FarmPolicy

September 16, 2014

Budget- Farm Bill; Biotech; Ag Economy; and, Immigration

Budget- Farm Bill, Policy Issues

Steven T. Dennis reported yesterday at Roll Call Online that, “Back at the White House after his golf weekend in Florida, President Barack Obama on Tuesday morning took sharp aim at a Congress on recess just 10 days before what he called ‘brutal’ across-the-board cuts take effect.

“Speaking in front of a backdrop of ‘first responders,’ Obama warned that the cuts would put thousands of people on the unemployment rolls and might cause the unemployment rate to tick up again if Congress fails to act.”

Jennifer Epstein reported yesterday at Politico that, “Taking an even more combative approach Tuesday than he did when first proposing the stop gap measure earlier in the month, Obama said he’s confident that most Americans agree with him. By spelling out the effects of the cuts, he’s hoping to pressure Republicans into accepting an agreement that includes new revenues.”

Ms. Epstein noted that, “Senate Majority Leader Harry Reid (D-Nev.) said he will soon hold a vote on the plan to postpone the sequester that Obama also supports, but insisted that Republicans ‘get off the sidelines’ and work with Democrats on a ‘balanced approach.’”

Zachary A. Goldfarb reported in today’s Washington Post that, “The fight between President Obama and congressional Republicans over the automatic spending cuts that start next week is shifting from one about stopping them to one about assigning blame if they happen.”

Likewise, Janet Hook and Colleen McCain Nelson reported in today’s Wall Street Journal that, “With less than two weeks to go before the latest fiscal face-off, rhetoric heated up Tuesday as the political parties exchanged fire over whom to blame if looming spending cuts take effect.”

In a lengthy column on the sequester issue published in today’s Wall Street Journal, House Speaker John Boehner (R., Ohio) stated that, “The president’s sequester is the wrong way to reduce the deficit, but it is here to stay until Washington Democrats get serious about cutting spending. The government simply cannot keep delaying the inevitable and spending money it doesn’t have.”

Senate Finance Committee Chairman Max Baucus (D., Mont.) indicated yesterday that, “The sequester is not the right way to take on the economic challenges facing our nation.  We absolutely need to cut federal spending, but we should do so with a scalpel, not an ax.  The sequester’s indiscriminate cuts pose a serious threat to our nation’s economic recovery, and every American will feel the effects.  In the short term, we need a balanced approach that focuses on job creation.  In the long term, we need a comprehensive bipartisan plan to bring down the deficit.”

Iowa GOP Sen. Chuck Grassley pointed out yesterday that, “It’s discouraging to see the President complain about fiscal responsibility after the record of the last four years, including having done nothing to avert the approaching sequester which the White House proposed and worked to enact in August 2011.”

Meanwhile, Ron Hays, of The Oklahoma Farm Report and Radio Oklahoma Network, spoke on Monday evening with House Agriculture Committee Chairman Frank Lucas (R., Okla.) about budget issues and the Farm Bill.

A summary and audio replay of that discussion can be found here, while a FarmPolicy.com transcript of the interview is available here.

In part, Mr. Hays noted that the Senate Democratic proposal to avoid sequester eliminates direct payments to farmers.

Chairman Lucas stated that, “That’s the resource base we need to use to craft the next farm bill in 2013. Literally, if the Senate gets their way, I don’t know what we have left to write a farm bill with this summer…[B]ut I would tell you, you’ve got to have something to work with to craft the next farm bill. And while we all know direct payments won’t be a part of the next equation, you still have to have something to plus up the insurance side. You still have to have something to address all the other issues.”

Chairman Lucas added that, “I don’t know how we write a farm bill if the Senate proposal were to become law. But the House will not accept Senate language that has tax increases.”

With respect to the Farm Service Agency sign up period for direct payments, and the surety of those payments for this crop year, Chairman Lucas pointed out that, “Not everybody in D.C. wants us to have a safety net for the rest of this crop year. We need to get signed up…[E]verything is subject to OMB’s interpretation, Office of Management & Budget, OMB, and also to the department. But I don’t see how, when you’ve got a signed contract and the resources are committed, I don’t see how they renege on that. Even being subject to sequestration, we’re talking about so many percents. The body of the direct payment as promised will still be there. You need to sign up. You need to tie down that commitment.”

In his discussion with Ron Hays, Chairman Lucas also noted that, “The moment that it became obvious that direct payments would not be a part of the next farm bill, the bean counters, the budget choppers, those people who don’t want to spend any money on rural America, who don’t understand where their food comes from, have started targeting crop insurance.

“But remember, we’ve already seen, in the ’08 Farm Bill, reductions made in the crop insurance spending. We also already saw the administration, in their first four years, in the SRA [Standard Reinsurance Agreement], turn down the money for crop insurance, so they’ve already taken two bites from it. I’m committed to hold the line because with direct payments gone, crop insurance and whatever we do with shallow loss, whatever we do with potential for price protection becomes your safety net. I want a safety net. Mother Nature’s demonstrated you need a safety net.”

Chris Clayton reported yesterday at DTN (link requires subscription) that, “The across-the-board budget cuts facing the country in less than two weeks again highlight the conflicts in Washington pitting largely urban Democrats unwilling to cut nutrition programs against largely rural Republicans who have proven just as unwilling to cut farm programs.

“Democrats have proposed a way to avoid cuts to social programs and government workers, but Republicans and farm groups counter that the plan relies too heavily on farmers to bear the brunt of the budget cuts.

“Congress is not in Washington this week, but USDA will hold its Agricultural Outlook Forum Thursday and Friday as the department’s economists discuss various issues affecting sectors of the industry. With hundreds of outside economists, ag policy wonks and farm media in attendance, the forum will be one of the last major opportunities for USDA officials and others to make their case about the sequester and need to consider other budget-cutting options. Sequester cuts, as much as $84 billion for this year, are set to take effect March 1.”

In an update yesterday at the DTN Ag Policy Blog, Mr. Clayton pointed out that, “Fourteen farm organizations signed onto a letter Tuesday to Senate Majority Leader Harry Reid raising their concerns over the Senate proposal that would cut $27.5 billion from farm programs over the next decade through elimination of direct payments.”

In other policy news, Leslie Josephs reported yesterday at The Wall Street Journal Online that, “The U.S. government is unlikely to raise the quota for no- or low-tariff sugar imports for the first time in four years, due to increased domestic production, a person who works for the U.S. Department of Agriculture said Tuesday.

“Big U.S. sugar production is mirroring the global market, where output is expected to outpace demand this season. If the U.S. buys less of the sweetener from the global market, it could put more pressure on sugar prices, which have been trading near 30-month lows.”

In nutrition news, Evie Blad reported this week at The Arkansas Democrat-Gazette that, “The Little Rock School District has changed the way it serves lunch to some younger students in hopes of keeping uneaten food out of the trash and cutting unnecessary costs.

“Last week, third- through fifth-grade grade students started participating in a national initiative called Offer Versus Serve, which allows them to take at least three out of five food items, leaving behind dishes they don’t intend to eat. At least one of their selected foods must be a vegetable or fruit.

Previously, the district required those students to take all five items, even if they knew some of them would be bound for the trash.”

While Steven Shater reported this week at the South Jersey Times that, “In September 2012, when school districts across the country received a letter from U.S. Secretary of Education Arne Duncan about finding innovative ways to increase participation in school breakfast programs, Woodbury Public Schools had already done just that.”

The article explained that, “As students settle in, meals packed into milk crates are delivered to each classroom, the quantity based upon the number of children in each classroom. The meals change from day to day, but are limited due to safety issues – which means no hot food.

“The choices usually include different brands of cereal, Nutrigrain bars, muffins, and yogurt. Children can choose between a side of graham crackers or apple slices, and between milk or juice as their drink. As the children eat, the teachers can take attendance, collect homework or teach a short lesson plan.”

And in other news, a recent video from the United Egg Producers took a closer look at proposed federal legislation relating to egg production.  The informative video features remarks from David Lathem, President and CEO of Lathem Farms, and runs about three minutes.

 

Biotech- U.S. Supreme Court Case

Adam Liptak reported in today’s New York Times that, “A freewheeling and almost entirely one-sided argument at the Supreme Court on Tuesday indicated that the justices would not allow Monsanto’s patents for genetically altered soybeans to be threatened by an Indiana farmer who used them without paying the company a fee.

“The question in the case, Bowman v. Monsanto Company, No. 11-796, was whether patent rights to seeds and other things that can replicate themselves extend beyond the first generation. The justices appeared alert to the consequences of their eventual ruling not only for Monsanto’s very lucrative soybean patents but also for modern agriculture generally and for areas as varied as vaccines, cell lines and software.”

The Wall Street Journal editorial board noted today that, “Monsanto spends $1.5 billion a year on R&D, and it takes over a decade and more than $100 million to bring a product to market. For Roundup Ready, research began in the 1980s and it became a commercial product in 1996. Some 275,000 farmers a year now use it, but the patent expires in 2014.

The case has implications beyond agriculture to biotech and any business that depends heavily on patents. That may be precisely why the Justices took the case and would be consistent with their recent interest in sorting out increasingly confused U.S. patent law. The Justices can help in this case by sending a useful message that when it comes to innovation, you reap what you sow.”

 

Agricultural Economy- Trade

Reuters writer Sam Nelson reported yesterday that, “Wheat and corn farmers are banking on more rain and snow in late February so they can keep nursing depleted soil back to healthier levels of moisture amid the worst drought in the United States grain belt in more than 50 years.

“Agricultural meteorologists said on Tuesday that the precipitation in the next week to 10 days will provide significant relief for crop prospects in the U.S. Plains and Midwest.”

A recent report from the Federal Reserve Bank of Kansas City (“Survey of Tenth Disctrict Agricultural Credit Conditions, 4th Quarter 2012”)  stated that, “Persistent drought sparked a rush in irrigated farmland sales during the fourth quarter of 2012. Stronger sales vaulted irrigated cropland values in the District 30 percent above year-ago levels, with a 13 percent jump in the fourth quarter alone. Cash rental rates for irrigated cropland also surged more than 20 percent from a year ago, as landowners factored in high farm incomes on land with consistent access to water when renegotiating lease terms.”

Meanwhile, an update yesterday at the Economic Research Service (USDA) Chart Detail webpage stated that, “In the final three months of 2012, higher field corn prices resulting from the Midwest drought began to show up on supermarket shelves. From October to December, while the all-items CPI fell 0.8 percent and overall food-at-home prices increased only 0.2 percent, prices rose for most foods that rely heavily on corn-based animal feed—beef, pork, poultry, other meats, eggs, and dairy products.”

AP writer Dirk Lammers reported yesterday that, “A new study documents a loss of 1.3 million acres of grassland over a five-year period in the Western Corn Belt — a rate not seen since the 1920s and 1930s.

The research by Christopher Wright and Michael Wimberly of the Geographic Information Science Center of Excellence at South Dakota State University said a recent doubling in commodity prices has created incentives for landowners in South Dakota, North Dakota, Nebraska, Minnesota and Iowa to convert grassland to corn and soybean cropping.”

And Bloomberg writer Elizabeth Campbell reported yesterday that, “The number of farms in the U.S., the world’s biggest agriculture exporter, fell 0.5 percent in 2012 to the lowest since 2006, the government said.

Farm operations dropped to 2.17 million, compared with 2.18 million in 2011, the U.S. Department of Agriculture said today in a report on its website. The amount of land in use for cultivation or livestock production declined to 914 million acres from 917 million in 2011, while the average farm size increased to 421 acres from 420” [related graph from report here].

With respect to trade issues, Vicki Needham reported yesterday at The Hill’s On the Money Blog that, “A bipartisan group of lawmakers is pressing trade officials to quickly resolve Russia’s recent ban on U.S. meat.

“Senate Agriculture Committee Chairwoman Debbie Stabenow (D-Mich.) and panel ranking member Thad Cochran (R-Miss.), were joined by 31 other senators on Tuesday in urging the U.S. Trade Representative to deal with Russia’s import ban on U.S. beef, poultry and turkey, they argue would cost the industry $600 million a year.

“They argue that the ban ‘is unfounded, not based on sound science and violates World Trade Organization rules,’ they wrote in a letter to U.S. Trade Representative Ron Kirk.”

Jessica Alaimo reported this week (video included) at The Democrat and Chronicle (Rochester, N.Y.) Online that, “A booming dairy industry means upstate New York products can be found anywhere in the country, however our neighbors to the north have proposed a deal that would limit the amount of dairy that can cross the border.

Canada’s proposed strict trade limitations could hinder the growth of Upstate New York’s dairy industry, said U.S. Sen. Chuck Schumer.”

The article noted that, “Schumer said he is leaning on the U.S. Department of Agriculture and the Office of the United States Trade Representative to reach an agreement with Canada that does not slow dairy exports. Since he has intervened, Schumer said Canada officials have backed off their request.

“‘This type of lopsided tariff could choke off a huge market a couple of hours away, and in addition to new barriers, there are existing barriers from countries like New Zealand that have to be eliminated,’ Schumer said.”

 

Immigration

Miriam Jordan and Mark Peters reported in today’s Wall Street Journal that, “Red Bryan says he has never seen a labor shortage like this in more than four decades as a berry farmer.

“‘Labor is the No. 1 issue for agriculture,’ says the California grower. ‘It’s not pesticides, water supply or land use. Without workers, we’re out of business.’ Mr. Bryan, a partner in California Giant Berry Farms, which operates fields throughout the state, says he fears for the strawberry harvest getting under way.

The tight labor market explains why farm groups are pressing Congress to include, in any immigration overhaul, provisions that would ensure a steady flow of workers and prevent an exodus of newly legalized laborers from the sector. Under one possible scenario, agriculture workers would earn permanent legal residency by working a certain number of days on farms each year; those who worked longer would get a green card sooner.”

Today’s article added that, “‘It’s important that existing experienced workers be encouraged to remain in the agriculture sector for a while,’ says Craig Regelbrugge, national co-chairman of the Agriculture Coalition for Immigration Reform. A Senate immigration proposal, which could be in a bill next month, calls for stabilizing the current workforce and establishing a new temporary-worker program.”

“Meanwhile, ahead of their coming harvest, many farmers are turning to a temporary agricultural visa, known as the H-2A program, which allows growers to bring workers into the U.S. for a short period. Growers have long avoided this program because it means they have to pay higher wages, housing costs and other expenses. But in a difficult labor market, ‘there is no room for error,’ said Mike Carlton, director of labor relations for the Florida Fruit & Vegetable Association.”

Keith Good

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