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Farm Bill; RFS; Ag Economy; and, Immigration

Farm Bill

Gwin Faulconer-Lippert, of News Radio 1000 KTOK radio (Okla. City), spoke Sunday with House Agriculture Committee Chairman Frank Lucas (R., Okla.) about a variety of current policy variables regarding the Farm Bill.

An audio replay of the Chairman’s remarks from Sunday can be found here, while an unofficial FarmPolicy.com transcript of the conversation with Gwin Faulconer-Lippert and Chairman Lucas is available here.

Chairman Lucas stated that, “Technically the five year farm bill, which we extended for a sixth year, expires at the end of September, but farm policy, the commodity title, actually works in conjunction with the crop cycle, so the first thing that would be directly impacted would be milk at the end of December. The next thing in our part of the world would be wheat when it’s cut next summer, then the corn crop after that, and the cotton crop after that.

So it needs to be done by the end of September to provide certainty to producers out there so they know where they stand, they understand what the crop insurance program is going to look like, and when they explain that to their bankers and their spouses and their landlords, they’re in a position of knowledge. But yes, there is a sense of urgency about getting this process done.”

Chairman Lucas noted that, “And at the present moment in the United States House leadership is advocating that we pass a freestanding nutrition bill,” and he pointed out that, “My liberal colleagues in the United States House don’t want to make any reforms in food stamps whatsoever…[B]y the same token, my friends on the conservative side didn’t think we went far enough in any of that stuff, and instead of $40 billion we should have saved 100 plus billion.”

Chairman Lucas indicated: “[H]ow do I get 218 out of 435 people to vote with me? That’s what I’m working on right now. And hopefully, by the end of this week, either we can come to a consensus bill that the majority will support on the nutrition title or we’ll just acknowledge it can’t be done and I’ll go on to conference with what I have—the Senate’s already passed their bill—and we’ll work out our differences.  But yes, I’m caught between a rock and a hard place. I am being pelted with political stones by both sides.”

Later in the interview he added that, “The Senate has passed a bill with food stamps in it and they’re waiting to conference. If we in the House cannot work out a freestanding food stamp bill, it’s my view that we need to acknowledge that we can’t achieve consensus and just move forward, take the non-food stamp bill that the House passed and then sit down with the Senate and begin to work out everything.”

On the commodity title, Chairman Lucas explained that, “But I’d remind some of our listeners, as the direct payment goes away—that’s the old traditional safety net of the last three farm bills—the shift is over to crop insurance to address both weather and price. But it’ll be a system by which you have to pay a premium to participate. And when Mother Nature smiles on us, which isn’t always the case in Oklahoma, you’ll get nothing back, but you’ll have to pay the premium to participate in the program every year if you want to be there. On the price side, you’ll still have to pay a premium to participate, but it will only help you when they’re bad years.

“Right now under the direct payment system you get the annual payment no matter how good or bad conditions are, you get the same payment. At least by shifting this focus to insurance everybody will make a premium every year who wants to participate, and they’ll only benefit from it when conditions are bad, it’ll only help you when you really need help. In the good years you’ll get nothing out of it, but you’ll pay the premiums, just like the way insurance works on everything else.”

And with respect to the executive branch, Chairman Lucas pointed out that, “And then ultimately, remember, you’ve got to get President Obama to sign the bill. And this is a White House and a President that have a very limited understanding of rural America or how our food and fiber is raised, and that presents special challenges, too, when you’ve got somebody who’s so far removed from the countryside.”

Meanwhile, a news update on Monday from Rep. Jackie Walorski (R., Ind.) stated that, “Joined by House Agriculture Committee Chairman Frank Lucas (OK-3), [Rep. Walorski] today hosted a roundtable discussion with Hoosier farmers to address important issues facing the agriculture industry.  Held by Starke County Farm Bureau President Brad Lawrence at LTL Farms in Knox, Walorski and Lucas provided a legislative update on the farm bill and listened to questions and concerns from members of the Indiana Farm Bureau and local farmers.” (Related photo here).

Ron Nixon reported in today’s New York Times that, “The Health Impact Project, a Washington research group, released a study on Tuesday about the impact of the proposed cuts to the food stamp program. The project is a collaboration between the Robert Wood Johnson Foundation and the Pew Charitable Trusts.

“The report said the cuts to the program, also known as the Supplemental Nutrition Assistance Program, or SNAP, would not only affect the ability of low-income households to feed themselves but would also increase poverty.”

New York Times writer Jonathan Weisman noted this week that, “House and Senate negotiators have yet to reach agreements on a farm bill, a budget, an immigration law overhaul, or an annual defense policy law. The House has yet to pass legislation reauthorizing the food stamp program after supplemental nutrition assistance was stripped from the House’s version of the farm bill this month.”

In addition, Ramsey Cox reported yesterday at The Hill’s Floor Action Blog that, “Sen. Mike Johanns (R-Neb.) warned his colleagues that they ‘are headed for a big multi-train pile up’ in September, when lawmakers return to negotiate a fiscal path forward for 2014.

“Johann pointed out that when the Senate returns from the month-long August recess, senators will have only a few weeks to negotiate a way to fund the federal government. Fiscal 2014 starts Oct. 1. It is unlikely the Senate and House would be able to consider all 12 appropriations bill within that time, especially since they still haven’t reached a deal to hold a conference on budget differences.”

And David Bennett reported yesterday at the Delta Farm Press Online that, “House leadership continues to insist that nutrition program legislation – removed from the farm bill it passed on a party-line vote earlier in July – must be addressed prior to a farm bill conference with the Senate.

“At the end of this week, Congress will go into recess for the month of August. That leaves scant time in September for the House to come up with a nutrition bill, conference the farm bill, and then pass what has been agreed to.”

Erik Wasson, a staff writer for The Hill, tweeted yesterday that, “Sen. Pat Roberts says he doesn’t expect any progress on conferencing #farmbill this week. ‘We’ll be lucky if we can appoint conferees’

In other developments, a news update yesterday from Sen. Patrick Leahy (D., Vt.) stated that, “U.S. Sens. [Leahy], Thad Cochran (R-Miss.), Bob Casey (D-Pa.) and Jerry Moran (R-Kan.) Tuesday announced the introduction of their bipartisan Good Samaritan Hunger Relief Tax Incentive Act.  The bill would continue and expand a proven and effective tax incentive to encourage businesses and farms to donate surplus food to their local food banks.”

And a news release yesterday from Sen. John Thune (R., S.D.) indicated that, “[Sen. Thune], Ranking Member of the Senate Committee on Commerce, Science, and Transportation, today praised his committee colleagues for passing the Drought Information Act of 2013 (S. 376), which reauthorizes the National Integrated Drought Information System (NIDIS).”


RFS- Renewable Fuel Standard

Ken Anderson reported yesterday at Brownfield that, “There’s growing pressure on Congress to modify or even repeal the Renewable Fuels Standard (RFS).

Iowa Senator Chuck Grassley describes support for the RFS as ‘weak in the House and weakening in the Senate.’

But Grassley thinks RFS still has enough backers in the Senate and the Obama Administration to fight off any attempts to change it.”

Myke Feinman reported yesterday at DTN (link requires subscription) that, “A repeal of the Renewable Fuel Standard is off the table because there are not enough votes, according to Rep. John Shimkus, R-Ill., who now heads a four-member Republican taskforce to examine possible RFS reform.

“In the wake of a two-day hearing last week with testimony from stakeholders’ concerns over the RFS, House Energy and Commerce Committee Chairman Fred Upton, R-Mich., selected four Republican members of the House subcommittee holding the hearings to form a taskforce to explore possible ways to reform the standard.”

Mr. Feinman noted that, “But outright repeal of the RFS, something requested by oil and gas industry representatives at the hearings as well as by representatives from the food and agriculture industries, is off the table for the taskforce, Steve Tomaszewski, press secretary for Shimkus told Schneider Electric Tuesday morning.

“‘He pretty much said that at the hearings,’ Tomaszewski said. ‘There are not enough votes for a total repeal. So we have to find an in-between.’”

Meanwhile, Amy Harder reported earlier this week at National Journal Online that, “If there was a referee in the fight over a federal biofuels mandate, it would be Rep. John Shimkus, R-Ill.

“First elected to Congress in 1996, Shimkus represents a sprawling district in Southern Illinois that is home or close to home to at least two oil refineries and five ethanol plants. These industries are at opposite ends of a bitter fight over what, if anything, Congress should do to address concerns about the renewable-fuel standard, a federal mandate that refineries must meet by blending biofuels—mostly corn-based ethanol—with gasoline. Illinois is also the country’s No. 2 producer of corn. You can drive three hours in Shimkus’s district, which spans 200 miles up, down, and across, and see nothing but cornfields. The corn and biofuels industries want Congress to defend the mandate, while the oil, livestock, and food industries want to repeal it altogether.

“‘I’m in the middle of this fight. They’re both throwing blows, and I’m getting caught in the middle and taking a few,’ Shimkus said in a recent interview in his office. ‘I could have easily just stayed out of it and put my head in the sand. But I guess you get to a point. Why did I do it? Because they are my friends. If you do nothing, someone gets harmed.’”


Agricultural Economy- Trade, Production

AP writer Kelly P. Kissel reported yesterday that, “Federal agriculture officials told members of Arkansas’ congressional delegation Tuesday that China has stopped importing the state’s poultry products.

“Sen. Mark Pryor decried the decision , saying an ‘isolated incident’ led to the ban. Pryor didn’t say what the incident was, but birds on a Scott County farm tested positive for a low-pathogenic strain of avian flu in June.

“‘China is being unfair by banning poultry imports from our entire state,’ said Pryor, D-Ark.”

And AP writer Nigel Duara reported yesterday that, “Japan has agreed to resume importing Northwest soft white wheat two months after a genetically modified rogue strain of the crop appeared in an Oregon farmer’s field.

“The news was met with cheers by regional and national wheat growers.”

In other trade news, Julian Pecquet reported yesterday at The Hill’s Global Affairs Blog that, “The Obama administration continues to work with Congress to get fast-track trade authority into law as soon as possible, the top U.S. trade negotiator said Tuesday.

“U.S. Trade Representative Michael Froman told the U.S. Chamber of Commerce that he’s ‘cautiously optimistic’ that the Trans-Pacific Partnership (TPP), a pending trade deal with Pacific rim countries, will be finalized this year. The administration wants to have Trade Promotion Authority (TPA), or so-called fast-track powers, in order to bring the negotiations to a close.”

James Politi reported yesterday at the Financial Times Online that, “Yet there is a political battle brewing in Congress over the renewal of Trade Promotion Authority, which expired in 2007 and would make it much easier and faster for the Obama administration to pass the TPP and EU deals through the US legislature. A bipartisan bill in the Senate was supposed to have been reached by the end of last month, but has so far not materialised.

“Some business groups as well as Republican lawmakers have accused the White House of tepid enthusiasm for TPA. Mr Froman said USTR was working with Congress to reach a deal on so-called ‘fast track’ authority, offering technical assistance to lawmakers, but suggested it was really their responsibility to come up with an agreement.”

The Wall Street Journal editorial board today commented on the potential acquisition of Smithfield Foods by the Chinese conglomerate Shuanghui in an item titled, “The Other White Medicine: The worst argument so far to reject the Smithfield pork deal.”

Meanwhile, Emiko Terazono reported on Monday at the Financial Times Online that, “Sugar jumped almost 3 percent to a four-week high as uncertainty about the impact on output from bad weather in Brazil triggered covering of investors’ bearish bets.”

And Alexandra Wexler reported yesterday at The Wall Street Journal Online that, “Domestic-sugar futures rose to 3 1/2-month highs Tuesday as the market anticipated the latest round of sugar purchases by the U.S. Department of Agriculture.

“The USDA said last week that it planned to buy $18.7 million of domestic sugar Tuesday, after buying $43.8 million of such purchases earlier this month.”

Sameer C. Mohindru and Warangkana Chomchuen reported in today’s Wall Street Journal that, “Asia is awash in rice, as favorable weather and government support for farmers combine to produce a bumper crop.

The glut is driving down prices for big rice importers in Africa and China. But consumers in some of the biggest rice-producing nations, including Thailand and India, are paying higher prices as surplus supplies sit in government warehouses. Asia’s surplus will have little impact in the U.S., which produces different varieties of rice.”

Also, Owen Fletcher reported in today’s Wall Street Journal that, “Russian potash producer Uralkali’s move to end a global cartel in the potash market will likely give some U.S. farmers a boost from lower fertilizer prices and could eventually show up in small ways in the supermarket.

“Potash, a potassium-based fertilizer, is one of three key fertilizer products—along with nitrogen and phosphate—that farmers often apply to their fields before planting crops such as corn, soybeans or wheat.”

Mr. Fletcher noted that, “Uralkali said its move would likely result in potash prices tumbling 25%, to about $300 per ton, by the end of year.

Such a price drop could save the average U.S. corn farmer about $10 an acre in production costs, which would cut total costs by 3% from around $330 an acre for many producers, said Glen Buckley, chief economist at St. Louis-based NPK Fertilizer Advisory Service, which advises companies in the fertilizer industry…[C]orn farmers are likely to welcome any reduction in production costs, especially because corn and soybean prices have declined sharply from last year’s highs. U.S. corn futures prices on Tuesday closed 40% below their record settlement of $8.3125 a bushel reached last summer, when a historic drought was withering crops and cutting the outlook for corn supplies.”

In related news, University of Illinois Agricultural Economist Gary Schnitkey noted yesterday at the farmdoc daily blog (“2014 Crop Budgets”) that, “The 2014 Illinois Crop Budgets are now available on farmdoc (click here for budgets). These budgets give projected revenues, costs, and returns for corn-after-soybeans (corn planted in farmland that had been in soybeans the previous year), corn-after-corn, soybeans-after-corn, soybeans-after-two-years-corn, wheat, and double-crop soybeans.”



A news release yesterday from the American Farm Bureau Federation (AFBF) stated that, “The [AFBF] and more than 400 leading U.S. businesses and advocacy organizations called on the House to enact immigration reform legislation. The letter, sent today, was signed by a broad cross section of industries that includes agriculture, housing, retail, tourism, hospitality, technology, engineering, manufacturing, finance, venture capital, consumer electronics and others with a combined presence in every state in the United States.”

Keith Good