FarmPolicy

May 19, 2019

Farm Bill; Budget; Ag Economy; and, Immigration

Farm Bill- Perspectives and Observations from Lawmakers

Erich Schaffhauser reported on Friday at Keloland Television (Sioux Falls, S.D.) Online that, “With the future of a farm bill up in the air, people at the South Dakota State Fair had a chance to hear from some of the leaders working on the measure.

“Rep. Kristi Noem held a town hall meeting with House Agriculture Committee Chairman Frank Lucas, R-Okla., Friday.

“Congress has about a month before the current farm bill, which was already extended a year, expires. The Senate has passed a version of the farm bill. The House has passed one without a food stamps component included. Lucas says he expects a food stamps bill to pass the House next month.”

Friday’s update noted that, “Both Lucas and Noem said they’d like to pass a permanent back-up plan in case farm bills in the future don’t pass. As it sits now, farm policy would revert back decades, which could have adverse effects on the public in general.”

Rachel Skytta reported on Friday at KDLT-TV (Sioux Falls, S.D.) Online that, “Dozens gathered at the South Dakota State Fair on Saturday to hear [Senator Tim Johnson (R., S.D.)] and a panel of supporters speak on the progress of the [farm] bill. The rally was held to urge the House to act as quickly as possible.

‘Let us work out our differences, and let’s get a farm bill,’ said Johnson.

“‘As a member of the senate, I hear you loud and clear, and I share your frustration about how slow this process has been,’ said Sen. Johnson.”

Also, Allison Sherry reported late last week in The Denver Post that, “The House rejected a comprehensive agriculture and food stamp bill earlier this summer, in part, because Democrats didn’t like the $20 billion in cuts to food stamps and some Republicans didn’t think the cuts went far enough. Instead the House mustered a close vote on an agriculture-only bill. It was the first time since the 1970s the two pieces of policy were decoupled.”

Ms. Sherry noted that, “It was also deeply troubling to Rep. Cory Gardner, a Republican from this Eastern Plains town [Yuma], who stood at a town hall earlier this week and threw his own GOP-controlled caucus under the bus because of its dysfunctional approach to agriculture policy.

“‘I think the House weakened its hands by splitting the bill in the first place,’ Gardner said, after the meeting. ‘It was bad for rural Colorado.’”

The Denver Post article added that, “Sen. Michael Bennet — a Democrat who was appointed to the farm bill conference committee charged with navigating differences between the House and the Senate — says he is worried the politics in Washington are crippling Colorado farmers, and livestock and dairy producers.

“‘People should have differences about things … but that’s not an excuse for not doing your job,’ he told a group of rural stakeholders in Fort Morgan this week. ‘In this case it’s passing a farm bill for the farmers and ranchers in Colorado.’”

Jessica Roose reported on Friday at KMOT-TV (Minot, N.D.) Online that, “[Rep. Kevin Cramer (R., N.D.)] was in Bismarck this morning to update his constituents on issues in D.C.”

“[Rep. Kramer] added that they first need to pass the nutrition piece of the farm bill and then they can go to conference committee with the Senate.

“‘Discussions have already begun. There’s already been some negotiating going on between the leadership in the House Ag and the Senate Ag committees. So I think it will be very efficient once we get back and it will move along rather quickly,’ says Rep. Kevin Cramer.”

And House Ag Committee Member Rick Crawford (R., Ark.) tweeted on Friday that, “In Ash Flat at the Livestock Auction talking #FarmBill this morning.”

 

Farm Bill- Nutrition Issues

Maxwell Murphy noted on Friday at the CFO Journal Blog (Wall Street Journal) that, “The roughly one in seven Americans who receive federal aid with their grocery bills will soon need to stretch fewer dollars further. Grocers and food makers, meanwhile, will struggle with lost revenue and how to keep consumers from swapping brands.

“The 2009 Recovery Act gave additional funding to the Supplemental Nutrition Assistance Program, more commonly called food stamps. On November 1, that funding will expire, barring congressional action that observers say is unlikely. That means an estimated $11 billion for food stamps will be gradually cut by the end of the government’s 2016 fiscal year, according to Stacy Dean, vice president for food assistance policy for the Center on Budget and Policy Priorities, a budget and tax-policy research and analysis think tank.”

The update added that, “As the affected consumers need to feed the same number of mouths with fewer dollars, they will increasingly seek private-label and store-branded products to save money, according to Burt P. Flickinger III, managing director of grocery and retail consultant Strategic Resources Group.

“For grocers, this could mean that the lost revenue is offset by the higher margins they make on store brands, he said. But brand-name food makers could find themselves losing shelf space and market share.”

Mr. Murphy noted that, “However, some food makers, at least so far, don’t appear worried about the changes.

“Campbell Soup Co. Chief Executive Officer Denise Morrison said Thursday she doesn’t expect a ‘material impact’ from the cuts, according to a transcript of the earnings conference call provided by FactSet.”

Mike McGraw and Robert A. Cronkleton noted on Saturday at The Kansas City Star Online that, “Kansas offers an interesting lens through which to view the debate raging in Congress over whether there should be large cuts in funds for food stamps.”

The Star item noted that, “Dan Glickman, a Democrat and former congressman from Kansas who oversaw the programs as secretary of agriculture from 1995 to 2001, sees it differently.

“‘It’s fine to tell SNAP recipients to look for work, but if there are no jobs available, that begs the question,’ Glickman told The Star. ‘Most people on food stamps don’t want to be on food stamps.’

“U.S. Rep. Kevin Yoder, a Kansas Republican, said finding better-paying positions needs to be part of the jobs equation.”

The lengthy and in-depth Star article also pointed out that, “Kansas has begun a voluntary work project as an additional incentive to get SNAP beneficiaries into jobs.

“State officials said 6,455 SNAP beneficiaries in eight counties were offered voluntary job assistance. Of those, though, 333 opted to take part and only 140 of them ended up with work. Those jobs paid an average of $11 an hour. State officials were not able to say how many of those workers had come off food stamps.

“Overall, though, about 316,000 Kansans are now enrolled in SNAP. In 2000, 4.6 percent of the population received food stamps, compared with 9.4 percent in 2010.”

 

Farm Bill Programs: Sugar; and, Trade Promotion

Alexandra Wexler reported in Saturday’s Wall Street Journal that, “The U.S. Department of Agriculture bought sugar from a domestic processor and sold it to an ethanol producer at a loss of $2.7 million, the latest move by the agency to boost prices and stave off defaults on federal loans.

“The USDA’s purchase of 7,118 short tons of refined beet sugar this past week was far less than the nearly 100,000 tons that processors had offered to the agency, indicating little demand from ethanol makers. The agency only purchased sugar for which it had a ready buyer.

“This was the first use of a sugar-to-ethanol program that was outlined in the 2008 Farm Bill. It requires the USDA to buy the sweetener and sell it to domestic ethanol producers if the agency believes U.S. sugar processors might default on their operating loans.”

In addition, a recently released Government Accountability Office (GAO) report, “USDA Is Monitoring Market Development Programs as Required but Could Improve Analysis of Impact,” indicated that, “USDA administers five programs to assist U.S. agricultural industry efforts to build, maintain, and expand overseas markets. However, members of Congress continue to debate the level of funding for this assistance and its impact on agricultural exports. USDA provides about $250 million annually for the five market development programs. MAP [the Market Access Program] and FMD [the Foreign Market Development Program] received about 90 percent of this funding in fiscal year 2012, with allocations of $200 million and $34.5 million, respectively.”

The report noted that, “GAO recommends that USDA (1) emphasize that market development program participants’ annual progress reports should identify the methodologies used to assess results and (2) ensure that any economic models used in future cost-benefit analyses of the programs include industry-specific variables and sensitivity analyses of key assumptions. USDA concurred with GAO’s recommendations.”

 

Farm Policy- Biotech

Henry I. Miller, a physician and former director of the FDA’s Office of Biotechnology, indicated in a column in Friday’s Los Angeles Times that, “Americans might soon need to get used to apple or grape juice as their breakfast drink of choice — unless, that is, they’re willing to pay exorbitant prices for orange juice. Or maybe scientists, plant breeders and farmers will manage to save the day, using two critical but often-disparaged technologies: chemical pesticides in the short run and genetic engineering in the longer term.”

Dr. Miller noted that, “If we are to preserve Florida’s $9-billion orange juice industry — and citrus crops in California and Texas when the disease spreads further — we will need to rely on the best technologies available. That means coming to terms with safe and rational genetic engineering and the innovative applications of systemic neonic pesticides.”

 

Budget

Janet Hook reported in Friday’s Wall Street Journal that, “White House budget talks with a small group of GOP senators have stalled, all but extinguishing hope that a compromise could emerge from the only remaining venue for discussions between the administration and Republicans in Congress.

“Word that talks had hit a brick wall came after the GOP senators met Thursday with the White House chief of staff and budget director. Their failure portends a difficult, partisan fight over the federal budget for the fiscal year that starts Oct. 1, less than five weeks away.”

Peter Schroeder reported on Friday at The Hill’s On the Money Blog that, “The White House and Congress are heading into a showdown over the debt limit with no firm deadline for raising the nation’s borrowing limit.

“It’s a stark contrast from 2011, the last time President Obama and congressional Republicans were headed for such a collision.

Back then, Treasury Secretary Timothy Geithner consistently offered Congress hard dates to work with, landing on an Aug. 2 deadline three months in advance.”

 

Agricultural Economy

Bloomberg writer Whitney McFerron reported on Friday that, “Rebounding grain yields in the European Union will lift combined harvests of soft wheat, corn and barley to a five-year high, data from the bloc showed.

“Total output of the three crops may be 256.1 million metric tons in the 2013-14 season, up 8.6 percent from a year earlier and the highest since 2008, according to estimates released today by the Brussels-based European Commission, the bloc’s executive arm. Production is increasing in part as yields in eastern Europe recover from dry weather in the past season.”

Meanwhile, Donnelle Eller reported in yesterday’s Des Moines Register that, “Not only do farmers need rain soon to help improve yields, after weeks of hot, dry weather, but frost also threatens crops that were planted late because of a wet spring.

The timing of the next ground-soaking rain — and the growth-ending frost — will play a big role in determining whether farmers post a profit or a loss, Bill Northey, Iowa’s secretary of agriculture, said Friday. ‘There’s a lot at stake over the next few weeks,’ Northey said.

Rain could be especially beneficial to soybeans, enabling plants to fully develop beans in the pods, he said. Rain could bring another 10 to 15 bushels per acre. ‘It can make a big difference’ to a farmer’s bottom line, he said.”

The Register article noted that. “‘Iowa farmers face a double-whammy this year: lower prices and lower yields,’ said Chad Hart, an Iowa State University agriculture economist. ‘That’s something you don’t tend to see in Iowa. Typically, as Iowa goes, so goes the rest of the country when it comes to corn and soybeans.’

“Iowa farmers were already reeling from the wettest spring on record when they were hit with some of the driest summer months.”

USDA’s National Agricultural Statistics Service released its monthly Agricultural Prices report on Friday, which stated: “The corn price, at $6.02 per bushel, is 77 cents lower than last month and $1.61 below August 2012 [related graph]… The soybean price, at $13.80 per bushel, decreased $1.50 from July and is $2.40 below August 2012 [related graph]…and…The August price for all wheat, at $6.91 per bushel, is down 2 cents from July and $1.13 below August 2012 [related graph].”

Also on Friday, USDA’s Economic Research Service (ERS) released a report titled, “U.S. Wheat Production Practices, Costs, and Yields: Variations Across Regions.”

An ERS summary of the report stated that, “Wheat, produced in nearly every part of the United States, is the third largest U.S. crop in terms of both value and acreage, behind corn and soybeans. Unlike most other crops, however, wheat has distinct varieties that are produced in different regions or over different seasons. The result is wide variation in the costs of wheat production across growing areas, inherent in the diversity of inputs and production practices. These costs can affect the competitiveness of wheat with other crops in each region and the profitability of planting wheat. This study explores the variation in wheat production costs across U.S. regions, based on data from the 2009 Agricultural Resource Management Survey (ARMS).”

In other news, Stephanie Strom reported in Saturday’s New York Times that, “The Department of Agriculture on Friday approved four Chinese poultry processors to begin shipping a limited amount of meat to the United States, a move that is likely to add to the debate over food imports.

“Initially, the companies will be allowed to export only cooked poultry products from birds raised in the United States and Canada. But critics predicted that the government would eventually expand the rules, so that chickens and turkeys bred in China could end up in the American market.”

The Times article noted that, “The proposed sale of Smithfield Foods to Shuanghui International, a major Chinese food processor, has added to the industry scrutiny. In July, senators from both parties questioned Larry Pope, the chief executive of Smithfield, about the implications of his company’s deal for food safety and United States employment.”

On Friday, Rep. Rosa DeLauro (D., Conn.) released a statement on the USDA decision: “The fact that USDA, the agency charged with ensuring the poultry products the public consumes are safe, is green lighting the export of processed poultry products to the United States from a country with an atrocious food safety record should be deeply worrisome to American consumers.  The audit released today erases neither the fact that past inspections revealed unsanitary conditions at China’s poultry processing plants nor the fact that U.S. inspectors will not be onsite at these plants going forward to ensure the exported products are safe.  Meanwhile, I remain deeply concerned that USDA appears to be heading down the same path with China’s slaughtering plants, even as cases of bird flu deaths are reported out of that country.  Sadly, business interests, which are currently also attacking country-of-origin labeling so consumers do not even know where the meat they are consuming is coming from, are trumping the public interest.”

 

Immigration

Agriculture Secretary Tom Vilsack recently penned a column in The Des Moines Register, which noted that, “The broad effects that immigration reform would have for our economy are well documented. According to the non-partisan Congressional Budget Office and Social Security Office of the Chief Actuary, the bipartisan Senate immigration reform bill would boost our economy by 3.3 percent, reduce the deficit by a projected $850 billion and add nearly $300 billion to our Social Security system by the end of the decade.”

Sec. Vilsack added that, “Farmworkers drive an industry that is directly related to one in 12 American jobs. They’re in the fields as crops are planted, cared for and harvested. They’re in packing houses and processing facilities. They help get food to markets and stores that ends up on kitchen tables across the country.

About half of these workers are unauthorized, and many more are employed under a temporary worker program that is difficult for farmers and farmworkers alike to understand. In the years to come, the resulting instability in our agricultural workforce threatens productivity on farms and ranches, and affects rural communities where agriculture is a thriving part of their economies.

The common-sense immigration reform measure that passed in June by the U.S. Senate, with bipartisan support, would provide a comprehensive set of rules to ensure a stable and adequate workforce for agriculture.”

O. Kay Henderson reported on Friday at Radio Iowa Online that, “U.S. Agriculture Secretary Tom Vilsack held a forum in Des Moines this morning to discuss immigration reform.”

The news item pointed out that, “The USDA today projected both agricultural exports and net farm income will set records in 2013.

“‘That’s obviously positive news for producers and for people who are associated and connected to agricultural trade,’ Vilsack said. ‘But there are some serious challenges to the future of American agriculture and two of those challenges require congressional action.’

The first is passage of a five-year Farm Bill and the second, according to Vilsack, is passage of comprehensive immigration reform.”

Keith Good

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