FarmPolicy

September 2, 2014

Farm Bill; Ag Economy; Biofuels; and, Immigration

Farm Bill

A news release yesterday from Senate Ag Committee Chairwoman Debbie Stabenow (D., Mich.) stated that, “[Stabenow] today met with community leaders at Hunter Park GardenHouse in Lansing to discuss how the production and sale of more locally grown foods boosts the local economy. According to the Michigan Department of Agriculture, if every household spent just $10 dollars per week on locally grown food it would generate nearly $40 million in economic activity in Michigan. Senator Stabenow heard from local leaders who are working on food initiatives in Lansing that will help boost economic growth, support Mid-Michigan agriculture, and increase access to more locally grown, healthy food choices for families.”

The release noted that, “In June, the Senate passed Chairwoman Stabenow’s 2013 Farm Bill with wide bipartisan support (66-27). The Farm Bill expands support for community gardens, farmers’ markets and local food hubs to boost Michigan agriculture, our state’s second largest industry. The bill also strengthens crop insurance and provides disaster relief for fruit and vegetable growers who were affected by last year’s freeze and drought. While strengthening key initiatives to help farmers and agriculture businesses create jobs, the Farm Bill also cuts unnecessary programs and streamlines existing ones to reduce the deficit by $24 billion.”

Steve Carmody reported yesterday at Michigan Radio Online that, “Michigan Senator Debbie Stabenow is hopeful getting a deal on a new Farm Bill won’t be derailed by a looming deadline to avoid a federal government shutdown.

“The current Farm Bill’s mix of farm subsidies and low-income food programs expires at the end of September. The next day, unless a budget deal can be reached, the federal government may have to shut down.”

Mr. Carmody noted that, “‘Regardless of the broader discussion going on the budget, we can get this done,’ says Stabenow.

“The Michigan Democrat, who leads the Senate Agriculture committee, says it’s up to the House Republican leadership to get behind one plan.

“‘We can get this done regardless of the broader debate on the budget,’ says Stabenow, ‘But we have to have a willingness by House leadership….the Speaker (John Boehner)…Majority Leader (Eric Cantor) have to decide they just want to get this done.’”

A report yesterday on the Agriculture Today radio program by Mike Hergert (Red River Farm Network (RRFN)) included remarks on the Farm Bill from Senate Ag Committee member Amy Klobuchar (D., Minn.), who noted that, “We don’t want to have another extension, and we don’t want to go back to decades old price numbers, we want to be able to move forward just as our country is moving forward with agriculture, one of our best exports that we have in this country.” (Related RRFN audio replay here (MP3- 1:30)).

And Julie Harker reported yesterday at Brownfield that, “Missouri Congresswoman Vicki Hartzler says she would support food stamp reforms with cuts as high as $40 billion dollars in a stand-alone bill or in a farm bill. Hartzler supported the $20 billion in nutrition program cuts in the House Farm Bill that failed to pass.

“The Republican, and only Missouri member of the House Ag Committee, says the House nutrition reform bill that will likely be put forth makes sense because it contains a reasonable work requirement tied to food stamp benefits, ‘But, the work requirements include not just working on a job for 20 hours a week but for also going to work training programs for 20 hours a week would qualify. And, volunteering for 20 hours a week would qualify as work.’

“Hartzler tells Brownfield Ag News, the requirements would be for able-bodied adults.  But, we asked, what about other food stamp beneficiaries? ‘There’ll be no changes for them and it’s very important that the public understands that – that senior citizens, the disabled and children would have no work requirements put on them. And, so, it would be only able-bodied adults without dependents that the states would have the option of it. So, the federal government, we’re not mandating this at all. We would just allow the state legislatures IF they wanted to,’ Hartzler answered.”

An audio clip from the Brownfield interview with Rep. Hartzler, which also included remarks on “permanent law,” can be heard here (MP3- 1:59).

Meanwhile, Chris Clayton reported yesterday at the DTN Ag Policy Blog that, “Farm groups and lawmakers will have some significant discussions about the role of target prices when conference talks begin about marrying the commodity titles. More farmers may also pay attention if market price declines continue and the possibility of actual payments on target prices or revenue benchmarks hit closer to home.

“Keep in mind, farm groups that testified in hearings before both the House and Senate stressed that they deemed crop insurance to be more vital than the commodity title and wished to protect insurance from cuts.”

The DTN update contained a brief overview of the differences in the Senate and House commodity titles.

In other policy news, Nirmala Menon reported yesterday at the Canada Real Time Blog (Wall Street Journal) that, “Canada is again taking its dispute over a U.S. meat-labeling rule to the World Trade Organization.

“Ottawa says Washington’s amendments to its mandatory country-of-origin labeling rule don’t conform to global trade obligations, so it has asked for a WTO compliance panel to be struck to rule on the matter, confirming a previous report by Canada Real Time.”

The update noted that, “A spokeswoman for the U.S. Trade Representative said the U.S. is ‘disappointed that Canada and Mexico have decided to litigate this matter further’ and ‘strongly believes’ the WTO will side with Washington…[I]n June, Canada unveiled a list of items which could be targeted for retaliatory tariffs.”

 

Agricultural Economy

University of Illinois Agricultural Economist Darrel Good indicated yesterday at the farmdoc daily blog (“Large Number of Late Season Corn Market Factors”) that, “Corn prices at this time of year are typically dominated by yield prospects of the U.S. crop with those prospects pretty well settled. This year, there is considerable uncertainty about U.S. production prospects as well as changing indications of corn consumption.

“Production uncertainty stems from both acreage and yield considerations. For acreage, the USDA’s National Agricultural Statistics Service (NASS) currently estimates planted acreage at 97.379 million acres. The Farm Service Agency report of prevented acreage released last week indicated prevented corn acreage of 3.411 million acres. The estimate exceeded expectations and resulted in speculation that the NASS estimate might eventually be reduced. However, there has not been a close relationship between prevented acres and the change in the NASS estimate of planted acres from June to the final estimate. In 2010, for example, 2.1 million corn acres were reported as prevented, but the NASS final estimate of planted acres exceeded the June estimate by 320,000. In 2011, prevented acres totaled 3.01 million, yet the final NASS estimate of planted acres was only 346,000 less than the June estimate.”

Yesterday’s update noted that, “The NASS August forecast of the U.S. average corn yield of 154.4 bushels per acre was three to four bushels less than expected. The initial reaction was that the forecast would be larger in subsequent reports. However, weather conditions have become less favorable as large areas of the Dakotas, Minnesota, Wisconsin, Iowa, Missouri, and Illinois received less than average precipitation over the last 60 days and particularly over the past 30 days. While more seasonal temperatures in coming weeks will help advance maturity, the combination of warm and dry weather will likely result in declining crop condition ratings and yield expectations more in line with the USDA forecast.”

After additional analysis, yesterday’s farmdoc article stated that, “Taken together, recent developments suggest that new crop corn prices may have established a low before harvest. At least the extreme lows that have been reflected in some private forecasts now seem unlikely. The September 12, USDA Crop Production report looms as very important for price direction.”

Cheri Zagurski and Anthony Greder reported yesterday at DTN (link requires subscription) that, “Corn condition ratings also dropped in the past week to 13% very poor to poor compared to 11% last week, [according to USDA's latest weekly crop progress report.]

Soybean condition ratings worsened slightly, adding one percentage point to the poor category and one percentage point to the fair category at the expense of the good category. Fourteen percent of the crop remains rated excellent, equal to last week,” the DTN article said.

Perry Beeman reported yesterday at The Des Moines Register Online that, “The state’s corn crop has tasseled, but the plants still aren’t as far as long as they are in an average year, the U.S. Department of Agriculture reported Monday.

Less than half the corn and soybean crop is in good or excellent condition.”

AP writer Steve Rothwell reported yesterday that, “Corn is gaining the most in almost four months as dry weather is forecast for the Midwest.

“December corn rose 22 cents, or 4.7 percent, to $4.85 a bushel Monday. That’s the biggest one-day increase since April 29.

“The forecast for drier weather has helped corn prices rebound from their lowest level in almost three years. Corn has slumped this year after the government said in the spring that growers intended to plant the most corn in almost 80 years.”

Also yesterday, Reuters writer Tom Polansek reported that, “The long reach of last summer’s devastating U.S. drought has reversed the flow of the mighty Mississippi River – for corn, at least, with grain-laden barges beginning the rare movement north to Midwest ethanol plants from southern farms.

“The shipments come as the U.S. faces a 17-year low in corn supplies by the end of the month due to the historic drought, which slashed harvests and sent grain prices to record highs a year ago.”

Mr. Polansek explained that, “The tight supply is upending the country’s tradition-bound agricultural economy, which is holding its breath in the weeks before an expected record harvest begins some time next month following a wet spring and summer.

Grain, which typically flows south on the river to export markets, is heading north from states like Louisiana and Arkansas, where farmers begin harvesting earlier than their Midwestern counterparts. Normally, much of that grain would ship overseas, but after prices climbed following the drought, exports are set to drop to a 41-year low.”

The Reuters article added that, “The 2013 corn crop is expected to come in at a record 13.8 billion bushels, up 28 percent from last year. If that happens, supplies will build to an eight-year high, making the famine-to-feast reversal the largest annual swing in more than half a century.

“But even with a big harvest coming, Mother Nature has added a unique twist: A historically wet spring delayed planting by weeks, and cool wet weather that followed means farmers expect a delayed harvest.

“Instead of drought, this year farmers are worried about an early frost that could wipe out their crops–a new anomaly that would delay a return to normalcy for the farm economy.”

Meanwhile, AP Bruce Smith reported yesterday that, “South Carolina’s governor warned Monday that torrential rains soaking the Southeast have flooded fields and wiped out crops, creating a disaster for agriculture in her state alone on par with a tornado or a hurricane.

“Soggy conditions around the region have delayed harvests, cut yields and will be felt well into winter as farmers worry there may not be enough feed for livestock when the growing season is over.”

In news regarding trade issues, James Politi reported yesterday at The Financial Times Online that, “The top US trade official pressed Japan to open up its car and insurance markets as transpacific trade talks reach a critical stage, with negotiators trying to seal a deal by the end of the year.

Michael Froman, the US trade representative, delivered a blunt message about persistent ‘barriers to Japan’s market’ in a speech in Tokyo on Monday, before heading to Brunei to meet fellow trade ministers for the latest round of talks on the so-called Trans Pacific Partnership.”

The FT article added that, “But the US also has what Mr Froman describes as its own ‘sensitivities’. In the coming weeks it will have to lay bare how far it is willing to go to phase out its own protections for the American sugar, dairy and textile sectors. Australia, New Zealand, and Vietnam are most irked by these measures.”

Eric Bradner reported yesterday at Politico that, “To seal a blockbuster trade deal that would let the United States export rice to Japan and dairy products to Canada, free trades advocates say, the Obama administration must concede at least one sweetener: More sugar imports from Australia.

“Other sticking points include Vietnamese shoes, New Zealand milk and privacy worries involving Big Data as the U.S. and other countries approach the 19th round of talks for the Trans-Pacific Partnership.

“The round is scheduled to begin Thursday in Brunei and last 10 days. It’s seen as especially important because it will feature ‘ministerial-level’ officials, including U.S. Trade Representative Michael Froman and his foreign counterparts, rather than just their negotiators.”

Mr. Bradner explained that, “In particular, [National Foreign Trade Council President Bill Reinsch, a top Commerce Department official under President Bill Clinton] and other trade experts said negotiators must resolve a situation that has simmered since the United States locked the sugar industry in Australia – the world’s eighth largest producer, at 3.5 million tons per year – out of a 2005 deal that otherwise expanded trade between the two countries. The United States consumes more than 10 million tons of sugar annually, but allows only 89,000 tons of Australian cane sugar imports before imposing high tariffs on anything above that quota.

However, as might be expected, domestic sugarcane growers don’t want the 2005 deal re-opened. That deal came the same year that the sugar industry joined labor and environmental groups in mounting a fierce battle against President George W. Bush’s Central America Free Trade Agreement, although Congress ultimately approved it.”

 

Biofuels

DTN Ag Policy Editor Chris Clayton reported yesterday (“In Search of Cellulosic Fuel”) that, “For too long, legitimate commercial cellulosic ethanol has been just on the horizon. By now, the biofuels industry was supposed to be producing 1 billion gallons of cellulosic fuel a year. By 2022, the Renewable Fuels Standard expects nearly 16 billion gallons of cellulosic ethanol annually.

“In early August, EPA approved a cellulosic requirement of just 6 million gallons of cellulosic fuel, ratcheting back from earlier proposals requiring 14 million gallons of cellulosic blend. Then petroleum groups petitioned EPA to reduce the Renewable Fuels Standard for 2014. Regarding cellulosic ethanol, the petroleum industry stated the blending standard should reflect actual production.

Members of Congress from both parties also have been pushing to repeal or at least modify the Renewable Fuels Standard. More hearings are expected once lawmakers return from their August break.”

A news release yesterday from Purdue University stated that, “The nation likely can produce federally mandated levels of biofuels in 2014 if the U.S. Environmental Protection Agency reduces its requirements by 2.3 billion gallons, Purdue University energy policy specialist Wally Tyner says.

“Tyner, the James and Lois Ackerman Professor of Agricultural Economics, projects that refiners could reasonably expect to produce 15.85 billion gallons of biofuels, less than the 18.15 billion that the EPA requires in its Renewable Fuel Standard for 2014. The EPA said on Aug. 6 that it will ‘propose adjustments’ to next year’s volume requirements because of limitations hindering production of biofuels, suggesting that the target levels will be reduced.

“‘The devil is in the details. However, it is clear that if the EPA does what is implied … the RFS moves from being unworkable to quite manageable,’ Tyner says in his report ‘The Biofuels Renewable Fuel Standard – EPA to the Rescue’  on the PennEnergy website.”

Also, Charles Lane noted on the opinion pages of The Washington Post today (“Ethanol mandates creating an economic car-wreck”) that, “Still, the EPA’s action is far from a permanent fix. The 2007 law allows the agency to grant such waivers for only a year at a time. Oh, and here’s another perversity: Eliminating the ‘blend wall’ would destroy the value of RINs people have bought to cope with it.

Meanwhile, a central purpose of the 2007 law — energy ‘independence’ — is well on its way to being met through other means, chiefly a boom in oil production that Congress and the Bush administration never anticipated. The Energy Department projected earlier this year that the United States will be able to supply two-thirds of its petroleum needs through the next three decades.”

 

Immigration

Jordy Yager reported yesterday at The Hill Online that, “Rep. Bob Goodlatte (R-Va.) faced off against more than three dozen immigration reform advocates at a packed town hall meeting at the Augusta County Government Center on Monday evening.

“The 11-term Goodlatte fielded a wide range of questions ranging from government spying programs to background checks on gun purchases and defunding ObamaCare before a packed room of about 200 voters for nearly two hours.

But the focus of the evening for the chairman of the House Judiciary Committee was immigration reform, as Goodlatte defended his step-by-step approach and explained his desire to implement enforcement mandates before creating a pathway to legal status for people in the country unlawfully.”

Keith Good

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