FarmPolicy

October 31, 2014

Farm Bill; FDA; Budget; and the Ag Economy

Farm Bill

Rep. Kevin Cramer (R., N.D.) was a guest Monday on the Valley News Live (Fargo, N.D.) Point of View television program where in part, the conversation focused on the Farm Bill.

Rep. Cramer indicated that, “I think when we get back the first thing we’ll do is test the waters and see if the—there is an agreed upon nutrition bill right now.  If, in fact, we have enough votes to pass that, we’ll bring it up and pass it.  If not, we’ll bring it up probably the next week, either pass it or not pass it, because to me whether we pass it or don’t pass it, the Senate does have it in theirs.  After that I think you’ll see us name confereesThe Speaker has said he will name conferees whether we pass the nutrition piece or don’t pass the nutrition piece.

“So do we get it done by September 30th?  We’ll perhaps get the House piece done.  The conferees will be named.  Maybe it will go into October and even November before the whole thing is finished.  But really, even though the current bill expires September 30th, it really doesn’t have any impact until January, so we have a little time to do it, but we have to get it done.  We have got to get it done.”

The host of Point of View also showed Rep. Cramer this graphic illustration depicting farm program and nutrition spending as a share of the federal budget for selected years.  The graph came from a recent presentation by Dr. Stephanie Mercier, an Agricultural Policy Consultant at Agricultural Perspectives and former Chief Economist at the Senate Ag Committee.

Rep. Cramer was asked, “Why is it so tough for Democrats to understand that graphic?”

In response, Rep. Cramer noted that, “Well, I think they understand it, Chris, but I think they support it because there is a coalition in Washington that supports permanent dependency on the government.  And that’s what you have when you have perpetual welfare.”

He added that, “Now we can have a transparent debate about both pieces.  We passed the farm piece.  Next it’ll be the nutrition piece.  And the bottom line is, Chris, it will go to conference committee.  The nutrition program will be put back in there.  It won’t be as drastic of cuts as the Republicans want.  That’s what compromise is all about.  And in the end I think we’ll have a very good, in fact, superior farm bill.”

In a radio interview earlier this week with Mick Kjar (Ag News 890, Terry Loomis, Farm Director (Fargo, ND)), Senate Agriculture Committee member Heidi Heitkamp (D., N.D.) also discussed the Farm Bill.

In part, Sen. Heitkamp noted that, “I can only say, you know, that you have to take a look and take a cue from Collin Peterson, who thinks that the House actions were irresponsible, that what we needed to do was actually pass it all in one package, get it into conference committee so it could be worked on in August.

“But now we’re at the point when we come back there’s only ten or 15 working days that people will have, and we still don’t even have conferees from the House.  And so, you know, I think this falls squarely on the shoulders of the House of Representatives.  The Senate stands ready to go to negotiations and go to conference committee on a farm bill.  We just can’t get the votes to move.”

Sen. Heitkamp added that, “This is a compromise that was worked out years and years and years ago so that the farm bill would be relevant to every member of the House of Representatives, every member of Congress.  You take and separate [nutrition] out, I think you have an extraordinarily difficult time in passing a farm bill into the future.

Also on the nutrition-Title I symmetry issue, Sen. Heitkamp explained that, “The thing is that we haven’t done our job showing the connection between food security and a farm bill.  And a lot of people think that a farm bill is simply a bunch of subsidies for farmers and doesn’t really have any benefit beyond that, and we all know that that’s not true in our area.  But I think that we would have a hard time convincing a lot of urban legislators that that’s true.  And as our representation goes more and more towards the urban side, we need to make sure that that farm bill has some relevance to those folks.”

A report earlier this week at Siouxland News (Sioux City, Iowa) Online indicated that at a town hall meeting in Sioux City, Sen. Charles Grassley (R., Iowa) noted that, “I believe coming out of that conference you have to have both the Food Stamp Bill and a Farm Bill together, that’s not necessarily the way I like it but as a practical matter that’s what you’re going to have to do to get a bill to the President. I think we’ll get a bill to the President.”

And a recent update from WEEK-TV (Peoria, Il.) quoted House Ag Committee Member Cheri Bustos (D., Il) as saying, “All the members of congress are back in their own districts. In my case, I am talking to farmers everywhere I go. It is the same message and that is do your best to get a five-year farm bill through.”

Rep. Rick Crawford (R., Ark.), the Chairman of the House Ag Subcommittee on Livestock, Rural Development, and Credit, tweeted yesterday that, “We need a ‪#FarmBill for farmers to make planting decisions. Hearing from growers in Wheatley today.”

Also, an update posted yesterday at AgWired.com, which was filed from the Farm Progress Show in Decatur, Il., included audio interviews with both House Ag Committee Member Rodney Davis (R., Il.) and Rep. John Shimkus (R., Il.).

In part, the AgWired report noted that, “Davis said he was shocked when the farm bill failed in the House and called it ‘probably the worst day I’ve had in Congress’ but he is hopeful they will get it done yet. ‘We passed an ag-side only, didn’t change hardly anything, and that’s going to give us a chance to conference that portion. And we’re going to go back to Washington at the beginning of next month and pass a food and nutrition side which I hope then is combined back together.’”

Yesterday’s update added that, “Congressman John Shimkus, who represents Illinois’ 15th district, says nutrition is still going to be tough. ‘It’s going to be $40 billion in major reforms,’ he said. ‘But once we do that, I do believe (both bills) will go to conference and Chairman Lucas and Debbie Stabenow will work their magic.’”

And an update yesterday from Sen. John Boozman (R., Ark.) noted in part that, “We’re visiting 15 counties in Arkansas this week as part of our annual Agriculture Tour. The tour takes on extra significance as we are running up against the September 30th expiration of the Farm Bill, legislation that dictates our nation’s agriculture policy.  I’m honored to be on the committee that will reconcile the differences between the Senate and House bills.”

A news release yesterday from Senate Ag Committee Member Michael Bennet (D., Colo.) stated that, “[Bennet] today sat down with leaders from Colorado’s agriculture and rural communities in addition to local farmers and ranchers to discuss trade priorities and the critical part agricultural exports play in our state’s economy.”

Meanwhile, a news release yesterday from Senate Ag Committee Member John Hoeven (R., N.D.) stated that, “[Hoeven] today convened roundtables in Grand Forks and Minot with Risk Management Agency (RMA) Administrator Brandon Willis to clarify new rules for the prevented planting crop insurance program. Hoeven was joined by Senator Heidi Heitkamp and representatives from North Dakota’s agriculture groups to continue working to make the prevented planting program workable for North Dakota producers.”

In other news regarding crop insurance, DTN writer Todd Neeley reported yesterday that, “U.S. farmers would be able to get reduced crop insurance premiums by taking steps to manage soil health as a risk-management strategy as part of a pilot program the Natural Resources Defense Council is expected to propose to the U.S. Risk Management Agency.

“NRDC officials announced the plan Tuesday during a press conference on the release of a study looking at how the current federal crop insurance program encourages farmers to turn to crop insurance to manage weather-related crop risks rather than taking steps to improve conservation and soil health.”

Such a program is not unprecedented. For example, two years ago, RMA started a pilot program that offered premium discounts to farmers who used genetically-engineered corn varieties,” Mr. Neeley said.

The DTN article added that, “Tom Zacharias, president of National Crop Insurance Services, said in a statement that NRDC’s assertion that current crop insurance encourages farmers to take risks ‘lacks adequate analytical foundation.’

“‘The primary driver behind planting decisions is crop prices — which have increased dramatically, doubling since 2006,’ he said, ‘not crop insurance policies that farmers purchase to manage risk. The 326 million acres planted in 2012 was about the same as the 328 million acres averaged over 1981 to 2012.’

“Zacharias said crop insurance instead serves as a ‘disincentive to unnecessary risk taking.’

“‘That is because farmers have high deductibles and pay a significant portion of the premium out of their own pockets,’ he said.”

And with respect to conservation issues, DTN writer Todd Neeley reported yesterday that, “USDA released a new report Tuesday that shows voluntary conservation efforts have reduced sediment and nutrients loss from farms in the Mississippi River basin.

“The report released by USDA’s Natural Resources Conservation Service this week shows conservation work, like controlling erosion and managing nutrients, has reduced the edge-of-field losses of sediment by 35%, nitrogen by 21% and phosphorous by 52%.”

In more specific news regarding nutrition issues, AP writer Carolyn Thompson reported yesterday that, “After just one year, some schools around the country are dropping out of the healthier new federal lunch program, complaining that so many students turned up their noses at meals packed with whole grains, fruits and vegetables that the cafeterias were losing money.”

However, an update posted yesterday at the USDA Blog stated that, “Today a news report claimed that schools across the country are dropping out of the National School Lunch Program because the standards are too difficult to implement.

The truth is that the vast majority of schools across the country are meeting the updated meal standards successfully, which is so important to help all our Nations children lead healthier lives. Even before the new standards took effect and more resources were available, many schools across the country were leading the way with healthier options and appropriate portion sizes. In fact, schools that adopted the changes earlier report that participation increased as students and parents became accustomed to the healthier options. USDA continues to provide additional flexibility and technical assistance to schools as they all now work to offer healthier meals. We also encourage the very few eligible school districts that have chosen not to participate in the program to take steps to ensure all children will still have access to healthy, affordable meals during the school day.”

Also, USDA’s Economic Research Service (ERS) released a report yesterday titled, “Fruit and Vegetable Consumption by School Lunch Participants: Implications for the Success of New Nutrition Standards.”

An ERS summary of the report stated that, “Students in schools that offered greater quantities of fruits and vegetables consumed more of these foods by most measures. However, many students did not eat any fruits and vegetables, implying that additional methods may need to be considered in order to achieve the goal of having students consume foods in schools that more closely meet the nutritional goals of the Dietary Guidelines for Americans.

“Students who were offered fruit, dark green vegetables, red/orange vegetables, or ‘other’ vegetables in amounts that would meet a daily standard for those foods ate more of those vegetables than students who were offered amounts that did not meet the daily standard. In addition, more students at schools that met the new daily standards tried vegetables than did students at schools that did not meet the new daily standards.”

And in a separate policy related issue, Eric Bradner reported yesterday at Politico that, “Meat packers will face a brutal financial blow unless a judge blocks the U.S. Department of Agriculture from enforcing a new labeling mandate, an attorney for the industry warned in a Washington, D.C., courtroom Tuesday.

“Producers of beef, pork and chicken are taking aim at a “country-of-origin labeling” rule that will soon require them to list the countries where their meat is born, raised and slaughtered. The new rule — a more detailed update of labeling requirements the Agriculture Department first put into place in 2009 — is set to take effect in November.

“The rule would throw the meat industry into ‘a rabbit hole of upstream and downstream changes’ that would cost millions, attorney Cate Stetson told U.S. District Court Judge Ketanji Jackson during a two-hour hearing in which the industry asked for a preliminary injunction against USDA.”

Mr. Bradner added that, “Agriculture Department attorney Tamra Moore said the new rule ‘provides more information’ and that ensuring the accuracy of food labels is a critical aim.”

 

FDA- Food and Drug Administration

Tarini Parti reported yesterday at Politico that, “Sugary snacks fortified with vitamins might make consumers feel less guilty, but they’re making the feds increasingly more nervous.

The Food and Drug Administration has submitted to the White House’s Office of Management and Budget the required paperwork to launch a study into whether artificially adding vitamins to snack foods and carbonated drinks causes consumers to believe that substituting them for more nutritious foods ensures a healthier diet.”

 

Budget

Ashley Parker reported in today’s New York Times that, “Speaker John A. Boehner says he is gearing up for ‘a whale of a fight’ with President Obama over raising the federal debt ceiling, even though Mr. Obama has repeatedly said he has no plans to negotiate with Congressional Republicans over the nation’s debt limit and wants it lifted without a political showdown.

“At an Idaho fund-raiser on Monday for Representative Mike Simpson, a Republican and a close ally, Mr. Boehner said he planned to use the need to raise the debt ceiling to gain political leverage and demand ‘cuts and reforms that are greater than the increase in the debt limit.’”

 

Agricultural Economy

An update yesterday from USDA’s Economic Research Service (ERS), “2013 Farm Sector Income Forecast,” stated that, “Net farm income is forecast to be $120.6 billion in 2013, up 6 percent from 2012’s estimate of $113.8 billion. After adjusting for inflation, 2013’s net farm income is expected to be the second highest since 1973.”

The ERS report noted that, “The projected increase of $13.1 billion (3.8 percent) in total expenses in 2013 (see table on production expenses) continues a string of recent annual increases, interrupted only in 2009, as expenses are forecast to reach another nominal record-high, at $354.2 billion [related graph].”

And yesterday’s update added that, “Government payments [related graph] paid directly to producers are expected to total $11.1 billion in 2013, representing a 4.4-percent increase from 2012 (see table on government payments). Fixed direct payments under the Direct and Countercyclical Program and the Average Crop Revenue Election Program (ACRE) are forecast at $4.39 billion for 2013, down 6.3 percent from 2012. The decline is attributed both to a reduction in payments because of sequestration and the likelihood that more producers will exceed statutory limits on adjusted gross income.

Strong crop prices in 2013 are expected to result in few commodity program payments based on price.  Farmers are currently expected to receive $30 million in ACRE payments this year, covering final 2011-crop ACRE payments for rice and 2012-crop ACRE payments for the other commodities. ACRE payments in 2013 could change depending on final 2012-13 market-year average prices.”

A separate ERS update from yesterday pointed out that, “Projected median total farm household income is expected to decrease by 2.5 percent in 2013, to $66,989. Given the broad USDA definition of a farm, many farms are not profitable even in the best farm income years. Despite high prices for many crops, 2012 was no exception, with a median farm income of -$1,453. With sectorwide net cash farm income forecast to decline in 2013, median farm income is expected to decline to -$2,300. Most farm households earn all of their income from off-farm sources—median off-farm income is projected to increase by 1.8 percent in 2013, to $60,659 [related graph].”

Bloomberg writer Brian Wingfield reported yesterday that, “The USDA figures released today tell a ‘very, very good story, and a very positive story for much of U.S. agriculture,’ Patrick Westhoff, director of the Food and Agricultural Policy Research Institute at the University of Missouri, said in a telephone interview.

“‘A bigger question is, what’s it going to look like a year from now?’ Westhoff said. Projected prices for farm commodities are lower than they have been over the past two years, which could translate into lower revenue for farmers in two or three years, he said.”

Also yesterday, the Food and Agricultural Policy Research Institute (FAPRI) released its “August 2013 Baseline Update for U.S. Agricultural Markets,” which “serves as a mid-year update to the 2013 baseline prepared in January 2013. It reflects market developments and incorporates information available in early August 2013.”

In part, the FAPRI update indicated that, “Corn prices average $4.65 per bushel for the crop harvested in 2013. Once stocks rebuild, prices could be even lower in subsequent yearsSoybean prices average $11.33 per bushel for this year’s crop and could also decline further in 2014. For all crops, actual prices will be very sensitive to changing production estimates.”

A news release yesterday from Purdue University noted that, “High net farm income, low interest rates and high farmland demand with limited supply combined to push the state’s [Indiana] land values upward by anywhere from 14.7 to 19.1 percent, depending on productivity. Statewide cash rents increased by 9.4 to 10.9 percent.”  (For more details, see, “Up Again: Indiana’s Farmland Market in 2013”).

And Jane Black reported yesterday at The Washington Post Online that, “As shorthand, the big-equals-bad equation is convenient. But it obscures an inconvenient truth: Plenty of small farmers do not embrace sustainable practices — the Amish farmers I know, for example, love their pesticides — and some big farmers are creative, responsible stewards of the land… [N]ew small farms can help reinvigorate agriculture, and they deserve champions. But large-scale farmers who are working toward sustainability also deserve a platform. Like it or not, those farmers grow the staples that feed (and fuel) our country and the world. The small, incremental changes that they make can have dramatic impact — perhaps more than a dozen or even a hundred small farms that adhere to strict environmental standards.”

Keith Good

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