December 5, 2019

Farm Bill- Budget Issues; and, the Ag Economy

Farm Bill- Budget- Policy Issues

Sen. Pat Roberts was a guest on yesterday’s AgriTalk radio program with Mike Adams where the conversation focused on recent legislation introduced by the Kansas Republican regarding the SNAP program (food stamps).

An audio replay of yesterday’s conversation can be heard here (MP3- 10:26); while a transcript is available here.

Sen. Roberts explained that, “Well, the title of the bill is To Improve Nutrition Program Integrity and Deficit Reduction, and we do it by taking a look at the eligibility for food stamps. There’s $11.5 billion in savings there. We also take a look at the fact that 17 states are really gaming the food stamp program with the Low Income Energy Assistance Program. The acronym for that back here in Washington is LIHEAP. What happens is that a state will accept one dollar of the LIHEAP program, and then that really makes somebody eligible for food stamps that otherwise wouldn’t be eligible. That saves $12 billion.

“We take a look at a lot of the things, Michael, that we had considered in the last farm bill. But in the last farm bill, the bright line for Democrats was to not touch food stamps other than four billion, and my bright line was to strengthen and improve crop insurance, so that was the deal that was made. But now the Congressional Budget Office says that that bill does not save 23 billion, it saves only 13 billion, because our baseline went down—I know this gets a little complicated—and there’s no savings to the nutrition program.

What we’re trying to do is make sure that nobody who receives benefits that truly need them, there are absolutely no cuts to those folks.”

Sen. Roberts added that, “So this is a program that’s out of control, really, in regards to any kind of transparency and getting rid of fraud and abuse, so we simply put together everything that everybody had been thinking of in a separate bill and compiled them…[F]armers, when they ask about, goodness gracious, you know, nutrition takes over 80% of the money we spend at the Department of Agriculture, and then we find out that food stamps is exempt from the sequester, when we see all of this money that we think we can reform, we think this bill is very appropriate.”

Mike Adams queried yesterday by asking, “Senator, are you happy with the role USDA has taken to cut down on fraud and abuse in the program? They cite that it’s the lowest level of fraud ever in the history of the program. Do you think they’re doing enough to make sure that the loopholes are closed?”

Sen. Roberts: “Well, in a word, no.”

Last week Feeding America President Bob Aiken indicated that, “Feeding America strongly opposes legislation being introduced in the Senate that would cut $36 billion in critical food assistance for low-income families. This bill would be devastating to millions of vulnerable Americans who are struggling to make ends meet. The assertion that the bill would achieve billions in savings in [SNAP] without affecting food on the table is not true.”

Eric Olsen, Senior Vice President of Government Relations for Feeding America was also a guest on yesterday’s AgriTalk program, where he noted that “this is not the time to be cutting the SNAP program in any regard.” (audio clip – MP3- 0:38).

Meanwhile, CBO recently released a score of The Improve Nutrition Program Integrity and Deficit Reduction Act of 2013.

And Daniel Halper reported yesterday at The Weekly Standard Blog that, “On Friday, the United States Department of Agriculture quietly released new statistics related to the food stamps program, officially known as SNAP.  The numbers reveal, in 2012, the food stamps program was the biggest it’s ever been, with an average of 46,609,072 people on the program every month of last year. 47,791,996 people were on the program in the month of December 2012.”

Note also that House Budget Committee Chairman Paul Ryan (R., Wis.), in a discussion about the upcoming House GOP budget on “Fox News Sunday,” stated that, “On food stamps, we basically say, you actually have to qualify for the food stamp programs to get the food stamp benefits. With our reforms, food stamps would have grown by 260 percent over the last 10 years…”

Also during yesterday’s AgriTalk discussion, Sen. Roberts noted that, “I wish Secretary Vilsack would quit running around the country saying he’s going to cut out the meat inspectors so that we close the packing plants and every sale barn in the country, and have our livestock producers wondering what in the heck is going on.”

In related developments, a news release yesterday from Sen. Mike Johanns (R., Neb.) stated that, “[Sen. Johanns] today sent a letter to Secretary of Agriculture Tom Vilsack asking why he never requested funding flexibility from Congressional Appropriators to avoid furloughing crucial employees like food safety inspectors.

“‘USDA has had more than a year and a half to prepare for these spending reductions,’ Johanns said. ‘During that time, Sec. Vilsack asked Congress to give USDA funds to the Department of Interior to roundup wild horses and requested additional funds to process the 2012 Census of Agriculture, among other spending changes. However, no request was made to prioritize keeping food safety inspectors on the job. I hope the absence of such a request is not intentional.’”

And later this week, Alfred V. Almanza, the USDA’s Food Safety and Inspection Service Administrator and Dr. Elizabeth Hagen, USDA Under Secretary for Food Safety, will participate in an oversight hearing conducted by the House Appropriations Agriculture Subcommittee.

More specifically on budget issues, Erik Wasson reported last night at The Hill’s On the Money Blog that, “Senate Democrats and Republicans on the Appropriations Committee late Monday reached a deal on a $984 billion government funding bill to avert a government shutdown after March 27.

“Senate Appropriations Committee Chairwoman Barbara Mikulski (D-Md.) and Ranking Member Richard Shelby (R-Ala.) have signed off on the measure which will be debated on the Senate floor on Tuesday.”

The article noted that, “The Senate deal amends the funding bill that passed the House last week by adding three full appropriations measures: the agriculture bill, the homeland security bill and the commerce, justice and science bill.

The Agriculture bill spends $20.5 billion, up from $19.6 billion.”

More specific provisions relating to agriculture were posted at the Senate Appropriations webpage and can be found here.

In addition, Jeremy W. Peters reported in today’s New York Times that, “Congress this week will begin taking the first steps toward a more structured and orderly budget process, beginning what both parties hope is a move away from the vicious cycle of deadline-driven quick fixes.

“In the Senate, Democrats were putting the finishing touches on a budget they plan to introduce on Wednesday, their first in four years, while House Republicans were preparing to introduce a spending plan of their own on Tuesday morning.

“The two proposals, which would set spending targets for the fiscal year that begins Oct. 1, will be miles apart ideologically and difficult to merge. Democrats plan to rely heavily on closing tax loopholes that benefit corporations and the wealthy to produce new revenue, while Republicans will focus on slashing spending to balance the budget in 10 years.”

House Budget Committee Chairman Paul Ryan (R., Wis.) indicated in a column published in today’s Wall Street Journal that, “On the current path, we’ll spend $46 trillion over the next 10 years. Under our proposal, we’ll spend $41 trillion. On the current path, spending will increase by 5% each year. Under our proposal, it will increase by 3.4%. Because the U.S. economy will grow faster than spending, the budget will balance by 2023, and debt held by the public will drop to just over half the size of the economy.”

Chairman Ryan added that, “The recent debt-ceiling agreement forced Senate Democrats to write a budget this year, and we expect to see it this week. I hate to break the suspense, but their budget won’t balance—ever. Instead, it will raise taxes to pay for more spending. The president, meanwhile, is standing on the sidelines. He is expected to submit his budget in April—two months past his deadline.”

In other policy developments, DTN Ag Policy Editor Chris Clayton reported yesterday (link requires subscription) that, “The American Soybean Association board of directors voted Monday to change its policy positions to support keeping a target-price program for farmers and dropped its support for the shallow-loss revenue program ASA fervently backed last year.

“The group will support an updated version of the counter-cyclical program crafted by the House of Representatives, according to a news release. The soybean growers also support keeping the proposed crop insurance program called the Supplemental Coverage Option that was in both the House and Senate farm bills.”

Also, Nirmala Menon reported yesterday at the Canada Real Time Blog (Wall Street Journal) that, “Canada finds proposed changes to U.S. meat-labeling requirements less than appetizing… In documents posted online for public comment, the USDA said the changes would ensure labeling requirements comply with international trade obligations.

Canada disagrees. ‘The proposed changes will increase the discrimination against exports of cattle and hogs from Canada and increase damages to Canadian industry,’ Canadian Agriculture Minister Gerry Ritz said in a statement late Friday. Ottawa will ‘consider all options, including retaliatory measures, should the U.S. not achieve compliance by May 23, 2013, as mandated by the WTO,’ he added.”

Kevin Bogardus reported last night at The Hill Online that, “Lobbyists for and against a federal sugar program are preparing for a bitter floor fight over the farm bill.

Industries that use sugar in their products are sending lobbyists to Capitol Hill to brief aides on legislation that would reform price and trade protections for the domestic crop.”

The article added that, “Candy companies argue federal support for sugar is distorting the market and trade deals, like the Trans-Pacific Partnership, while driving up prices. They plan to lobby for big policy changes in this year’s farm bill.”

Meanwhile, Michael M. Grynbaum reported in today’s New York Times that, “A judge struck down New York’s limits on large sugary drinks on Monday, one day before they were to take effect, in a significant blow to one of the most ambitious and divisive initiatives of Mayor Michael R. Bloomberg’s tenure.

“In an unusually critical opinion, Justice Milton A. Tingling Jr. of State Supreme Court in Manhattan called the limits ‘arbitrary and capricious,’ echoing the complaints of city business owners and consumers who had deemed the rules unworkable and unenforceable, with confusing loopholes and voluminous exemptions.”


Agricultural Economy- Biofuels

AP writers Jim Suhr and Jim Salter reported yesterday that, “Recent rain and snowstorms have eased the grip of the worst U.S. drought in decades in portions of the nation’s midsection, swelling some major inland rivers to near flood stage and drenching some farmland enough to possibly delay fast-approaching spring planting.

“But climatologists caution that the moisture — a blessing after a disastrous, bone-dry 2012 across much of the nation’s Corn Belt — doesn’t signal the end of the stubborn drought still with a hold on more than half the continental U.S.”

The USDA’s National Agriculture Statistics Service Kansas Field Office noted yesterday that, “For the week ending March 10, 2013, many areas of Kansas continued to receive much needed moisture…”

“The condition of the Kansas winter wheat crop was rated as11 percent very poor, 21 percent poor, 41 percent fair, 26 percent good, and 1 percent excellent.”

The USDA report added that, “The condition of Kansas range and pasture was rated as 49 percent very poor, 32 percent poor, 16 percent fair, and 3 percent good. Feed grain supplies were 21 percent very short, 25 percent short, 52 percent adequate, and 2 percent surplus. Hay and forage supplies were 38 percent very short, 37 percent short, 24 percent adequate, and 1 percent surplus. Stock water supplies were rated as 41 percent very short, 31 percent short, 28 percent adequate, and 0 percent surplus.”

Bloomberg writer Tony C. Dreibus reported earlier this week that, “Even after storms dumped 22 inches (56 centimeters) of snow over four days in February, water shortages and dirt-dry pastures across the Great Plains are shrinking herds. Cattle grazing in Kansas, Oklahoma and Texas on Jan. 1 fell 16 percent from a year earlier to 1.34 million head, the fewest since the government began collecting the data in 2002. Retail-beef prices jumped to a record in January, the same month a shortage of cattle forced Cargill Inc. to shut a Texas processing plant.”

And Dan Piller reported yesterday at The Des Moines Register Online that, “Cattle slaughter and beef production continue to slump, the latest U.S. Department of Agriculture reports show.

“Last week the beef slaughter in the U.S. was down 5.9 percent from a year ago and total beef production down 4.8 percent as packers cut back in the face of lower demand caused by retail prices that have increased by ten per cent or more in the last year.”

On the issue of biofuels, Gregory Meyer reported yesterday at The Financial Times Online that, “The market is in ‘Renewable Identification Numbers’, or RINs. These 38-digit codes are at the heart America’s experiment with ‘green’ fuels. As Washington requires more ethanol and biodiesel to be mixed into motor fuel, oil refiners and importers that fail to meet minimum targets have an alternative. They can buy excess RINs, which biofuel producers generate with each gallon they make, and claim them as credits.

The sharp rise in RIN prices this year shows what happens when policy clashes with the realities of supply and demand. In 2007, Congress passed a law requiring more and more gallons of biofuels be sold each year. But fuel consumption has fallen, limiting how much ethanol can be blended with petrol.”

And The Wall Street Journal editorial board noted today that, “This year refiners and importers are required to blend 13.8 billion gallons of ethanol into the nation’s gasoline, rising to 14.4 billion next year. The EPA allocates a share of this mandate to oil and gas companies, and to monitor compliance each gallon of ethanol is assigned a 38 digit Renewable Identification Number, or RIN.

The problem is that Washington’s seers were wildly wrong about how much gas Americans would keep putting in their tanks. In 2007 annual gasoline consumption was about 140 billion gallons per year, with forecasts of rising demand. But the 2008-09 recession and better fuel economy have lowered consumption to an estimated 135 billion gallons.”

The Journal item noted that, “Refiners are now crashing into what is called a ‘blend wall,’ meaning the feds have forced them to purchase more ethanol than they can safely put in their gasoline. Refiners are reluctant to blend more than 10% ethanol into gasoline because consumers don’t want it, and because a higher blend can damage the engines of older cars, boats and electrical equipment.

Refiners must therefore purchase RIN credits from companies that have used more ethanol than required. But the credits are running out, and so the price of RINs has soared to nearly $1 a gallon, up from about seven cents at the start of the year. According to Darrel Good, a University of Illinois agriculture economist, the RIN price ‘could continue to rise as we approach the higher ethanol mandate for 2014’ as credits run out. These costs are mostly passed on to motorists.”

Keith Good

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