FarmPolicy

September 19, 2014

Farm Bill; Appropriations; Crop Insurance; Ag Econ; and, the RFS

Farm Bill- Chairman Lucas

Ron Hays, of the Oklahoma Farm Report and Radio Oklahoma Network, spoke yesterday with House Agriculture Committee Chairman Frank Lucas (R., Okla.) about a variety of current policy variables regarding the Farm Bill.

An audio replay and summary of the Chairman’s remarks from yesterday can be found here, while an unofficial FarmPolicy.com transcript of the conversation with Ron Hays and Chairman Lucas is available here.

Chairman Lucas stated that, “This is my fourth farm bill, and in 1996 I watched as two farm bills were rejected in the House Agriculture Committee itself, but this is the first time, as far as I can tell, a bill was rejected on the floor. And that doesn’t mean that the process is over with. That doesn’t mean that the reforms that were included in the bill, whether it’s the commodity title, or nutrition, or conservation aren’t important, relevant, and won’t ultimately become law. It just means on that day, on that bill, at that moment, Mr. Peterson and I could not persuade a simple majority, 218 of our colleagues, to vote with us.”

The Oklahoma Republican explained that, “And the great debate up here is not cutting the stuff that we spend from year to year discretionary, which we’ve done a very good job in the House, but how do you go after the long-term locked in spending mandatory. This $40 billion, half out of the part of the bill that raises food, half out of the part of the bill that deals with the consumption of food, was the first real major mandatory spending reform bill to come to the floor in I don’t know how long.”

Chairman Lucas also noted that, “The ultimate thing I think that made it impossible on that day to pass a bill dealt with the food stamp issues, the nutrition issues. My liberal colleagues could apparently only accept so much reform. I think they would have voted for a bill that would have cut the $20 billion out of the nutrition title through reforms. I think they were prepared to address testing and a variety of other things.

“But when you put all that together, it was too much for my liberal friends to support, and there was a revolt among the Democrats. But also, in all fairness, Ron, I cannot criticize the Democrats exclusively because 61 of my Republican colleagues, who voted for every one of those major reforms on food stamps, wouldn’t vote for the final bill, and that’s even more amazing.”

On the issue of what may be next in the Farm Bill process, Chairman Lucas indicated that, “I’m in the process of nonstop discussions with Collin and with my majority leadership about where we do go next. We have to have a farm bill. These reforms were too important to step away from, but what vehicle do we use, how quick can we do it? That’s what I’m trying to figure out today.”

More specifically, Chairman Lucas pointed out that, “The possibility of going back to Rules Committee and asking that the House committee passed version be brought back to the floor with a rule basically limiting the number of amendments is a possibility. But I would say on many of the amendments that were adopted, there was overwhelming support, so it’s hard to not offer up again the language that overwhelmingly the membership supported.

“So perhaps one of the options would be simply bring the House considered version in its final form, minus one or two very, very contentious points, back in a closed rule. We’ve debated everything. Just have a limited hour of debate and then vote up or down with a slightly…a more straightforward version, something like that. These are all things on the table. I do not control the Rules Committee, nor do I control the floor schedule, so I have to work with my majority leadership, and of course my ranking member, because it’s got to be done in a bipartisan way.”

On the issue of separating the nutrition title from the Farm Bill, Chairman Lucas stated that,  “If you split the two bills apart, if you take the two concepts, if you break the bill up into pieces—maybe that’s the better way to put it—I can’t imagine very many Republican votes for a nutrition reform bill…[B]y the same token, many of my members from more urban and inner city districts only tolerate the farm policy because it’s attached to the social nutrition programs. I don’t think you can pass a farm bill without some incentive from our friends who live outside of rural America to vote with us.

“How many times have you heard me say in public that with the 2002 Farm Bill it became nutrition, it became a commodity title, and it became a conservation bill. If we don’t have that three-legged stool, we can’t get by on one leg by ourselves. When you look at the so-called political activist groups on the East Coast, the paid mercenaries, they don’t want a farm bill, and that’s why they advocate these things. This is the best way to kill a farm safety net is split us up, chop us up and cause us to wilt and die.”

 

Conference Meeting—  A “Republican Farm Bill”

Despite these observations, Daniel Newhauser reported yesterday at Roll Call Online that, “A week after a surprising defeat for the farm bill, some House conservatives who helped sink the legislation are trying to build momentum to split it in half, ending years of precedent for passing agriculture and nutrition legislation in one package.

“Members made their case in a House Republican Conference meeting Wednesday morning, but they were rebuked by farm-district Republicans who said the group did them a disservice by voting for controversial amendments that cost the bill Democratic support and then voting against the underlying bill.”

Mr. Newhauser noted that, “A senior Agriculture Committee member, K. Michael Conaway, R-Texas, said he favors seeking more Republican support for the bill than trying to win over Democrats. Some Democrats will support the bill in the end so it could still be considered bipartisan, he said. ‘At the end of the day, we’ll have a bipartisan bill,’ said Conaway, adding that ‘it is not time’ for the bill’s backers ‘to panic.’”

And the Roll Call item added that, “Rep. Kevin Cramer, R-N.D., told the conference that those members who voted for controversial amendments but against the bill had hung agriculture-district Republicans like himself out to dry because there could be political ramifications to the farm bill’s failure.”

Jake Sherman and John Bresnahan reported yesterday at Politico that, “Republican Reps. Kristi Noem of South Dakota and Kevin Cramer of North Dakota separately stood up at a GOP meeting Wednesday and confronted their leadership about its bumbling legislative strategy and inability to figure out a way forward on the massive legislation, according to multiple sources at the meeting.

“Noem, who once served in Republican leadership, took aim squarely at Majority Leader Eric Cantor (R-Va.). She reminded him that he controls the House floor, and she drilled Cantor hard on his precise plans to mop up the mess, several Republicans who attended the meeting said. Cantor wasn’t able to outline a plan that satisfied Noem, and he blamed Democrats for the bill’s defeat.

“Noem — usually a quiet figure in GOP circles — also warned the 61 Republicans who opposed the farm bill after voting for tougher work requirements for food-stamp recipients that she will not be supporting them in the future. Agriculture Committee Chairman Frank Lucas (R-Okla.) and other lawmakers were later heard on the floor backing Noem in her heated dispute with Cantor.”

The Politico article noted that, “[Majority Whip Kevin McCarthy], speaking first at a small meeting of his vote-counting team and later to the larger House Republican Conference, said he ‘[takes] responsibility’ for the farm bill’s failure.

“The California Republican also made a round of calls to his top allies on the whip team late last week following the bill’s demise, taking their temperature about the legislative meltdown. In addition, McCarthy contacted lawmakers who voted against the bill to express his disappointment, according to sources familiar with the discussions.”

Sherman and Breshnahan added that, “Something needs to pass, and Cantor is now privately saying he’s open to moving forward a far more conservative farm bill. There’s even talk about splitting the food-stamp program from the agriculture bill to attract all GOP support.”

Jake Sherman reported yesterday at Politico that, “Speaker John Boehner told a closed meeting of House Republicans he was ‘pissed off’ at the failure of the farm bill.”

Mr. Sherman noted that, “The path forward for the farm bill is still uncertain, but the House leaves town Friday for the July 4 recess.

“Boehner told lawmakers he welcomes suggestions going forward.”

Lacey Koontz reported yesterday at Brownfield that, “[Rep. Bob Goodlatte (R., Va.)], Vice Chairman of the House Agriculture Committee, believes that the next step for Congress is to split the farm bill.

“‘We will probably either see a modified farm bill come back, maybe with just the farm provisions and without the food stamps in it, or we may see an extension of the current farm bill,’ he said.” (Related audio (MP3- 0:24)).

In this clip (MP3- 0:33), Rep. Goodlatte explains why he voted against the Farm Bill

The Brownfield link included an extended interview with Rep. Goodlatte that also covered immigration issues; it can be heard here.

Also, Erik Wasson reported yesterday at The Hill’s On the Money Blog that, “Speaker John Boehner (Ohio) and other GOP leaders should learn from the farm bill’s surprise defeat and stop negotiating with Democrats, House conservatives said Wednesday.

“Members of the Republican Study Committee said their leaders should bring a ‘Republican farm bill’ to the floor that deeply cuts food stamp spending and contains other reforms to farm subsidies.

“‘If they would have actually negotiated with the conservatives, we would have had a farm bill passed out of the House last week,’ Rep. Raúl Labrador (R-Idaho) said. ‘Our leadership needs to take a lesson from this: Stop negotiating with Democrats!’”

Also with respect to conservative perspective on the process, Corey Boles reported yesterday at the Washington Wire blog (Wall Street Journal) that, “Rep. Matt Salmon (R., Ariz.), a freshman Republican who previously served three terms in the House during the 1990s, said that many House conservatives were frustrated with the number of bills that had passed the House with backing from a majority of House Democrats over the opposition of a majority of House Republicans.

“‘We have already had several pieces of legislation that have gone out of this place with a majority of Democrats and a minority of Republicans…this could be the proverbial straw that would break the camel’s back.,’ Mr. Salmon said at a meeting of conservative House Republicans on Wednesday. The meeting was open to the media and structured as part press conference, part symposium.”

Mr. Boles noted that, “Several conservative House lawmakers said at the Wednesday meeting that the unexpected defeat of the House farm bill last week provided clear evidence of why House GOP leaders should focus on working with Republicans rather than trying to cut deals with Democrats.”

Former Ag Committee Member Tim Huelskamp (R., Kans.) also participated at yesterday’s meeting, and remarked on the Farm Bill, a portion of his comments can be heard here (MP3- 1:24).

And Ledyard King reported yesterday at the Tallahassee Democrat Online that, “Republican Rep. Steve Southerland, whose proposal to allow tougher eligibility requirements for food assistance was blamed for torpedoing the farm bill, made no apologies Tuesday.

The North Florida congressman disputed news reports he would abandon his plan if the House reconsiders the farm bill and indicated he would reintroduce the measure, calling it a ‘moral issue.’”

And Erik Wasson reported yesterday at The Hill’s On the Money Blog that, “No path forward has yet been found to revive the failed farm bill, Agriculture Committee Ranking Member Collin Peterson (D-Minn.) said Wednesday.”

Mr. Wasson pointed out that, “He [Peterson] dismissed calls made Wednesday by House conservatives to bring up a Republican-only farm bill.”

The Hill article stated that, “The ranking member also continued to push back against blame from House Majority Leader Eric Cantor (R-Va.) that Democrats sank the bill. He reiterated that the approval of an amendment by Rep. Steve Southerland (R-Ill.) to bolster work requirements for food stamps was the reason the bill failed.

“‘Without that I could get that to where I was, 45 to 50 votes,’ Peterson said. He said that he had given Cantor a list with unacceptable amendments marked ‘deal-breakersso Cantor knew that bringing up Southerland’s amendment would cause problems.”

 

Farm Bill: Path Forward Remains Murky

Christopher Doering reported yesterday at USA Today Online that, “Analysts and lobbyists say the most likely outcome will be an extension of the current farm law, despite steadfast opposition from top leaders in the Senate.”

Mr. Doering noted that, “‘The word is there is a lot of dissension, uncertainty and distrust,’ said Pat Westhoff, director of the Food and Agricultural Policy Research Institute, a think-tank at the University of Missouri. ‘People didn’t like the way that process happened and aren’t terribly confident that they want to engage in the process going forward.’

“As a result, the path of least resistance would be to extend the farm bill again.”

Meanwhile, a news release yesterday from Rep. David Loebsack (D., Iowa) stated that, “[Loebsack] announced today that he has introduced the Senate farm bill in the House of Representatives.  He was joined by Congressman Bruce Braley (D., Iowa) and Congresswoman Cheri Bustos (D., Il.) as original cosponsors.”

 

Sugar Issues

Recent news items have focused more narrowly on specific aspects of the Farm Bill relating to the sugar program.  Alexandra Wexler penned an article that was posted yesterday at The Wall Street Journal Online titled, “Bulk of U.S. Sugar Loans Went to Three Companies,” while Hill writer Erik Wasson wrote an article yesterday titled, “Candy companies gain ground in war with sugar producers over subsidies.”

 

Appropriations Issues

David Rogers reported yesterday at Politico that, “The House farm bill’s collapse spilled over Wednesday to the Agriculture Department’s annual budget, threatening additional cuts that would lower 2014 appropriations to levels well below the already-reduced funding set by the March sequester.

“On a 235-187 vote, Republicans cleared the way for consideration of the $19.45 billion spending bill after the July 4th recess.

But as part of the bargain, Agriculture Committee Chairman Frank Lucas (R-Okla.) kept his right to be a one-man wrecking crew unless he sees some progress in the interim on his priority — the five-year farm bill.”

The article added that, “‘I’d like the Ag appropriations bill to not move until we address the future of the farm bill,’ Lucas told POLITICO. ‘It’s all intertwined, and it is hard to pass an appropriations bill until you have a farm bill, to know how it’s going to interact.’”

Mr. Rogers explained that, “Under the terms of the rule, Lucas is free to raise points-of-order that would strip out close to $885 million in legislative off-sets used by the House Appropriations Committee to stay within its budget.

“These often intrude on his Agriculture Committee’s jurisdiction: setting a lower-than-authorized cap on a wetlands conservation program to achieve $50 million in savings, for example. In recent years, there has been more of a live-and-let-live approach between the committees. But the savings are more jealously guarded now and as Lucas hinted, it gives him some leverage.

“Indeed, if Lucas were to exercise all his options, the bill’s managers would have to consider an across-the-board cut to make up the difference and meet their spending cuts. That could mean an additional 5 percent reduction from what is now provided.”

On the House floor yesterday, Reps. Alcee Hastings (D., Fla.) (video replay here) and Jim McGovern (D., Mass.) (video replay here) discussed the Ag Appropriations measure, as well as the Farm Bill.

Rep. Hastings noted that, “Draconian cuts and work requirements imposed on programs that benefit the poorest among us effectively killed any chance of the Farm Bill passing.”

And Rep. McGovern stated that, “The [Farm Bill] failed in large part because of Republican’s nasty attacks on America’s nutrition and anti-hunger programs.”

 

Crop Insurance

A news release yesterday from USDA’s Risk Management Agency (RMA) stated that, “[USDA] today announced a streamlined and simpler approach to buying area risk protection. The [RMA] published the Area Risk Protection Insurance (ARPI) final rule effective for the 2014 and succeeding crop years. This new rule, published today, provides clarity, simplicity, transparency, and the reduction of duplication for producers and agents.

ARPI combines the Group Risk Plan (GRP), which covers against loss of yield due to a county level production loss, and the Group Risk Income Protection Plan (GRIP), which covers against loss of revenue due to a county level production loss, price decline, or combination of both, into one insurance policy. With the publication of this final rule the GRP and GRIP insurance plans will not be available for the 2014 crop year.”

 

Agricultural Economy

University of Illinois Agricultural Economists Darrel Good and Scott Irwin indicated yesterday at the farmdoc daily blog (“Is the U.S. Corn Boom Ending?”) that, “The U.S. corn industry experienced a significant ‘growth spurt’ beginning in the 2007-08 marketing year that continued through the 2011-12 marketing year. That 5-year boom period was characterized by larger consumption, larger production, and higher prices; a combination that demonstrates the strong demand for U.S. corn beginning in 2007-08. The issue moving forward is whether or not demand for U.S. corn has peaked. The answer to the question has important implications for corn prices, farm incomes, land prices, and corn processing and handling industries.”

After a brief but detailed analysis, yesterday’s update stated that, “The recent period of growth in the U.S. corn industry appears to have peaked. The domestic ethanol market has hit the E10 blend wall and will be dependent on consumption of higher blends in order to expand total domestic consumption and to increase corn consumption. The domestic livestock industry is also mature and may require larger exports for production growth. Finally, the corn export market has become a lot more competitive in the past several years as high corn prices have stimulated an increase in world production. If the size of the U.S. corn market has peaked, a period of lower prices and reduced acreage may be required. Lower prices would be beneficial for the livestock industry, at least initially. Lower crop farm incomes might result in some downward pressure on farm land prices, particularly if interest rates continue to increase. Making plans for such an adjustment seems prudent, while at the same time hoping for a surprise development on the demand side.”

 

Renewable Fuel Standard (RFS)

DTN Ag Policy Editor Chris Clayton reported yesterday that, “Federal experts on renewable fuels stated in various ways Wednesday that biofuels are under pressure from a variety of factors that raise increasing doubts about the ability to meet higher production levels or blends of ethanol.

“A subcommittee of the House Energy & Commerce Committee held the first of what is likely to be a series of hearings this summer over the Renewable Fuels Standard and its effects on the economy and environment. The hearings reflect growing doubts in Congress from members of both parties over the costs of further expanding biofuel production.

“EPA now is struggling with how to balance the 2007 law and the reality in the marketplace because cellulosic and advanced biofuels have failed to meet expectations. The 2007 energy law set the Renewable Fuels Standard at 36 billion gallons by 2022. Under that law, corn-based ethanol would be capped at 15 billion gallons, and the industry is now encroaching on that threshold. It’s in the area of other biofuels expected to fill the rest of that 36-billion-gallon mandate that the renewable fuels industry has fallen short.”

The DTN article noted that, “Joe Glauber, chief economist of USDA, highlighted the benefits that have come to grain producers over the past decade as corn ethanol has gone from 2 billion gallons in 2002 to 14 billion gallons now. Farm income is at record levels. Net cash incomes for grain and oilseed producers are up 78%, but livestock, dairy and poultry face tighter margins due to higher feed costs. Feed makes up more than 50% of the cost for dairy producers, 42% for hogs and 35% for dairy.

“Glauber said other factors have helped increase the costs of grain, including droughts and higher exports to other countries. Still, ‘most of the studies we have looked at show ethanol has contributed some percentage of that increase,’ he said.”

Keith Good

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