FarmPolicy

December 9, 2019

Budget- Policy Issues; Ag Economy; and, Immigration

Budget: House GOP Proposal- Farm Bill Issues

Reuters writer Charles Abbott reported yesterday that, “Republicans in the House of Representatives on Tuesday proposed $31 billion in farm subsidy cuts and the conversion of food stamps into a cash benefit program, as a way to help balance the federal budget in 10 years.

The proposal, signed by House Budget Committee Chairman Paul Ryan, left it to the Agriculture Committee to pick the specific cuts, but cited the $5 billion-a-year ‘direct payment’ subsidy, paid regardless of need, and the heavily subsidized federal crop insurance program as areas worthy of review.

“It also called for turning food stamps, used by millions of poor and elderly Americans to buy food, into a cash payment and to allow states to ‘tailor their programs to their recipients’ needs.’ Under the plan, food stamps would become a block grant.”

The Reuters article added that, “‘With farm profitability – and (federal) deficits – continuing at high levels, it is time to adjust support to this industry to reflect economic realities,’ the Ryan budget document said.”

“By allowing customized food stamp programs through block grants, ‘it encourages states to help recipients find work,’ Ryan’s budget said, adding there should be time limits and work requirements for food stamp recipients,” yesterday’s article noted.

DTN Ag Policy Editor Chris Clayton reported yesterday that, “The House Republican budget plan would balance the budget in 10 years under a proposal released Tuesday.

“But the plan offered by House Budget Chairman Paul Ryan, R-Wis., also would require farmers to admit they are in the midst of a strong economic period and pony up a larger share of spending cuts from agricultural programs than either of the farm-bill proposals that failed to pass last year.

“Ryan’s plan is unlikely to become law. Instead, it adds one more chapter to the continuing budget saga between congressional Republicans and President Barack Obama.”

Mr. Clayton explained that, “Ryan doesn’t propose specific cuts to agriculture, but his budget states that the House Agriculture Committee should come up with reforms to save taxpayers $31 billion over the next decade.

A year ago, the Budget Committee proposed to cut $30 billion out of farm programs over 10 years by reducing ‘fixed payments’ and recommending to ‘reform the open-ended nature’ of crop insurance.

“Under Ryan’s plan, USDA would take a $5 billion cut in discretionary spending from fiscal year 2014 to 2015. The budget gives back $4.5 billion in 2016. In 2017, USDA would face a $1.9 billion cut again.”

The DTN article added that, “House Agriculture Committee Chairman Frank Lucas, R-Okla., issued a brief statement applauding Ryan for once again leading on budget issues and potentially balancing the federal budget. Still, Lucas noted Ryan’s budget isn’t gospel for the Ag Committee, but only provides suggestions.”

“Rep. Collin Peterson, D-Minn., ranking member of the House Ag Committee, said the proposal would make it tougher to pass a farm bill. Peterson said the GOP continues to ‘put forward political messaging’ rather than a real budget proposal. Peterson added the committee will continue to look for ‘balanced cuts across farm programs.’”

National Farmers Union President Roger Johnson indicated yesterday that, “We are certainly willing to do our fair share for deficit reduction, but these projected cuts to farm bill programs are many times larger than proportionate and will likely make it impossible to pass a five-year farm bill.”

In a presentation yesterday on the Senate floor, Agriculture Committee Chairwoman Debbie Stabenow (D., Mich.) addressed the House GOP budget proposal with specific emphasis on the SNAP program and crop insurance- video replay available here.

In part, Chairwoman Stabenow stated that, “And I can assure you that in the Farm Bill we will present again to colleagues as we did last year– and we’re so grateful for the bipartisan support we had– we will strongly support efforts around the crop insurance [program] as well as nutrition.”

Daniel Looker reported yesterday at Agriculture.com that, “But behind the public pronouncements, some members of congressional agriculture committees seem to be preparing to write farm bills that will spend less than they would have a year ago.

“Early on Tuesday, Senate Agriculture Committee member Chuck Grassley (R-IA), told Agriculture.com that there might not be new commodity programs in the next farm bill.

“‘I think that we’re going to end up with probably just one safety net for farmers in the new farm bill, and that’s going to be crop insurance,’ Grassley said.”

Mr. Looker added that, “Grassley said he supports the programs passed in last year’s version of a farm bill in the Senate — Agriculture Risk Coverage and the Supplemental Coverage Option — programs intended to cover shallow losses not protected by crop insurance. But if they ‘might undo crop insurance,’ he has questions about them, he said.

“‘What I hear from the farmers isn’t some new program. I’m hearing from farmers: preserve crop insurance,’ Grassley said.”

Yesterday’s article noted that, “Grassley said Tuesday that the crop insurance industry has already taken reductions in spending of about $6 billion over 10 years in the 2008 farm bill and another $6 billion when the USDA renegotiated its standard reinsurance agreement with crop insurers in 2010.

“But Grassley said it’s possible that any farm bill passed this year might include a requirement to tie conservation compliance to eligibility to buy crop insurance.”

In a related item regarding crop insurance, an update posted yesterday at FarmPolicyFacts.org stated that, “As lawmakers debate the next Farm Bill, more than 40 commodity groups, lending organizations, input suppliers and other stakeholders are calling on Congress to oppose to any changes to crop insurance that would discourage producer participation in insurance or undermine private sector delivery of insurance products.

“‘In agriculture, one thing is for certain: crop loss will occur in some part of the United States each year. The significant, widespread crop losses of 2011 and 2012 have clearly demonstrated the need for crop insurance protection and the public-private partnership of program delivery.  Farmers, ranchers, their lenders, input suppliers and other stakeholders agree that crop insurance protection should remain a viable, affordable tool for managing risk,’ stated the organizations in a letter sent to House [link] and Senate [link] Agriculture Committee members.”

And, in an article from Monday, Reuters writer Charles Abbott reported that, “An aide to House Agriculture Chairman Frank Lucas said the committee’s target for savings remained at $36 billion over 10 years, including cuts in food stamps for the poor. The panel’s 2012 bill got half of its savings from food stamps.

“A core question for the farm bill, Lucas said last week, is the split in spending between food stamps and money for farmers. Food stamps account for the lion’s share of Agriculture Department spending” [see related discussion regarding food stamps with Sen. Pat Roberts (R., Kan.) here.]

Bloomberg writer Alan Bjerga reported yesterday that, “DuPont Co. long-term investment decisions are being hindered as Congress puts off for a year adopting legislation to set U.S. agricultural policy, said Paul Schickler, the president of the company’s seed unit.

“‘We’re highly concerned about the farm bill because you can’t operate an industry that is so long-term focused on a month-to-month basis with no idea of what the next year or two might look like,’ Schickler, who heads DuPont Pioneer seed, said today at a Bloomberg Government breakfast in Washington. ‘This is creating real uncertainty.’”

In other policy related developments, a news release yesterday from the Senate Finance Committee stated that, “Senate Finance Committee Chairman Max Baucus (D-Mont.) and Ranking Member Orrin Hatch (R-Utah) introduced legislation today to permanently extend tax relief for ranchers, farmers and other landowners who donate land for conservation.”

And Alexandra Wexler reported in yesterday at The Wall Street Journal Online that, “The U.S. Department of Agriculture is considering buying 400,000 tons of sugar—enough for 142 billion Hershey’s Kisses—to stave off a wave of defaults by sugar processors that borrowed $862 million under a government price-support program.

“The action aims to prop up tumbling U.S. sugar prices, which have fallen 18% since the USDA made the nine-month operations-financing loans beginning in October. The purchases could leave the price-support program with an $80 million loss, its biggest in 13 years, said Barbara Fecso, an economist at the USDA, in an interview.”

The Journal article pointed out that, “Any defaults on loans this year would be the first test of a provision in the 2008 Farm Bill that requires the USDA to sell forfeited sugar to ethanol producers. Most ethanol in the U.S. is distilled from corn.”

 

Budget: Senate Democrat Proposal

Vicki Needham and Bernie Becker reported yesterday at The Hill’s On the Money Blog that, “The House Budget Committee will start the festivities on Wednesday morning with a markup of the blueprint proposed Tuesday by Chairman Paul Ryan (R-Wis.) that would cut spending by $5.7 trillion, reduce the top tax rate to 25 percent and balance the budget within 10 years.

“In the afternoon, the Senate Budget Committee will take up Chairwoman Patty Murray’s (D-Wash.) budget planThe first budget from Senate Democrats in four years includes nearly $1 trillion in new taxes but would not balance the budget.

“Her panel is taking two days to get through the budget process.”

The Hill item explained that, “Murray’s plan would turn off the next nine years of the sequester and replace those spending cuts with a 50-50 mix of tax increases and spending cuts.

“Murray argues that her budget cuts $1.85 trillion from deficits over 10 years. But once the sequester cuts are turned off, Murray’s budget appears to reduce deficits by about $800 billion.

“The budget would dedicate $100 billion to economic stimulus in the form of infrastructure spending and job training.”

 

Budget: Sequester Issues

Christopher Doering reported in yesterday’s Des Moines Register that, “Agriculture Secretary Tom Vilsack fired back at congressional lawmakers who criticized him for not doing enough to avoid a series of mandatory spending cuts, including the furloughs of meat inspectors expected later this year.

“Instead, Vilsack put the blame squarely on congressional lawmakers. He said the spending reductions, known as sequestration, will have a significant impact on agriculture by reducing the amount of money the USDA can loan out to producers, leading to cuts in conservation programs and curtailing exports to the tune of about $500 million.

“‘The focus has been on ‘Can’t we avoid this?’ when Congress knows full well that they structured this sequester in a way that provides no flexibility,’ Vilsack said in an interview with Gannett’s Washington Bureau. ‘I have to do what I have to do because the law is what it is today. If they want to change the law, great. If they want to provide more money, great.’”

The article noted that, “Rep. Steve King, R-Ia., said Vilsack is using the possibility of meat shutdowns to highlight the ‘most painful ways’ to comply with the sequester. ‘For now, he’s going to posture himself as if there are going to be shutdowns of meat plants come mid-summer,’ said King. ‘But I don’t think (the shutdowns) are going to happen.’”

Also, Bill Tomson reported yesterday at The Wall Street Journal Online that, “The U.S. Department of Agriculture said Tuesday it is cutting production of several statistical reports it releases regularly on cattle, grain, fruits, vegetables, lentils, milk and other commodities in order to comply with automatic spending cuts.”

 

Budget: Continuing Resolution Developments

Chris Clayton reported yesterday at the DTN Ag Policy Blog that, “The Senate plan to fund the federal government through the end of the fiscal year spends just over $1 billion on the Food Safety and Inspection Service, but USDA indicates it would take another $52 million to avoid furloughing meat inspectors at the agency.”

Mr. Clayton pointed out that, “The Senate Appropriations Committee did not make changes to the funding bill that would boost FSIS beyond the point of requiring inspector furloughs, according to USDA.

“A release issued Monday by the Senate Appropriations Committee would fund FSIS at just over $1 billion for the full fiscal year. The committee doesn’t make any comments in its report whether that would protect FSIS from sequester, or give USDA flexibility to avoid furloughing inspectors.

“The appropriations bill — a continuing resolution, or ‘CR’ — is expected to come to the floor in the Senate on Wednesday. The House CR did not deal with meat inspectors. It’s expected there will be at least one major amendment on the Senate floor to fix some of the issues with sequester, likely giving more flexibility to departments on where to make cuts.”

David Rogers reported yesterday at Politico that, “After a rocky, sometimes comical start, Senate leaders still hoped to right the ship Tuesday and move ahead this week with a stopgap bill to keep the government operating past March 27, and through the last six months of the fiscal year.

“Sens. John McCain (R-Ariz.) and Tom Coburn (R-Okla.) initially raised objections, insisting on more time to read the 587-page measure before allowing any debate on amendments.”

Mr. Rogers noted that, “Together with the committee’s ranking Republican, Alabama Sen. Richard Shelby, [Senate Appropriations Committee Chairwoman Barbara Mikulski (D-Md.)] has sought to use the Senate bill to greatly expand on a narrower continuing resolution, or CR, passed by the House last week. Six Cabinet departments and major science agencies would be given full-year budgets and new provisions added, impacting everything from highway and transit funding to new nonlethal U.S. aid to Syrian rebels.

“Indeed, in a week when President Barack Obama is coming and going from the Capitol and the air filled with warring 10-year tax and spending plans, the Mikulski-Shelby bill is the only real budget before Congress for the six months remaining in this fiscal year.”

 

Agricultural Economy

Vicki Needham reported yesterday at The Hill’s On the Money Blog that, “President Obama said Tuesday that forging new trade deals should serve as a catalyst to job creation and broader economic growth in the United States.”

The article noted that, “[Pres. Obama] also said he is ‘modestly optimistic’ that a trade deal between the U.S. and the European Union, with talks expected to start in June, can be completed and will further help grow U.S. exports.”

And Ben Geman reported yesterday at The Hill’s Energy Blog that, “President Obama said Tuesday that federal investments in waterway maintenance will be vital as drought fueled by climate change creates problems for barges bringing goods out of the Midwest.

“Obama, during a meeting of the President’s Export Council, noted recent problems moving goods when last year’s major drought lowered water levels in the Mississippi River.”

The article added that, “‘Recently we had the challenge of … getting goods from the Midwest down the Mississippi when the water started going down,’ Obama said.

“He said the upcoming White House budget proposal would seek to address maintenance needs.”

For an additional look at transportation related issues, see this recent St. Louis Post-Dispatch article, “Critical system of locks and dams is aging, but there’s little money for repairs.”

Meanwhile, Cameron McWhirter reported in today’s Wall Street Journal that, “Heavy winter rains have broken a three-year pattern of drought in much of the Southeast, while drought conditions still plague the Plains and other parts of the country, according to the U.S. Drought Monitor.”

The article explained that, “Recent rains and snow have also brought some relief to the Midwest, but large swaths of the country’s middle remain in extreme to exceptional drought, according to the U.S. Drought Monitor, a consortium of several federal agencies that tracks drought.”

 

Immigration

Bloomberg writer Alan Bjerga reported yesterday that, “The Alpina Foods Inc. plant that just opened in Batavia, New York, to feed the nation’s growing appetite for Greek-style yogurt should have nearby dairy farmers such as Matt Lamb scrambling to expand their herds.

“It isn’t — and not because cows are in short supply. Lamb says he’s reluctant to add to his family’s 5,000-cow dairy operation for fear he won’t have enough workers to milk them every day. That’s partly due, he says, to U.S. immigration laws that were designed for seasonal farm laborers instead of the year-round, seven-days-a-week ones he needs.”

The article noted that, “The labor shortfall has the bipartisan group of U.S. senators vowing to ensure dairy interests will be reflected in the revamp of immigration laws they are trying to craft. Senators including New York Democrat Charles Schumer, who has pledged to make his state a hub of Greek yogurt production, say they are trying to ensure a reliable supply for companies including Dean Foods Co., the country’s biggest milk producer.”

Keith Good

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