FarmPolicy

December 21, 2014

Farm Bill; Ag Economy; and, the Budget

Farm Bill

David Rogers reported yesterday at Politico that, “House Agriculture Committee Chairman Frank Lucas says more ‘outside the box’ thinking will be needed to save a farm bill this fall and he is prepared to support ‘bigger ideas’ to get the task done.

“‘I may have to do a lot of things outside the box to get this final thing together, I will acknowledge that to you,’ Lucas told POLITICO of upcoming talks with the Senate. ‘This is going to be a hard, complicated conference.’

“‘I’m not opposed to bigger ideas. I just want to get it done,’ he said. ‘And right now you know how difficult it will be to make something happen from the status quo in the two bills.’

“‘The challenges that will confront the House and Senate, when we both get there, are so great. The positions are locked in so tight on so many issues. That to achieve a consensus that we can pass on both floors, that we get the president to sign, we may have to think outside the box.’”

Mr. Rogers indicated that, “But first up is a floor vote, now expected late next week, on Cantor’s food stamp cuts. The majority leader has spelled out significant detail already but the actual text is being closely held — as is the Congressional Budget Office scoring of the proposal and its impact on beneficiaries.

“Outside experts estimate millions of low-income individuals could be forced off the rolls. But the CBO’s analysis is the most important, and it is to Cantor’s advantage to slow the release of this information.”

Bloomberg writer Derek Wallbank reported yesterday that, “House Republican plan to vote on a bill next week that could push millions of people off U.S. food aid programs that have expanded since the economic downturn, potentially burdening charities that help feed the hungry.”

The article noted that, “Backers of the bill say they want to curb waste and abuse.

“‘I think a lot of our members want to finally make real reforms to the food-stamp program,’ said Representative Steve King, an Iowa Republican and senior member of the House Agriculture Committee, which has jurisdiction over the programs. The goal is to ‘ensure that while you have a safety net you shouldn’t be giving welfare benefits to people who are able-bodied and capable of getting a job who just choose to continue to get food stamps when they can actually go and work.'”

The Bloomberg article noted that, “House Republican leaders will have to depend on their own party members to pass the bill as Democratic leaders say their rank-and-file will oppose it.

“‘There are too many that through no fault of their own depend on these programs to feed their families,’ West Virginia Democratic Representative Nick Rahall said in an interview. ‘It’s numbness, without any feeling of pain. They go and chop out these programs for people who are feeling a great deal of pain.'”

Pete Kasperowicz reported yesterday at The Hill’s Floor Action Blog that, “House GOP leaders plan to call up a bill next week that would reauthorize the federal food stamp program and restore a requirement that able-bodied people must work or be looking for work in order to receive food stamps.

Republicans have sought to restore the work requirement since the Obama administration told states in 2012 that it could be waived. The GOP has said that decision gutted a key reform from 1996 that helped thousands of people leave the welfare rolls, and Majority Leader Eric Cantor (R-Va.) said the House would try to fix this mistake next week.

“‘No law-abiding beneficiary who meets the income and asset test of the current program and is willing to comply with applicable work requirements will lose their benefits under the bill,’ he said on the House floor Thursday.”  (See related video of Rep. Cantor’s remarks on the floor here).

The Hill update noted that, “‘We want to help provide jobs and opportunities for those who are able to work in order to get government benefits,’ said Megan Whittemore, a spokeswoman for Cantor. ‘By encouraging people to engage in job training or workfare we can help those in the program build the skills and gain the experience they need to become self-sufficient in the future.’

In turn, Democrats argue that the government is only letting states waive the rules if they put in place a plan to increase the number of people moving from welfare to work by 20 percent. Democrats are likely to make this point next week, and argue that the GOP should support these sorts of flexibilities to states.”

Chris Clayton reported yesterday at the DTN Ag Policy Blog that, “[Iowa Democrat Senator Tom Harkin] noted that if the House passes the $40 billion in cuts to food aid, it would complicate conference talks, considering the Senate approved $4 billion in cuts over 10 years to nutrition programs. Harkin said most observers recognize the Senate is not going to make steep cuts to nutrition programs.

“‘If they do go ahead and pass this $40 billion cut, it’s going to be by a very narrow margin,’ Harkin said. ‘I dare say they won’t get one Democratic vote. They are going to lose Republican votes on that too. At this time, it’s a close question on whether that would even pass. I don’t know.’

“He added, ‘Maybe if they could bring it up and defeat it, that would be the best thing of all.’”

The “Washington Insider” section of DTN reported yesterday (link requires subscription) that, “With Republicans holding a large, 34-vote majority in the House, it is clear that the [SNAP- nutrition] proposal will pass, if all Republicans are on board. The House leadership will conduct a nose-count today and tomorrow to determine if those votes can be counted in the aye category.

“It is expected that if the bill passes the House, leaders will shortly thereafter name members of a conference committee that will work out differences between the two bills, and there are many. The Senate named its conferees on Aug. 1.

“Some agricultural lobbyists predict that even if House conferees are appointed, it is unlikely that the conference will get underway until October. And some observers give long odds that the committee will be able to produce a report that can pass both chambers and be forwarded to the president for his signature.”

Meanwhile, the GOP nutrition measure was a point of discussion yesterday on the MSNBC program NOW with Alex Wagner, a replay of that conversation, which included remarks from Feeding America’s Maura Daly, can be viewed here, at FarmPolicy.com Online.

Michael Catalini noted earlier this week at National Journal Online that, “What is certain, though, is that [SNAP] cutbacks are set to take effect regardless of Congress’s action on the farm bill and the food-stamp program. Temporary benefits as part of the economic stimulus enacted in 2009 expire on Nov. 1. That amounts to a cut for an average family of nearly $30 a month, according to the Food Research and Action Center.”

Reuters writer Susan Heavey reported yesterday that, “Four years after the recession ended, one in five American adults are still struggling to buy enough food, according to a survey released on Thursday that underscored the unevenness of the U.S. economic recovery.

“Twenty percent of U.S. adults polled last month said that at times in the past year they had not had enough money to buy food for themselves or their family, according to Gallup’s findings.”

Jim Weill, the president of the Food Research and Action Center, penned an update yesterday at The Hill’s Congress Blog titled, “Don’t cut SNAP from Farm Bill,” which state in part that, “When you consider the cross section of Americans whose lives stand to be harmed by the House Republicans’ plan to cut SNAP by $40 billion over the next ten years, it’s hard not to get angry.  Let’s call this coldblooded lack of humanity what it is, and demand that Congress pass a farm bill with no cuts to SNAP.”

At a news conference yesterday, Senate Majority Whip Richard Durbin (D., Il.) indicated that, “It’s a story of a House of Representatives that can’t pass a farm bill. We’ve been at that for two years. We passed it twice in the Senate…I sometimes sympathize with Speaker Boehner, but the fact of the matter is, if he wants to lead for the good of this nation, he has to step beyond the tea party faction in his caucus.

If he would call our farm bill on the floor of the U.S. House of Representatives, it would pass.”

In a tele-conference with reporters yesterday, Nebraska GOP Senator Mike Johanns noted that, “The House is still working on the nutrition portion, and it is my hope that they get that done and move something to conference so we can start working toward a resolution.

“Anticipation is that they’ll vote on this next week. So my hope is that there is a vote, we get something into conference, and we can start iron — ironing out the differences between the Senate and the House bill.”

With respect to the floor debate on the GOP nutrition measure, House Minority Leader Nancy Pelosi (D., Calif.) stated in a news conference yesterday that, “The momentum is really springing from our members. I’m very proud that Congresswoman Marcia Fudge, a member of the Agriculture Committee — of course, she’s from Ohio. She’s the chair of the Congressional Black Caucus. She would be managing our side of the bill for that — and that means in opposition to the cuts.”

Meanwhile, an update yesterday from National Crop Insurance Services stated that, “While farmers must make their decisions about purchasing crop insurance well before they plant, more than 1.2 million policies have been processed through participating companies and RMA as of September 9, 2013. Those policies protect more than 292 million acres representing more than $121 billion in liabilities, accounting for $4.4 billion in farmer paid premium.”

And, an update yesterday from USDA’s Farm Service Agency indicated that, “The U.S. Department of Agriculture today announced that the Commodity Credit Corporation (CCC) is offering to exchange its recently acquired sugar inventory for credits held by refiners holding licenses under the Refined Sugar Re-export Program. This exchange offer will be administered in a similar manner as the exchange portion of the sugar actions announced by news release on June 17, 2013, and July 23, 2013.”

On a separate policy issue, Kimberly Kindy reported yesterday at the Post Politics Blog (Washington Post) that, “Food safety legislation was introduced Thursday in the Senate that seeks to preserve current staffing levels of USDA inspectors in meat plants at the same time the agency promotes a new model that would cut the federal inspection force by as much as half.

“Sen. Kirsten Gillibrand (D-NY), the bill’s sponsor, said the measure also would ensure that each carcass in the nation’s poultry, beef and hog plants is checked by a U.S. Department of Agriculture inspector before it is processed and sent to consumers.”

 

Agricultural Economy

The USDA’s National Agricultural Statistics Service (NASS) released its September Crop Production report yesterday, which stated that, “Corn production is forecast at 13.8 billion bushels, up less than 1 percent from the August forecast and up 28 percent from 2012. If realized, this will be a new record production for the United States. Based on conditions as of September 1, yields are expected to average 155.3 bushels per acre, up 0.9 bushels from the August forecast and 31.9 bushels above the 2012 average. If realized, this will be the highest average yield since 2009. Area harvested for grain is forecast at 89.1 million acres, unchanged from the August forecast but up 2 percent from 2012.”

Soybean production is forecast at 3.15 billion bushels, down 3 percent from August but up 4 percent from last year. If realized, production will be the fourth largest on record. Based on September 1 conditions, yields are expected to average 41.2 bushels per acre, down 1.4 bushels from last month but up 1.6 bushels from last year. Area for harvest in the United States is forecast at 76.4 million acres, unchanged from August but up slightly from 2012.”

Also yesterday, the World Agricultural Outlook Board (WAOB) released its monthly World Agricultural Supply and Demand Estimates (WASDE), which incorporated the NASS production update.

In part, the WASDE report stated that, “The projected season-average farm price for corn is lowered 10 cents at both ends of the range to $4.40 to $5.20 per bushel… The U.S. season-average soybean price is projected at $11.50 to $13.50 per bushel, up $1.15 on both ends of the range.”

University of Illinois Agricultural Economist Darrel Good provided a summary of the USDA forecasts and a discussion of the market implications of the forecasts in an update posted yesterday the farmdoc daily blog, “New Production and Consumption Forecasts for Corn and Soybeans.”

Gregory Meyer reported yesterday at The Financial Times Online that, “Soyabean futures rose and corn fell after the US government revealed a blast of heat in the nation’s midsection last month did more damage to the oilseed than the yellow grain.”

And Tony C. Dreibus and Eric Morath reported in today’s Wall Street Journal that, “Soybean and corn futures have both declined sharply from record highs reached last summer as the worst U.S. drought in decades battered crops.

But soybeans have held up better than corn, due in part to strong demand for the oilseed from foreign buyers such as China.

“Analysts are worried that a disappointing soybean crop could further squeeze U.S. supplies that fell to their smallest level in nine years last month.”

An update yesterday at the National Drought Mitigation Center Online indicated that, “Hot, dry weather in the Midwest and South led to incremental increases in drought on the Sept. 10 U.S. Drought Monitor map.

The proportion of the contiguous United States in moderate drought or worse increased to 50.69 percent, from 50.09 percent a week earlier. The areas in severe and extreme drought had similar small increases, and exceptional drought remained unchanged. More than three-quarters of the western United States remains in moderate drought or worse.

“In the Midwest, where temperatures were as much as 10 degrees Fahrenheit above normal, drought expanded in parts of Missouri, Iowa, Illinois, Indiana, Minnesota and Wisconsin.”

AP writer David Pitt reported yesterday that, “The [drought] report said in Iowa, the nation’s largest corn producer, severe drought spread to nearly 42 percent of the state — up from 32 percent a week ago. All but two of the state’s counties, both in east-central Iowa, are experiencing some level of drought or abnormally dry conditions.”

A news release yesterday from University of Missouri Extension noted that, “Late-planted corn north of Interstate 70 is dead or dying due to lack of rain and scorching temperatures.

“‘As corn and soybean plants entered critical seed-filling periods this year, drought returned to some parts of Missouri with a vengeance,’ said University of Missouri Extension agronomy specialist Bill Wiebold.”

The update added that, “It’s too late for future rains to save corn yields, said MU Extension corn specialist Brent Myers. Hope for rains to come to the rescue ended about three weeks ago, he said, and damage is widespread.”

In trade related news, Doug Palmer and Eric Bradner reported this week at Politico that, “Top Obama administration officials on Wednesday met with lawmakers to discuss including rules against currency manipulation in trade agreements as the United States presses to wrap up talks on a landmark trade pact in the Asia-Pacific by the end of the year.

“U.S. Treasury Secretary Jack Lew and U.S. Trade Representative Michael Froman met behind closed doors with members of the House Ways and Means Committee, which plays a leading role in the approval of any trade agreement the White House submits to Congress.”

 

Budget

Janet Hook and Corey Boles reported in today’s Wall Street Journal that, “House Speaker John Boehner argued Thursday that lawmakers and President Barack Obama should agree to a new round of budget cuts or other conservative priorities as elements of a bill that would raise the nation’s debt ceiling.

“The move came as legislative leaders struggled to find a way forward in talks on several pressing fiscal issues. Democrats immediately dismissed Mr. Boehner’s proposal to link the debt ceiling with GOP policy goals, and fears re-emerged that Congress was reviving the kind of budget battle that in the past has scared the markets and triggered fears of a government shutdown.”

The Journal article stated that, “Democrats feel increasingly confident they can fend off any GOP attempt to force cuts, citing a steady narrowing of the deficit. Treasury Department data released Thursday showed the government is on track to post a deficit of less than $700 billion in fiscal 2013, which ends on Sept. 30—the lowest since 2008.”

Keith Good

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