effects of SNAP” (by Kenneth Hanson, Oct. 2010), which stated in part that, “An increase of $1 billion in SNAP expenditures is estimated to increase economic activity (GDP) by $1.79 billion. In other words, every $5 in new SNAP benefits generates as much as $9 of economic activity. This multiplier estimate replaces a similar but older estimate of $1.84 billion reported in Hanson and Golan (2002)” (at page iv).

Ron Nixon reported in Saturday’s New York Times that, “The Obama administration on Friday released its long-awaited nutritional guidelines for snack foods sold in schools, an effort to combat the expanding waistlines of school-age children.

The guidelines come a year after the administration made the first changes to the $11 billion government-subsidized school meal program in more than three decades, adding more fruits and green vegetables to breakfasts and lunches and reducing the amount of salt and fat in meals.

“The guidelines, which set minimum requirements for calories and fats allowed, encourage schools to offer low-fat and whole-grain snack foods or fruits and limit the availability of sugary drinks. They leave room for parents to send treats to school for activities like birthdays and holiday parties and will also allow schools to sell sweets for fund-raisers and after-school sporting events. School districts would have the flexibility to set tougher standards than the federal guidelines.”

Josh Hicks reported on Friday at the Federal Eye Blog (Washington Post) that, “The proposed standards would not affect the breakfasts and lunches served up in cafeterias, which the USDA dealt with last year with stricter guidelines for school meal options.”

On Friday, Senator Tom Harkin (D., Iowa) applauded the USDA action, and Rep. Rosa DeLauro (D., Conn.) noted that the nutrition proposals were “a critical step forward.”  On the other hand, Rep. Adrian Smith (R., Neb.) tweeted on Friday that, “Today ‪@USDA announced new restrictions on school snacks. These decisions are best made at the local level, not by the federal government.”

Also, United Fresh noted in part on Friday that, “This rule supports and complements the new school meal standards, helps create healthier school food environments, and makes the healthy choice the easy choice for our nation’s school children.”

Meanwhile, Tim Carman reported in today’s Washington Post that, “The Agriculture Department — the agency tasked with, among other things, improving public health — made a groundbreaking decision last year when soliciting bids for cafeteria vendors at its headquarters: The USDA would go fryer-less. As in not a single deep-fat fryer in the department’s Whitten and South building cafeterias, which serve more than 40,000 people a month, including members of the public.

“And that’s just the most obvious change at the revamped USDA cafeterias, which debut today. The agency — one of the chief architects of the Dietary Guidelines for Americans, which counsels citizens to reduce their intake of red meat and salt — has fully embraced its own recommendations (possibly this time without alienating lawmakers from livestock states who were furious last year over the USDA’s suggestion that employees avoid meat one day a week).”

In other news, an update Friday from Sen. John Jon Tester (R., Mont.) stated that, “[Sen. Tester], Mike Enzi (R-Wyo.), and Tim Johnson (D-S.D.) are leading a bipartisan coalition of Senators in calling on the U.S. Department of Agriculture and the U.S. Trade Representative to work with consumers, ranchers and meatpackers to make sure that American families know where their meat comes from.

“The World Trade Organization recently required the USDA to adjust its rules requiring American retailers to clearly label where meat was raised and processed…[T]he Senators, who were joined by 28 colleagues from both sides of the aisle, want to make sure the updated rules still ensure consumers know the origin of their food, giving them the option to buy American meat if they choose.”

 

Farm Bill: Budget Issues

An update Friday at the National Sustainable Agriculture Coalition (NSAC) blog stated that, “The triple-headed budget monster [automatic long-term budget cuts (sequestration), providing government funding for the rest of the current fiscal year, and reaching a long-term deficit reduction plan (tied to a debt ceiling increase)] created by the new law will consume much of Washington’s time over the coming four or five months.  While the outcomes of the triple-header debate will inform the budget parameters for the 2013 Farm Bill and 2014 Agriculture Appropriations Bills, it will also delay the start of the 2013 Farm Bill and 2014 Agriculture Appropriations Bill debates until all the budget dust settles at the conclusion of this three-part process…if in fact it reaches a conclusion.  In other words, at this point in time at least, it appears work on the new farm bill and the new appropriations bill will not formally begin until June at the earliest.”

The NSAC update discussed the trifecta of budget variables in more detail and added that, “It is still quite possible, however, for Congress to agree to specific terms and parameters for the debate of a new five-year farm bill in 2013.  If they did so, it would greatly enhance the chances for a new farm bill to be enacted this year.  In fact, done right, it would all but guarantee a new farm bill.

For instance, in a vote later this month (or in March) on a measure to modify the automatic sequestration cuts, Congress could include a measure removing all farm bill mandatory spending from the sequester provided the Agriculture Committees produce a bill by a date certain that will save $29 billion (or whatever other figure they care to choose) over the next decade.  To ensure that such a proposal is in fact reported out of Committee and that it in fact actually receives floor consideration in both chambers, the provision could include specific deadlines for Committee and for floor action, and specific guidelines for fair but expedited floor consideration.

With such deadlines and conditions, it is a near certainty a new farm bill would become law this year.  However, to allay the fears of any doubters, the measure could also return the farm bill to automatic sequester rules if the effort failed.”

 

Agricultural Economy- Biofuels- Trade

Mark Peters reported in Saturday’s Wall Street Journal that, “Faced with a deepening drought in the Great Plains, cattle ranchers are making sizable cuts to their herds as some enter a second or even third year of dry conditions.

“The cattle industry has been particularly hard hit by the drought that by some measures is the worst in more than five decades. Federal data show 69% of cattle in the U.S. are located in areas currently facing drought conditions.

“A report from the U.S. Department of Agriculture released Friday showed the nation’s cattle herd shrank by 2% over the last year to under 90 million head as ranchers faced dwindling supplies of feed and water” (related graph from Friday’s report here).

And, Steven Mufson reported in Saturday’s Washington Post that, “When Congress in 2007 mandated greater use of ethanol in U.S. motor fuel, it wanted to avoid a collision between food and fuel. So instead of creating a mandate for ever-rising amounts of corn-based ethanol, it ordered refineries to use a billion gallons of cellulosic ethanol in 2013 and to use 16 billion barrels of cellulosic ethanol by 2022.”

But cellulosic ethanol projects have had trouble gaining traction…[S]o Thursday, the Environmental Protection Agency proposed a new standard, slashing the amount of cellulosic ethanol that refiners would need to use to just 14 million barrels a year. At the same time, the EPA said refiners would still need to use high levels of ‘advanced biofuels.’”

The Post article added that, “The EPA move did nothing to calm the storm of lobbying and litigation over the fuel standard: Corn-based ethanol producers see new opportunity, the American Petroleum Institute vows to continue to fight against the standard and environmentalists are worried about the use of crops such as corn or sugarcane, cultivation of which requires higher levels of greenhouse gas emissions than cellulosic feedstocks.

“The new proposed standard also comes in the shadow of a D.C. Court of Appeals ruling last week that threw out the standards the EPA set in 2010 and 2011. The agency had set a mandate of 5 million gallons of cellulosic ethanol use for 2010 and 6.6 million gallons for 2011 and none was produced. The court said there was no basis for those figures.”

The article stated that, “But the oil industry, which runs the nation’s refineries, says that even the new standard is arbitrary and optimistic. And the Energy Department’s Energy Information Administration has forecast nationwide production of just 9.6 million gallons.”

In other news, James Politi reported yesterday at The Financial Times Online that, “The US and Mexico have reached a deal to avert a trade dispute over tomatoes that had threatened to jeopardise economic relations between the North American neighbours.

Late on Saturday, the US commerce department announced that it had struck an agreement with Mexico resetting the terms of tomato imports to the US.

“Last year, Washington had sided with Florida growers by backing away from a 1996 deal that kept Mexican tomato prices low in US supermarket – causing anger in Mexico.”

 

Regulations- EPA

Reuters writer Jeff Mason reported on Friday that, “President Barack Obama is leaning toward choosing Gina McCarthy, a top official in charge of air quality at the Environmental Protection Agency, to run the EPA in his second term, according to two sources familiar with the matter.”

 

Immigration

Laura Meckler reported in Saturday’s Wall Street Journal that, “How to determine whether the U.S. border with Mexico is secure has emerged as a central battle among senators writing an overhaul of immigration laws.”

While Ricardo Lopez reported in Saturday’s Los Angeles Times that, “According to data from the U.S. Department of Agriculture, roughly half of all hired crop farmworkers are in the country illegally. Of all workers, 7 of 10 are from Mexico, a country that has provided a steady supply of farm laborers to California since the middle of the last century.

With immigration reform back on the table this year, California farm groups are fiercely lobbying to make sure proposed legislation includes provisions for their workers.”

Meghashyam Mali reported yesterday at The Hill Online that, “Senate Majority Leader Harry Reid (D-Nev.) on Sunday said that immigration reform was ‘certainly going to pass’ the upper chamber.”

And, Brian Bennett and Lisa Mascaro provided a broad and interesting look at the immigration debate in yesterday’s Los Angeles Times in an article titled, “How a discordant Senate band got back together on immigration.”

Keith Good

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