FarmPolicy

Budget; Policy Issues; EPA; and, the Ag Economy

Budget Issues Persist

Kerry Young reported yesterday at Roll Call Online that, “House appropriators are proposing a final fiscal 2013 spending package that would effectively cap federal operating expenses at $982 billion, while giving military and veterans programs new flexibility to cushion the effects of the sequester’s automatic cuts.

“The House is expected to vote Thursday on the measure unveiled Monday, which combines Defense and Military Construction-VA bills with a stopgap continuing resolution covering most of the rest of the federal agencies.”

The article noted that, “Although Senate Democrats still may take a different approach with the CR by adding in separate measures beyond defense, neither side appears to be eager to stir a confrontation by doing much more about the sequester or potentially creating a new shutdown threat. The president and Senate Minority Leader Mitch McConnell, R-Ky., were among those who last week predicted new fiscal 2013 appropriations would be cleared before the current six-month fiscal 2013 continuing resolution (PL 112-175) expires March 27.”

Rosalind S. Helderman explained in today’s Washington Post that, “House Republicans on Monday introduced a bill that would avoid a government shutdown at the end of March but that also could mitigate some of the most striking effects of the across-the-board federal spending cuts enacted last week.

“But even though the proposed shifts would make the sequester slightly less indiscriminate — particularly for the military — the measure would leave in place the $85 billion spending reduction, locking in the cuts through Sept. 30, end of the fiscal year.”

Reuters writers David Lawder and Richard Cowan reported yesterday that, “Tension over the fiscal crisis eased on Monday as President Barack Obama called more opposition lawmakers to find a way to stop $85 billion in damaging budget cuts and congressional Republicans announced a plan to prevent a government shutdown.”

The article added that, “A Republican bill announced on Monday would give some relief to the Defense Department, the Veterans Administration and military construction.”

“Introduced by House Appropriations Committee Chairman Hal Rogers, the measure would prevent a government shutdown by extending funding through the end of the fiscal year on September 30.

“But the automatic spending cuts would stay in place, drawing criticism from Democrats that it only addresses a small part of Washington’s budget woes.”

Speaking yesterday on the AgriTalk radio program with Mike Adams, Mary Kay Thatcher, the Senior Director of Congressional Relations at the American Farm Bureau Federation, briefly discussed potential sequester impacts on agricultural related programs, including meat inspectors – related audio (MP3- 1:15).

More specifically on the meat inspector issue, George Safferans, CEO of Rogers Poultry, a California company that “processes 30,000 to 40,000 chickens a day,” was a guest on yesterday’s OnPoint radio program (WBUR-NPR) and discussed the sequester impacts on his business in more detail.

A portion of this segment from yesterday’s program can be heard here (MP3- 2:08).

More broadly, Brett Neely reported on Friday at Minnesota Public Radio Online that, “‘Here we are and it’s going to happen,’ said Collin Peterson, a Democrat who represents the District 7. Peterson voted for the legislation that created the sequester. He would prefer the cuts were replaced by some combination of tax hikes and spending cuts.

“But unlike most of his colleagues, Peterson’s not worried about the immediate impact of the cuts.

“‘I don’t think it’s going to be anywhere near what people are talking about,’ he said.”

Secretary of Agriculture Tom Vilsack will be testifying this morning at a hearing at the House Agriculture Committee where lawmakers will likely pursue additional executive branch perspective on sequester issues.  The hearing is titled, “To review the state of the rural economy.”

Farm Bill- Policy Issues

Bloomberg writer Alan Bjerga reported yesterday that, “U.S. crop-insurance rates for corn, soybeans and wheat are being set higher than this year’s projected cash prices, encouraging more planting a year after a drought led to record damage payout to farmers.

“Farmers in most growing regions will be guaranteed a price of $5.65 a bushel for corn, the country’s biggest crop, according to the Department of Agriculture. Soybeans will have a floor of $12.87 a bushel and spring wheat will be priced at $8.44 a bushel, the department said in a March 1 release.”

And an update yesterday at the Economic Research Service (USDA) Chart Detail webpage noted that, “Government payments to farm producers forecast to remain steady in 2013.”

Meanwhile, a news release yesterday from Rep. Bob Goodlatte (R., Va.) indicated in part that, “[Rep. Goodlatte] and Congressman David Scott (D-GA) released a statement regarding the Congressional Budget Office’s (CBO) updated estimates of the costs of the Goodlatte/Scott Amendment to the Dairy Security Act. Congressmen Goodlatte and Scott offered this amendment during markup of the House Farm Bill.

“‘Last year, we offered an alternative dairy policy that would provide dairy producers with voluntary margin insurance protection that did not include administrative fees and was not tied to a new supply management program that manipulates dairy prices and penalizes consumers,’ said Goodlatte and Scott.”

“Goodlatte and Scott continued, ‘CBO’s updated score of the Farm Bill finds that our amendment would save $100 million over the Dairy Security Act as included in the dairy title of last year’s proposed House Farm Bill.’”

On a separate policy issue regarding animal production and antibiotics, The Des Moines Register editorial board opined yesterday that, “A few years ago, Congress considered following the recommendations of scores of scientists to phase out the use of antibiotics in animal farming, except specifically to treat disease. Though researchers, including those at Iowa State University, estimated the cost to the livestock industry and consumers would be small, the agriculture opposed the legislation — and won. The Food and Drug Administration is trying to rein in the routine use of drugs in animals, but it is unclear whether producers are responding.

“At the very least, Congress should require more reporting on what drugs are being used on what animals so scientists can better track the impact on human health.  ‘We need to know what’s going on,’ said Dr. Lance Price during a recent meeting with the Register’s editorial board. He and his colleagues have traced new strains of antibiotic-resistant pathogens to industrial livestock operations.

“Sen. Tom Harkin, chairman of the Health, Education, Labor and Pensions Committee, can ensure such data is gathered by requiring it in the Animal Drug User Fee Act, which the committee is discussing now. Longer term, American producers, who lead the world in aggressive use of antibiotics, should move toward reducing and eliminating the use of the drugs, except to directly treat disease.”

EPA- Environmental Protection Agency

Keith Johnson reported in today’s Wall Street Journal that, “President Barack Obama presented his second-term team to handle environmental and energy issues, nominating on Monday a pair of Washington veterans in hopes of avoiding some of the rancor of his first term.

“Gina McCarthy was picked to be administrator of the Environmental Protection Agency, where she is currently in charge of air quality programs, and Massachusetts Institute of Technology physicist Ernest Moniz was named to head the Department of Energy, where he served as undersecretary during the Clinton administration.”

The article noted that, “Still, Republicans said they had concerns about [Ms. MCarthy]. Louisiana Sen. David Vitter, the top Republican on the committee that will hold hearings on her nomination, said the EPA needs ‘a leader who will stop ignoring congressional information requests, hiding emails and more from the public, and relying on flawed science.’

“The committee’s chairman, Sen. Barbara Boxer (D., Calif.), praised Ms. McCarthy, as did environmentalists who cited her work as a state regulator under then-Massachusetts Gov. Mitt Romney and former Connecticut Gov. Jodi Rell, both Republicans.”

Juliet Eilperin reported yesterday at The Washington Post Online that, “[T]he nomination of McCarthy, 58, comes amid questions about the EPA’s responsiveness to lawmakers’ requests and its sensitivity to economic factors. Climate-change policy has become more polarized since Obama took office and will come under intense scrutiny now that he has identified it as a top priority for his second term.

“For four years, the EPA and the woman who led it until last month — Lisa P. Jackson — have been a lightning rod for criticism, with many manufacturing and utility executives accusing it of imposing job-killing regulations. The tensions have run so high that McCarthy, speaking at a luncheon in Kentucky in 2011, felt compelled to say, ‘The EPA is not the enemy.’”

Mary Kay Thatcher of the American Farm Bureau commented on this news development on yesterday’s AgriTalk radio program with Mike Adams, a portion of her remarks can be heard here (MP3- 0:44).

In other developments regarding regulations, a news release yesterday from the House Agriculture Committee stated that, “Today, a group of bipartisan lawmakers introduced H.R. 935, The Reducing Regulatory Burdens Act of 2013. This bill would amend the Federal Insecticide, Fungicide, Rodenticide Act (FIFRA) and the Clean Water Act (CWA) to clarify Congressional intent and eliminate the requirement of a National Pollutant Discharge Elimination System (NPDES) permit for the use of pesticides already approved for use under FIFRA.

“This legislation passed the U.S. House of Representatives on March 31, 2011 as H.R. 872, The Reducing Regulatory Burdens Act of 2011. Additionally, it advanced out of the U.S. Senate Committee on Agriculture, Nutrition, and Forestry, but the full Senate failed to consider it during the last Congress.

“H.R. 935 is necessary to address the negative economic consequences of the ruling posed by the case National Cotton Council v. EPA (6th Cir. 2009). Under the court ruling, pesticide users are required to obtain a redundant permit under the Clean Water Act (CWA) or be subject to a costly fine.” [For more background on the case, see this FarmPolicy update from April 2009.]

Agricultural Economy- Trade

Purdue University Agricultural Economist Chris Hurt noted yesterday at the farmdoc daily blog (“Spring Pork Price Recovery Threatened”) that, “Hog prices have dropped sharply in the past month, falling from about $67 per live hundredweight in early February to $58 recently. Futures prices have followed suit, with April lean hog futures dropping about $7.50 since the beginning of February. These declining prices raise concerns over the spring price recovery and whether that recovery will be strong enough to push hog prices up to breakeven levels as had been expected.

“Supply is not the culprit. Over the last four weeks, pork production has been down nearly one percent compared to the same weeks a year-ago. With smaller supplies over this four week period, prices have been $3.80 per hundredweight lower than during the same period in 2012. This means that price weakness is coming from demand concerns. The first of those concerns is the weakened buying power of U.S. consumers. Unusually high gasoline prices for this time of year and increased payroll taxes since January 1 have reduced the buying power of consumers. Secondly, the recent discussions around potential furloughing of federal meat inspectors due to sequestration have probably had a numbing effect on hog prices. If plants were to shut down some days they would not buy hogs for those days, thus weakening hog prices.

“However, the largest demand concerns are a result of recent trade issues. Pork exports have become a very important part of hog prices. In 2012, the volume of pork exports represented 23 percent of total U.S. production. The first threat came in early February when Russia banned imports of U.S. pork due to their stated concerns over U.S. ractopamine use. Russia was the 6th largest buyer of U.S. pork in 2012 and that volume represented 1.2 percent of U.S. production. The loss of Russian business would not be terribly bearish due to their small share, but later in February China also announced that they were going to more closely check imports of U.S. pork for ractopamine. Last year China’s pork purchases from the U.S. represented 3.4 percent of total U.S. production volume.”

John Magsam reported on Sunday in the Arkansas Democrat Gazette that, “With three years of dry weather – including last year’s crushing drought that struck most of the Midwest and South – Arkansas dairy farmers have seen their pasture land burn and the cost of hay and feed skyrocket.

“‘What Arkansas dairy farmers need right now is for Mother Nature to let go of some rain,’ said Bruce Tencleve, coordinator for the dairy division of the Arkansas Farm Bureau.”

The article added that, “In Arkansas, a ton of hay brought an average $133 in 2012, a 78 percent increase over 2009 prices, according to data provided by the U.S. Department of Agriculture. Hay stocks in the state as of December were 1.15 million tons, down 60 percent from 2.9 million tons in 2009.

“At the same time, corn, a key ingredient in cattle food, averaged $6.22 a bushel in the 2011/2012 market year, up 75 percent from an average of $3.55 a bushel in the 2009/2010 period, according to the USDA.”

Dan Piller reported yesterday at The Des Moines Register Online that, “Because the above-average snowfall in Iowa the last three months has fallen largely on frozen ground, just 13 percent of Iowa’s soils reported adequate moisture as of Sunday, according to the U.S. Department of Agriculture and the State Climatologist.

“The snowfall totals translated into new precipitation total of 1.31 inches statewide, well below the ten inches more deficit Iowa ended 2012.”

Senate Finance Committee Chairman Max Baucus (D., Mont.) penned a column earlier this week at The Financial Times Online, which stated that, “After almost four years of digging their way out of the global financial crisis, the US and the EU are eager to get their economies growing. Increased trade is crucial to a balanced plan for stimulating growth and job creation on both sides of the Atlantic.

“A comprehensive transatlantic trade and investment deal would not only lower barriers but also raise the level of confidence in the US and EU – sparking significant growth in the world’s two largest economies.

“This is a deal that must be done, it must be done now, and it must be done right. But in order to complete this pact, both sides are going to have to devote significant political focus to making tough choices in sensitive areas such as agriculture and domestic regulatory processes. Without addressing these vital issues, a deal will never happen.”

Sen. Baucus added that, “As a senator from a large agricultural state, I understand the critical importance to the US, including the Montana farmers and ranchers I work for, of eliminating unfair barriers that keep our agricultural products out of the European market without any scientific justification – for example, blocking genetically modified crops and beef and pork containing feed additives that have been deemed to be safe. America’s ranchers and farmers produce the highest-quality products in the world. As chairman of the committee overseeing US trade, I will support a deal only if it gives America’s producers the opportunity to compete in the world’s biggest market.”

And a news release yesterday from the National Pork Producers Council (NPPC) stated that, “A coalition of U.S. food and agricultural organizations led by the [NPPC] today praised the Obama administration for launching negotiations with the European Union (EU) on a transatlantic free trade agreement (FTA) and for its insistence that the agreement be comprehensive and ambitious.”

Keith Good

Posted by Keith Good • March, 5, 2013 • 5:07 am