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Budget- Policy Issues; Farm Bill; Biofuels; and, Trade

Budget: Sequestration, Senate Continuing Resolution

House Agriculture Committee Ranking Member Collin Peterson (D., Minn.) was on KFGO radio (Fargo, N.D.) yesterday where he visited with Joel Heitkamp about a variety of budgetary and policy issues.

An audio replay of the conversation is available here, while a FarmPolicy.com transcript of yesterday’s interview can be found here.

In part, Rep. Peterson discussed food safety issues, the sequester and the Continuing Resolution (CR) and pointed out that, “What needs to be done is the agencies and the military need to be given flexibility. One of the problems with the sequester is that it says that you have to take each line item and reduce it equally. And in agriculture, for example, that caused a problem because the meat inspectors, for example, it’s 87% salaries. They’d already made significant reductions in administrative costs through cuts that we’d made before and they didn’t have, really, any way to avoid it, so they were talking about furloughing meat inspectors, shutting down meat plants potentially, and so forth.

“If the Secretary had flexibility so he could reduce his entire department by a percent and could decide how to do it, then he would have been able to keep the meat inspectors on the line and make cuts other places. So I think at the end of the day if we can get this CR worked out, I think you’re going to see flexibility in there, and that’s probably the best you’re going to get, and we’ll see how the rest of this plays out.”

Likewise, on Tuesday Sen. Chris Coons (D., Del.) addressed food safety issues associated with the sequester and meat inspectors on the Senate floor (video replay of complete presentation), and in regard to the Senate CR he stated that, “With the sequester having kicked in, many of us who are from states that have livestock or poultry processing are aware of the impending and significant negative impact on our home states and our economies, on people’s employment and on their opportunity to support their families.

“And so I wanted to briefly speak in support of what I know are [Sen. Appropriations Chairwoman Barbara Mikulski’s (D., Md.)] tireless efforts to ensure that the 6,200 meat and poultry processing plants in this country do not get needlessly shut down.”

Bloomberg writers Roxana Tiron & James Rowley reported yesterday that, “The Senate also today began considering amendments to a House-passed proposal to fund the government through Sept. 30…Senate Democratic leaders are looking to give the Agriculture, Homeland Security, Commerce and Justice departments as well as science programs flexibility to execute across-the- board spending cuts that took effect March 1. The House-passed bill gives that leeway to the Defense and Veterans Affairs departments.”

However, at a House Agriculture Appropriations Subcommittee oversight hearing of the Department of Agriculture Food Safety and Inspection Service yesterday, Undersecretary for food safety Dr. Elizabeth Hagen indicated that the Senate CR “would not give us additional flexibilities; the funding levels are different, but it would not give us additional flexibilities.”   Dr. Hagen provided this perspective in response to a question from Rep. Sanford Bishop (D., Ga.), the exchange can be heard here (MP3- 1:01).

More broadly, Ellyn Ferguson reported yesterday at Roll Call Online that, “Agriculture officials have rejected rolling furloughs that would allow some inspectors to remain on the job and slaughterhouses in different regions to remain open, Hagen told the House Agriculture Appropriations Subcommittee. Hagen said department officials believe the nationwide approach would treat all regions and markets equitably.”

Ms. Ferguson added that, “Even with those efforts, Hagen told Jeff Fortenberry, R-Neb., that ‘at this point we’re looking at enormous economic disruption not only to the regulated industry but to people who work for the industry  . . .  if we have to furlough our entire workforce.’

“She agreed with subcommittee members that not having meat inspectors on the job will have a significant economic effect on the meat and livestock industry and lead to higher prices for consumers. However, Hagen said food safety would not be compromised because no domestic meat or poultry can go to market without inspection.”  (An audio replay of the exchange between Dr. Hagen and Rep. Fortenberry can be heard here, (MP3- 2:52)).

The Roll Call article explained that, “Subcommittee members with meat-packing, livestock and poultry interests spent much of the hearing trying to determine whether there was a way out of a sequester many lawmakers say they never expected to happen.”

Examples of this line of questioning occurred in additional colloquies yesterday between the USDA officials and Rep. Fortenberry (audio–  MP3- 2:39)), and Rep. Bishop (audio–  MP3- 3:02)).

Reuters writer Charles Abbott reported yesterday that, “All U.S. meat inspectors will be furloughed on the same days as the federal meat safety agency, a top USDA official said, leading to spotty meat shortages in the summer and fall as automatic spending cuts shave $53 million off the agency’s budget.

“Agriculture Undersecretary Elizabeth Hagen told a House Appropriations subcommittee on Wednesday that the furloughs, expected to total 11 days before the end of September, were likely to begin in mid-July. None of the days would come consecutively, she added.”

Mr. Abbott pointed out that, “Kansas Republican Kevin Yoder said there was ‘healthy skepticism’ that a 5 percent cut in USDA’s funds would necessitate such draconian cutbacks. And Republican Tom Latham, from the large hog and cattle producing state of Iowa, asked, ‘Have you been told to make it as painful as possible?’

“‘Absolutely not,’ replied Hagen.”

Meanwhile, a news release yesterday from Sen. Roy Blunt (R., Mo.) stated that, “In the wake of sequestration, [Sen. Blunt] introduced an amendment today to provide the Obama Administration with the flexibility it claims it currently does not have to ensure ‘essential’ federal employees continue to provide vital services, including meat inspections, control tower operations, and border security.

“Blunt’s amendment will apply the same standards used during occurrences of inclement weather or other government shutdowns to the sequestration cuts to each agency. The provision is co-sponsored by U.S. Senators Mike Enzi (Wyo.), Deb Fischer (Neb.), John Hoeven (N.D.), Mike Johanns (Neb.), Jim Risch (Idaho), and Roger Wicker (Miss.).”

Sen. Blunt was a guest on yesterday’s AgriTalk radio program with Mike Adams where he fleshed out more information on the amendment.  An audio replay of a portion of yesterday’s AgriTalk show with Sen. Blunt can be heard here (MP3- 10:12), while a FarmPolicy.com transcript of part of yesterday’s program can be found here.

Sen. Blunt stated that, “But the essential services, the people that would show up on a bad weather day, the people that would show up—and in fact the amendment that I’ve introduced to the Continuing Resolution and the ag bill and some other updated appropriations bills that are in that resolution will just basically use the same standard that the Obama Administration set in 2011, April of 2011, or the Clinton Administration set in 1995 when we either had a government shutdown or concern that we would have, and say these people that are essential to safety and the protection of property and life have to show up.

“And of course the things that are inspected by the FDA, which is another area under the appropriations bill that Senator Pryor and I have, they can show up periodically, and all of those places can still work. But as you well know, for meat, poultry, eggs, that federal inspector has to be there every minute the facility’s open. And so if the federal inspector doesn’t show up, nobody else that works there gets to show up. So the livelihood of those people who work at hard jobs are impacted, and of course the supply of, again, meat, eggs and poultry for everybody else is impacted, and it’s impacted pretty quickly.”

Sen. Blunt added that, “Well, every indication so far is that the administration’s decided that they want any reduction in federal spending to be as painful as it can possibly be. And so I wrote Secretary Vilsack a letter on this. He wrote back and said, well, under the sequestration rules, we don’t have the authority we would have under a government shutdown, so I’m going to try to give him the authority.”

Also on the issue of the Senate CR, Sens. John McCain (R., Ariz.) and Tom Coburn (R., Okla.) have objected to some of the agricultural provisions contained in the legislation, while a National Farmers Union (NFU) news release this week stated that, “[NFU] signed a coalition letter today urging opposition to a policy rider in the Senate version of the Fiscal Year 2013 Continuing Resolution that would rescind regulations that help ensure fair markets for poultry growers.”

On Tuesday, Appropriations Chairwoman Barbara Mikulski pointed out on the Senate floor that the Senate CR funds the Food Safety Modernization Act, which was not included in the House bill.

 

Budget: Senate Proposal, House Proposal

Manu Raju and Ginger Gibson reported yesterday at Politico that, “Sen. Patty Murray’s new budget plan would cut annual deficits but still leaves the country with a $566 billion shortfall after 10 years, as Senate Democrats and House Republicans continue to debate whether balancing the budget in a decade is the best approach to bolster the tepid economy.”

Ezra Klein reported yesterday at the WonkBlog (Washington Post) that, “On agricultural policy, ‘this budget provides flexibility to the Senate Agriculture Committee to write a strong five‐year Farm Bill that will maintain an effective safety net for farmers and will continue to invest in communities through key conservation, research, nutrition, energy, and rural development programs.’”

The budget proposal also stated that, “Our country’s farmers and ranchers are critical to our economy, environment, and food supply. The Senate Budget assumes $23 billion in savings can be found from reforming agriculture programs. Our budget supports the efforts of the Senate Agriculture Committee to write a new Farm Bill that will make significant reforms to farm programs, while refocusing support on helping farmers throughout the country manage risk.”

The budget outline noted that, “The Senate Budget protects funding for SNAP, America’s most important program for preventing hunger among extremely vulnerable families. Nearly 72 percent of SNAP participants are in households with children, and more than 25 percent of SNAP participants are in households that include seniors or individuals with disabilities.”

On the Senate floor yesterday, Budget Committee Ranking Member Jeff Sessions (R., Ala.) stated that, “I just left my farmers, they came up from Alabama.  We were talking about that. The Farm Bill is about $100 billion a year, of that Farm Bill- $80 billion of it is in the food stamp budget.  It’s gone up four times.  The $20 billion that goes to farmers in aid and insurance and those kinds of things actually was cut this year, but nothing was cut out of food stamps.  They resisted that and turned down even a modest amendment I offered to end clear abuse that wouldn’t have hurt anybody.”

An update posted yesterday at the Congressional Budget Office Online noted that, “Under current law, total funding for child nutrition programs will grow from $20 billion in 2013 to $29 billion in 2023, CBO projects. That rise largely reflects projected increases in food prices and thus the cost per meal, although the number of meals served by those programs is also expected to grow. The School Breakfast Program is projected to see the fastest growth, because CBO expects that more schools will participate and will implement policies that make it easier for eligible children to take part in the program” (related graph).

Vicki Needham reported yesterday at The Hill’s On the Money Blog that, “The White House said Wednesday evening that it is supporting a fiscal 2014 budget plan proposed by Senate Democrats.”

While Erik Wasson noted this morning at The Hill that, “The House Budget Committee late Wednesday approved the latest budget from Rep. Paul Ryan (R-Wis.) on a party-line 22 to 17 vote.”

Jeremy W. Peters and Ashley Parker reported in today’s New York Times that, “President Obama’s meeting with a restive and resistant House Republican majority on Wednesday underscored their deep divisions over fiscal policy as both sides acknowledged that an overarching budget compromise was in doubt despite a new push by the White House.

“One day after Republicans rolled out a detailed proposal aimed at eliminating the federal deficit through steep cuts and repealing many of the president’s accomplishments, Mr. Obama told them pointedly in a rare visit that their highest fiscal priority was not his.”

The Times article added that, “The hourlong discussion at the Capitol, and the release of a new budget by Senate Democrats on Wednesday that adds $100 billion in new stimulus spending and would impose higher taxes on large corporations and wealthy Americans, illustrated anew just how difficult it will be to resolve the issues that have split the Congress for years and created a perpetual cycle of deadline-driven short-term fiscal policy.”

 

Farm Bill

In his discussion yesterday on KFGO radio with Joel Heitkamp, Rep. Collin Peterson noted that, “Well, we fully intend to try to move the farm bill this summer. We’re going to wait till May before we start so we can kind of let all this budget stuff sort out. But all the ag groups are in town. I met with dairy people Monday night, soybean people yesterday, the National Corn Growers this morning, and the chairman was there, and I was there.

“We intend to move ahead, but it’s a, you know… Like last time, we can work this out in the committee, but when we get drug up on the floor, we get tied into all this other stuff that’s going on, and that’s what happened last year. I had a meeting with the Speaker a couple weeks ago. He said in that meeting that he doesn’t want another extension, he wants us to get the bill done, so I think that’s a good sign.

But there’s still some divisions. There’s differences on the commodity title. There’s still differences on the dairy part of the bill. There’s differences on food stamps. So it’s not going to be easy, but we need to get this done. It’s not a good situation extending the current law year after year, just like it’s not a good situation allowing the sequester to go ahead, and it’s not a good situation to not be able to do any appropriation bills and run the government on CR, but that’s what we’ve been doing. So we’re hoping we can get this done, but it’s not a slam dunk, by any means.”

A news release earlier this week from the National Milk Producers Federation (NMPF) stated that, “The (NMPF) Board of Directors reaffirmed the organization’s support for a new farm bill, containing a better safety net for dairy farmers, at the Federation’s spring meeting Tuesday in Arlington.

“With the Senate Agriculture Committee expected to begin work on a new farm bill next month, NMPF’s leadership said this week that a new, voluntary dairy program known as the Dairy Security Act (DSA), which combines margin insurance with market stabilization, remains critical to the future of the industry.”

 

Biofuels

Yesterday the Food and Agricultural Policy Research Institute (FAPRI) released its Biofuel Baseline report; FAPRI indicated that, “This report presents a summary of ten year projections for U.S. ethanol, biodiesel, RIN, and related feedstock markets.”

 

Trade

The House Ways and Means Trade Subcommittee held a hearing yesterday on U.S.-India Trade Relations.

Reuters writer Doug Palmer reported yesterday that, “U.S. industry groups on Wednesday called for the United States to increase pressure on India to reform high-tech, agricultural and pharmaceutical policies they said block U.S. exports and damage patent rights.”

The article noted that, “‘With a population of over 1.2 billion, India’s markets hold the potential for world-class U.S. products and services. I want to ensure that U.S. job creators can compete there on a level playing field,’ said Representative Devin Nunes of California, the Republican chairman of the Ways and Means trade subcommittee.”

AP writer Mathew Pennington reported yesterday that, “In the agriculture sector — highly sensitive because it remains the lifeblood of much of India’s vast and impoverished rural population — lawmakers heard there are major barriers to foreign imports.

Allen Johnson, a former U.S. agricultural trade negotiator, said that for most U.S. export priorities, tariffs can be set as high as 100 percent, although day-to-day the applied tariff may be less if India needs to keep food costs down.

He also cited regulatory barriers, such as on dairy and pork imports that lack ‘scientific justification.’”

Rep. Adrian Smith (R., Neb.) participated in yesterday’s hearing and noted agricultural exporters in Nebraska’s Third District experience tariff and non-tariff barriers to trade in India. Smith asked Amb. Johnson to explain these barriers, according to a news release.

A replay of the conversation with Rep. Smith and Amb. Johnson from yesterday is available here.

Meanwhile, Chico Harlan reported in today’s Washington Post that, “Prime Minister Shinzo Abe will announce as early as this week Japan’s intent to enter talks on a major and controversial Asia-Pacific free-trade pact that would help open the door to the world’s third-largest economy, Japanese media reported Wednesday.”

And Reuters writer Doug Palmer tweeted yesterday that, “Sen Baucus has scheduled Mar 19 hearing on ‘President’s trade agenda’ to discuss TPP, TPA, TAA, ITA, ISA and TTIP (aka the US-EU FTA).”

Keith Good