FarmPolicy

April 24, 2014

Budget- Policy Issues; Farm Bill; Ag Economy; and, Immigration

Budget (Sequestration)- Policy Issues

Alan K. Ota reported yesterday at Roll Call Online that, “A split among Senate Republicans over what to propose as a substitute for the sequester has complicated plans for Senate votes this week on competing GOP and Democratic deficit reduction proposals.

“A GOP plan to grant federal agencies more flexibility to implement $85 billion in fiscal 2013 spending worries some Republicans, who fear the White House would use the measure to circumvent congressional budgeting authority.

“Meanwhile, Senate Majority Leader Harry Reid, D-Nev., filed cloture Tuesday on a motion to proceed to a Democratic alternative to the automatic budget cuts scheduled to go into effect Friday. Republicans are expected to introduce their alternative Wednesday, if their differences are resolved over whether to give the Obama administration more flexibility to make the $85 billion in fiscal 2013 cuts or embrace an alternative plan of spending cuts similar to sequester replacement legislation the House passed last year.”

The article pointed out that, “[S]ome Republicans have qualms about a proposal by James M. Inhofe, R-Okla., and Patrick J. Toomey, R-Pa., to give the administration flexibility to distribute the scheduled spending cuts. ‘There are some members of our conference who are suspicious of the administration taking advantage of such flexibility to punish their political enemies,’ said Minority Leader Mitch McConnell, R-Ky.”

Erik Wasson reported yesterday at The Hill’s On the Money Blog that, “The divide threatened to derail the GOP’s quest to counter an all-out White House offensive to blame the cuts, currently set to be apportioned across-the-board, on Republicans in Congress.

“The bickering also stood in stark contrast to Senate Democrats, who have rallied around a $110 billion sequester replacement bill that would raise taxes on those making more than $5 million a year, close corporate tax loopholes, end direct farm payments and delay defense cuts.”

At a Senate Finance Committee hearing yesterday, Chairman Max Baucus (D., Mont.) commented on the Senate Democrat sequester replacement proposal: “This proposal is not perfect. I have concerns about cuts to programs family farmers rely on. But I understand the alternative of doing nothing could be far worse for agriculture and the rest of our economy.

That’s why I secured a compromise that will extend the SURE program and give farmers a bridge between direct payments and the next farm bill.

“And I worked to include livestock disaster assistance for ranchers recovering from the worst drought in decades. That, too, is important. So while this plan is not exactly how I would have designed it on my own, I recognize that compromise is necessary to get something done.”

Sen. Charles Grassley (R., Iowa) also commented on the Senate Democrat sequester alternative while speaking with Mike Adams on yesterday’s AgriTalk radio program.  In part, Sen. Grassley noted that if the Democrat alternative passed, it would “put us in a terrible position when we write a new Farm Bill.” (related AgriTalk audio here, (MP3- 1:42).

Nonetheless, at a GOP news conference on Monday, a reporter pointed out to House Speaker John Boehner (R., Ohio) that direct payments had been included in sequester alternatives as a source for potential spending cuts on both sides of Capitol Hill.

In response, Speaker Boehner indicated that cutting direct payments was an “option” with respect to a sequester alternative and that it could be “someplace to start” (related video clip here).

Regarding executive branch perspective on the sequester, Amie Parnes reported yesterday at The Hill Online that, “President Obama on Tuesday traveled to a Navy shipyard in Newport News, Va., to argue allowing $85 billion in spending cuts to be triggered was ‘not smart’ and would inflict a ‘self-inflicted wound’ on the economy.”

Michael D. Shear and Thom Shanker reported in today’s New York Times that, “In a sign of the deepening intransigence on both sides, Republicans dismissed Mr. Obama’s remarks as political grandstanding and accused him of trying to scare Americans by exaggerating the impact of the cuts. They mocked Mr. Obama’s recent trips to sound alarms about the budget cuts as campaign-style events that would not ease the nation’s fiscal problems.”

Also, The Wall Street Journal editorial board took a closer look at the sequester issue in today’s paper in a piece titled, “The Sequester Revelation: Obama has the legal power to avoid spending-cut damage.”

And AP writer Calvin Woodward reported yesterday that, “President Barack Obama and his officials are doing their best to drum up public concern over the shock wave of spending cuts that could strike the government in just days. So it’s a good time to be alert for sky-is-falling hype.”

More specific to USDA programs, the AP article noted that, “As for the assertion that 600,000 women could be dropped from the Women, Infants and Children Program, that’s not to say the rolls would be cut by that number. The actual number is likely to include women who are not enrolled in the program now and could be denied when seeking to join it. Federal officials say the true number will depend on how states can manage their caseloads.”

And on the meat inspector issue, Reuters news reported yesterday that, “The Obama administration may institute a ‘rolling’ furlough to keep meat plants open during automatic budget cuts rather than idle all 8,400 U.S. meat inspectors at the same time, a House subcommittee chairman said on Tuesday.”

The article noted that, “‘It appears now it’s a rolling furlough,’ Texas Republican Michael Conaway, chairman of a House Agriculture subcommittee, told reporters. ‘No one plant would be shut down.’

The timing and assignment of furloughs would be spread across the country to minimize the impact on processors, said Conaway, who asked the USDA last week to explain in detail how it would apply the budget cuts. A USDA spokesman was not immediately available for comment.”

“Conaway said the administration has not replied in writing to his request for information about meat inspections and the White House budget office ‘owes us an explanation.’”

Also, a news item yesterday from Sen. Roy Blunt (R., Mo.) stated that, “[Sen. Blunt], Ranking Member of the Appropriations Subcommittee on Agriculture, Rural Development, Food and Drug Administration, & Related Agencies, sent a letter to U.S. Department of Agriculture (USDA) Secretary Thomas Vilsack urging him to use his authority to minimize the economic impact of sequestration for Americans as it relates to the Food Safety and Inspection Service (FSIS).”

Similarly, a news release yesterday from Iowa GOP Senator Charles Grassley noted that, “[Sen. Grassley] is leading a group of senators asking U.S. Department of Agriculture Secretary Tom Vilsack [in a letter] about the department’s discussion of furloughing meat inspectors due to the sequestration.”

Yesterday’s release added that, “The letter was signed by Grassley and Senators Thad Cochran, Deb Fisher, Mike Johanns, Pat Roberts, John Boozman, Saxby Chambliss, John Hoeven and Jerry Moran.”

 

Budget: Continuing Resolution

Stacy Kaper and Amy Harder reported earlier this week at National Journal Online that, “Congressional leaders are already shifting their focus to the next spending battle after the automatic budget sequester takes effect on Friday—how to keep the government running—but the Democratic strategy on this fight is far from set.

House Republicans are gearing up for a bill spearheaded by Appropriations Committee Chairman Harold Rogers, R-Ky., which would keep the government funded for the rest of the fiscal year at the post-sequester spending levels of $974 billion. That bill is expected to be brought to the House floor as soon as next week.

“Meanwhile, Senate Democratic leaders are waiting to see what the House can pass and how the votes break down before devising their plans. Although Senate Democratic leaders are engaged in conversations with their House Republican counterparts about the expiring continuing resolution to fund the government, they have not communicated a strategy for handling the CR to the Democratic caucus.”

 

Farm Bill

A news update yesterday from the House Agriculture Committee indicated that, “[T]he House Agriculture Committee adopted the budget views and estimates letter which outlines the committee’s budget recommendations for the agencies and programs under its jurisdiction for fiscal year 2014.”

During yesterday’s Committee meeting, Ranking Member Collin Peterson (D., Minn.) noted that, “But at the same time our programs have become a frequent target for those outside the committee who, frankly, don’t understand agriculture, don’t understand the programs under our jurisdiction, and don’t understand the need for a safety net in agriculture which, frankly, benefits consumers and bankers more than it does farmers.  The Ag Committee can best contribute to deficit reduction as part of the farm bill process, and I hope that the rest of our colleagues will let us…leave us alone, let the Ag Committee do their work, and we’ll get it done.”

Rep. Peterson added that, “As it was last year, the budget situation is going to be a huge challenge, and that’s why Chairman Lucas and I agree that Congress needs to address these budgetary issues before we can really begin work on the farm bill process.”

Rep. Mike Conaway (R., Tex.), the Subcommittee Chairman for General Farm Commodities and Risk Management, filled in yesterday for Chairman Frank Lucas (R., Okla.), who was unable to travel to Washington, D.C. due to excess snow.

During his remarks yesterday, Rep. Conaway defended the farm safety net while discussing a recent Washington Post editorial on the topic- audio here (MP3- 1:04).

Meanwhile, DTN Ag Policy Editor Chris Clayton reported yesterday (link requires subscription) that, “A former USDA deputy secretary in the George W. Bush administration is taking a vocal stand to get farm organizations and members of Congress to rethink their opposition to tying conservation compliance to eligibility for crop-insurance premium subsidies.

Jim Moseley, who continues to farm in Indiana, said Tuesday he’s concerned that conservation gains made over the past 25 years could be lost. With the expectation that direct payments will either be eliminated or reduced as Congress focuses on risk-management tools such as crop insurance, it is important farmers continue to follow a conservation plan.”

Mr. Clayton pointed out that, “Moseley, a co-chair on the group AGree, released a report Tuesday with American Farmland Trust President Jon Scholl, ‘Conservation Compliance: A 25-Year Legacy of Stewardship.’”

 

Agricultural Economy

University of Illinois Agricultural Economist Darrel Good noted earlier this week at the farmdoc daily blog (“A Review of the USDA’s 2013-14 Projections for Corn and Soybeans”) that, “The USDA’s Interagency Commodity Estimates Committees prepared projections for the 2013-14 U.S. marketing year for corn and soybeans (as well as other crops) presented at the USDA’s 2013 Agricultural Outlook Forum on February 22.

“Under the assumption of normal spring and summer weather conditions, the projections for both crops reflect expectations of much larger U.S. production, increased consumption, larger year-ending stocks, and lower prices than experienced during the current marketing year. The projections are consistent with our expectations, with some minor exceptions.”

The update noted that, “Based on a model estimated over the period 1988 through 2012, the USDA projects the 2013 U.S. average corn yield at 163.6 bushels per acre. The model incorporates trend, planting progress, and summer weather variables to explain average yield. The 2013 projection assumes normal planting progress, no extreme June dryness, and average summer weather. The forecast is higher than most other forecasts, including ours. Using a longer time period, and the application of a different weather model, our analysis points to a 2013 yield near 160 bushels.

A record large corn crop, near the USDA projection of 14.5 billion bushels, is consistent with our expectation.”

After additional analysis, the farmdoc update concluded by pointing out that, “The early USDA projections for the 2013-14 marketing year are well-reasoned and represent a useful starting point. Our projections differ only slightly. Larger year-ending stocks and a marketing year average price near $4.50 for corn may result from a crop of 14.5 billion bushels. Producers appear to have been reluctant to take advantage of the high pre-harvest prices available early in the year. In contrast, our expectations would be for a slightly smaller soybean crop, stronger domestic soybean oil demand, and a marketing year average farm price of soybeans near $11.00.”

Meanwhile, a recent update at The Economist Online outlined a variety of recent statistical variables relating to the U.S. farm economy.

After this cogent summary, the Economist item noted that, “Many observers are now wondering whether a repeat of boom-and-bust is on the horizon. Some hopeful people, as well as the USDA, argue that farm debt has not soared as it did in previous farm booms. Others point out that the picture is more patchy. Allen Featherstone, a professor at Kansas State University, has studied farms within the Kansas Farm Management Association. He found that in 2010 the average debt-to-asset ratio was higher than it was in 1979; and that there was a higher percentage of farms with ratios of more than 40% debt to assets, and more with 70% or more. If commodity prices take a dive downwards, the future for some farmers will be far less golden.”

 

Immigration

Chris Clayton reported yesterday at DTN that, “Former Ag Committee chairman, Rep. Bob Goodlatte, R-Va., who now chairs the House Judiciary Committee, said Tuesday he supports working to replace the H-2A program ‘and implement new policies that will bring our illegal agricultural workers out of the shadows, as a first step in the process of overhauling our nation’s immigration system.’

“Goodlatte commented as the House Judiciary Subcommittee on Immigration and Border Security held a hearing Tuesday looking at issues affecting agricultural employers.

“Members of the Agriculture Workforce Coalition also sent a letter Tuesday to House and Senate leadership calling for support of immigration legislation that addresses agriculture’s unique labor needs.”

The DTN update noted that, “In testimony on Tuesday, farmers and others talked about the need for a comprehensive immigration bill that includes agricultural workers and not just people in high-tech jobs. [Bob Stallman, president of the American Farm Bureau Federation] also said the H-2A program is increasingly denying farmers the workers they need or creating new barriers that make it harder to get workers when farmers need them” [related AFBF news item here]

The Associated Press reported yesterday that, “The existing program for temporary farmworkers — the H-2A visa — allows workers into the U.S. for 10 months at a time but growers complain that it is extremely bureaucratic and pays artificially inflated wages. Some 55,000 H-2A visas were issued in 2011 compared to over a million workers on fields and farms. Also, dairy farms and meat processing plants, which are increasingly major employers of foreign workers, are not covered by the program.

“Lawmakers of both parties said the system is broken and needed to be fixed but disagreements emerged over how to improve it. Goodlatte said there should be a new program to replace the existing one and ensure a ‘stable, legal agricultural workforce.’ But several Democrats said any changes should be made in the context of comprehensive changes to the nation’s immigration laws that would provide a pathway to citizenship for illegal immigrants already in the country, including eventual citizenship for farmworkers.”

Keith Good

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