FarmPolicy

October 22, 2014

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

Budget Issues

Emily Holden reported yesterday at Roll Call Online that, “Senators rejected competing sequester replacement proposals Thursday, unable to agree on what legislation to take up to stop $85.3 billion in across-the-board spending cuts from going into effect Friday.

“The chamber turned back Democratic and Republican plans in two test votes designed to help the parties position themselves for negotiations after the budget cuts take hold tomorrow.”

Alexander Bolton reported yesterday at The Hill Online that, “A bill crafted by Senate Democrats won 51 votes, while a Republican alternative won only 38 votes. Three Democrats — Sens. Mary Landrieu (La.), Mark Pryor (Ark.) and Kay Hagan (N.C.), who are all up for reelection in 2014 — voted against their party’s bill, which fell 51-49.”

The Hill update noted that, “Congressional leaders say there is no Plan B and that the sequester, as the cuts are known in Washington, will be phased in over the next seven months. Hopes that a government-funding measure could become a vehicle to avert some of the cuts have also faded.”

“Following the votes, President Obama said Senate Republicans voted ‘to let the entire burden of deficit reduction fall squarely on the middle class,’” yesterday’s article said; while adding that, “Obama will meet with congressional leaders from both parties and chambers on Friday at the White House to discuss the next steps for addressing the sequester.

“Senate GOP Leader Mitch McConnell (Ky.) said he will tell Obama in blunt terms that Republicans will not accept additional tax increases after voting for a $620 billion tax hike on New Year’s Day.”

Josh Hicks reported yesterday at The Federal Eye Blog (Washington Post) that, “The White House budget office on Wednesday expanded its guidance on how federal agencies should reduce spending if the automatic spending cuts known as the sequester take effect Friday.

“In a government-wide memo, Office of Management and Budget controller Danny Werfel issued directions for handling furloughs, contracts, communication, acquisition, and federal assistance to outside entities, as well as for identifying non-essential costs.”

Damian Paletta and Janet Hook reported in today’s Wall Street Journal that, “The federal government enters a controversial new phase of deficit cutting Friday, as an automatic trigger begins slicing budgets in some areas while leaving programs such as Medicare and Medicaid—among the largest drivers of future debt—largely untouched…[E]ven cuts that have some bipartisan support, such as limiting the growth of future Social Security benefits or ending farm subsidies, have been shelved amid the brinkmanship.”

The Journal article added that, “House Republicans are preparing to enshrine the lower spending levels in a bill to finance the government from March 27 through Sept. 30. Senate Democrats haven’t said how they will respond, but there are strong indications they will fight over priorities and details within the bill, but not contest its overall spending level.”

Lori Montgomery and Rosalind S. Helderman reported yesterday at The Washington Post Online that, “House Republicans are already turning their attention to the next deadline on March 27, drafting a measure that would avoid a government shutdown while leaving the sequester in place through the end of September.”

With respect to the short-term impacts of the sequester Michael D. Shear reported in today’s New York Times that, “[O]fficials conceded this week, the specific impacts are more fuzzy than the aggregate ones. Ask officials about which contracts will be cut or which services will be trimmed back, and there are long pauses and blank looks.”

And Sudeep Reddy reported in today’s Wall Street Journal that, “The overall economic effects of the coming cuts will be hard to discern, at least at first.”

House Ag. Committee Chairman Frank Lucas (R., Okla.) indicated in a statement yesterday that, “It is disappointing that the Senate has failed to pass a replacement for the sequester, and more importantly has failed to pass a budget in nearly four years. But, I am pleased they rejected the Reid-Stabenow plan, which unfairly targeted agriculture. America’s farmers and ranchers deserve better than to be used as a pawn in a political game.”

More specifically on the potential impacts of the sequester, AP writer Ryan J. Foley reported yesterday that, “Automatic federal budget reductions set to take effect Friday could fall like a meat ax on the small Iowa town of Columbus Junction, where a sprawling Tyson Foods hog processing plant dominates the economy.

“The White House has warned that 6,300 meat and poultry plants could slow production or temporarily shut down under the across-the-board cuts, which may force U.S. Department of Agriculture to furlough meat inspectors for up to 15 days through Sept. 30.”

The article stated that, “At his desk in City Hall, Mayor Daniel Wilson dismisses the warning as a scare tactic by USDA Secretary Tom Vilsack, a former Iowa governor who got his start in politics as mayor of Mount Pleasant, 30 miles down the road. He said Vilsack knows the area well — and should stop scaring residents in the low-income, sparsely-populated region, many of whom live paycheck to paycheck. The plant’s annual payroll is about $36 million.”

And AP writer Mary Clare Jalonick reported yesterday that, “Fewer food safety inspections and an increased risk to consumers will result from the lack of a new 2013 budget from Congress and the upcoming across-the-board spending cuts, Food and Drug Administration Commissioner Margaret Hamburg said Thursday.”

“The FDA has said the so-called sequestration cuts will mean 2,100 fewer food safety inspections this year, though Hamburg said in an interview with The Associated Press that the number is an estimate. She said most of the effects wouldn’t be felt for a while, and the agency won’t have to furlough workers,” the AP article explained.

Meanwhile, a large number of environmental and agricultural organizations sent a letter yesterday to House and Senate Appropriations Committee leaders saying in part: “The undersigned organizations, representing millions of people across the country, urge you to oppose cuts to mandatory farm bill agricultural conservation programs and discretionary conservation technical assistance in the remaining fiscal year 2013 agriculture appropriations legislation. We also urge you to work for a sequester replacement package that will stop the sequester cuts to mandatory farm bill conservation programs.”

 

Policy Issues: Farm Bill- Crop Insurance

A news release Wednesday from Rep. Steve Daines (R., Mont.) stated that, “[Rep. Daines] today called on leaders of the House Agriculture Committee to quickly move forward consideration of a five-year Farm Bill.

In a letter to House Agriculture Chairman Frank Lucas and Ranking Member Collin Peterson, Daines expressed his frustration in the failure to approve a five-year Farm Bill in the last Congress.”

The update added that, “Daines called for a five-year Farm Bill that included a comprehensive Revenue Loss Coverage program that would take into account the needs of Montana’s farmers.  Daines expressed his concerns that past House proposals would not be sufficient for states with large and geographically diverse counties, like Montana.”

An update yesterday from University of Missouri Extension stated that, “Dairy producers will seek a new safety net when farm bill discussions restart in Congress, said a University of Missouri dairy economist at the recent USDA Agricultural Outlook Forum. Current proposals look more like insurance than price programs of the past…‘With rapidly rising feed costs, dairy interest turned to a margin insurance plan,’ said [Scott Brown of the MU Department of Agricultural and Applied Economics]. That’s a shift by milk producers from years of price-support programs in the federal act.”

Yesterday’s update added that, “Dairy groups know the situation and propose legislation based on margin protection instead of prices.

“‘Margin protection helps reduce government outlays,’ Brown said. ‘They are triggered less often than price supports.’”

In other policy news, DTN Ag Policy Editor Chris Clayton reported yesterday that, “Delegates for the National Corn Growers Association remain leery of the prospect of tying conservation compliance to eligibility for crop-insurance premium subsidies.

“In an early policy debate during the Corn Congress at Commodity Classic, producers voted 45-75 on Thursday to reject changes to NCGA’s policy that currently opposes requiring farmers to maintain conservation measures to keep eligibility for the premium subsidy.”

Mr. Clayton pointed out that, “Members of the South Dakota Corn Growers had proposed striking the language and taking a neutral position on the issue, which has proven controversial for farm and commodity organizations. South Dakota has seen a mix of farmers leave the farm program so they can drain wetlands to farm the acreage. There have been other stewardship challenges in the state as more land has gone into production.

“‘One of the things we have found in South Dakota is we just can’t defend growers who choose to grow out of compliance,’ said Keith Alverson, who proposed the resolution.”

A recent news update from National Crop Insurance Services stated that, “While 2012 crop insurance indemnity payments have hit a new record high, the taxpayer-funded portion of those losses will be much lower than crop insurance critics warned last summer.

“That is good news for the future of the program and good news for farmers who are closing in on the March 15 deadline for signing up for crop insurance on most spring planted crops. March 15 is also the deadline to make any changes to existing policies.”

An update posted yesterday at DTN (link requires subscription) reported that, “The month of February is important for corn growers in the key Corn Belt states who purchase revenue-based crop insurance policies. It’s when the projected price for those policies is set.”

The DTN item stated that, “Running Average as of 02/28/13: $5.65 per bushel for corn and $12.87 per bushel for soybeans and $8.44 per bushel for wheat.”

See also this page from USDA’s Risk Management Agency titled, “Active Discovery Periods,” that includes more specifics on policy price variables.

Also, a recent American Association of Crop Insurers (AACI) Affiliate Reporter indicated that, “Each year at the site of the crop insurance industry convention, AACI conducts annual meetings for the general membership, board of directors and the agent division.  In those meetings, Tim Weber, President, Crop Division, Great American Insurance Company, Cincinnati, OH, was elected chairmanBob Haney, CEO, Rain and Hail L.L.C., was elected vice-chairman.”

 

Animal Production Issues: Antibiotics, and, Production Systems

The Los Angeles Times editorial board opined yesterday that, “Describing the routine use of antibiotics in meat and poultry production as a ‘serious threat to public health,’ the U.S. Food and Drug Administration in 2010 called on livestock operations to voluntarily reduce their reliance on the medications. But an FDA report this month indicates that, so far, the results are unimpressive: Antibiotic sales to livestock operations rose in 2011, rather than falling.”

The opinion item noted that, “Later this year, the public can expect legislation — which has come up every year for well over a decade and been rejected, thanks to industry lobbying — to limit livestock operations’ use of antibiotics that are important for human use. Given the FDA’s apparent timidity, the need for such a law is clear.”

Eric Mortenson reported earlier this week at The Oregonian (Portland) Online that, “Most of Willamette Egg Farms‘ production will still come from hens in conventional — and controversial — cages. But the 40,000 hens roaming each of the new houses, one in full operation and the other nearly so, will have three levels of perches, nesting boxes in which to lay eggs and ground space to move around. Hens cannot go outside — it’s not a free-range system — but they can hop down to dirt floors to socialize, flap their wings and scratch the dirt.”

The article noted that, “The company, established in 1934 and still family-owned, produces about 1 million eggs a day in Oregon and another 600,000 daily at a site in Moses Lake, Wash. With the new houses, the company’s cage-free production will amount to about 8 percent of its total. It will increase that percentage as its old buildings are phased out and replaced by more cage-free facilities over time.”

Action by some of the nation’s largest supermarket and fast-food chains are helping drive the industry shift,” the article said; and added that, “After years of banging heads over egg-farm conditions, HSUS [Humane Society of the United States] and egg producers now jointly back federal legislation that over 15 years would phase out wire enclosures that limit hens to about as much floor space as a sheet of paper. Often in that setup, the birds can’t even turn around, and spend their lives confined.”

 

Agricultural Economy- Trade

A recent drought update from the U.S. Drought Monitor indicated that, “According to the February 26, 2013 U.S. Drought Monitor, moderate (D1) to exceptional (D4) drought covers 54.17% of the contiguous U.S., down from 55.8% last week.”

The update noted that, “In most places in the United States, drought conditions began this past summer, with low rainfall exacerbated by high temperatures. Analyses comparing the current drought with the droughts of the 1930s are ongoing; however, across much of central the U.S., the current drought onset is similar to the drought of summer 1988. Both the 1930s and 1950s droughts covered greater areas than currently with drought peaking at 79.9% of the U.S. in July 1934 and 60.4% in July 1954.”

Yesterday, USDA released its monthly Agricultural Prices report, which stated in part that, “The corn price, at $6.89 per bushel, is down 7 cents from last month but 61 cents above February 2012 [related graph], the soybean price, at $14.20 per bushel, decreased 10 cents from January but increased $2.00 from February 2012 [related graph]…and…the February price for all wheat, at $7.75 per bushel, is down 37 cents from January but 65 cents above February 2012 [related graph].”

A news release on Wednesday from Rep. Bruce Braley (D., Iowa) stated that, “[Reps. Braley] and Lee Terry (R-NE) today are urging U.S. Trade Representative Ron Kirk to take aggressive action to enforce Russia’s compliance with World Trade Organization (WTO) agriculture trade standards in the wake of a recent ban on American meat imports.”

The release included a letter on this issue from the two Representatives that was sent to Ambassador Kirk earlier this week.

 

Immigration

Daniel Newhauser and David M. Drucker reported yesterday at Roll Call Online that, “House Republican leaders will begin to engage next week on the contentious issue of an immigration rewrite, launching a series of listening sessions to educate members.

“The sessions will be led by House Majority Whip Kevin McCarthy, R-Calif., House Judiciary Chairman Robert W. Goodlatte, R-Va., and Rep. Trey Gowdy, R-S.C., who serves as chairman of the Judiciary Subcommittee on Immigration and Border Security.

While immigration is still likely to be overshadowed by budget issues and fiscal maneuvering this month, the move signals that party leaders are beginning to look at how they could move legislation aimed at addressing the issue.  Several sources said House GOP leaders are disinclined to attempt to move comprehensive legislation that would cover all aspects of immigration policy, preferring instead to tackle the overhaul in pieces, beginning with components that would immediately garner broad support.”

Keith Good

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