FarmPolicy

July 23, 2014

Budget; Farm Bill; Ag Economy; Biofuels; and, Immigration

Budget: Continuing Resolution

David Rogers reported yesterday at Politico that, “Congress approved and sent to the White House on Thursday a stopgap spending bill to avert any threat of a government shutdown next week and keep agencies funded through September in the wake of automatic cuts ordered under sequestration.

“Final passage came on a 318-109 vote in the House, as top Republicans opted to embrace significant changes approved by the Senate on Wednesday rather than risk further delay.”

An update yesterday at the National Sustainable Agriculture Coalition (NSAC) Blog stated that, “We are very pleased to report that the final bill [Continuing Resolution] restores funding for the Conservation Stewardship Program (CSP).  The first FY 2013 continuing resolution left USDA’s Natural Resources Conservation Service (NRCS) with insufficient money to conduct a CSP sign up this year.  Fortunately, NRCS will now have the funds necessary to enroll roughly 12 million acres in the program in the remaining six months of the fiscal year.  This will bring the program to a grand total of 62 million acres.

“NRCS is required by the 2008 Farm Bill to enroll 12.76 million acres in the program each year.  However, the automatic across-the-board spending cuts known as sequestration will reduce that total by roughly 740,000 acres.  NRCS has not yet set a new enrollment deadline; however, we expect the date to be sometime in May.  Once the new enrollment deadline (also called a ranking or batching cutoff) for FY 2013 is set, NSAC will launch an outreach campaign to assist farmers in signing up for the program.

The same sequestration cuts – roughly 5.8 percent – will be applied to all mandatory conservation program spending.  This equates to a cut of $195 million from conservation spending in FY 2013.  On top of the sequestration cut, the appropriations bill includes cuts, known in Hill-speak as Changes in Mandatory Program Spending (CHIMPS) [related article], to three mandatory conservation programs – a $350 million cut to the Environmental Quality Incentives Program, a $5 million cut to the Agricultural Management Assistance program, and a $12 million cut to the Wildlife Habitat Incentives Program.  With these CHIMPS, the total FY 2013 cut to mandatory farm bill conservation programs comes out to $562 million.”

Chris Clayton provided a closer look at the biotech rider contained in the CR: “The language in the bill would come into effect when there is litigation on a biotech crop and an attempt by the courts to either remove crops from the field or stop a harvest of the crops. That was a situation a few years ago when an environmental group had sued USDA over Roundup Ready sugar beets.

The CR would effectively allow USDA to sign a temporary permit for the crop rather than putting those decisions in the hands of a judge.”

 

Budget Issues Persist: 2014 Budget Resolutions- Debt Ceiling

Rosalind S. Helderman and Lisa Rein reported yesterday at The Washington Post Online that, “Congress approved a short-term funding bill Thursday that ends the possibility of a federal government shutdown next week. But a broader budget battle about taxes and spending for the year is just beginning.”

The Post writers stated that, “Lawmakers are debating how much to tax and spend for the years to come. On Thursday, the House also approved a budget blueprint by Rep. Paul Ryan (R-Wis.) in a mostly partisan 221 to 207 vote. Ten Republicans joined House Democrats in opposing the Ryan budget measure.”

Yesterday’s article explained that, “The first budget put forward by Senate Democrats in three years, the proposal by Sen. Patty Murray (D-Wash.) would raise taxes by nearly $1 trillion over the next decade in an effort to stabilize deficits but would not balance the budget in that time.

Trying to reconcile those two visions will consume Washington in the coming months, as leaders warily look to the next fiscal showdown: the yet-to-be-determined deadline, somewhere in the late summer, when the Treasury will be out of options to manage the federal debt and need congressional approval to increase its borrowing authority.”

The Post article added that, “In blunt terms, House Speaker John A. Boehner (R-Ohio) acknowledged Thursday that the path ahead is murky: Republicans are demanding reforms to reduce entitlement spending in exchange for increasing the debt ceiling – a position Democrats object to unless large tax revenue is included beyond the more than $600 billion in tax hikes approved New Year’s Day.

“‘At this point in time, I don’t know how we go forward,’ Boehner told reporters.”

Jonathan Weisman reported yesterday at The New York Times Online that, “With a final flurry, Republican leaders sent the House home for a two-week recess, confident that they had outmaneuvered President Obama and the Democrats in the running fiscal fight from the last redoubt of Republican control in Washington. In the Senate, Republicans put Democrats on notice that passage of the Senate’s first budget since 2009 would come at a political price.”

“Speaker John A. Boehner said he was looking toward the next showdown this summer, when the government’s borrowing limit must be raised, to extract more concessions. ‘Dollar for dollar is the plan,’ Mr. Boehner said, reviving a rule, breached in January, that holds that any increase in the debt ceiling must be matched by spending cuts.”

 

Farm Bill

Reuters writer Charles Abbott reported on Wednesday that, “The U.S. government is readying a tool created during last decade’s biofuels craze – a never-used program to sell sugar at a loss to ethanol makers – as a way to whittle a looming sugar surplus down to an affordable size.

The sugar-for-ethanol program could be a lower-cost way for the Agriculture Department to meet its obligation, by law, to assure a minimum price for U.S.-grown sugar. Due to large crops worldwide, New York futures prices are below the federal guarantee of 20.94 cents per lb.”

Mr. Abbott explained that, “The government has yet to settle on a course of action. Agriculture Secretary Tom Vilsack said this week it was inappropriate to talk about specific steps, such as taking surplus sugar off the market, ‘until we get the plan out.’

“‘We will be in a position soon to put the structure for the Feedstock Flexibility Plan in place. The fact it’s in place doesn’t necessarily mean it’s going to get triggered,’ Vilsack told reporters at a luncheon on Tuesday, using the formal name of the sugar-for-ethanol plan.”

The Reuters article pointed out that, “USDA will need approval from the White House budget office to operate the sugar-for-ethanol scheme, which has not yet been transformed from statutory language into federal regulation. White House review of proposed regulations can sometimes take months.

“A sugar-for-ethanol program could buy 247,300 tons of surplus sweetener at a net cost of $66 million under a scenario outlined by USDA economist Steve Haley. He estimated ethanol makers, who mainly use corn as a feedstock, would pay 6 or 7 cents per lb for sugar acquired by USDA for 20.9 cents.”

Alexandra Wexler reported yesterday at The Wall Street Journal Online that, “Several senators took aim at a program requiring the U.S. Department of Agriculture to buy sugar in order to prop up prices to prevent some processors from defaulting on government loans.

“The lawmakers offered an amendment to a Democratic budget plan that calls for cutting funding of surplus sugar purchases by the government. The measure may come up for a vote in the Senate this week.”

The Journal article stated that, “The move follows a Wall Street Journal article that the USDA was considering buying 400,000 tons of sugar to boost market prices. The sugar then would be sold to U.S. ethanol producers, likely at a loss of $80 million, according to an economist at the USDA. If market prices stay low, processors who default on government loans would give sugar that was put up for collateral to the USDA.

“The amendment was submitted Wednesday by Sen. Jeanne Shaheen (D., N.H.), and was co-sponsored by Sens. John McCain (R., Ariz.), Pat Toomey (R., Pa.), Mark Kirk (R., Ill.) and Kelly Ayotte (R., N.H.), a Senate staffer said Thursday.”

The Journal article pointed out that, “But the American Sugar Alliance, an industry group, said the price-support program is necessary to protect U.S. sugar processors from a potential flood of imports from Mexico under the North American Free Trade Agreement.

“‘The Shaheen amendment is not only bad for farmers and rural economies, but for taxpayers and consumers, too,’ said Phillip Hayes, spokesman for the American Sugar Alliance. ‘It is surprising that Sen. Shaheen would target the one commodity program that’s run at no taxpayer cost for a decade, especially since her amendment would leave America more dependent on unreliable, subsidized foreign sugar producers.’”

A Scranton Times-Tribune editorial on Thursday stated in part that, “The federal sugar subsidy program is among the worst examples of government policy…[S]en. Pat Toomey has introduced a measure to eliminate the sugar support program, which would be the best course but is not politically likely.”

Yesterday, Senator Toomey tweeted about the sugar program, updates here and here.

Meanwhile in news regarding nutrition, an update on Wednesday from Rep. Marcia L. Fudge (D., Ohio) stated that, “[Rep. Fudge] today introduced the School Nutrition Flexibility Act, a bipartisan bill that gives local school administrators more flexibility to better support children and provide nutritious school meals. She introduced the bill with Congressman Steve Stivers (R-OH15).”

The release noted that, “Endorsed by the School Nutrition Association, the School Nutrition Flexibility Act works to assist the United States Department of Agriculture (USDA) in its efforts to develop school nutritional standards by permanently removing a harmful protein and grain limit that the USDA has temporarily waived for two years.

“The School Nutrition Flexibility Act also allows local school food authorities and local school boards to set the prices of school meals where the local programs are being well-managed and operating in the black.”

Also on the school nutrition issue, Rep. Rick Crawford (R., Ark.) discussed legislation he recently cosponsored titled the, “Sensible School Lunch Act,” on yesterday’s AgriTalk radio program with Mike Adams.  A replay of a portion of yesterday’s AgriTalk discussion with Mike Adams and Rep. Crawford on this issue is available here (MP3- 5:30).

A recent news release from Rep. Crawford explained that, “The legislation will provide school districts with greater flexibility in implementing new rules for the National School Lunch Program and School Breakfast Program. The House bill is a companion to bipartisan legislation introduced in the U.S. Senate by Senators John Hoeven (R-ND) and Mark Pryor (D-AR). The School Nutrition Association (SNA) has already endorsed the Senate bill.”

And a recent editorial from the Southwest Times Record (Fort Smith, Ark.) stated that, “So we are glad Sen. Mark Pryor, D-Ark., has worked for several months to get the USDA to loosen its regulations. A temporary adjustment in the rules in December, lifting the cap on proteins and grains, followed protests by Sen. Pryor and Sen. John Hoeven, R-N.D.

“Hoping for a more permanent solution, Sens. Pryor and Hoeven, supported by the School Nutrition Association, have introduced the Sensible School Lunch Act, which would lift the caps on proteins and grains and give fruits and vegetables a boost, while keeping calorie caps.

“On Tuesday, Arkansas’ four congressmen introduced a similar bill in the House of Representatives.”

 

Agricultural Economy

An update yesterday from the University of Nebraska-Lincoln indicated that, “Despite an extreme drought and indicators of weaker agricultural earnings on the horizon, Nebraska’s agricultural land markets remain strong, with an overall increase of 25 percent in the last year, according to preliminary findings from the University of Nebraska-Lincoln.

“Following the advances of 22 and 32 percent in the previous two years, the 2013 all-land value of $3,040 per acre is more than double the value in early 2010.”

And Bloomberg writer Brian K. Sullivan reported yesterday that, “Drought may persist from California to Texas while improving slightly in the Great Plains as temperatures soar above normal across most of the U.S. from April through June, the Climate Prediction Center said.

“The worst of the drought, an ‘exceptional’ dryness that currently stretches across parts of the Plains from South Dakota to Oklahoma, may lessen by one level on a four-step scale, according to the seasonal forecast by the center in College Park, Maryland.”

 

Biofuels

Dan Piller reported in yesterday’s Des Moines Register that, “Gasoline prices remain stuck above $3.50 per gallon despite the highest monthly domestic oil production in 21 years.

Big Oil and renewable fuels advocates on Wednesday blamed each other for motorists’ continued pain at the pump.”

The article added that, “Big oil companies said the federal Renewable Fuel Standard, which requires that ethanol account for at least 10 percent of the 136 billion gallons of gas consumed by U.S. automobiles each year, is driving up fuel prices.

“The ethanol industry, on the other hand, says Big Oil is trying to divert attention from high gas prices. Because ethanol is cheaper than gasoline, they say blaming biofuels is the rhetorical equivalent of a dry hole.

Both sides agreed Wednesday that the matter is likely to come before Congress in some manner this year. Renewable energy people want an investigation of oil company pricing. The oil companies want Congress to repeal the six-year-old Renewable Fuel Standard that is the basis for demand for ethanol and biofuels.”

 

Immigration

Humberto Sanchez reported yesterday at Roll Call Online that, “A delay in finishing work on a comprehensive immigration overhaul could threaten the recent momentum for Congress to take on the issue.

“A bipartisan group of eight senators has been working since January on a bill, and they expect to unveil their package the week of April 8.

“But the group has come under criticism recently from prominent Democrats and Republicans — including Judiciary Chairman Patrick J. Leahy, D-Vt., and ranking member Charles E. Grassley, R-Iowa — as well as advocates of immigration policy changes. The complaints range from the group’s decision to craft the bill behind closed doors to the failure of the eight to release their proposal in March, as they had previously pledged.”

Meanwhile, Kevin Sullivan provided an interesting look at Dutch family living in Michigan and an immigration program known as EB-5 in today’s Washington Post.

The article noted that, “The Dekkers sold their farm in Denmark and paid $250,000 for their farm in Ubly [Mich.]. They moved into their small white farmhouse in 2000 and started their new life with three young children, a couple of ramshackle barns and 70 Holsteins.

“Over the next decade they slowly built barns, added milking equipment, hired a dozen employees, and bought fields to grow corn and hay to feed their expanding herd. They paid their taxes and put their kids in public schools. And they grew their farm into a 1,000-acre operation that is one of the largest dairies in the area.

“But in 2011, worried that their teenagers would soon turn 21, they called an immigration lawyer in Detroit. She told them about EB-5 and referred them to a company that advises U.S. firms and foreign investors.”

The Post article noted that, “The EB-5 program is booming in popularity, driven largely by a struggling U.S. economy in which developers are searching for new sources of capital. It is also fueled by rising demand from foreigners looking for access to U.S. schools, safe investment in U.S. projects and — in the case of China, where most of the investors are from — greater freedom.

The program has broad bipartisan support in Congress, and key senators who are negotiating an overhaul of the immigration system have said they are leaning toward expanding visa programs that provide an immediate boost to the economy.

But others argue that the EB-5 program amounts to buying citizenship, and that it unfairly allows wealthy foreigners to cut the visa line ahead of others who have waited for years.”

Keith Good

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