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Farm Bill; and the Ag Economy

Farm Bill

A floor schedule update posted recently at the Senate Democrats webpage indicated that, “The Senate stands in adjournment until 2:00pm on Monday, May 20, 2013.  Following any Leader remarks, the Senate will be in a period of morning business until 3:00pm.

“Following morning business, the Senate will proceed to the consideration of S.954, the Farm bill.”

And the Congressional Budget Office on Friday released its cost estimate of the Senate Ag Committee based legislation, which can be viewed here, “S. 954, Agriculture Reform and Risk Management Act of 2013.”

Also on Friday, The Mississippi Business Journal Blog reported that, “Politics, agriculture, and the economy were the hot topics on a rainy Delta morning as hundreds gathered for the 78th annual meeting of Delta Council, Friday, May 17, on the campus of Delta State University…[F]ollowing the business session of the annual meeting, United States Senator Thad Cochran introduced United States Senator from Michigan and Chairwoman of the Senate Committee on Agriculture, Forestry and Nutrition Debbie Stabenow as the featured speaker.”

Friday’s update noted that, “‘We passed a Farm Bill last year with a broad, bipartisan vote – in the middle of an election year, no less,’ said Stabenow. ‘Unfortunately, the House did not take up the Farm Bill on the floor and the 2008 Farm Bill expired on September 30. This was unacceptable to us, as was the partial extension that was added to the fiscal cliff deal on January 1st of this year, which left out many key programs, including disaster assistance. So when Senator Cochran and I sat down at the beginning of this year, I told him I wanted to build on our successes from last year and give America’s farmers the Farm Bill they deserve. We had made great progress, and we knew that, together, we could make even more. Together, we worked to craft another strong Farm Bill that gives farmers the ability to manage their risk; that streamlines programs and cuts red tape for farmers; and that recognizes the diversity of agriculture from the cotton fields in the Mississippi Delta to the cherry orchards of Traverse City in northern Michigan.’

“Stabenow thanked Senator Cochran for his leadership, noting that writing a Farm Bill that works for every region of the country can be challenging. ‘I’m glad Senator Cochran joined the leadership team and helped build the Southern connection we needed to make sure this bill works for everyone – that cotton, rice and peanut farmers receive the support they need to succeed.’

“The Senator cited the changes in rice farming over the past 20 years as an example. ‘The high costs of rice farming have deterred entry for new farmers, the number of rice farms has dropped by almost half, and the average rice farm size has more than doubled between 1992 and 2007. We took this and other aspects of rice and peanut farming into consideration when creating a new price program. Under the Adverse Market Protection program, which would operate very similarly to the existing counter-cyclical program, payments are made on historic base acres and decoupled from production. This way, farmers would still have the freedom to decide what and where to plant,’ she said. ‘For most crops, payments would only be made to farmers when prices drop below 55 percent of their historic rolling average. For rice and peanuts, however, there will be a fixed target price, and producers would have the opportunity to update their historic payment yields and acres. We also have included the crop insurance program designed specifically for cotton that we drafted in the 2012 Farm Bill that takes into account the unique challenges of cotton growers.’”

Pete Kasperowicz reported on Friday at The Hill’s Floor Action Blog that, “The main business of the Senate next week is the $955 billion farm bill. Senate leaders aren’t expecting to finish work on the bill next week, but it will start the process of passing the nation’s next five-year agricultural plan.

“The bill would cut $23 billion from current spending levels over 10 years, but some Republicans have noted with a similar bill last year, that this cut is from post-stimulus levels. It also cuts $4 billion in food stamps, which has led to some Democratic opposition.

Still, the Senate seems likely to pass a version of the bill passed the Senate last year in a 64-35 vote.”

With respect to Farm Bill perspective from the House, DTN Ag Policy Editor Chris Clayton reported on Friday that, “The House Agriculture Committee will face floor fights on a number of issues from both parties when the farm bill is taken up, but should be able to hold together its version of the bill for eventual negotiations with the Senate later this summer, ranking member Collin Peterson said Friday.

“Peterson, a Democrat from Minnesota, also expressed confidence the farm bill could be done before the August recess if both versions are able to get past their respective floor debates in the coming weeks. Peterson said his conversations with House Agriculture Committee Chairman Frank Lucas, R-Okla., suggest the legislation will be debated in mid-June. Floor debate begins on the Senate bill Monday afternoon.

“‘Having said that, we have challenges facing us when we get to the floor,’ Peterson said.”

Mr. Clayton pointed out that, “Peterson noted 13 of 21 Democrats on the committee voted for the bill, ‘which was better than I thought.’ Peterson said it showed there is ability to get Democratic votes despite $20.5 billion in cuts to the Supplemental Nutrition Assistance Program.

“In the coming weeks, Peterson said he, Lucas and others will be talking with House leaders about how to manage the floor debate. Peterson said without restrictions on amendments, the floor debate will become too unwieldy to manage.

“Peterson still sees significant battles on the floor, starting with nutrition programs and cuts.”

In the telenews conference with reporters on Friday, Rep. Peterson stated: “That’s a tricky thing because you have some Democrats that have taken a position, which I think is not defensible, that SNAP can’t be cut one penny.  I think that’s a ridiculous position.  You’ve got people on the other side that want $130 billion of cuts, and that’s ridiculous.”

Noting that without administration opposition to the Farm Bill, and no veto override vote to plan for, Rep. Peterson stated that only 218 votes were needed in the House to pass the measure; he added that, “We don’t expect…you know, [Speaker] Boehner is not going to be for this bill.  [Majority Leader] Cantor, I would be surprised if he is.  But I think Kevin McCarthy probably will be for the bill, who’s the whip, so I expect, at the end of the day, there will be some help on their side, and there will help on our side.  Leader Pelosi is behind us.  I’ve been talking to her.  She will be supporting what we’re doing.”

On the crop insurance issue, Rep. Peterson noted that, “I’ve been looking into the flood insurance situation.  Flood insurance is being subsidized roughly the same amount as crop insurance, so if we’re going to have this discussion and they want to reduce government subsidy in crop insurance, then I would argue we ought to be looking at flood insurance as well, because I think there’s more reason for the government to be behind crop insurance than there is flood insurance, because crop insurance supports the food production system, which is a national security issue, and has much bigger implications than whether you’re going to build a mansion on the Outer Banks that gets wiped out every other year and why the government should subsidize that.  So that’s where, when we get to this discussion, that’s where I think it should be focused.”

A reporter asked Rep. Peterson on Friday: “Congressman, the conservation compliance tie-in with crop insurance in the Senate, on the House Ag Committee bill, how do you see that issue coming together as we get to the floor and ultimately into conference?

“Rep. Peterson:  Well, that will be a fight.  The chairman feels strongly about this.  I supported him.  So the position of the committee is to not tie the two together.  There will be an amendment on this on the floor.  This will be a tough fight.  We may not win.  But we’ll deal with what comes out of the situation.”

Beyond crop insurance issues, Rep. Peterson pointed out that, “We’re going to have challenges in certain areas on the floor.  The dairy issue will be a contentious issue.  There will be a vote on sugar, which will also be contentious.  There will be other issues in other areas, so it’s not going to be easy…And it looks like the Senate is on track to get their bill moved.  And at the end of the day, this bill is going to be written in conference, and we just need to figure out how to get this to conference.  That’s the trick.”

Eric Wasson reported on Friday at The Hill’s On the Money Blog that, “Pelosi’s office clarified Friday that the minority leader supports moving forward on a farm bill, but has not weighed in on the substance of the Agriculture Committee bill.

“‘As Ranking Member Peterson stated today, Leader Pelosi is supportive of getting a five year farm bill reauthorized. She is hopeful that the Republican leadership will bring the committee-passed bill to the floor under an open rule so that Members will have an opportunity to weigh in.  Sixteen million jobs are on the line, including 800,000 jobs in California,’ spokesman Drew Hammill said.”

Ted Booker reported on Friday at the Watertown Daily Times (N.Y.) Online that, “The new margin insurance program [for dairy producers] is expected to be hotly contested in the House, even though it is included in versions of the farm bill passed by committee, according to U.S. Rep. William L. Owens, D-Plattsburgh [N.Y.] The free, voluntary insurance program is designed to help dairy farmers combat low milk prices and high feed costs. It would reimburse farmers when the difference between their costs and milk prices surpasses a certain threshold.”

The article noted that, “Because the Dairy Freedom Act [an alternative dairy proposal] is supported by House Speaker John A. Boehner, Mr. Owens said, it has a strong chance of being approved on the floor. If that happens, he said, the fight over that policy would then be waged between the House and Senate before a final bill is sent to the president.”

To listen to remarks on the dairy issue by Rep. Peterson from Wednesday’s Ag Committee markup of the Farm Bill, just click here (MP3- 6:00).

In executive branch perspective on Farm Bill issues, on Thursday’s AgriTalk radio program with Mike Adams, Sec. of Agriculture Tom Vilsack noted that, “I think frankly, at the end of the day, it isn’t going to be target prices that is the most difficult hurdle to cross here.  I think it’s going to be the dairy program that absolutely needs to be done.  We have too much volatility in dairy prices.  It’s not stable.  I think Rep. Peterson has taken a good shot at trying to resolve the volatility issue.  I think he’s got some challenges with the speaker of the house on the supply side piece of it.

But at the end of the day, he’s right that you can’t have a program that just opens up the checkbook.  There has to be some constraint and restraint on that.  But at the same time you need a system that provides better assistance and help for dairy producers when prices are low or feed costs are high.”

Also last week, Bloomberg writers Eric Martin and Alan Bjerga reported that, “U.S. House and Senate agriculture committee proposals for a new farm law represent a ‘good faith’ effort by lawmakers to resolve a trade dispute over cotton with Brazil, U.S. Agriculture Secretary Tom Vilsack said.

“The proposals passed this week may modify farm subsidies enough to satisfy the South American nation, Vilsack said today in an interview in Mexico City. The U.S. competes with Brazil in exporting grain, soybeans, beef and cotton.

“‘We would not intentionally pass legislation with the knowledge or awareness that it was going to invite a series of challenges,’ Vilsack said after a meeting with Enrique Martinez, Mexico’s agriculture minister. Farm-bill subsidy plans, which emphasize crop insurance over price-pegged supports, represent ‘a real good-faith effort to resolve that issue with Brazil and to get it finished once and for all,’ Vilsack said.”

Also on the Farm Bill, David Rogers reported on Friday that, “Pigs, chickens, the U.S. Constitution — and a dose of olive oil — all got thrown together in a House farm bill markup that took a remarkable turn from the barnyard to the judicial bench late Wednesday night.

“‘I’m one of these country lawyers, which is no lawyer at all,’ Rep. Jim Costa (D-Calif.) was candid to say at the outset. But that didn’t stop him or most of the House Agriculture Committee from plunging into an hour-long debate on the constitutional fine points of the interstate commerce clause and state laws excluding eggs or meat that don’t meet local production standards.”

(Note that at a FarmPolicy.com transcript of the full debate from Wednesday on this issue is available here).

Mr. Rogers added that, “Before the dust settled, the committee had adopted a far-reaching amendment that infuriated animal welfare groups, delighted the pork and beef lobbies and broke more than a few eggs. Where it goes next in the context of the larger farm bill debate, no one truly knows. But scores of state laws could be impacted and it surely reaches well beyond its initial target: sunny California.

Most simply the language would bar any state from excluding the marketing of ‘agricultural products’ if they have been grown in a manner ‘pursuant’ to federal law and the laws of the state or locality from which they come.

“Proponents argue that this is needed to allow the free flow of farm commerce across state lines. But for animal welfare groups, it’s a huge Catch 22, since the same committee continues to resist any new federal standards for raising livestock — preferring to leave the issue to farmers and individual states.”

And Ron Nixon reported in Saturday’s New York Times that, “In response to the Obama administration’s plans to overhaul the nation’s international food aid program, which provides food to disaster-stricken regions, Congress this week began laying the groundwork for its own changes.

“Farm bills passed this week by the House and Senate Agriculture Committees do not go as far as the Obama administration’s proposal, which would move the $1.4 billion program from the budget of the Agriculture Department to the foreign affairs budget in an effort to speed delivery and cut costs. The bills reauthorized the food aid program and left it largely intact, in the agriculture budget.”

Mr. Nixon indicated that, “Senator Debbie Stabenow, Democrat of Michigan and the chairwoman of the Senate Agriculture Committee, said she had had conversations with the Obama administration about changes to the food aid program.

“‘We chose to keep it in the Agriculture Department, but give it more flexibility,’ she said in a conference call with reporters on Thursday. ‘I think it’s a big step forward, and it had bipartisan support.’

Tamara Hinton, a spokeswoman for the House Agriculture Committee, said there was also widespread support among members of the committee for keeping food aid in the farm bill.”

Meanwhile, University of Illinois Agricultural Economist Nick Paulson noted on Thursday at the farmdoc daily blog (“A Farm Bill Update: More Changes to Commodity Programs”) that, “After creating a one-year extension to the 2008 Farm Bill in the midst of larger budget issues at the end of last year, Congress has resumed the Farm Bill process. Both the Senate and House Ag Committees have released 2013 Farm Bill markups (see Senate version here; House version here). Both the Senate and House drafts are similar to the versions passed by the full Senate and House Ag Committee in 2012 (see previous posts from Carl Zulauf summarizing those here and here) in that the majority of existing commodity programs (direct, countercyclical, ACRE, and SURE programs) are repealed to achieve spending reductions. However, there have been some slight changes to the programs created to replace those being repealed, particularly in the new version from the Senate. Today’s post provides a summary of some of those commodity program changes. Discussion of continued changes in other titles, such as Crop Insurance, and the budget implications will be saved for future posts.”

 

Agricultural Economy

Michael Birnbaum reported in Saturday’s Washington Post that, “Many Europeans see American farming and its reliance on genetically modified crops as more Frankenstein than Farmer in the Dell.

“Now, the opposition here [Lennewitz, Germany] to U.S. agricultural practices is threatening to become a major battle in discussions starting next month that could sweep away trade barriers between the United States and Europe.”

The Post article noted that, “Many here worry that a trade pact would ease regulations that have made it difficult for genetically modified crops and products to reach European shores. Genetically modified crops are broadly unpopular in Europe, and farmers and environmentalists fear that if trade restrictions are lowered, both genetically modified seeds and U.S.-grown genetically modified products would quickly take over European farmland and grocery stores.

“Some farmers are hoping to stop the talks if rules that govern their work are thrown into the mix, and they are determined to keep U.S. industrial farming an ocean’s-length away.”

Michael Wines reported in today’s New York Times that, “The land, known as Section 35, sits atop the High Plains Aquifer, a waterlogged jumble of sand, clay and gravel that begins beneath Wyoming and South Dakota and stretches clear to the Texas Panhandle. The aquifer’s northern reaches still hold enough water in many places to last hundreds of years. But as one heads south, it is increasingly tapped out, drained by ever more intensive farming and, lately, by drought.

“Vast stretches of Texas farmland lying over the aquifer no longer support irrigation. In west-central Kansas, up to a fifth of the irrigated farmland along a 100-mile swath of the aquifer has already gone dry. In many other places, there no longer is enough water to supply farmers’ peak needs during Kansas’ scorching summers.

“And when the groundwater runs out, it is gone for good. Refilling the aquifer would require hundreds, if not thousands, of years of rains.”

And on Friday, Reuters writer Sam Nelson penned an article titled, “U.S. farmers dodge showers to plant corn at breakneck pace.”

Keith Good