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Farm Bill; Appropriations Hearing; Ag Economy; and, EPA

Farm Bill Developments

David Rogers reported yesterday at Politico that, “A new drafted Farm Bill, released by the Senate Agriculture Committee late Thursday [full draft, summary], reflects concessions to powerful pork and beef lobbies as well as an effort to secure Southern Republican votes with target prices for rice and peanut producers.

“The Midwest Corn Belt would retain its costly new Agricultural Risk Coverage program—which was the mainstay of the commodity title approved last summer by the Senate in the last Congress. But the ARC payments have been trimmed back modestly and more importantly, the standard index changed from a five-month average market price to the 12-month average.

“This should reduce the costs to the government based on a typical marketing year. But even more importantly, it will also push ARC payments into the next fiscal year since the average 12-month marketing price for corn, for example, won’t be known until past Sept 30.”

Mr. Rogers explained that, “In the case of the commodity title, the big new Southern element is an ‘adverse market payment’ program giving rice and peanuts the target price protection they have wanted. For rice it will be $13.30 per hundred weight and for peanuts $523.77 per ton. Both would have the option to update their yields but any future countercyclical payments will be calculated on 85 percent of base or historical acres for a farm.

“Southern producers would have preferred to be free to operate based on their planted acres, but this was a compromise insisted upon by Midwest critics who argue that the target prices will drive planting decisions unless some cap is set.”

The Politico article noted that, “At the same time, [Sen. Ag. Comm. Chairwoman Debbie Stabenow (D., Mich.)] admitted her own frustration with the outcome of a behind-the-scenes fight over proposed new egg-production standards, important to producers in her state.

“The legislation has the strong backing from the Georgia-based United Egg Producers, the leading industry trade group which last year reached a compromise with the Humane Society after a rancorous set of battles at the state level. And in Michigan’s case, it promises some for egg producers, faced with stricter cage-size and production rules enacted at the state level.

“But when Stabenow’s staff told pork and beef cattle lobbies of her intent, it provoked such a firestorm that it threatened the entire farm bill. It’s been known for days that the draft bill would not include the egg language, but Thursday, Stabenow told POLITICO that she won’t even attempt to offer an amendment in the markup.”

Mr. Rogers added that, “And Chad Gregory, president of UEP, said he had been stunned by the fierce reaction from the meat lobbies as well as their power [see a related statement from Mr. Gregory in yesterday’s FarmPolicy.com update].

“Both [Mr. Gregory] and the Humane Society said they now look for other legislative paths to pursue. ‘We are committed to getting this done, it is a common sense solution,’ said Michael Markarian, a chief program officer at the society.”

DTN Ag Policy Editor Chris Clayton reported yesterday on the Senate Farm Bill draft and pointed out that, “Senators also not only ensure crop insurance is protected from cuts, but they propose several new policies to broaden crop insurance with a variety of new programs for different agriculture sectors. The bill encourages USDA to study and create whole-farm coverage for farmers that would have a $1.5 million liability cap. Another provision would ensure organic producers are paid the market price for organic crops in policies. Catfish producers could become eligible for margin coverage to protect against losses. Another policy would be for poultry producers in cases of catastrophic diseases.

“Yet another pilot program would create a federally subsidized ‘index-based weather insurance’ program. Farmers and ranchers would receive 60% premium assistance for buying such coverage.”

The DTN article noted that, “For cotton producers, the bill keeps the Stacked Income Protection for Cotton, or STAX. Under STAX, USDA would pay 80% of the premiums. The bill also would include a new crop-insurance coverage for peanut producers.

“In commodity programs, the Senate bill would still stick with the Agricultural Risk Coverage proposal as the basis for its commodity title. Those provisions are much the same as last year’s Senate proposal. Farmers would make a one-time election to choose to be enrolled in ARC, as well as whether to enroll in individual coverage or county coverage. For individual coverage, 65% of planted acres could be covered. For county coverage, 80% of planted acres could be covered. Also, farmers enrolled in the program could receive payments for 45% of eligible acres.”

In addition, Mr. Clayton stated that, “The bill also maintains the Supplemental Coverage Option in the crop-insurance title of the farm bill. The program allows farmers to buy a county-based average yield insurance that would supplement their individual insurance policy. To squeeze more savings out of the bill, the Senate bill trims back the premium level that would be paid by taxpayers to 65% of the coverage cost. Last year’s bill set the taxpayer subsidy at 70%.

“For producers who enroll in ARC, the deductible for the SCO plan would be 22% of the value of the crop. For all other producers, the deductible would be 10% of the crop value.”

Yesterday’s article also pointed out that, “While farm and conservation groups came together to announce a deal on conservation compliance and eliminating means testing for crop insurance, the chairman’s mark doesn’t include that language. The bill would extend conservation compliance to crop insurance and require anyone who buys crop insurance to have a conservation plan by the end of the farm bill. The mark also keeps the amendment added on the Senate floor last year capping premium subsidies for producers with adjusted gross incomes higher than $750,000. The bill does require a study to determine the effects of that provision.

“On sod busting, the Senate bill wouldn’t eliminate crop insurance for farmers putting virgin land into production, but the proposal would limit assistance to 65% of the transitional yield and reduce the premium subsidy by 50% as well.”

Also with respect to Farm Bill commodity title issues, Agricultural Economists Carl Zulauf (Ohio State) and Gary Schnitkey (University of Illinois) penned an update yesterday at the farmdoc daily blog titled, “Payments by U.S. Farm Safety Net Program: Differences by Crop.”

Erik Wasson reported yesterday at The Hill’s On the Money Blog that, “The Stabenow draft saves $16 billion from commodity programs by repealing direct payments, counter-cyclical payments and Average Crop Revenue Election Program and replacing them with expanded crop insurance.

“Stabenow has included also some changes to farm subsidies to enhance payments to rice and peanut growers in ways that resemble the House approach last year. These growers—important constituents of new committee Ranking Member Sen. Thad Cochran (R-Miss.)–will receive more generous target-price based supports.”

In a statement yesterday, Iowa GOP Senator Chuck Grassley indicated in part that, “I appreciate Chairwoman Stabenow’s continued commitment to farm program payments reform…I was also pleased to see Congressman Fortenberry introduce companion legislation to my payment limits reform bill in the House today.  As the House Agriculture Committee considers a farm bill it would send a strong message if the House included the common sense and meaningful payment limit reforms in Congressman Fortenberry’s bill and that Senator Stabenow has included in her mark.”

Matt Kelley, in an update yesterday at Iowa Radio Online, quoted Sen. Tom Harkin (D., Iowa) with respect to the Senate draft: “‘I’m very happy about the conservation provisions in it, the conservation compliance provisions, the fresh fruit and vegetable program that we have in there, so I think our bill looks pretty good,’ Harkin says. ‘I hope we can get it through.’”

Also on the conservation issue, an update yesterday at the National Sustainable Agriculture Coalition (NSAC) Blog stated that, “Today, Representative Earl Blumenauer (D-OR), along with eleven additional cosponsors, introduced a bill to improve current farm conservation programs.  The Balancing Food, Farm, and the Environment Act (H.R. 1890) aims to help farmers and ranchers improve their environmental performance and reward them for the conservation benefits they produce.”

“Senator Tom Udall (D-NM) is expected to introduce companion legislation in the Senate later today,” the NSAC update said.

And in a teleconference with reporters yesterday, Sen. Mike Johanns (R., Neb.) stated that, “Parts of the new [Senate Farm Bill draft] are just being released, and I’m carefully reviewing the information we can get. I will say, some of the changes from last year do raise flags…[W]e have a window of opportunity now in the Senate to get this bill done, but I believe that’s only going to last for a few weeks. I expect most of June will be devoted to debate on immigration reform, so it is my hope that we move the farm bill forward in a very timely manner…”

Meanwhile, Reuters writer Charles Abbott reported yesterday that, “The Senate Agriculture Committee is scheduled to start drafting its bill on Tuesday, with its House panel likely to follow on Wednesday. ‘On food stamps, they’re going to be 10 miles apart,’ said a farm lobbyist.”

“In the House, Massachusetts Democrat Jim McGovern has sponsored a resolution opposing against food stamp cuts. As of Wednesday, it had 115 sponsors, all Democrats,” the Reuters article said.

The National Farmers Union, National Association of Wheat Growers, American Soybean Association,and National Milk Producers Federation released updates relating to the Senate draft bill yesterday.

Also, House Agriculture Committee Chairman Frank Lucas (R., Okla.) and Ranking Member Collin Peterson (D., Minn.) were guests on yesterday’s AgriTalk radio program with Mike Adams, where the discussion focused on Farm Bill issues.

A FarmPolicy.com transcript of yesterday’s AgriTalk discussion is available here.

In part, Rep. Peterson noted that, “I think we’re in pretty good shape here, really. I think we’ve hit a middle ground here. By increasing the food stamp cuts, I think it’s going to help with the members on the Republican side. We still are going to have a fair number of Democrats supporting it, even with the higher food stamp cuts. And so I’m feeling pretty good that we’re going to be able to, by Frank and I sticking together, and by coming together with a kind of middle ground, that we’re going to oppose the people on the right and the people on the left that come at us, and I’m pretty optimistic we’re going to be able to hold this together pretty much the way it comes out of committee.”

On the potential differences between the Senate and House Farm Bills, Rep. Peterson indicated that, “Well, I think where the differences are we knew about and have known about. There’s going to be a significant difference in the nutrition area, but that’s been there the whole time, and that will get worked out somehow or another.  There are some differences, potentially, on the commodity title, but I think we have an ally with Mr. Cochran on what we’re doing here in the House on the commodity title, and so at the end of the day I think it’s going to look very much like what we’ve put together. And I don’t know how you can be against this if you’re for giving people the option between the price loss contract and the revenue coverage. I don’t know why anybody should get hung up about that.”

Chairman Lucas noted yesterday on AgriTalk that, “But I would tell you, just from a hot button issue, so far—and this is an issue very close to Collin’s heart—dairy has been a really lively subject, and I suspect both in committee and on the floor it will be a lively subject. We’re going to use Collin’s language as the base text language on dairy. That’s where we’ll begin on Wednesday morning. We’ll see how many amendments fly, so to speak.”

On the dairy issue, Rep. Peterson stated that, “Well, the proposal that…first of all, I don’t think there’s even a finalized version of what the alternative is going to be, but what they have put together is not workable, and it basically puts the taxpayers on the hook if things don’t work out the way they plan. This is…you know, we gave IDFA 80% of what they were looking for—forward contracting, other things they’ve been asking for for ten years. But really what they want, at the end of the day, is cheap milk, and they don’t really care how they get it. And if the taxpayers have to subsidize it in order for them to get cheap milk, they’re fine with that, but that’s bad policy.

“So what they have put together as an alternative, first of all, we don’t even know what it is, but I know enough about it to know that it’s not something that’s going to work. And frankly, from what I can tell, these people don’t care if it works or not. We’ve spent three and a half years putting something together that we know will work, and if we get an oversupply situation, the farmers end up paying for it. The ones that are using the Dairy Security Act are going to end up paying for it and not the taxpayers, and we think that’s the right way to go about it.”

In a tweet yesterday, that contained a link to a video, Rep. Bob Goodlatte (R., Va.) indicated that, “#Dairy supply management is contrary to the goals of limited govt, economic growth & free markets.”

And a news release earlier this week from Rep. Jim Sensenbrenner (R., Wis.) stated that, “[Rep. Sensenbrenner] and Congressman Sean Duffy (WI-7), along with several other members of the Wisconsin delegation, sent a letter today to the House Committee on Agriculture Chairman Frank Lucas and Ranking Member Collin PetersonThe letter expresses opposition to the Dairy Market Stabilization Program (DMSP), which is included in the Dairy Security Act – part of the farm bill scheduled to be marked-up by the Committee later this month.”

Also yesterday, Bloomberg writer Isis Almeida reported that, “The U.S. doubled the amount of refined sugar exports allowed by processors to 100,000 metric tons because of expanding supplies in the domestic market.

“The increase took effect May 1 and will revert back to 50,000 tons on Jan. 1, 2015, the U.S. Department of Agriculture said in an April 30 notice on its website. U.S. sugar production will climb 5.8 percent to 8.98 million short tons (8.1 million metric tons) in the year ending Sept. 30, the USDA said April 10. Stockpiles are forecast at 2.1 million short tons, 55 percent higher than two years earlier.”

 

Senate Agriculture Appropriations Subcommittee Hearing with Sec. Vilsack

Chris Clayton reported yesterday at DTN (link requires subscription) that, “An Obama administration proposal to shift at least some U.S. foreign food aid from buying domestic commodities to direct cash purchases overseas continues to hit a wall with members of Congress.

“The chairman and ranking member of the Senate Agriculture Appropriations Subcommittee on Thursday  both expressed their displeasure with the administration proposal and said they were flat-out unwilling to go along with it.

“Under the plan, the administration would shift $1.5 billion in international food aid under the Food for Peace program from buying U.S. commodities and instead use that money to make cash purchases of food closer to regions or countries in distress. The administration argues the program shift would feed up to 4 million more people over 10 years while cutting costs by about $50 million annually, largely by eliminating shipping costs. The administration highlighted that 55% of all international food aid would still rely on U.S. commodities.”

To listen to an exchange on this issue with Subcommittee Chairman Mark Pryor (D., Ark.) and Secretary of Agriculture Tom Vilsack from yesterday’s hearing, just click here (MP3- 3:53).

Also on this issue, see this recent column  from the Chicago Tribune by Sec. Vilsack, Sec. of State John Kerry, and Rajiv Shah, the administrator of the U.S. Agency for International Development.

Crop insurance was also a topic at yesterday’s Ag Appropriations hearing as both Jerry Moran (R., Kans.)- audio replay (MP3- 2:43),  and John Hoeven (R., N.D.)- audio replay (MP3- 2:22) raised the issue with Sec. Vilsack.

And a news release yesterday from Sen. Thad Cochran (R., Miss.) stated that, [Sen. Cochran] today once again pressed the Secretary of Agriculture to explain why a catfish inspection program authorized five years ago has not been implemented.”

 

Agricultural Economy

Owen Fletcher reported in today’s Wall Street Journal that, “Heavy rains in the nation’s Corn Belt are tapering off just in time for many farmers to sow their crops, a shift that is putting a damper on corn prices…[N]ow, though, farmers are able to play catch-up. Many investors and analysts think the U.S.—the world’s biggest corn grower and exporter—will produce one of its largest harvests ever, replenishing supplies after last year’s severe drought and sending prices lower in the $46-billion corn-futures market.”

The Journal article also included this interesting graphical depiction.

Patti Domm reported earlier this week at CNBC Online that, “Just a quarter of the U.S. corn crop normally planted by this time of year is in the ground, but this could still be a bumper crop if muddy fields dry up and the weather cooperates.”

Recent agricultural related tweets, with video and photos, showed planting in Illinois- here and here, Indiana, and South Dakota; as well as significant rain in Illinois- here  and here.

A National Climatic Data Center update yesterday stated that, “According to the May 7, 2013 U.S. Drought Monitor, moderate to exceptional drought covers 48.1% of the contiguous United States, increasing from last week’s 46.9% and interrupting the recent decreasing trend.”

And Lizette Alvarez reported in today’s New York Times that, “Florida’s citrus industry is grappling with the most serious threat in its history: a bacterial disease with no cure that has infected all 32 of the state’s citrus-growing counties.”

 

EPA Issues

John M. Broder reported in today’s New York Times that, “Senate Republicans continued a campaign to delay confirmation of President Obama’s second-term cabinet nominees on Thursday, blocking a committee vote on Gina McCarthy, the president’s pick to lead the Environmental Protection Agency.”

And Ben Goad reported yesterday at The Hill’s RegWatch Blog that, “Small farmers who keep oil tanks would get a reprieve from forthcoming federal regulations intended to protect waterways against disastrous spills under a bipartisan amendment approved Thursday in the Senate.”

Keith Good