FarmPolicy

November 28, 2014

Farm Bill (Budget); Ag Economy; Biotech; and, Immigration

Farm Bill- Policy Issues, Budget- Sequestration

Reuters writer Charles Abbott reported on Friday that, “The Obama administration warned on Friday that across-the-board spending cuts set to take effect in March may result in furloughing every U.S. meat and poultry inspector for two weeks, causing the meat industry to shut down.

“By law, meatpackers and processors are not allowed to ship beef, pork, lamb and poultry meat without the Agriculture Department’s inspection seal.

“The prospect of mass furloughs of meat and food inspectors was part of a broader White House warning about the effects of the potential spending cuts on everyday life. Meatpackers said a shut-down would devastate consumers as well as their industry.”

Justin Sink reported at The Hill Online on Friday that, “At a press briefing earlier in the day, [Danny Werfel, federal controller of the Office of Management and Budget] warned of sweeping cutbacks to the paychecks of federal workers and contractors.

“‘There’s no way to implement the sequester without significant furlough of hundreds of thousands of [federal] employees,’ he said.”

In the Reuters article, Mr. Abbott explained that, “An estimated $10 billion in production would be lost during a two-week furlough, said a USDA official, and consumers could see meat shortages and higher prices as a result.”

Recall that Secretary of Agriculture Tom Vilsack noted on Thursday at the National Ethanol Conference in Las Vegas that, “It is likely, if sequester is triggered, that in our food safety area we will have to furlough workers for a period of a couple weeks. Now you say, well, you know, everybody gets a couple weeks’ vacation. The problem is, as soon as you take an inspector off the floor, that plant shuts down, so it’s not just the inspectors, it’s the hundreds of thousands of people who are in the processing business. Those plants shut down.

“Now, what impact and effect is that going to have on markets? It’s billions and billions of dollars of impact on the markets. What happens when supply gets shorted because we aren’t processing? Prices go up for consumers. That’s one tiny, tiny implication or consequence of sequester.”

Meanwhile, Bloomberg writers Kathleen Hunter & Roger Runningen reported on Friday that, “U.S. Senate Democrats are close to proposing a $120 billion plan for a 10-month delay in automatic spending cuts for defense and domestic programs set to begin March 1, according to a Senate Democratic aide…[T]he Senate plan being considered includes more specific defense reductions and cuts to agricultural subsidies, the aide said.”

In his weekly address on Saturday, President Obama indicated that, “[I]f Congress doesn’t act by March 1, a series of harmful, automatic cuts to job-creating investments and defense spending – also known as the sequester – are scheduled to take effect…The good news is, there’s another option. Two months ago, we faced a similar deadline, and instead of making deep, indiscriminate cuts that would have cost us jobs and slowed down our recovery, Democrats and Republicans came together and made responsible cuts and manageable changes to our tax code that will bring down our deficit. This time, Congress should pass a similar set of balanced cuts and close more tax loopholes until they can find a way to replace the sequester with a smarter, longer-term solution.”

Nonetheless, Jim Puzzanghera and Richard Simon reported in yesterday’s Los Angeles Times that, “Though the [sequester] reductions were never intended to be implemented, there is a growing belief they will kick in anyway, because Washington politicians are sharply divided on how to reduce the deficit.”

Janet Hook reported in today’s Wall Street Journal that, “Despite warnings about the threat to military readiness, education programs and activities across the government, both parties say that it is likely the deadline will pass without a compromise being reached and that the spending cuts will take effect at least temporarily.”

In other developments, Pete Kasperowicz reported on Friday at The Hill’s Floor Action Blog that, “Congress returns to a week that will be dominated by preparing for, attending and reacting to President Obama’s State of the Union address on Tuesday.

“Obama can be expected to offer broad policy themes on a huge range of issues that might include deficit reduction, the sequester, taxes, jobs, healthcare, immigration and gun control, among others.”

House Agriculture Committee Member Glenn Thompson (R., Pa.) noted on the House floor last week that, “Many of us are eager to hear the President’s plan to help the nation achieve fiscal balance during next week’s State of the Union. I encourage the President to elevate passage of a new farm bill to the forefront in his speech. It’s good policy. It’s one area where we can come together and start the path to fiscal balance. I encourage my leaders in the House to welcome this call.”

In more specific Farm Bill news, a news release late last week from Sen. Al Franken (D., Minn.) stated that, “The new five-year Farm Bill I’m pushing in the Senate will provide certainty for our producers, at the same time it saves tens of billions of dollars for taxpayers and strengthens the farm safety net. We need to get it enacted as soon as possible.”

However, Mike Wilson reported on Friday at Farm Futures Online that, “The Farm Bill may not get acted upon until after May, and more likely between September and December – if at all, says a leading farm policy voice.

Mary Kay Thatcher, senior director of congressional relations with American Farm Bureau Federation, says there’s only a 25% chance of getting a farm bill before the end of the year. ‘It may even expire, but the last time it did no one really noticed other than dairy,’ she told a group of executives at the annual meeting of the Crop Insurance and Reinsurance Bureau.”

The update noted that, “There’s little sense of urgency to finish the farm bill, says Thatcher. ‘Farmers are apathetic right now, as are congressional leaders. (House speaker John) Boehner doesn’t care, he’s worried about the budget. Obama’s focusing on gun control, immigration, climate change – the farm bill is not a hot item. If farmers don’t push their congressmen, why should they bother?’”

An article on Friday at Inside U.S. Trade reported that, “Brazil and the United States late last week informally agreed that they will continue to abide by an interim settlement to a trade fight over U.S. cotton subsidies despite a nine-month extension of the 2008 farm bill that Brazil had previously suggested may be unacceptable, according to U.S. and Brazilian officials.”

The article explained that, “The interim settlement deal staved off Brazilian trade retaliation against U.S. exports sanctioned by the WTO. It does so with some administrative changes to the export credit guarantee program known as GSM-102, which was faulted as a prohibited export subsidy by the WTO, and with a $147 million annual U.S. payment to Brazil.”

And an update on Friday at that the National Sustainable Agriculture Coalition Blog indicated that, “AGree, an initiative to seek consensus on proposals to transform food, agriculture, conservation, energy, nutrition policies, today issued some near-term recommendations for the 2013 Farm Bill and other food and agriculture-related legislation.”

Meanwhile, Jordan Roach noted in a column last week at the Modesto Bee Online that, “For many farmers, particularly the thousands who grow specialty crops, crop insurance is the only risk-management tool available. Most of the growers I know buy crop insurance every year, yet nine times out of 10 they don’t collect a dime.

“It’s not cheap. In fact, some growers spend $100,000 on policies they seldom use. Those who say farmers are getting rich off crop insurance, do the math…If a farmer loses his entire crop to disease or disaster, many could go under without a backup plan. That plan is crop insurance.”

A more detailed analysis of crop insurance issues was included last week in an update posted at the farmdoc daily blog by Agricultural Economists Carl Zulauf (Ohio State University) and Gary Schnitkey (University of Illinois) titled, “Distribution of Crop Insurance Net Farm Payments by Crop and State.”

In other policy related developments, a news release last week from Sen. Roy Blunt (R., Mo.) stated that, “[Sen. Blunt] and Tom Harkin (Iowa) announced the launch of the Mississippi River Caucus today, a bipartisan initiative intended to focus congressional efforts on important river management goals such as addressing flood mitigation, encouraging commerce along the Mississippi River, and generally assisting river communities with their concerns.”

Juliet Eilperin reported in today’s Washington Post that, “The plan to plug a quarter-mile gap in an enormous levee along the Mississippi River and install two pumping stations would help control flooding in southeastern Missouri, but it requires draining as much as 55,000 acres of wetlands that provide backwater habitat for fish and waterfowl.”

The Post article noted that, “But the Corps is about to release its seventh analysis of the $165 million project saying the benefits outweigh the loss of the wetlands, according to a copy of the assessment obtained by The Washington Post…[O]ne hundred and fifty landowners and tenants raise mostly corn and soybeans on 100,000 acres in the New Madrid Floodway. About every three to five years, floods harm some of their crops or force farmers to delay planting. The Corps estimates that eliminating flooding there will produce $15.5 million in annual benefits by preventing damage and enabling the planting of a more diverse set of crops.”

 

Agricultural Economy

Owen Fletcher and Bill Tomson reported in Saturday’s Wall Street Journal that, “Corn prices fell 0.2% to a one-month low after the U.S. Department of Agriculture boosted its forecast for domestic supplies of the grain. The USDA, citing weak export demand for U.S. corn, estimated that stockpiles will total 632 million bushels before this year’s harvest, a 5% increase over its forecast last month.

The higher-than-expected estimate provides only slight relief for corn buyers such as ethanol companies and livestock producers, which have grappled with higher corn prices since last year. The USDA’s forecast for supplies as of Aug. 31 would still mark the lowest level for that time of year since 1996.”

(Note that a copy of Friday’s USDA report, with highlights on U.S. corn (summary), soybeans (summary) and wheat (summary), can be found at FarmPolicy.com Online.)

The Journal article added that, “For wheat, the USDA cut its forecast for domestic supplies at the end of May, when the wheat marketing year ends, by 3.5%, to 691 million bushels, citing greater demand for the use of wheat as animal feed. The reduction came as a surprise to analysts, who had expected the government to raise its estimate.”

Also, AP writer Jim Salter reported yesterday that, “The persistent drought is taking a toll on producers of ethanol, with corn becoming so scarce that nearly two dozen ethanol plants have been forced to halt production.”

More broadly on the biofuels issue, Anna Fifield reported yesterday at The Financial Times Online that, “A lobbying war has broken out in Washington as an unlikely coalition of the oil industry, environmentalists and aid groups tries to convince Congress to scrap the requirement for petrol to contain 15 per cent corn ethanol.

But proponents of biofuels are fighting back, saying that it is an environmentally friendly alternative and will lessen the US’s dependence on oil.”

With respect to trade, The Washington Post editorial board indicated today that, “Miserable as the past few years have been for the sluggish global economy, there is a bright side. Hard times have forced political leaders to cast about for ideas to boost growth, and every now and then they come up with a good one.

Case in point: the push for a free-trade agreement between the United States and the European Union.”

The Post added that, “Indeed, once talks begin in earnest, agriculture is likely to be the worst sticking point.”

And a news release Friday from Senate Agriculture Committee Ranking Member Thad Cochran (R., Miss.) stated that, “[Senators Cochran] and Roger Wicker (R-Miss) today asserted that catfish producers in Mississippi and other states are being harmed by the U.S. Department of Commerce not doing enough to stem a flood of imported fish products.”

 

Biotech

Ellyn Ferguson reported on Friday at Roll Call Online that, “By developing and inserting a glyphosate- resistant gene into plant DNA, Monsanto Co. has created premium seeds of soybean, canola and cotton able to withstand its Roundup herbicides and similar weed killers.

In the agribusiness world, Monsanto is known as an aggressive enforcer of restrictions on farmers’ use of its patented line of genetically engineered crops. Now the St. Louis-based conglomerate is in a showdown with a southern Indiana farmer that will play out this month in the U.S. Supreme Court.”

Ms. Ferguson explained that, “At issue is Vernon Hugh Bowman’s argument that Monsanto lost the right to keep him from planting Roundup Ready soybean seeds he bought from a grain elevator. The seeds came from soybean growers who had harvested and sold second-generation seed to the elevator, which in turn sold them to Bowman.

“It’s an argument Bowman lost in a federal district court and on appeal. They found that Bowman owed the company $84,456 as compensation for patent infringement.”

Robert Barnes also discussed this case in an article in yesterday’s Washington Post, “Farmer’s use of genetically modified soybeans grows into Supreme Court case.”

In a separate update on Friday at Roll Call, Ellyn Ferguson reported that, “An Ohio lawmaker says her legislation could provide a middle ground for companies such as Monsanto Co. that want to protect their patented seed from infringement and farmers who want to save and plant genetically engineered seed without fear of a conglomerate suing them.

“But Rep. Marcy Kaptur, a senior Democratic appropriator, has had little luck moving the bill she first introduced in 2004. She filed the legislation (HR 193) again in January, making this the fourth Congress in which she has offered it.”

And Ramsey Cox reported on Friday at The Hill’s Floor Action Blog that, “Alaska Sens. Mark Begich (D) and Lisa Murkowski (R) introduced two bills Thursday to prevent the sale of genetically altered salmon.

“‘We cannot afford to experiment with the world’s largest wild salmon stocks without the certainty that these fake fish won’t pose a serious environmental risk, especially to wild salmon and their habitat,’ Begich said Thursday. ‘I am introducing these bills to prevent against science experiments ending up on the plates of Alaska families.’”

 

Immigration

Bernie Becker and Russell Berman reported on Friday at The Hill Online that, “A bipartisan House group working on immigration is ‘on the cusp’ of an agreement, a senior House Democrat participating in the talks said Friday.

“Rep. Xavier Becerra (Calif.), the chairman of the House Democratic Caucus, told reporters that lawmakers on both sides of the aisle were being pragmatic about the issue, and that he was hopeful the Senate would also deliver on legislation soon.”

Keith Good

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