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Farm Bill; Ag Economy; Regulations; RFS; and, Political Notes

Farm Bill

Colleen McCain Nelson reported in today’s Wall Street Journal that, “President Barack Obama, facing a likely escalation of sniping on spending and debt this fall, delivered a long and impassioned plea Wednesday for a change in the Washington economic debate, away from arguments over budgets to a focus on the long-term condition of the middle class and American competitiveness.

“In the first of a series of about a half-dozen speeches that will lay out his blueprint for sustained economic growth, Mr. Obama offered mostly familiar policy prescriptions.”

The Journal article noted that, “Sprinkled throughout the speech were familiar proposals, including calls for investments in infrastructure; government job training programs that are more directly connected to business needs; expanded pre-kindergarten programs; federal policies designed to reduce college costs; and an increased minimum wage.

“He also called for an end to the across-the-board spending cuts known as the sequester, which he described as a meat cleaver that has cost jobs and harmed growth. And he made a new pitch for an overhaul of the immigration system, saying more legal immigrants could pay the taxes to help finance imperiled retirement programs.”

Ms. Nelson added that, “In a new twist, the president drew a clearer distinction between House and Senate Republicans, praising those in the Senate who are willing to work toward compromise and those who helped pass the immigration bill.

“‘But a faction of Republicans in the House won’t even give that bill a vote, and gutted a farm bill that America’s farmers and most vulnerable children depend on,’ Mr. Obama said.”

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, “Right now, Ron, both I and the majority leader’s office are attempting to poll, to have discussions with various members, both Republicans and Democrats, to try and come up with what would be a consensus bill, how can you address the social nutrition title, the food stamp title, in effect, SNAP, in a way that 218, a majority of my colleagues, will vote for. Right now that equation is not there, and discussions are still going on. My friends on the left don’t want to have any reforms and my friends on the right want dramatically more reforms than probably are achievable in this environment.

“But that said, my personal goal is by some point next week, if it’s quite clear that consensus cannot be achieved, if it’s just not achievable, then I think we need to recognize that fact and move on conferencing the bill that the Senate’s passed and the House has passed and see what evolves from that. But right now still trying to achieve consensus. That consensus is at the very least elusive. It might even be impossible. But I’m still trying.

And with a statement of fact one way or the other, either we move with the bill or we don’t move with the nutrition bill, then we need to begin the process of getting ready for a full conference.”

Chairman Lucas also noted that, “I think there’s a consensus, at least among the aggies in the Senate and in the House, that crop insurance is the real safety net. It is the thing that makes this a viable farm bill, and we will all work to protect it. But there will be fights.”

And with respect to a conference committee, Chairman Lucas pointed out that, “Now, our listeners need to bear in mind that when you go from having a House bill and a Senate bill to a conference committee, the conference committee is made up of members appointed by the leadership of the Senate and the leadership of the House to address the subject matters that are in the bills being conferenced. In this case all 12 titles, including nutrition on the Senate side. In this case 11 titles—that’s not including nutrition—on the House side. So the ultimate bill can reflect anything of subject matter brought by either side.

“But when the product is voted out by the conference committee, assuming you achieve that consensus, and it goes back to the House and the Senate, the product there is non-amendable. It is a vote up or down by simple majority in both bodies, with limited debate. So bear in mind what we come out of conference committee with, when we achieve this consensus, can’t be changed on the floor of the House or Senate. It simply is either accepted or rejected.

“I would like to think that we’ll be able to build a 51 seat Senate coalition and 218 seat House coalition to pass that final product, but it’s just a different type of legislative process now once you get into conference.

Ron Hays also asked Chairman Lucas about “permanent law,” and in response to an inquiry on this issue, he explained that, “The old logic was if you had a ‘38 and a ’49 law on the books that were so horrendous, so impossible to implement, that will force action. I would tell you in the new environment, my friends on the left and my friends on the right don’t care. They just don’t care. The White House doesn’t understand rural America, doesn’t understand production agriculture.

That creates a situation where, in future years, if it’s like now, and we get to this point we’re at now, somebody will simply include language in a CR to finish the appropriations year or some other legislation will just simply repeal it all and we’ll have nothing. I’m trying to craft good policy in a way that we can live with it, not just for the next five years, but the next ten or 15 years. I want to use that as permanent law to protect us from a day when we can’t pass any farm legislation.

“At that point it becomes a defensive battle, protecting what we have, not trying to scare people by using the bad old policy from Franklin Roosevelt and Harry Truman’s time to force something to happen. Because the group I’m now part of will just simply repeal a ’38 and ’49 law before it—when it takes effect and we’ll have nothing. That’s what I’m afraid of.”

Meanwhile, AP writer Mary Clare Jalonick reported yesterday that, “About 47 million Americans received food stamps last year, but only a relative few are required to work or look for a job as a condition of receiving the aid.

“Now, House Republicans are considering whether the work requirement should be strengthened as they seek cuts to the $80 billion-a-year program, which has doubled in cost over the last five years. One in seven Americans used the federal food aid last year.

“A small group of GOP lawmakers met Wednesday to discuss trimming the program, now called the Supplemental Nutrition Assistance Program, or SNAP. One approach discussed in the meeting was a proposal by Rep. Steve Southerland, R-Fla., that would allow — but not require — individual states to test work requirements.”

Ms. Jalonick explained that, “Agriculture Secretary Tom Vilsack said Wednesday that in looking at deeper work requirements, Republicans are ignoring who actually gets food stamps. He said 92 percent of recipients are children, the elderly, disabled or people who are already working.

“Vilsack called the Southerland amendment ‘arbitrary’ and said it would make more sense to improve state employment and training programs that help food stamp recipients find and keep jobs.

“Rep. Kristi Noem, R-S.D., said the lawmakers in Wednesday’s meeting discussed the Southerland proposal and whether work requirements should be voluntary or mandatory for states. She said the group floated other ideas such as drug testing recipients and reducing automatic food stamp eligibility for people who are enrolled in other benefit programs. Similar provisions were included in the version of the farm bill that was defeated.”

An update yesterday at USDA’s Economic Research Service Chart Gallery indicated that, “As the 2007-09 Great Recession and its accompanying higher unemployment took its toll on U.S. families, food insecurity at the national level increased. In 2011, 14.9 percent of U.S. households were food insecure—up from 10.7 percent in 2001…[F]rom 2001 to 2011, the prevalence of food insecurity was essentially unchanged in 9 States and grew for the remaining 41 States and Washington, DC.” (national map here).

And a news release yesterday from USDA stated that, “[Sec. Vilsack] today announced the results of USDA’s Healthy Incentives Pilot (HIP) and discussed additional steps USDA and its partners are taking to encourage recipients to purchase healthy foods using SNAP benefits.

“Authorized by Congress through the 2008 Farm Bill, HIP tested the impact of incentivizing fruit and vegetable purchases among a small group of SNAP recipients in Hampden, Mass. The pilot determined that an ongoing investment of less than 15 cents per person per day may result in a 25 percent increase in fruit and vegetable consumption among adults. Adults receiving the HIP incentive consumed, on average, an ounce more fruits and vegetables per day than non-participants.”


Agricultural Economy

Perry Beeman reported in yesterday’s Des Moines Register that, “Iowa, the nation’s king of corn production, will have to import some of the prized kernels because this season’s dicey crop won’t meet demand, an analyst said Tuesday.

“A couple of big reasons: ethanol plants are returning to full production and livestock operations are growing and need more feed.

“Ross Korves, economic policy analyst for Michigan-based ProExporter Network, said it’s a rare situation that comes because flooding delayed spring planting, and a year earlier, drought shriveled the state’s usual shining yields.”

Emiko Terazono indicated yesterday at The Financial Times Online that, “It is the million dollar question that is dividing wheat bulls and bears at the moment: how much grain will China need to import?

“The US Department of Agriculture wrong footed the markets by more than doubling its forecasts for Chinese wheat imports for the 2013-14 crop year from 3.5m tonnes to 8m tonnes.

“The estimate, the highest since 1995-96, lifts China to the second largest importer of wheat after Egypt and comes as ill-timed rains damaged the country’s wheat crop in Henan, Shandong and Hubei, according to the USDA.”

The FT article added that, “China has been busy buying wheat from the US, Australia and Canada, but if traders and analysts are worried, it has not affected wheat prices.

“CBOT September wheat is trading around $6.50 a bushel, about 16 per cent lower than the start of the year, and down 4 per cent since the USDA published its latest supply and demand estimates earlier this month.”

Owen Fletcher reported in today’s Wall Street Journal that, “Soybean futures tumbled 4.8%, declining by the exchange-imposed daily limit, as a wave of sales of the oilseed by U.S. farmers weakened prices in cash markets.

“Soybeans for August delivery settled down 70 cents—the maximum move allowed in a single day—at $13.92½ a bushel at the Chicago Board of Trade, a three-month low for the front-month contract.

“Wednesday’s decline marked the first time since February 2011 that soybeans fell by their daily trading limit, and it left futures with a two-day slide of 8.4%.”

Also yesterday, Julian Hattem reported at The Hill’s RegWatch Blog that, “Lawmakers are pushing the Obama administration to make sure that a U.S. trade deal with Europe doesn’t subject American companies to a double set of regulations.

“The deal being considered goes beyond reducing tariffs and fees to how regulations and standards on both sides of the Atlantic will interact with each other and whether one set of rules can substitute for another.

“Lawmakers and business groups from a wide variety of sectors worry that one outcome could force them to have to deal with two sets of regulators, making it harder for businesses to run smoothly and wasting taxpayer resources.”


Regulations: Smithfield Review; and CFTC Issues

Ben Goad reported yesterday at The Hill’s RegWatch Blog that, “An interagency panel of U.S. regulators will take more time to consider the national security implications of a proposed $4.7 billion acquisition of Smithfield Foods, the Virginia-based company said Wednesday.

“Smithfield, the world’s largest pork processor and hog producer, and Shuanghui International announced the proposed deal in May, triggering a review by the Committee on Foreign Investment in the United States (CFIUS).

“The committee, led by Treasury Secretary Jacob Lew, is charged with determining whether purchases of U.S. businesses by foreign interests could threaten national security.

“Law provides for a 30-day review following notification of a potential acquisition. After that CFIUS has the option to extend the inquiry for up to 45 days. Smithfield said Wednesday that CFIUS had chosen to move to the second phase, potentially extending the review into September.”

And a news release yesterday from the House Ag. Committee stated that, “Today, Rep. K. Michael Conaway, Chairman of the House Agriculture Subcommittee on General Farm Commodities and Risk Management, held a hearing to examine the impact of the Commodity Futures Trading Commission’s (CFTC) actions on end-users. These are businesses that provide our daily goods and services, and rely upon derivatives contracts to manage the risks associated with their operations. Since the passage of the Dodd-Frank Act, end-users have shared consistent concerns that the CFTC is overreaching in its rulemaking and cautioned it would ultimately lead to higher costs for consumers.”


Renewable Fuel Standard (RFS)

Myke Feinman reported yesterday at DTN (link requires subscription) that, “Corn ethanol production is squeezing out production of advanced biofuels, is more polluting to the environment than gasoline, drives up the cost of food and feed, and should be phased out, according to testimony before a House subcommittee Wednesday afternoon exploring stakeholder impact of the Renewable Fuel Standard.”

Mr. Feinman noted that, “The hearing concluded a two-day process hosted by the House Subcommittee on Energy and Power seeking testimony from stakeholders affected by the RFS. The RFS, part of the Clean Air Act, was introduced in 2005 and amended in 2007. It is administered by the Environmental Protection Agency. It requires higher levels of renewables to be blended each year into petroleum-based fuels through 2022 when it reaches 36 billion gallons.”

The DTN item added that, “Chris Hurt, professor of agricultural economics at Purdue University, testified that there are two factors driving up the cost of grains: the RFS and increased demand for oilseed crops from China.

“‘RFS2 has increased the use of corn for ethanol production and to a smaller extent the use of soybean oil for biodiesel,’ Hurt said. ‘The second [driver] is often overlooked in the discussion of the impacts of the RFS and that is the tremendous increase in the exports of soybeans to China.’

“He said corn usage in the U.S. to meet ethanol needs went from 7.8 million acres in 2005 to 24 million by 2010, a 16-million-acre surge in demand. For soybeans headed to China, U.S. land used to grow these beans surged 12.8 million acres from 8.3 million acres in 2005 to 21.1 million acres in 2010.”


Political Notes

Emily Cahn reported yesterday at Roll Call Online that, “Scott Van Binsbergen, a Minnesota businessman and former staffer for retired Rep. Vin Weber, R-Minn., confirmed to CQ Roll Call on Wednesday that he is eyeing a bid against Rep. Collin C. Peterson, D-Minn., in the 7th District…The 12-term Democrat [Peterson] represents a district that Republican presidential candidates have carried each of the past three presidential cycles; GOP presidential nominee Mitt Romney won the district in 2012 with 54 percent.”

And Nathan L. Gonzales noted yesterday at Roll Call Online that, “Former Rep. Bobby Schilling, R-Ill., [who served on the Ag. Comm.] is going to put a Democratic gerrymander to the test.

“Democrats redrew the congressional map in Illinois before the 2012 elections to defeat Schilling and some of his GOP colleagues. They were successful, as Rep. Cheri Bustos, D-Ill., [who currently serves on the Ag. Comm.] defeated the incumbent, 53 percent to 47 percent, in a competitive race that didn’t end up being particularly close.

Without Schilling, Republicans wouldn’t have much of a shot of defeating Bustos. But since Schilling is running again, the contest should be competitive.

“Now that Schilling is in, we’re moving the race from Democrat Favored to Lean Democrat in the Rothenberg Political Report/Roll Call ratings.”

Keith Good