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Farm Bill; Ag Economy; EPA; and, Biotech

Farm Bill

Sen. Heidi Heitkamp (D., N.D.), who chairs the Senate Agriculture Subcommittee on Jobs, Rural Economic Growth and Energy Innovation, indicated in a column yesterday at The Dickinson Press (N.D.) Online that, “This week, I am working with other members of the Senate Agriculture Committee to draft a five-year farm bill…[T]he farm bill I am working to draft will provide growers with the support they need to survive the tough years and thrive in the good ones. Specifically, the Senate draft of the farm bill authorizes a new commodity program called Agricultural Risk Coverage (ARC).”

Sen. Heitkamp explained that, “This program will kick in when farmers lose money — from either yield losses or price collapse — to provide modest payments to help cover some of the losses they experience. It utilizes a market-oriented approach to adjust support when prices are high to keep pace with increased costs in inputs. It will also track with the market and pay growers on historical production to prevent the policy from influencing planting decisions. ARC will work in concert with the Federal Crop Insurance Program to allow growers to mitigate the variety of risks they face each year.

“As the risks pile up for American growers, it is critical our nation strengthens its commitment to a strong domestic agricultural economy. American farmers are some of the most efficient and productive farmers in the world, which is why the American agricultural system is the envy of the world. But in order for that to remain the case, we need to continue to make modest investments to the farm safety net to support farmers in North Dakota and throughout the country.”

House Ag. Comm. Member Doug LaMalfa (R., Calif.) noted yesterday at The Record Searchlight (Redding, Calif.) Online that, “A hot topic when I campaigned for this office was the federal Farm Bill and the need for major reform of this program. I’ve lived it as a family farmer, which makes me uniquely suited to undertake this difficult task. Few members of Congress have a first-hand understanding of how Farm Bill policies impact on-the-ground agriculture, how we can save billions through meaningful reform and how important modern agriculture policy is to our economy. In order to support a federal Farm Bill, I believe that it must contain three key components: the elimination of direct subsidy payments, major reform of food stamp programs and an overall reduction in spending.”

Rep. LaMalfa indicated that, “Over 80 percent of Farm Bill spending is actually on the Supplemental Nutrition Assistance Program, generally known as food stamps. While we must help those in need, the success of the food stamp program should be measured by how many are able to transition from this government assistance, not how many are added to the rolls. A first step toward this goal is to eliminate the bizarre spending on advertising and recruitment of more recipients and instead ensure that they comply with work and work-training requirements, essentially helping them become self-sufficient.”

(Note: For more on USDA outreach funding and the SNAP program, see this FarmPolicy.com update from March 16 that included a video replay of a brief floor discussion on this issue with Rep. Diane Black (R., Tenn.) and House Ag. Comm. Chairman Frank Lucas (R., Okla.)).

Bartholomew Sullivan reported on Saturday at The Commercial Appeal (Memphis, Tenn.) Online that, “The farm bill proposals go before committees in which the Mid-South is well-represented. The House Agriculture Committee, for example has members Stephen Fincher and Scott DesJarlais, both R-Tenn., and Rick Crawford, R-Ark., whose district includes the state’s entire Mississippi riverfront. Sen. Thad Cochran is the lead Republican on the Senate Agriculture Committee which also includes John Boozman, R-Ark.

“‘The farm bill is still a work in progress,’ Cochran said last week. ‘I am hopeful it will benefit agriculture specifically and help improve our economy generally.’ Along the same line, Fincher said he’d been button-holed by Speaker John Boehner about some milk provisions in the bill, adding, ‘a lot of people are moving a lot of pieces around.’”

Mr. Sullivan pointed out that, “The Cordova-based National Cotton Council of America is again backing a shallow loss crop insurance measure for cotton alone that it says would provide the necessary safety net for its farmers while not violating its obligations under international trade agreements. The Stacked Income Protection Plan (known as Stax) would, as the name implies, supplement revenue insurance with an 80 percent premium subsidy paid by taxpayers but would replace cotton’s direct and counter-cyclical program to which Brazil, among others, has objected over the years.

“America’s cotton industry lost a trade dispute with Brazil over allegations U.S. agriculture subsidies created an incentive to overproduce and thus lower world prices for Third World countries, including subsistence farmers in West Africa. The new head of the World Trade Organization, selected last week with support from those developing countries, was Brazil’s ambassador to the WTO, Roberto Azevedo. He was the Brazilian trade official in Geneva who helped win the first major concessions by a developing country against American crop subsidies.”

The Commercial Appeal article noted that, “‘The only thing that was WTO-compliant was direct payments, which are going away, and so we’re ending up with crop insurance,’ [Rep. Fincher]. ‘From what I’m gathering (with crop insurance and Stax), we may be able to go forward and put this to bed.’”

(Note: In a related item regarding the WTO, The Wall Street Journal editorial board indicated today that, “Yet [Roberto Azevedo] won that support in large part by helping to scuttle the Doha round of free-trade talks.  Mr. Azevedo was Brazil’s chief Doha negotiator, and opposition to freer trade in manufacturing by Brazil, India, South Africa and other emerging economic powers made a worthwhile Doha deal impossible. It’s now moribund….The result has been that the WTO is increasingly a bystander as the world’s economic powers ignore the global talks and pursue their own bilateral and regional trade pacts. The most important trade diplomacy today is taking place within the trans-Pacific and Europe-U.S. negotiations.”)

Meanwhile, Ron Smith reported on Saturday at the Southwest Farm Press Online that, “As the Agriculture Committees in both the U.S. House of Representatives and the U.S. Senate prepare to mark up farm bill proposals next week, farmers and the commodity organizations that support them will watch closely to see where cuts are proposed, how deep those cuts are and what kind of safety net will be left after all the slicing and dicing is accomplished.

Crop insurance will be top of mind as the industry assesses the importance of what has become the key element of the farm safety net.”

Also, The Washington Post editorial board noted today that, “Among the more laudable ideas in President Obama’s budget for fiscal 2014 is a plan to modernize and reform the $1.5 billion U.S. food aid program. Mr. Obama would end ‘monetization,’ the inefficient practice whereby the federal government buys commodities from U.S. farmers and ships them abroad (on U.S.-flagged vessels) to governments and nongovernmental organizations — which sell them and use the proceeds for development projects. Monetization raises costs for U.S. taxpayers while displacing goods produced by farmers overseas.”

The Post added that, “Among the many points [USAID Administrator Rajiv Shah] makes are that food aid shipments have declined by 64 percent in the last decade anyway, so it’s a bit late for farmers and merchant mariners to be claiming that they can’t survive without them. In fact, farmers are prospering as never before, thanks in part to commercial exports.

“As for the merchant marine, the number of U.S.-flagged ships has been in steady decline for decades, yet the U.S. military managed to prosecute several wars overseas. If we need sealift for national security, it would be more transparent to subsidize that directly.”

And with respect to legislative action by the Senate and House on the Farm Bill, Jerry Hagstrom reported yesterday at National Journal Online that, “The reason the bills are moving seems to be that each chamber has gotten tired of the farm bill hanging on and has something more interesting to move on to. Reid has told the Senate that he wants the farm bill passed in May because he wants to devote June to immigration reform. Since exit polls showed that President Obama’s election percentage in rural America went from 50 percent in 2008 to 41 percent in 2012, while Hispanic voters have become the new hope of the Democratic Party, it seems that [Sen. Majority Leader Harry Reid] has a logical reason to get the farm bill done quickly and move on to something that interests more Democratic voters. Agricultural employers will encourage this movement, too, since they are promoting provisions for immigrant farm workers and meat-company employees that are included in the immigration-reform bill.

House Republicans want to move on to the periodic reauthorization of the Commodity Futures Trading Commission, and the House Agriculture Committee has to do it. Most of the futures industry today is financial, but the commission, which regulates the industry, falls under the jurisdiction of the Agriculture committees because the exchanges that engage in financial futures started out trading in agricultural commodities and minerals.”

Mr. Hagstrom noted that, “It did not seem to be a coincidence that last Thursday, when [House Ag. Com. Chairman Frank Lucas] scheduled the House panel’s farm-bill markup for Wednesday, he also announced that the committee will hold the first of a series of CFTC reauthorization hearings on May 21.”

 

Agricultural Economy- WASDE Update, Farmland Values

Gregory Meyer reported on Friday at The Financial Times Online that, “US farmers will overcome soggy planting conditions to grow their largest corn crop on record, the government said in a report that knocked buoyant grain markets.

“The US Department of Agriculture forecast the nation’s corn haul at 14.1bn bushels, 31 per cent higher than last year’s drought-stressed harvest.

“The price of yellow corn used in animal feed, ethanol fuel and processed food has hovered near historic highs this spring as steady rain kept farmers indoors. This delayed planting and raised worries that stalks would enter their fragile pollination stage when summer heat is at its most damaging. As a result, the USDA tempered its estimate of how much average corn fields would yield to 158 bushels per acre, 5.6 bushels less than its previous projection.”

The FT article noted that, “CBOT December corn futures, which will contain supplies from this year’s harvest, fell 2.3 per cent to $5.29 a bushel Friday. The USDA predicted farmers will be paid an average $4.70 per bushel for their crop, down more than $2 from this year.”

Reuters writer Charles Abbott reported on Friday that, “Record-large U.S. corn and soybean crops will end three years of punishingly tight domestic supplies, the government said on Friday in a report that offered the brightest outlook in years for world food supplies.

“One year after a brutal Midwest drought revived fears of grain shortages and higher prices, the U.S. Agriculture Department projected the largest-ever global wheat, corn, rice and oilseed crops in its first projections for the 2013/14 crop year. Global grain stocks would rise more than analysts expected, with corn zooming 23 percent to a 13-year high, it said.”

Mr. Abbott noted that, “The forecasts tipped Chicago grain prices lower, but losses were limited by concerns that conditions may change dramatically in the five months before the crops are in the bin. July weather conditions are critical for U.S. crops. A cold, rainy and snowy spring has farmers weeks behind in sowing corn.”

For a broad-based look at historic corn production variables, click on this graph, while a similar soybean graph is available here.

Owen Fletcher reported on Friday at The Wall Street Journal Online that, “The USDA said the expected large corn harvest likely would result in significant declines in the prices farmers would receive for their crops. The government projected a season-average farm price for this coming harvest of $4.30 to $5.10 a bushel, down sharply from the record of $6.70 to $7.10 a bushel for corn harvested last fall.”

“As of Sunday, only 12% of the nation’s corn crop had been planted, the lowest level for that point in the year since 1984. But forecasts this week showing drier weather in much of the Midwest have eased fears about planting delays. Farmers in many states are expected to have a window this weekend and next week in which to sow crops,” the Journal item said.

Christopher Doering reported on Friday at The Des Moines Register Online that, “The monster crops bode well for consumers, as well as livestock and ethanol producers who suffered through the 2012 drought, the worst since the Dust Bowl of the 1930s.

Ethanol plants last year were forced to scale back production of the corn-based fuel or shutter facilities altogether. Rather than pay higher feed costs, livestock producers reduced their herds — resulting in a short-term meat glut but lower stockpiles today. The public is still feeling the pinch at the supermarket, with higher prices for everything from beef and pork to eggs and milk.”

Also Friday, AP writer Roxana Hegeman reported that, “The winter wheat crop is expected to be far smaller this season compared to last, particularly for hard red varieties used in bread, the U.S. Department of Agriculture reported Friday.

“In the first government projection on the harvest’s anticipated size, the National Agricultural Statistics Service estimated winter wheat production will be down 10 percent to 1.49 billion bushels, due to fewer acres – 32.7 million acres, some 6 percent fewer acres than a year ago – and a 1.8-bushel decrease in average yields, to 45.4 bushels per acre.”

Agricultural related tweets, which included photos, showed planting in Illinoishere (May 11) and here (May 12), Ohio (May 11), South Dakota (May 11), and Missouri (May 12).

More broadly, the Food and Agriculture Organization of the United Nations indicated late last week that, “Strong growth is expected for global wheat, coarse grains and rice production in 2013, according to early forecasts published in the May issue of FAO’s monthly Cereals Supply and Demand Brief.”

Meanwhile, Nin-Hai Tseng reported on Friday at CNNMoney Online that, “Then there’s apparently a new bubble that few have ever heard about: America’s farmlands.”

The article stated that, “True there’s some bubbly behavior going on, but that doesn’t mean the market for farmlands has entered bubble territory, at least according to Yale University economist Robert Shiller, who first warned of a housing bubble back in 2003.

“The most obvious sign: Nobody has ever really heard about it, Shiller wrote in 2011 in Project Syndicate, an online opinion forum featuring leading economists.

“Even if prices went belly up, it likely won’t cause nearly the kind of financial havoc that subprime loans did onto the housing market and the nation’s financial system. As Shiller points out, the market for farmlands isn’t nearly as big as the housing market or stock market, for that matter. Whereas farmland had a total value of $1.8 trillion in 2010, the U.S. stock market’s value was $16.5 trillion, and the housing market was $16.6 trillion.”

Betsy Simon reported late last week at the Grand Forks Herald (N.D.) Online that, “North Dakota is almost 90 percent farm and ranch land, which rose in price, on average, a little more than 57 percent from 2007 to 2012, according to the results of a land valuation model for an ag real estate assessment conducted last year by North Dakota State University’s Department of Agribusiness and Applied Economics in Fargo.

“The report indicates that between 2011 and 2012, farmland values in southwest North Dakota counties increased by an average of 20 to 30 percent.”

 

Environmental Protection Agency (EPA)

Zack Colman reported on Friday at The Hill’s Energy Blog that, “Democrats will try to advance Environmental Protection Agency (EPA) nominee Gina McCarthy to the full Senate again next week after a GOP boycott thwarted attempts to do so Thursday.”

 

Biotech

Andrew Pollack reported in Saturday’s New York Times that, “Genetically engineered crops that could sharply increase the use of two powerful herbicides are now unlikely to reach the market until at least 2015 because the Department of Agriculture has decided to subject the crops to more stringent environmental reviews than it had originally intended.

“The department said on Friday that it had made the decision after determining that approval of the crops ‘may significantly affect the quality of the human environment.’”

The American Soybean Association issued a news release on Friday regarding this development.

Also on Friday, an update at the Center for Food Safety Online stated that, “[T]he Vermont House has voted 107-37 in support of legislation that would require foods that are genetically engineered (GE) to be labeled. This is the first-ever State House to pass a bill that would require that all GE foods to be labeled.”

Keith Good