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Budget; Farm Bill; Ag Economy; and, Regulations

Budget Developments

David Rogers reported yesterday at Politico that, “Senate Democrats mapped out plans Thursday to expand on a House-passed stopgap spending bill — adding full-year budgets for four more Cabinet departments as well as major science and space agencies.

“Justice, Homeland Security, Agriculture, Commerce, NASA and the National Science Foundation should benefit most. And Senate Appropriations Committee Chairwoman Barbara Mikulski said she has begun drafting new legislative language to expand on the ability of other departments to move money between accounts to cope with cuts ordered last week.”

Mr. Rogers explained that, “Mikulski and House Appropriations Committee Chairman Hal Rogers (R-Ky.) are working toward the goal of having an agreement in place by March 27, when that same CR runs out.

“After briefing her caucus at a party luncheon, Mikulski said she hopes to file the final package Monday and begin voting on the floor next Wednesday. A formal House-Senate conference could yet be needed to resolve remaining disputes, but she is betting on a strong bipartisan Senate vote that will give her leverage with Rogers in those talks.”

AP writer Andrew Taylor reported yesterday that, “Democrats controlling the Senate are moving to give the Obama administration more flexibility in administering automatic spending cuts ordered last week as the chamber advances a huge spending measure that would fund day-to-day federal operations through September and avert a government shutdown.

“Appropriations Chairwoman Barbara Mikulski, D-Md., said the new ‘enhanced transfer reprogramming authority’ would give agencies ‘breathing room’ to move money from one account to another to ease the sting of across-the-board cuts of 5 percent to domestic agency operating budgets and an 8 percent cut to the Pentagon.

“Mikulski also said the Senate would give agencies including the Agriculture, Homeland Security and Justice departments their detailed, line-by-line budgets as part of legislation advancing next week to head off a government shutdown at the end of March. Other agencies would run on autopilot essentially at last year’s funding levels. The automatic cuts, known as a sequester, apply whether or not an agency received its detailed budget.”

Meanwhile, Corey Boles reported yesterday at The Wall Street Journal Online that, “House Speaker John Boehner (R., Ohio) on Thursday said he would continue to insist that the next debt-ceiling increase be accompanied by matching spending cuts, raising the prospect of a high-stakes showdown when the borrowing limit expires this spring.

“Mr. Boehner’s comments could mean that House Republicans intend to force a confrontation with the Obama administration over a debt-ceiling increase, which likely will be required by July. The Treasury is expected to reach its $16.4 trillion borrowing limit in May, at which time officials will be expected to juggle assets to ensure the government can continue to borrow for a short period of time.”

However, Alexander Bolton reported yesterday at The Hill Online that, “President Obama wants to complete a grand bargain to reduce the deficit by the end of July, an aggressive timeline coinciding with the expiration of the nation’s debt limit.

“Obama told a small group of Republican senators who had dinner with him Wednesday evening that a deficit-reduction deal needs to happen in the next four to five months, according to three sources familiar with the meeting.

“A GOP lawmaker who met with Obama said the accelerated timeline has two advantages. Reaching a broad deficit deal by August would allow the president to avoid another messy standoff over raising the debt limit. The president, who has said he will not negotiate on the debt limit, believes it will be harder to forge a major deal in September and beyond, as both parties begin to position themselves for the 2014 mid-term election.”

Meanwhile, USDA issued a statement yesterday regarding conference spending at the Department, an issue that was raised in a recent letter from Sen. Tom Coburn (R., Okla.).

And on Wednesday’s AgriTalk radio program with Mike Adams, Sec. of Ag. Tom Vilsack also elaborated on some of the issues raised by Sen. Coburn with respect to USDA conferences- audio (MP3- 1:36).


Farm Bill- Policy Issues

House Agriculture Committee Chairman Frank Lucas appeared yesterday on Bloomberg television’s “Bottom Line” program, where he discussed budget issues, and the Farm Bill, among other topics.  A video replay of the Chairman’s appearance yesterday can be viewed here.

In part, the Oklahoma Republican noted that the Committee passed a Farm Bill last year that saved $35 billion, and compared that to the total sequester savings of $85 billion.  “We’ve been doing our work on the Ag Committee, we just need a chance to finish the Farm Bill this year, complete our work, achieve our savings- we’re going to do our part on ag,” the Chairman said.

Chairman Lucas added that, “I think Speaker Boehner understands we’ve got to have a Farm Bill.”

And a separate Bloomberg update yesterday indicated that, “House Agriculture Chairman Frank Lucas speaks about proposals to split spending on food stamps and other nutrition aid from a larger bill governing U.S. farm policy. He speaks with Bloomberg reporters and editors in Washington.”  This brief audio segment from Bloomberg can be heard here.

Heather Rutz reported on Wednesday at The Lima News (Ohio) Online that, “[Rep. Bob Latta (R., Ohio)], whose 5th Congressional District is the largest agricultural district in the state, said the general dysfunction of the federal government is preventing passage of a new Farm Bill.

“‘Too many things keep getting in the way: Making tax cuts permanent, the debt ceiling, sequestration, a budget, then the debt ceiling again,’ Latta said. ‘All those other things have occupied people, but they’ve got to get the farm bill out of there. We just can’t go to Sept. 30 and pass another (extension). To get all the things you want done, it has to be a new bill, you have to start over. That’s not real good news, but that’s where it’s at.’”

The article also noted that, “‘I don’t think we should measure compassion by how many people we get on food stamps,’ [Sen. Rob Portman (R., Ohio)] said. ‘We should measure it by how many people we get off food stamps and get on to a job.’”

In a tele-news conference with reporters yesterday Sen. Mike Johanns (R., Neb.) mentioned the recently updated Farm Bill score from the Congressional Budget Office and noted that, “We are going to have to sharpen the pencil all across the board on the farm bill. The Congressional Budget Office just did not believe we had the savings we thought we had. I don’t believe you can take anything off the table, whether it’s the SNAP program or any other piece of the — of the farm bill.”

Later, in response to a question on the updated CBO estimates, Sen. Johanns added that, “I was surprised. I really did think that the — that the bill that we put out was going to be very close, in terms of the way it was initially scored. I didn’t see that we would vary much, but at the end of the day, we did, and we’ve got to make up some ground here. And like I said, we’ve got to sharpen the pencil. I think that means we’ve all got to come in with an attitude of, look, we’ve got to find, you know, $10 billion more, maybe $15 billion more.

“So, you know, there’s a lot of moving targets in the farm bill, and they can affect the cost of the program. We know that. We have a CBO score that tells us we’ve got more work to do, and it’s as straightforward as that.”

In other news, an update yesterday from National Crop Insurance Services indicated that, “As the claims come in from one of the worst droughts in decades, farmers and ranchers across the country are receiving indemnity payments for the losses they have incurred. As of March 4, 2013, more than $15.4 billion has been sent to farmersFarmers will invest more than $4.1 billion to purchase more than 1.2 million crop insurance policies.”

And the AP reported today that, “New York officials want the state to be part of a pilot program to test the cost-effectiveness of serving Greek yogurt in school meal programs.

The U.S. Department of Agriculture is starting a pilot program that could lead to more Greek yogurt in schools as early as April. State Agriculture Commissioner Darrel Aubertine has written the USDA urging that New York be chosen for that program.”

A news release yesterday from Sen. Charles Schumer (D., N.Y.) indicated that, “Thanks to new plants including the Quaker Muller plant, Alpina, Fage, and Chobani, the New York Farm Bureau predicts that New York’s dairy farmers must be able to expand their output by 15 percent in order to take advantage of the opportunity that Greek yogurt presents for our farmers. To help dairy owners who wish to expand, Schumer plans to introduce bipartisan legislation – the DAIRY (Dairy Augmentation for Increased Retail in Yogurt products) Act – with Sen. Mike Crapo (R-ID) that would establish federal savings accounts targeted to farmers to help them save and grow during booms and to weather market downturns. The accounts would be structured to reward savings during periods when business is strong and defer taxes on those savings until farmers must withdraw funds to cover new expenses or manage cash flow.”


Agricultural Economy

Gregory Meyer reported earlier this week at The Financial Times Online that, “The niche market for US ethanol credits has started the year with a furious rally that underscores concerns about the practical impact of Washington’s renewable fuel mandate.

“The credits, known as Renewable Identification Numbers, or RINs, have gained 1,400 per cent in 2013 as oil refiners and fuel wholesalers worry they will be unable to meet ethanol blending mandates with physical supply. The Oil Price Information Service recently described the market as ‘RIN-Sanity’ [related graph].

“Fuel suppliers and oil refiners can use excess RINs in lieu of selling physical barrels to satisfy biofuels mandates. The numbers are 38-digit codes generated when biofuels are produced.”

Mr. Meyer noted that, “Market participants say oil companies have been buying excess RINs from blenders and others to ensure compliance with the rules as the difference between mandated levels and actual renewable fuel widens.”

“Analysis by Nick Paulson of the University of Illinois indicated about 2.5bn gallons worth of conventional ethanol RINs left over from 2012 that oil companies can use this year. Traders are now buying RINs issued in 2013, some of which they may bank for use next year when the corn-ethanol mandate rises to 14.4bn gallons,” the FT article said.

Bloomberg writer Whitney McFerron reported yesterday that, “World food prices were stable in February for a second month, as increasing dairy and cooking oil costs were compensated by declines in grains and sugar, the United Nations’ Food & Agriculture Organization said.

“An index of 55 food items tracked by the FAO was at 210.2 points last month, little changed from 210.4 points in January, the Rome-based FAO wrote in an online report.”

And a news release yesterday from the FAO indicated that, “First forecasts for the 2013 wheat harvest point to production increasing to 690 million tonnes – 4.3 percent up on 2012. This would be the second largest crop on record, according to the latest issue of FAO’s quarterly Crop Prospects and Food Situation report.

“The production hike is expected mostly in Europe, driven by increased plantings in response to high prices and a recovery in yields in some countries, notably the Russian Federation.

“The outlook in the United States, while less favourable because of earlier drought conditions, has improved somewhat over the last few weeks.”

A recent update from the National Climate Data Center noted that, “According to the March 5, 2013 U.S. Drought Monitor, moderate to exceptional drought covers 53.3% of the contiguous United States, a decrease from last week’s 54.2%. The worst drought categories (extreme to exceptional drought) also decreased from 16.9% to 17.0%.”

Meanwhile, Tim Mitchell reported yesterday at The News-Gazette (Champaign, Il.) Online that, “A 173-acre farm east of Urbana sold for $15,375 per acre Wednesday in a transaction that was billed as a new record for the area.”

“[Murray Wise, chief executive officer for Champaign-based Murray Wise Associates,] said he believes the sale was a record for undeveloped farmland in Champaign County, and auction manager Joe Bubon said it was the first time he has seen farmland prices without development potential be sold for more the $15,000 per acre in Champaign County.”



Ben Goad reported yesterday at The Hill’s RegWatch Blog that, “Noting the distinction between gas stations and farms, Sen. Mike Johanns on Thursday cosponsored a pair of bills that would exempt small agriculture operations from Environmental Protection Agency rules involving fuel storage and transport.

“EPA regulations meant to protect U.S. waterways from oil spills should not apply to fuel tanks on farms, the Nebraska Republican argues. And agriculture businesses shouldn’t have to apply for licenses to transport hazardous materials when carrying small amounts of diesel fuel, he said.”

Keith Good