FarmPolicy

November 28, 2014

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

Budget Developments

Lisa Mascaro reported in Sunday’s Los Angeles Times that, “For nearly 20 hours, senators considered more than 600 amendments, from lofty to less so, and voted on dozens. The marathon vote-a-rama did not end until just before dawn Saturday, when Democrats stumbled across the finish line and passed their first federal budget plan in four years.

“In a final squeaker, the chamber voted 50 to 49 to approve a $3.7-trillion budget blueprint that would raise taxes on corporations and the wealthy, trim spending, invest new revenue to build infrastructure and tamp down the federal deficit.”

Suzy Khimm, writing on Saturday at the Wonk Blog (The Washington Post), provided “a list of nearly all the amendments that were filed, with the ones that were actually voted on in bold”– click here to view the list.

A few of the amendments offered by Senators pertaining to agriculture, farm and food policy included:

Sen. John Thune (R., S.D.)- Offered an amendment to permanently abolish the federal death tax, which didn’t pass (Friday news release).

Sen. Rob Portman (R., Ohio)- Co-sponsored an amendment with Ron Wyden (D., Ore.) that would implement a deficit-neutral reserve fund that encourages swift movement on renewing Trade Promotion Authority.  The measure passed (Saturday news release).

Sen. Pat Roberts (R., Kans.)- “Offered several amendments to save the taxpayer billions while restoring integrity to the food stamp program” (Friday news release).

Sen. Ted Cruz (R., Tex.)- Offered the “Bloomberg Big Gulp Amendment,” the amendment would prohibit federal regulation of the size and quantity of food and beverages (Friday news release).

Sen. Dean Heller (R., Nev.) Submitted an amendment which ensures that the Bureau of Land Management collaborates with western states to prevent the listing of the sage-grouse under the Endangered Species Act of 1973.  This amendment was agreed to (Saturday news release).

And Sen. Lisa Murkowski (R., Alaska) tweeted on Friday that, “Buyer beware of Frankenfish!  ‪@SenatorBegich and I just introduced a measure requiring labeling GE salmon. It passed! ‪http://bit.ly/Zihtzr.”

Ginger Gibson pointed out on Saturday morning at Politico that, “A handful of Democrats, all up for reelection next year and representing conservative states, voted against the [budget resolution] measure: Sens. Kay Hagan (D-N.C.), Mark Pryor (D-Ark.), Max Baucus (D-Mont.) and Mark Begich (D-Alaska). Sen. Frank Lautenberg (D-N.J.) was absent.

“Nerves started to fray about 2 a.m., with Democrats pushing to end the voting and Republicans trying to continue to consider amendments. In total, they considered 101 amendments.”

In her LA Times article yesterday, Ms. Mascaro explained that, “Ordinarily, it would be an impressive achievement. But Republicans in the House had approved a sharply divergent budget days earlier that would slash taxes and spending, and radically shrink government. Reconciling the two plans is probably impossible, and neither will be put into effect.

“Instead, the competing blueprints serve as partisan warning shots, establishing the outer edges of the battle for a broad deficit-reduction deal that President Obama and Republicans will start addressing after Congress returns on April 8 from a two-week recess.”

Similarly, Pete Kasperowicz reported on Friday at The Hill’s Floor Action Blog that, “Senate Budget Committee ranking member Jeff Sessions (R-Ala.) said Friday that he doubts the House and Senate will be able to reconcile the two budget plans that each chamber will pass.”

With respect to Sen. Sessions, note that he spoke at some length about the SNAP program on the Senate floor on Thursday (excerpts, video clip available here).

Meanwhile, an update posted on Friday at the National Sustainable Agriculture (NSAC) Coalition Blog pointed to some of the contrasts in Farm Bill related funding in the Senate and House 2014 budget resolutions.

The House FY 2014 budget resolution that passed yesterday [Thursday] cuts farm bill spending by $184 billion over ten years.  Of this total, $135 billion would come from the Supplemental Nutrition Assistance Program (SNAP), $31 billion in cuts would be split between commodity program and crop insurance subsidies, and roughly $18 billion would come from cuts to farm bill conservation title spending,” the NSAC item said.

The update added that, “The Senate is currently debating amendments to its own FY 2014 budget resolution.  In contrast to the House budget resolution, the Senate resolution cuts farm bill spending by roughly $23 billion, which would come entirely from commodity and crop insurance spending.  Unlike the House’s proposal, this proposal does create a viable path for getting a farm bill done this year because the cuts are smaller and more consistent with the cuts that Senate and the House Agriculture Committee accepted as part of the last year’s farm bill debate.”

And Janet Hook reported in today’s Wall Street Journal that, “When the House and Senate return the week of April 8 from their spring recess, Speaker John Boehner (R., Ohio) has said House Republicans will begin meetings to decide how to handle the next budget challenge. Congress will have to raise the federal debt limit or else the U.S. Treasury will run out of cash to pay its bills.

“Mr. Boehner has said the GOP won’t approve any debt increase unless it is paired with matching budget cuts. Democrats have refused to make more big spending cuts unless they are linked to tax increases. Congress is expected to have until July or August to settle that conflict.”

A separate update posted on Friday at the NSAC blog (“Is There a Mega Budget Deal Coming?”) pointed out that, “Clearly, with the two parties and the two houses of Congress that far apart on farm bill basics, there is little hope for a new farm bill.  However, if there is a grand bargain, it could include a directive to both the House and Senate Agriculture Committees to achieve the same amount of savings by a certain date.  Under such a scenario where the amount to be cut and the deadline are the same, the odds that a new five-year farm bill can happen this year go up considerably.

Whether there is a mega deal coming or not remains to be seen.  It remains highly improbable that Congress will allow the country to go into default.  However, whether it reaches a deal or simply finds a new way to kick the can down the road is a matter that will be hotly debated for the next two months.  The ultimate fate of the funding for the programs left stranded by the farm bill extension, and the ultimate fate of the new farm bill, could hang in the balance.”

 

Farm Bill

AP writer David Pitt reported on Friday that, “Farmers will be paid a record $16 billion in crop insurance claims for 2012 because of the widespread drought, a staggering amount that has critics calling for changes to what they say is an inefficient taxpayer subsidy the government cannot afford.”

“Farmers say they must have some kind of protection or a year like the past two could put them out of business,” the article said, while adding that, “Some agriculture economists think the federal government should set up an emergency fund that sets aside a certain amount of money, perhaps $3 billion a year, to cover unusual disasters.

But crop insurers still say their program is a better bet because approval of emergency aid isn’t always certain and crop insurance pays faster. That ‘stabilizes the supply chain quite a bit’ because banks and other companies know farmers will be able to make loan payments and pay their bills even in bad years, said Tom Zacharias, president of National Crop Insurance Services, the nonprofit trade group for insurers that sell policies to farmers.”

Also, Ted Booker reported on Saturday at The Watertown Daily Times (N.Y.) Online that, “After a stalemate in Congress last year undermined efforts to pass a five-year farm bill, Rep. William L. Owens, D-Plattsburgh, is leading a charge to enact legislation to help farmers this year.

“Mr. Owens, who held a conference call with reporters Friday, is getting a jumpstart this year by reintroducing agriculture legislation that fizzled along with the farm bill proposed in 2012. Congress ended up passing a nine-month continuing resolution to extend the 2008 farm bill through September.”

 

Agricultural Economy- Trade

Christopher Doering reported in yesterday’s Des Moines Register that, “Record-high prices for corn, soybeans, wheat and other commodities have left growers flush with cash to purchase more land. And what the farmers don’t pay for out of their own pockets, historically low interest rates provide them with easy and cheap access to money to close the deal.

“The favorable mix of both cash and credit has provided fuel to drive up land values across the Midwest, stoking fears of a bubble ready to burst.

“In Iowa, where rich soil, favorable weather and ethanol and livestock production help foster demand for limited growing space, farmland values have soared 90 percent since 2009. An acre of farmland that a decade ago sold for an average of $2,275 now goes for $8,700, according to Mike Duffy, an economist at Iowa State University who watches land prices.”

The article noted that, “The inevitable drop in land prices is unlikely to be as sharp as in the early 1980s, when new purchases were financed largely with debt and less with farmers’ own capital, say economists and bankers who work in the agricultural industry…[S]ince then, farmers have become more financially conservative, leaving them in a better position to weather a downturn.

“Land purchases during the last few years have been made with growers regularly using 50 to 75 percent of their own cash. And the finances of the farm are stronger than ever with the debt-to-asset ratio expected to be the lowest level on record in 2013, according to the U.S. Department of Agriculture.”

A separate article in yesterday’s Register by Mr. Doering indicated that, “Lending by U.S. agricultural banks to farmers and ranchers in Iowa and other Corn Belt states increased by 15.6 percent, or $4.8 billion, to $35.6 billion in 2012, according to an industry report, as the rural economy shook off the impact from last year’s drought.

“The American Bankers Association’s annual Farm Bank Performance report found that agriculture remains strong, and the outlook going forward is ‘favorable.’ In the United States, overall loans increased by $10 billion, or 13.9 percent, to $81.8 billion at the end of 2012.”

Meanwhile, Carl Zulauf and Nick Rettig indicated on Friday at the farmdoc daily blog (“Comparing Current and 1970 Farm Prosperity: Crop Prices”) that, “It is common to hear references to the farm prosperity of the 1970s during the current period of farm prosperity. Therefore, this post is the first of a series that will examine various aspects of these two periods of U.S. farm prosperity. The series starts with U.S. crop prices since both periods are clearly associated with large increases in U.S. crop prices.”

After additional detailed analysis, the update noted that, “The different time paths suggest caution in using the 1970 period of farm prosperity as a guide to understanding the current period of farm prosperity. This does not mean that the current period of farm prosperity will continue forever. Economic incentives, behavior, and analysis all suggest that such will not be the case. But, by the same token, the current period has already taken a different path and thus may continue to take a different path. In particular, this post has pointed out that the timing of the increases in crop prices and the role of general price inflation are different.”

Dan Piller reported on Friday at The Des Moines Register Online that, “The U.S. Department of Agriculture said Friday that the number of cattle on the nation’s commercial feedlots was 7 percent below this date last year, a further indication of tight cattle supplies.

“The number of cattle going out of feedlots is down 7 percent as well, the USDA said.”

With respect to trade issues, AP writers Desmond Butler and Don Melvin reported on Saturday that, “President Barack Obama used Washington’s grandest stage — the State of the Union speech — to announce negotiations with Europe aimed at creating the world’s largest free trade agreement. Just weeks later, there are signs that old agriculture disputes could be deal-killers.

European Union leaders don’t want the negotiations to include discussions on their restrictions on genetically modified crops and other regulations that keep U.S. farm products out of Europe. But Obama says it’s hard to imagine an agreement that doesn’t address those issues. Powerful U.S. agricultural lobbies will do their best to make sure Congress rejects any pact that fails to address the restrictions.”

 

Biofuels

Bloomberg writer Mario Parker reported on Friday that, “U.S. Senator Ron Wyden asked the Environmental Protection Agency for data that would explain recent volatility in ethanol Renewable Identification Numbers.

“The value of RINs, certificates used by refiners and the EPA to show compliance with government biofuel mandates, reached a record $1.06 on March 8 from 7.1 cents on Jan. 7, data compiled by Bloomberg show.

Petroleum interests and ethanol proponents have been battling over the reason for the surge in prices and its effect on the cost of gasoline at filling stations. The credits are a mechanism of the Renewable Fuels Standard, a 2007 energy law that calls for an escalating amount of biofuel consumption.”

 

Immigration

Kate Nocera reported yesterday at Politico that, “Despite leaving Washington without a final deal on immigration reform, Sen. Chuck Schumer on Sunday continued to strike a positive note and said the Gang of Eight was ‘very, very close’ to finishing their work.

“The bipartisan group remains in regular contact, Schumer said, and its members were working on ‘drafting most of the legislative language’ right now.

“On Friday, the senators had appeared to be on the cusp of a deal, but a major sticking point remained: the details of a new visa program for low-skilled workers. A fight between labor and Big Business interests erupted over the program, delaying a final agreement.”

Keith Good

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