FarmPolicy

October 31, 2014

Policy Issues- Budget; Trade; Biofuels; Regulations; and, Immigration

Policy Issues- Budget- Farm Bill

DTN Political Correspondent Jerry Hagstrom reported yesterday (link requires subscription) that, “The Agriculture Department’s Food Safety and Inspection Service will have to furlough meat, poultry and egg product inspectors if sequestration goes into effect, U.S. Agriculture Secretary Tom Vilsack wrote the American Meat Institute on Tuesday. The National Cattlemen’s Beef Association also raised concerns about the furlough.

“AMI President and CEO J. Patrick Boyle had written Vilsack and President Barack Obama that USDA has a ‘statutory obligation’ to keep FSIS inspectors on the job.”

The DTN article indicated that, “‘You are correct in your assertion that FSIS’ governing statute imposes an obligation on the department to provide inspection,’ Vilsack wrote.

“‘However, our view of those authorities is that they allow for furloughs in order to comply with budget and fiscal laws enacted by Congress. Unlike other budget scenarios, such as a short-term government shutdown, the exemption provisions of the sequestration statutes do not include exceptions that would be applicable to FSIS inspection activities.’

“The White House noted last Friday that inspector furloughs would cause production in meat, poultry and egg product plants to shut down, affecting approximately 6,290 establishments nationwide and costing more than $10 billion in production losses, while industry workers would experience more than $400 million in lost wages.”

Also yesterday, a statement from National Cattlemen’s Beef Association (NCBA) President Scott George noted in part that, “Secretary Vilsack is using America’s cattlemen and women as pawns in the agency’s political wrangling with Congress. While we are certain the USDA contains other ‘non-essential’ employees, the Secretary has chosen to announce the consequences of sequestration in terms of a furlough of FSIS inspectors, essentially threating to close down all production, processing and interstate distribution of meat. This action has already cost cattle producers significant amounts of money with the downward slide in the futures markets caused by rampant speculation, with untold effect on producers through further regulatory uncertainty.”

Meanwhile, Seung Min Kim reported yesterday at Politico that, “Top congressional Republicans predicted Wednesday that the sequester will hit at the end of the month – the latest chapter in the series of budget battles that have stymied Washington in the last few years.

“Missouri Sen. Roy Blunt, a member of Senate Republican leadership, said ‘I think the sequester’s gonna happen…’”

Speaking yesterday after Sen. Blunt at Politico’s post-State of the Union event, House Budget Committee Ranking Member Chris Van Hollen (D., Md.), in a conversation with Jake Sherman, pointed to an alternative sequester plan offered by House Democrats that included cuts to direct payments for farmers- audio (MP3- 1:27).  However, that measure was not brought to the floor for a vote.

And, Molly K. Hooper reported yesterday at The Hill Online that, “Speaker John Boehner (R-Ohio) on Wednesday said the House will not act to prevent $85 billion in spending cuts set for March 1 unless the Senate acts first.”

In more specific Farm Bill news, during a House Agriculture Business Meeting yesterday, Ranking Member Collin Peterson (D., Minn.) noted that he was looking forward to getting to work on a Farm Bill “after we deal with all of these budget issues that are coming up in the next couple of months.”

Rep. Peterson indicated that he is “a little more optimistic” about the Farm Bill, and that he has had some recent discussion with Speaker John Boehner (R., Ohio) about the legislation- audio (MP3- 0:50).

In a news release yesterday from the National Farmers Union (NFU), Roger Johnson, the organization’s President, noted that, “There is no more critical issue for rural America and the consumers we serve than passage of a new comprehensive, five-year, farm bill in 2013.”

And a separate NFU update from yesterday stated that, “[NFU] applauded the efforts to establish payment limitations on farm programs in the Farm Program Integrity Act of 2013, introduced by Sens. Chuck Grassley, R-Iowa, Tim Johnson, D-S.D., Sherrod Brown, D.-Ohio, and Mike Enzi, R-Wyo. The bill would tighten eligibility requirements and limits the total value of payments farmers can receive annually.”

Also yesterday, a news release from Rep. John Garamendi (D., Calif.) stated that, “Today, the Democratic Caucus selected [Rep. Garamendi] as a Member of the House Agriculture Committee. Because the Congressman also serves on the Transportation and Infrastructure and the Armed Services committees, he sought and obtained a waiver to serve on this third committee.”

And on the Senate side, Emily Heil reported yesterday at the In the Loop Blog (Washington Post) that, “Sen. Mo Cowan might only be a senator for six months. But the Massachusetts Democrat appointed to fill the remainder of the term vacated when John Kerry was sworn in as Secretary of State won’t just be a seat-warmer — he’ll be plenty busy.

“Cowan was appointed on Tuesday to three committees: agriculture, commerce and small business.”

Ms. Heil added that, “…perhaps he’ll delve more into the other areas of that committee’s jurisdiction, like nutrition, school lunches and the like.”

Recall that the Senate Ag Committee will be holding a hearing later this morning titled, “Drought, Fire and Freeze: The Economics of Disasters for America’s Agricultural Producers.”

In related news, an update yesterday from National Crop Insurance Services stated that, “Crop insurance indemnity payments associated with the historic 2012 drought hit a record $14.2 billion Monday and will continue to climb as insurers work to finalize the remaining claims. But according to projections released last week by the Congressional Budget Office (CBO), total indemnities and the taxpayer-funded portion of those losses, will be much lower than crop insurance critics warned last summer.

“CBO predicted $16 billion in expected indemnities as a result of last year’s catastrophic weather; however, CBO foresees a sharp decline in indemnities in 2013 with a return to more normal weather conditions. Since August, the CBO has lowered its projections for total federal outlays for crop insurance by nearly $8 billion over the next 10 years.”

The update pointed out that, “This stands in sharp contrast to the wild claims made last summer by crop insurance opponents who were angling to weaken farmers’ most important risk management tool. Academics and think tanks with an anti-farm-policy agenda supplied the media with sloppy estimates ranging from more than $20 billion to $40 billion in total indemnities.

Critics also led people to believe that taxpayers would be on the hook for nearly all crop insurance payments to farmers, which is another fallacy. Final program costs will reflect the $4.1 billion in premiums farmers paid to purchase insurance policies, losses by private crop insurance companies, as well as government investment.”

A news release yesterday from the Federal Reserve Bank of St. Louis indicated that, “Abundant crop insurance shielded farmers’ income from much of the impact of this summer’s record drought across the Midwest and Mid-South, according to the latest Agricultural Finance Monitor released today by the Federal Reserve Bank of St. Louis.”

 

Trade

Sudeep Reddy, Matthew Dalton and Joann S. Lublin reported in today’s Wall Street Journal that, “The U.S. and European Union are launching negotiations to pursue one of the most complex trade pacts ever, aiming to reshape global standards by uniting two international economic powers.

“Officials from both sides of the Atlantic said Wednesday that it could take two years to work through thorny regulatory divisions, but that ultimately the talks could lead to a far-reaching agreement that serves as a model for international trade deals.”

The Journal article noted that, “Mr. Obama intends the so-called Transatlantic Trade and Investment Partnership to be a central piece of his second-term trade agenda, joining the Trans-Pacific Partnership the administration is negotiating with countries touching the Pacific Ocean.”

Europe’s environmental and public health rules are shaping up to be a flash point. The EU has strict regulations on genetically modified crops that have long angered the U.S., where a wide range of biotech plants have received approval. Only two strains have been approved to be grown in the bloc,” the Journal article said.

Nicholas Kulish and Jackie Calmes reported in today’s New York Times that, “Proponents hope that a comprehensive trade agreement will not only raise economic growth, but also lower prices for European and American consumers and give new impetus to a relationship that has lacked forward momentum almost since the end of the cold war. Talks could begin in late May or early June.

Negotiations are not expected to be easy, with entrenched interests, especially in protected sectors of the agriculture industry, fighting to maintain their subsidies and preferences. European consumers have rejected the kinds of genetically modified crops that are commonplace in the United States but are known across the Atlantic as Frankenfoods.”

A news release yesterday from Rep. Adrian Smith (R., Neb.) stated that, “I am pleased the Obama Administration has initiated trade negotiations with the EU, and am pleased the HLWG [High Level Working Group on Jobs and Growth] report calls for an ambitious sanitary and phytosanitary (SPS) chapter to ensure we are able to hold our trading partners to their obligations.  I will continue to promote strong science-based food safety standards to ensure Nebraska producers are not put at a disadvantage in the European market.”

American Farm Bureau Federation President Bob Stallman noted yesterday that, “The misuse of sanitary and phytosanitary standards, including the EU’s restrictions on genetically engineered crops, has long been a tactic to impede trade.  We will look closely to these negotiations to move past this trade distorting tactic and fully embrace a rules-based trading system with standards based upon scientific assessment.”

A news release yesterday from the National Milk Producers Federation (NMPF) and the U.S. Dairy Export Council (USDEC) stated that, “[NMPF] and [USDEC] welcomed the announcement yesterday that the United States and European Union (EU) will launch trade negotiations. The United States and EU stated that the planned Transatlantic Trade and Investment Partnership is intended to be a comprehensive agreement that addresses a broad range of bilateral trade and investment matters, including regulatory issues.”

 

Biofuels

University of Illinois Agricultural Economists Scott Irwin and Darrel Good penned a brief update yesterday at the farmdoc daily Blog (“The Ethanol Blend Wall, Biodiesel Production Capacity, and the RFS…Something Has to Give”), which stated in part that, “We have had a number of posts in in the last year addressing issues associated with U.S. biofuels policy. In particular, we noted in the post found here that the new era of higher crop prices that began in late 2006 could be extended well into the future as a result of the Renewable Fuels Standard (RFS) for advanced biofuels which in all likelihood could only be met with a rapid expansion in biodiesel production. That analysis is revisited here based on additional information, including the mandated RFS volumes of biofuels for 2013 recently released by the U.S. Environmental Protection Agency (EPA). Our focus is on the increasing difficulty of meeting the RFS for both renewable biofuel (domestically produced ethanol) and advanced biofuels in the next 12 to 18 months. This issue is quickly coming to the forefront as the total mandate for biofuels continues to increase sharply–from 16.55 billion gallons this year to 20.5 billion gallons in 2015. Most importantly, the mandates could exceed the capacity to produce and/or blend biofuels by a substantial amount as soon as mid-2014.”

 

Regulations

A news release yesterday from Sen. Mike Johanns (R., Neb.) stated that, “[Sen. Johanns] is introducing today a package of legislation promoting greater transparency and accountability in the Environmental Protection Agency’s (EPA) regulatory process. The package contains four individual pieces of legislation.

“‘Everyone from mayors to public utility providers to farmers and ranchers have expressed concern with EPA’s aggressive agenda and lack of understanding about how our economy works,’ Johanns said. ‘It’s not simply what EPA is doing that bothers so many of our nation’s job creators, it’s how EPA is doing it. I’ve heard countless times that EPA is not transparent or responsive, but rather short-sighted and arrogant.’”

Sen. Johanns elaborated on this issue in a presentation yesterday on the Senate floor (video replay).

Stephanie Strom reported in today’s New York Times that, “A group of health advocates and public health officials from major cities around the country are asking the Food and Drug Administration to regulate the amount of caloric sweeteners in sodas and other beverages, arguing that the scientific consensus is that the level of added sugars in those products is unsafe.”

 

Immigration

Rosalind S. Helderman reported in today’s Washington Post that, “It was perhaps the one topic that received bipartisan attention Tuesday night — from President Obama during his State of the Union address, in the official Republican response delivered by Sen. Marco Rubio of Florida, and in the tea party’s response to the response: the need to overhaul the nation’s immigration laws.

“But despite the bipartisan call for broad action, partisan divides on how the complex topic should be tackled were on display Wednesday as the Senate held its first substantive hearing on the path forward.”

The Post article noted that, “The four Democrats involved in a bipartisan group of eight senators who released a framework for revamping the system last month huddled with Obama at the White House on Wednesday to update him as they work to translate the brief document into a complicated bill. Congressional aides said the group briefed Obama on the ongoing talks during a meeting that lasted just under an hour. They assured him that negotiations are progressing well, that both sides are working in good faith and that they remain confident the group will be able to agree to a bill for proposal in coming weeks, aides said.

“Sen. Charles E. Schumer (D-N.Y.), a member of the Judiciary Committee and the bipartisan group, told others on the panel Wednesday that the senators are ‘on track’ to produce a bill by their targeted March time frame.

 

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Lastly today, David Kesmodel and Owen Fletcher reported in today’s Wall Street Journal that, “Iowa State University student Andrew Filipi faced a quandary recently that many college seniors today can only dream of: choosing between two job offers six months before graduation.

With a double major in animal science and international agriculture, Mr. Filipi is part of a wave of students at U.S. colleges of agriculture who are in high demand amid an expanding and increasingly global farm economy.”

Keith Good

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