FarmPolicy

October 30, 2014

Farm Bill; Ag Economy; and, Immigration

Farm Bill: Agriculture’s “Waning” Influence?

A couple of recent headlines have suggested that the political influence of American agricultural is “waning.”  (“Agriculture’s Waning Influence In Washington Hinders Farmers,” National Public Radio; “Farm Bill Defeat Shows Agriculture’s Waning Power,” The New York Times).

However, on Wednesday’s AgriTalk radio program with Mike Adams, Nebraska GOP Senator Mike Johanns noted that, “I really want to say to people involved in agriculture, let’s not get down on ourselves– start convincing ourselves that we have lost political influence.

“I just think it is tough these days in every area.  We’ve got budget constraints- I said two years ago the story of this Farm Bill is going to be budget constraints and it is.  It just is the reality of our time.”

The former Sec. of Agriculture added that, “We are not that far off, and getting a five-year Farm Bill done would be a very significant accomplishment.”  (Related audio from Wednesday’s AgritTalk program is available here (MP3- 0:52)).

And more specifically with respect the budget variable, recall a recent Bloomberg Government Study (BGov study), titled, “The Most Contentious and Difficult Farm Bill Ever?” (June 14) by Dr. Craig Jagger that was highlighted at FarmPolicy.com on June 25.

The BGov study explained that, “Budget rule changes and lost budget gimmicks constitute a second major reason that this has been the most contentious and difficult farm bill ever.

After the 1996 farm bill and until this farm bill, the agriculture committees have been able to add funding above the CBO baseline when they wrote major farm legislation. Before budget rules changed in 2007, the House and Senate Budget committees could simply add extra funding to the budget resolution. They added $6.5 billion above the CBO baseline over five years for the 2000 crop insurance reform bill and $73.5 billion above the CBO baseline over 10 years for the 2002 farm bill.

“With that budget resolution avenue closed for the 2008 farm bill, the agriculture committees, with leadership support, persuaded the Senate Finance and House Ways and Means committees to provide $10 billion in revenue offsets to be included in the farm bill, in return for getting some of their pet projects in the measure.”

Furthermore, the BGov Study stated that, “In addition, explicit timing shifts were used to capture ‘savings’ of $2.6 billion over 10 years for the 2002 farm bill and $4.5 billion over 10 years for the 2008 farm bill.  Timing shifts move costs outside the 10-year budget window. The CBO scores savings for the shifts even though only the timing, not the amount, of program costs change. Those explicit timing shifts are not available for the 2013 farm bill, because all that could be identified have been used and each timing shift can be used only once…When major program changes are being made, having extra money to make them more palatable to those losing benefits makes writing legislation easier. This farm bill process undoubtedly has been more contentious and difficult from not having extra money above its baseline that recent farm bills had. Now to add funding for a new program or to increase funding for an existing program, funding for a different Agriculture Committee program that has a baseline needs to be cut, robbing Peter to pay Paul.”

The BGov Study also noted that, “There are other reasons this farm bill is particularly challenging:

“- From a member’s perspective, reform and deficit reduction are not really compatible.

“- Increased partisanship makes compromise more difficult, especially outside the agriculture committees.

“- There are 37 programs/provisions with supporters that do not have budget baselines after 2012.

“- The farm economy, with some exceptions such as dairy, has generally been doing well. Not everyone understands that agricultural markets are cyclical and good can turn to bad very quickly.”

More broadly on the current political environment in the House, a recent update at the NBC News “First Read” webpage pointed out that, “When it comes to productivity, only 15 legislative items have become law under the current Congress. That’s fewer than the 23 items that became law at this same point in the 112th Congress, which passed a historically low number of bills that were signed into law. These numbers might not be surprising given the legislative stalemates so far this year — on the sequester, the farm bill, and student loans.”

Also, Gerald F. Seib noted recently at The Wall Street Journal Online that, “Many House Republicansparticularly the younger freshmen and sophomore members who now make up a stunning 46% of the caucusdon’t much care what conventional wisdom says they should do. They are happy to rock the boat.”

Consideration of both federal budget variables and the larger context of Congressional inertia are necessary to consider when evaluating the political influence of any sector, especially agriculture.

 

Agricultural Economy- Global Variables, Trade

Bloomberg writer Whitney McFerron reported yesterday that, “World food prices fell for a second month in June, led by declines in dairy and sugar on prospects of rising global output, the United Nations’ Food and Agriculture Organization said.

“An index of 55 food items traced by the FAO fell 0.9 percent to 211.3 points last month from a revised 213.2 points in May, the Rome-based agency wrote in an online report today. The measure, which climbed to a record 237.9 points in February 2011, is up 5.4 percent from a year earlier.”

In other international developments, Biman Mukherji and Rajesh Roy reported yesterday at The Wall Street Journal Online that, “India has decided to introduce one of the most ambitious food aid programs ever attempted, adding the right to food to others enshrined in Indian law such as free speech and equality of all citizens.

“The government of Prime Minister Manmohan Singh, which pushed through the National Food Security Law by executive order on Wednesday while Parliament was in recess, will spend $4 billion or more a year under the program to distribute cheap grains to around 70% of India’s 1.2 billion people.”

The Journal item noted that, “The legislation has sparked debate in India between those who say it is a way to eradicate deep rural poverty and others who want the state to instead focus on creating jobs and better infrastructure like irrigation facilities in remote areas.

“Parliament, which is due to come back into session at the end of July or early August, needs to pass the bill by a simple majority for it to become law. That is expected to happen as few politicians want to oppose such legislation before a number of state polls this year and national elections, which must be held by May 2014.

“Few countries have embarked on such an ambitious mission. India has about a third of the world’s extreme poor, according to the World Bank. About half of children below five suffer from malnutrition and a third of women are underweight, according to the Indian government’s National Family Health Survey.”

Also, Biman Mukherji noted in an update at the India Real Time Blog (Wall Street Journal) this week that, “Rather than launching one of the most ambitious food aid programs in history on Wednesday, India should have instead used the funds to directly support the agriculture sector, a leading farmer group said.”

The update indicated that, “‘More than 50% of the recipients under the program are farmers. Rather than give cheap food, why don’t you give them technology to feed themselves?’ asked Ajay Jhakar, chairman of farming body Bharatiya Krishak Samaj. ‘Why do you want to make them dependent on cheap food?’ he said in an interview ahead of the executive order being passed.

“‘The proposal of cheap food that they are giving is a short-term measure, used usually in terms of crisis. It does not have a vision to it… They should spend the same money on agriculture research and farm infrastructure,’ Mr. Jhakar added.”

Jim Yardley reported yesterday at the India Ink Blog (New York Times) that, “The issue of food security has been a source of controversy during the government’s second term. Sonia Gandhi, president of the Indian National Congress Party, has promoted the plan as a necessity to widen the safety net for India’s hundreds of millions of rural poor. But critics have complained about the high costs and have warned that the program will broaden a subsidy system that is already inefficient and corrupt.

“For the governing Congress Party, the new ordinance fulfills a campaign pledge made by Mrs. Gandhi and provides her party with something tangible to offer voters as the country prepares for national elections next year. The coalition government has been battered by corruption scandals and a sinking economy. With polls suggesting a loss of public support for the Congress Party, the food ordinance is good politics, some analysts say, if uncertain economics.”

Meanwhile, Julian Pecquet reported this week at The Hill’s Global Affairs Blog that, “President Obama told German Chancellor Angela Merkel on Wednesday that he takes European concerns about U.S. spying allegations ‘seriously’ and agreed to a high-level meeting of security officials of both countries in the coming days, the White House said.”

Hosuk Lee-Makiyama, the director of the European Centre for International Political Economy, noted yesterday at The Wall Street Journal Online that, “But Brussels is genuinely disturbed by the news that NSA surveillance may include EU institutions and overseas delegations. The claims have threatened to complicate already-complex negotiations for a free-trade agreement between the EU and U.S. The talks for the Transatlantic Trade and Investment Partnership (TTIP) were scheduled to begin next week, but some EU officials are now insinuating that no deal can be negotiated if the spying allegations are true.”

Mr. Lee-Makiyama pointed out that, “The EU initially requested the free-trade talks, not the U.S. Rather, negotiators in Washington were not entirely convinced (and arguably still are not) that the EU can deliver a sufficiently ambitious agreement in areas such as agriculture, services, or French movie quotas, to get through the U.S. Congress. The U.S. Trade Representative’s office, meanwhile, has its first priorities in Asia, negotiating the Trans-Pacific Partnership.

“It’s also worth remembering that calls to suspend the TTIP talks have come from EU officials with no technical influence over trade policy. European Trade Commissioner Karel De Gucht, for his part, has said he wants the negotiations to go forward as planned.”

European bluster over NSA spying is unlikely to decide the fate of trans-Atlantic trade talks, which faced huge obstacles long before Edward Snowden started leaking security briefs,” he added.

And William Mauldin and Gabriele Steinhauser reported in today’s Wall Street Journal that, “European officials said Thursday that they are ready to go ahead with the launch of trade talks with the U.S. next week, despite concerns that the U.S. National Security Agency has been spying on European institutions.”

In other trade news, Kwanwoo Jun reported in today at The Wall Street Journal Online that, “South Korea on Friday lifted a ban on U.S. wheat imports after the local food safety regulator found no unapproved genetically-modified grain in recent U.S. shipments to the Asian country.

“The Korea Flour Mills Industrial Association said in a statement it decided to resume purchasing U.S. wheat after a suspension imposed on May 31 following the discovery of unapproved genetically-modified white wheat strain at a farm in Oregon.

“‘The ban is lifted as of today,’ said Park Jeong-seop, general manager of the local millers’ association. ‘Local bidding for U.S. white wheat can resume next week.’”

 

Immigration

Erik Wasson reported this week at The Hill’s On the Money Blog that, “Increased border-security measures in the Senate’s immigration reform legislation have lowered the bill’s deficit reduction benefits by $39 billion, the nonpartisan Congressional Budget Office said Wednesday.

“The CBO issued a new deficit score for the Senate-passed immigration bill that says the legislation will cut the deficit by $158 billion over the 2014-2023 period.

“But that is $39 billion less than the $197 billion in deficit reduction for the original bill reported out of the Senate Judiciary Committee. The difference is due to amendments that beef up efforts to secure the border.”

Keith Good

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