FarmPolicy

November 22, 2014

Farm Bill; Appropriations; Ag Economy; Immigration; and, Climate

Farm Bill

Yesterday, Senate Agriculture Committee Chairwoman Debbie Stabenow (D., Mich.) appeared on “NOW with Alex Wagner,” the MSNBC television program and discussed the Farm Bill.  A replay of this discussion has been posted at FarmPolicy.com Online.

With respect to a way forward on the Farm Bill, Chairwoman Stabenow indicated that: “In my judgment, I am not going to allow—I will do everything in my power to stop just a temporary continuation like was done last year.  Why?  Because all of the subsidies these guys say they want to end that they don’t support would continue under a continuation budget.  We’d have no savings; we would have no reforms.

All of those things that they talk about would be eliminated and we would just continue with the old way, spending way too much money on the wrong things, and things like local food systems, organics, fruits and vegetables, healthy foods in schools, would not have the funding to continue.  So I don’t support that.  They need to get the job done.”

And Daniel Looker reported yesterday at Agriculture.com that, “Senator Chuck Grassley (R-IA) said Tuesday that he supports the Senate not extending the 2008 farm law again in order to keep pressure on the House of Representatives to pass a new farm bill.”

Mr. Looker noted that, “Grassley, who is a member of the Senate Agriculture Committee, indicated Tuesday that resistance to another extension is coming from the committee’s leader.

“‘I had a discussion with Chairwoman [Debbie] Stabenow (D-MI) and she said I could quote her that she said she’s not going to extend the farm bill for another year,’ Grassley said.

“Not extending current law holds out the possibility that permanent farm bill legislation, dating back to 1949 and earlier, could kick in sometime after the current fiscal year ends on September 30.”

And Woody Gottburg reported yesterday at RadioIowa Online that, “Iowa Congressman Steve King, a Republican from Kiron, is hopeful the U.S. House can pass a Farm Bill after a vote last week failed. The five-year bill was defeated after 62 Republicans voted against it despite being urged by House Speaker John Boehner to support it.

King says he starts work on reviving the bill today. ‘And it’s gonna take discipline, we’re going to put our nose to the grindstone and see what we can do to put this together,’ King says.

“He expects to meet with the chair of the House Ag Committee tonight. All of Iowa’s congressmen voted for the bill that failed.”

With respect to the executive branch, Reuters News reported yesterday that, “The balkanized U.S. House needs to revive and pass the new U.S. farm law, Agriculture Secretary Tom Vilsack said on Tuesday after rallying rural activists to demand action on the legislation which is now in limbo.

“‘There ought to be outrage,’ he said, in response to the House defeat of the five-year bill last week. It was the first time ever a farm bill was rejected in a House roll call.

“Vilsack, the Obama administration leader on farm and food policy, said he opposed another extension of current law. Analysts say that is the easiest and most likely method to end the impasse.”

Yesterday’s article pointed out that, “Republican leaders have not announced how they will proceed on the farm bill. And with the Independence Day recess approaching, they deferred debate on the Agriculture Department budget. It could have sparked new arguments on farm bill issues.”

 

House Ag Appropriations

The House Rules Committee convened yesterday and considered three measures, including H.R. 2410, which “Makes appropriations for Agriculture, Rural Development, Food and Drug Administration, and Related Agencies programs for the fiscal year ending September 30, 2014.”

On the appropriations bill, Rules determined that the legislation would be considered under an open rule.

Rules also noted that, “Floor action on H.R. 2410: TBD.”

Roll Call writer Tait Militana tweeted yesterday that, “Rules Committee grants House Ag approps bill an open rule. It’s expected on the floor the week after the July 4th recess.”

Meanwhile, Erik Wasson reported yesterday at The Hill’s On the Money Blog that, “The White House on Tuesday threatened to veto another House spending bill for 2014, deepening the sense that another fiscal cliff on appropriations and the debt ceiling looms in the fall.

The Agriculture spending bill, which covers the USDA, Commodity Futures Trading Commission and Food and Drug Administration operating budget, is coming before the Rules Committee Tuesday but has not yet been given floor time.

“The Obama administration listed failure to provide $120 million for CFTC to implement the Dodd-Frank financial reform law as a reason for the veto threat.”

Mr. Wasson explained that, “Delving into specifics, it criticized the House for failing to reform international food aid to allow the government to buy foreign food. It said cuts to aid in the bill could affect 12 million hungry people.

“The administration said funding for meat inspections, the FDA, and the Women, Infants and Children nutrition programs were dangerously low.”

Also, David Rogers reported yesterday at Politico that, “With no budget talks under way, the Senate and House continue to roll out wildly different spending bills — highlighted this week by back-to-back markups of appropriations for energy, water, transportation and housing programs.”

The article noted that, “Left pending are budgets for the Agriculture and Defense departments, both delayed for different reasons.

“The collapse of the farm bill last week makes the GOP leery of jumping back into anything related to agriculture for a while.”

 

Agricultural Economy

The USDA’s Economic Research Service (ERS) yesterday released its Atlas of Rural and Small-Town America and noted: “View the diversity of challenges and opportunities across America’s counties within different types of rural regions and communities. Get statistics on people, jobs, and agriculture. Data reflecting the 2007-2011 American Community Survey have been added to the Atlas,” which is available here.

Also yesterday, ERS indicated that, “Despite the severe drought in the Midwest, retail food prices were mostly flat in 2012…[T]he drought has affected prices for corn and soybeans as well as other field crops which should, in turn, drive up retail food prices. However, the transmission of commodity price changes into retail prices typically takes several months to occur, and most of the impact of the drought is expected to be realized in 2013.

“Based on current conditions, ERS’s inflation forecast for both all food and food-at-home (grocery store) prices in 2013 is for increases of 2.5 to 3.5 percent. This forecast means that prices are likely to increase more than in 2012, but that overall inflation is expected to be near the historical average for both indexes.”

Meanwhile, Marcia Zarley Taylor reported yesterday at the DTN Minding Ag’s Business Blog that, “Like Rip Van Winkle, long-term interest rates are awaking from years of deep sleep. Panic over the Fed’s eventual exit from mortgage markets sent rates on the benchmark 10-year Treasuries spiraling, up from 2.14% on June 14 to 2.62% a week later. Rates are now running the highest since August 2011.”

The DTN item added that, “Twenty-year, fixed rate mortgages for qualified borrowers at Louisville-based Farm Credit Mid-America (see Farm Finance page, under Farm Business) topped out at 5.55% today, up from all-time lows of 4.25% only a few months ago. For every $500,000 borrowed, that’s an extra $4,400 payment annually. Popular 15-year mortgages bottomed at 3.9% in early December 2012, but have since risen to 5.2%. (Farm Credit rates in other regions may charge a bit more, as Mid-America pays no patronage dividend).”

Ms. Taylor noted that, “Even with the rally, rates still appear low by historical standards, [Paul Bruce, Mid-America’s chief financial officer] says. Normally, long-term fixed mortgage rates have run closer to 7% to 8%.

“Several Federal Reserve economists believe the convulsion in long-term mortgage rates is worth monitoring, even if you pay cash for your farm purchases. History shows that for the past century, farm incomes and interest rates move in opposite directions, former Kansas City Federal Reserve Economist Jason Henderson points out. Rising rates and falling farm profits also curb enthusiasm for land purchases. Federal Reserve surveys already show farm real estate gains slowing in some regions in 2013.”

In other news, University of Illinois Agricultural Economist Gary Schnitkey indicated yesterday at the farmdoc daily blog (“Chinese and U.S. Pork Consumption and Production”) that, “Shuanghui International – a Chinese meat company – has expressed interest in purchasing Smithfield Foods – a global food company based in Virginia that is heavily involved in pork production. This interest suggests a comparison of pork consumption and production in China and the United States is useful. Overall, Chinese consumption currently is over six times that of the U.S., suggesting that efficiencies in Chinese pork production are important. The size and potential growth of the Chinese market represents potential for U.S. pork and grain sectors.”

After additional analysis, Dr. Schnitkey noted that, “Continuing income growth in China likely leads to more pork consumption in China, requiring more pork production. Increasing pork production likely requires increases in efficiencies in Chinese pork production, as well as Chinese reliance on agricultural output from outside China. A Chinese company’s purchase of Smithfield may aid in technology transfer and access to pork production outside China.

Chinese growth continues to offer prospects for both the pork and grain sectors in the U.S. It may not be possible for China to meet all pork needs with Chinese production, potentially leading to more pork imports. Moreover, hogs eat grain. Therefore, any increase in pork production leads to the need for more grains. Obviously, the U.S. will face competition in meeting Chinese needs, most likely from South America and, perhaps, Africa.”

 

Immigration

Kristina Peterson and Janet Hook reported yesterday at the Washington Wire Blog (Wall Street Journal) that, “Prospects dimmed Tuesday for resolving some Republicans’ concerns over the Senate immigration bill’s agricultural provisions, as lawmakers expressed pessimism that a standoff over amendments could be eased.

“Even with the Senate expected to easily pass a sweeping rewrite of immigration laws with more than 60 votes later this week, the bill’s supporters are still hoping to win over a handful of wavering GOP lawmakers and aides said it remained possible that the Senate would consider later this week amendments designed to assuage specific senators’ concerns. But mounting political and procedural hurdles made striking a deal increasingly unlikely over proposed changes to the bill’s carefully negotiated section on agricultural guest workers, according to lawmakers and aides.

“Sen. Saxby Chambliss (R., Ga.), who introduced a slew of agriculture amendments, told reporters Tuesday that negotiators were ‘not really’ making progress.”

The Journal writers explained that, “Mr. Chambliss’s amendments seek to alter provisions hashed out earlier this year through negotiations that reached beyond the bipartisan ‘Group of Eight’ senators who wrote the bill to include Sens. Dianne Feinstein (D., Calif.) and Orrin Hatch (R., Utah), farm-worker unions and employers. Among his proposals, the Georgia Republican wants the annual allotment of 112,333 visas for agricultural guest workers to be distributed twice a year: in January and in July, rather than the current bill’s quarterly schedule. His amendment would make 70% of the visas available in January, to better align with hiring practices, a Chambliss aide said.

“Mr. Chambliss has also objected to a provision in the bill that allows some agricultural workers to get permanent resident status, known as a green card, in five years, a faster process than the 10-year path for most other illegal immigrants already living in the United States.”

Yesterday’s update added that, “‘Right now it’s frankly too easy when it comes to the base bill, if you’re in agriculture, to get a green card — it needs to get tightened up,’ Mr. Chambliss said. His amendment would require agricultural workers to meet a higher standard of evidence — comparable to what is required elsewhere in the bill — to prove they are eligible for the expedited process, a Chambliss aide said.

“Fellow Georgia Republican Sen. Johnny Isakson supported Mr. Chambliss’s amendments, but the proposals quickly drew opposition from the unions that helped negotiate them.”

 

Climate Issues

Juliet Eilperin reported in today’s Washington Post that, “President Obama delivered his most forceful push for action on global warming on Tuesday, declaring that his administration would impose tighter pollution controls on coal- and gas-fired utilities and establish strict conditions for approval of the proposed Keystone XL pipeline.

Obama also announced that the government would take climate change into consideration in its everyday operations. The shift could affect decisions on a range of issues, including bridge heights, flood insurance rates and how the military gets electricity overseas.

The actions make clear that the president will bypass Congress in seeking to reshape the federal government and the nation’s electricity sector. The aggressive posture also sets up major confrontations with the fossil fuel industry and its Republican allies, who immediately vowed to punish Democrats in elections next year for waging a ‘war on coal’ by setting new limits on carbon emissions.”

A transcript of the President’s remarks is available here, while a Fact Sheet on the Climate Action Plan and a detailed graphical overview of the proposal can be found here and here.

The full report (“The President’s Climate Action Plan”) is available here.

In his speech yesterday, President Obama noted that, “Here at home, 2012 was the warmest year in our history. Midwest farms were parched by the worst drought since the Dust Bowl, and then drenched by the wettest spring on record…[F]armers see crops wilted one year, washed away the next; and the higher food prices get passed on to you, the American consumer.”

President Obama added that, “I am convinced this is the fight America can, and will, lead in the 21st century. And I’m convinced this is a fight that America must lead. But it will require all of us to do our part. We’ll need scientists to design new fuels, and we’ll need farmers to grow new fuels.”

The “Fact Sheet” noted that the Action Plan, “Maintains agricultural productivity by delivering tailored, science-based knowledge to farmers, ranchers, and landowners; and helps communities prepare for drought and wildfire by launching a National Drought Resilience Partnership…”

The Action Plan noted that, “Biofuels have an important role to play in increasing our energy security, fostering rural economic development, and reducing greenhouse gas emissions from the transportation sector. That is why the Administration supports the Renewable Fuels Standard, and is investing in research and development to help bring next-generation biofuels on line. For example, the United States Navy and Departments of Energy and Agriculture are working with the private sector to accelerate the development of cost-competitive advanced biofuels for use by the military and commercial sectors” (at page eight).

And the Action Plan added that, “Across the economy, there are multiple sectors in which methane emissions can be reduced, from coal mines and landfills to agriculture and oil and gas development. For example, in the agricultural sector, over the last three years, the Environmental Protection Agency and the Department of Agriculture have worked with the dairy industry to increase the adoption of methane digesters through loans, incentives, and other assistance” (at page 10).

At page 15, the Action Plan stated that, “Building on the existing network of federal climate- science research and action centers, the Department of Agriculture is creating seven new Regional Climate Hubs to deliver tailored, science-based knowledge to farmers, ranchers, and forest landowners. These hubs will work with universities and other partners, including the Department of the Interior and the National Oceanic and Atmospheric Administration, to support climate resilience. Its Natural Resources Conservation Service and the Department of the Interior’s Bureau of Reclamation are also providing grants and technical support to agricultural water users for more water-efficient practices in the face of drought and long-term climate change.”

And on page 20, the Action Plan noted that, “Failing to prepare adequately for the impacts of climate change that can no longer be avoided will put millions of people at risk, jeopardizing important development gains, and increasing the security risks that stem from climate change. That is why the Obama Administration has made historic investments in bolstering the capacity of countries to respond to climate-change risks. Going forward, we will continue to:

“- Develop innovative financial risk management tools such as index insurance to help smallholder farmers and pastoralists manage risk associated with changing rainfall patterns and drought

“- Distribute drought-resistant seeds and promote management practices that increase farmers’ ability to cope with climate impacts.”

Justin Gillis reported in today’s New York Times that, “With no chance of Congressional support, President Obama is staking part of his legacy on a big risk: that he can substantially reduce greenhouse gas emissions by stretching the intent of a law decades old and not written with climate change in mind.”

The Times article noted that, “The heart of Mr. Obama’s plan, however, is lowering the country’s emissions using administrative remedies, an effort to sidestep a recalcitrant Congress. The success of that goal will depend on how far the administration is able to stretch the boundaries of the Clean Air Act, signed into law by President Richard M. Nixon in 1970.

“The Supreme Court has already ruled that it can be used to regulate greenhouse gases, which include carbon dioxide emissions, but figuring out how to do that within the technical requirements of the law will be a major challenge.”

Mr. Gillis also noted that, “But formally, the main thing [the President] did on Tuesday was order the Environmental Protection Agency to devise an emissions control plan, with the first draft due in a year. Experts say he will be lucky to get a final plan in place by the time he leaves office in early 2017.

“Mr. Obama is trying to ensure continuation of a trend already under way: emissions in the United States have been falling for several years. But at the global scale, they are rising fast, and as the president acknowledged, it will take much stronger international action to turn that around and head off the worst effects of climate change.”

Ben Geman reported yesterday at The Hill’s Energy Blog that, “President Obama’s second-term climate plan unveiled Tuesday calls for new trade talks to expand global markets for carbon-friendly goods and services…‘The U.S. will work with trading partners to launch negotiations at the World Trade Organization towards global free trade in environmental goods, including clean energy technologies such as solar, wind, hydro and geothermal,’ the plan states.”

Meanwhile, Jared A. Favole reported in today’s Wall Street Journal that, “Republicans say Democrats will pay at the ballot box for President Barack Obama’s push to regulate emissions from existing power plants, particularly candidates in coal-producing states and conservative-leaning districts.

“The GOP has begun promoting that message in states such as Kentucky and West Virginia, and in states likely to see competitive Senate races. The Republican message is Mr. Obama is waging a ‘war on coal’ that will harm jobs and raise energy costs.”

Keith Good

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