- FarmPolicy - http://farmpolicy.com -

Farm Bill Issues; and, Biofuels

Farm Bill- Nutrition (SNAP), and Politico Looks at Title I Issues

The Leader’s Weekly Schedule, released on Friday by House Majority Leader Eric Cantor (R., Va.), indicated that the House will consider the Nutrition Reform and Work Opportunity Act (Subject to a Rule) on the floor this week.

Last week on Thursday, Rep. Cantor indicated on the House floor that, “The House will also consider the Nutrition Reform and Work Opportunity Act, authored by Agriculture chairman, Representative Frank Lucas. This legislation restores the intent of the bipartisan welfare reforms adopted in 1996 to the Supplemental Nutrition Assistance Program. It also refocuses the program on those who need it most. No law-abiding beneficiary who meets the income and asset tests of the current program and is willing to comply with the applicable work requirements will lose his benefits under the bill.”

Pete Kasperowicz reported on Friday at The Hill’s Floor Action Blog that, “The bill will include $20 billion in cuts that the House Agriculture Committee passed earlier this year as part of a farm bill. But it will also include another $20 billion in cuts that are achieved by making able-bodied adults who refuse to work or look for work ineligible for food stamps.

“The latter language will be included at the request of Majority Leader Eric Cantor (R-Va.). He and other Republicans strongly opposed the Obama administration’s decision to allow states to waive the work requirement, and vowed to restore the requirement through legislation.

“But the proposal is expected to draw significant opposition from Democrats, and could lead to immediate proposals from the Senate and the White House to restore the cuts.”

Nate Birt reported on Friday at AgWeb.com that, “Members of the U.S. House of Representatives likely will resume discussions on a freestanding food stamp bill during the week of Sept. 15, says Rep. Frank Lucas (R-OK), chairman of the House Agriculture Committee.

“‘The bill that I expect will come to the floor will include the reforms in the House Agriculture Committee-passed version, the nutrition reforms; would most likely include the reforms that were adopted by the United States House in our attempt back in July to pass a comprehensive bill; and might actually contain enough additional reforms that instead of $20 billion in savings, a $40 billion number might be achieved,’ Lucas tells AgriTalk in a video interview.”

Jim Spencer reported on Friday at the Minneapolis Star Tribune Online that, “‘I can’t figure out how this is going to get done,’ said Rep. Collin Peterson, a Democrat who represents Minnesota’s Seventh District and serves as ranking minority member of the House Agriculture Committee.

In June, Peterson led the fight to pass a new farm bill in the House, only to have it defeated by an odd coalition of those who wanted the bill to include no money for food stamps and those who wanted it to include $20 billion more.”

Mr. Spencer noted that, “This week, House Republicans are expected to vote on a SNAP-only bill that cuts $40 billion from food stamps over the next 10 years. That’s 10 times more than the Senate cut in the farm bill it passed in 2012 and 2013. President Obama has said he will veto any farm bill that comes to him without a SNAP component.

Next week, the House is expected to name members to a conference committee to work out differences in the two versions of the farm bill. But the two chambers seem impossibly far apart with little desire to come closer together.”

Also, agricultural reporter Charles Abbott  tweeted on Friday that, “Largest U.S. farm group ‪@farmbureau is neutral on ‪#House vote on $40 bln ‪#foodstamp cuts, wants ‪#farm bill conference.”

Kristina Peterson reported in today’s Wall Street Journal that, “Conservatives are applauding the proposed food-stamp cuts and the move to consider them separately from farm programs. ‘It’s a big victory,’ said Indiana Rep. Marlin Stutzman, one of about 20 House Republicans who helped craft the separate food-stamp bill with House Majority Leader Eric Cantor (R., Va.). ‘There’s still a long way to go in both programs moving forward, but we’ve been able to double the savings in this House proposal,’ he said in an interview Friday.”

The Journal article explained that, “If no agreement is reached, many nutrition programs might be funded at current levels under a short-term bill aimed at keeping all government agencies running for several months into the new fiscal year. The terms of such a bill, and whether Congress can agree on it, are expected to be a focal point of discussions among lawmakers this week. Many of the House conservatives who are pushing for cuts to food stamps also want the short-term government-spending bill to strip money from the new federal health law, a provision Democrats have rejected.

Separately, households receiving food stamps will already see their benefits trimmed in November when a temporary increase in benefits granted by the 2009 fiscal stimulus program expires.”

Former Senators Bob Dole (R-Kan.) and Tom Daschle (D., S.D.) penned a column today at the Los Angeles Times Online; stating in part that: “By stripping the nutrition title from the legislation this year, the House has severed the vital tie that helps connect our food system with those who struggle with hunger in our own backyard.”

The former Senate leaders added that, “Tackling our nation’s hunger issues has always resulted in a win-win situation for farmers, low-income families and our economy. The latest proposal from the House is an about-face on our progress fighting hunger. It would eliminate food assistance for 4 million to 6 million Americans.

If Congress lets this bill fall victim to the misguided and detrimental partisan politics we face today, the results for families and children challenged with hunger will be severe. In a country struggling to emerge from the worst economic recession since the Depression, this is no time to play politics with hunger. As friends and colleagues, we hope that the House will do the right thing and follow the Senate’s lead in passing a farm bill with adequate funding for food assistance. Our nation’s future depends on it.”

Washington Post columnist Ruth Marcus noted in yesterday’s paper that, “Democrats look at the food-stamp program and see an essential piece of a fraying safety net. Republicans see entitlement spending gone wild. This fierce debate is to be joined soon in the House, where Republicans plan to take up a mean-spirited measure that would cut spending on the program by a whopping $40 billion over the next decade — twice the original House proposal and 10 times the trims envisioned by the Senate.”

Ms. Marcus noted that, “A few other tidbits: Benefits are modest, averaging $1.40 per meal. Three-fourths of households receiving benefits include a child, a person age 60 or older or someone who is disabled. The average household receiving benefits in 2010 had annual income of $8,800.

“The Fox News-promoted poster boy for abuse, California surfer dude Jason Greenslate, using his $200 in monthly benefits to gorge on lobster and sushi, is infuriating, but he is hardly typical. More than 80 percent of food-stamp households with an able-bodied adult worked in the year before or after receiving benefits.

“Imaginary platoons of Greenslates are behind the latest Republican proposal. The biggest, and benign-sounding, change would buttress existing requirements that limit able-bodied adults without children to three months of benefits out of every three years, unless they are working 20 hours per week or participating in a job-training or ‘workfare’ program.”

Yesterday’s column added that, “Under existing law, however, states have the flexibility to request waivers from the strict three-month limit during times of high unemployment. In the current downturn, nearly every state has obtained such a waiver. The proposal being floated by House Majority Leader Eric Cantor(R-Va.) would eliminate the waivers, except for a sliver of the population. No work, no food stamps — even if there are no jobs.”

In a separate article on the front page of yesterday’s Washington Post, Lori Montgomery alluded to variables currently impacting the political environment and pointed out that, “These days, the [Club for Growth] is not alone. FreedomWorks, Americans for Prosperity, even the venerable Heritage Foundation are all trying to harness the energy of the tea party movement. What makes the Club the heavyweight is money — and its relentless focus on Republican primaries.

“In the 2012 election cycle, the Club and its various entities spent more than $9 million trying to ensure favored candidates won GOP primaries, more than twice as much as they spent trying to defeat Democrats, according to OpenSecrets.org.”

And DTN Ag Policy Editor Chris Clayton tweeted on Friday that, “I like the irony. Heritage, which is demanding SNAP cuts, laments Dem suggestion of letting milk prices rise. ‪http://blog.heritage.org/2013/09/12/taking-milk-from-babies-the-shocking-new-farm-bill-strategy/ …

On a separate nutrition related issue, recall that last week Rep. Phil Roe (R., Tenn.) introduced legislation that would “update the food guidelines for the Supplemental Nutrition Assistance Program (SNAP) to bring them in line with the purchasing standards for the Women, Infants and Children (WIC) program.  This would ensure the foods that SNAP recipients are purchasing are healthy and nutritious.”

Urban C. Lehner, Editor Emeritus at DTN, took a closer look at this issue on Friday and noted in part that, “Suggestion one: Rather than get down in the weeds analyzing each possible purchase’s nutritional value, as WIC does, pick a simpler, easier target. Forbid food-stamp purchases of sodas and other empty-calorie sugary drinks. That would both improve the nutritional profile of the program and cut, by one estimate, a billion bucks a year out of it.

Suggestion two: Try the carrot, not the stick. Expand the experimental programs that enhance the value of food stamps when used to buy fruits and vegetables at farmers’ markets.”

And Lauren Fox indicated on Friday at USNews Online that, “But food rights advocates argue the change would be drastic and significantly limit the purchasing power of those enrolled in SNAP. Individuals enrolled in the WIC program have specific rules that must be met when purchasing food. For example, soup, white potatoes, canned salsa, white rice and milk or orange juice with added calcium cannot be purchased under WIC.

“‘The food basket for WIC is very very limited,’ says Diane Schanzenbach, a fellow at the Institute for Policy Research who studies food consumption and economics. ‘This bill is also blocking them from buying lots of other nutritious food. It is not fair to frame this as restricting junk food alone, when is also restricts a lot of other items.’”

Meanwhile, David Rogers reported yesterday at Politico that, “Two great battles are being fought at once. The first — over the future of food stamps, retitled the Supplemental Nutrition Assistance Program — has already fractured the old alliance between farmers and food aid.

“With an eye toward the 2014 elections — and beyond — Cantor’s proposal is billed as Welfare Reform 2.0 with the goal of toughening work requirements while maintaining a core safety net for the very poor. But single mothers with preschool children are swept into the mix. Innovative training programs in states like Washington and New York could be put at risk. And the bill reinstates a flawed asset test on the poor that any farmer who has bought seed or a tractor in the past 20 years knows is hopelessly out of date.”

Mr. Rogers added that, “But the second great farm bill battle — a farmer-on-farmer struggle over the future safety net for producers themselves — has its own dark side.

“Both the House and Senate bills make real cuts in the commodity title by doing away with direct cash payments — a $4.5 billion annual subsidy begun in the mid-’90s but harder and harder to justify given farm profits. In making this change, lawmakers also confront how much the landscape has been transformed in the life of the program — especially with the remarkable rise of corn and ethanol under federal renewable fuel mandates in the past eight years.

“This summer’s slide in corn prices — recent cash sales in Illinois have been almost $2.40 per bushel less than highs a year ago — add a nervous energy to this process. And getting a deal could come down to this question: what acres count: planted or base?”

After a more detailed look at USDA acreage data “for 12 Southern states and 12 from the Midwest,” the Politico article indicated that, “The House seeks some middle ground by paying on 85 percent of all planted acres up to a level equal to the historic base for each farm. As a practical matter, this allows for about a 17 percent increase in acreage coverage. But the cap is also a brake for Lucas on what he argues is the ‘artificial’ impact of the renewable mandate.

“Midwest Republicans, most pivotal to the Senate farm bill, want more to capture their region’s gains. A new revenue protection plan backed by corn growers to supplement crop insurance would pay up to the four-year average of planted acres for a farm, regardless of the farmer’s old base.

“‘They want to lock the world into this new paradigm, which only lasts as long as there is that ethanol requirement,’ Lucas complained to POLITICO.”

Mr. Rogers provided additional analysis regarding “planted” acres and “base” acres, and pointed out that, “[House Ag Committee Ranking Member Collin Peterson’s] home state has shared in the Midwest’s success, but he fears that the Senate is trying to capture the good times without building a safety net for the bad.

“‘Why are we paying money to people for something they’re not doing?’ Peterson said. ‘The Senate has to get real.

“‘There are less and less of us that represent agriculture, so we have to have a way to explain to the other folks what we’re doing here that makes sense,’ Peterson told POLITICO. ‘You cannot explain to them why we would give somebody money based on what they did in 1985.’

“The focus, he said, should be on establishing some floor for farmers ‘if things go to hell.’”

 

Farm Bill Debate- Crop Insurance Issues

In news regarding crop insurance, an update on Friday from Kansas State Agricultural Economist Art Barnaby (“In Most Years, Farmers Write ‘Big’ Crop Insurance Checks”) indicated that, “Lost in all of the screaming headlines of the national press by crop insurance critics is the fact that in most years, farmers write premiums checks.”

Dr. Barnaby noted in part that, “The crop insurance critics forget, omit, misstate, or don’t understand the following:

“ – There is no cash subsidy transfer to a farmer unless there is a claim; otherwise a farmer writes a premium check.

– Crop insurance is a premium cost-share program rather than a traditional subsidy that pays farmers cash. In most years, farmers write premium checks and do not collect an indemnity.

There are states where the farmer-paid premiums have exceeded the claims over the past 20 years, i.e. farmers in those states have netted none of the cash premium subsidy.

– That does not mean that those states are over-rated, because one catastrophic loss year would wipe out all of the gains from the prior 20 years.”

After additional analysis, Friday’s update explained that, “The other nonsense argument is that if the government provided no crop insurance support, the private sector would provide the coverage. The real problem with crop insurance is the catastrophic loss year and how to rate for that year. In most lines of private property-casualty lines of insurance, about 65% of the premium is paid in claims, and varies little from year to year. However, on Minnesota corn RMA/AIPs have paid from 11% to a high of 827% of the premium in annual claims over the past 21 years. Loading a private rate to cover a potential 827% of premium claim year will generate rates higher than most farmers would pay. As a result it is likely most farmers would ‘self-insure’ and just wait for the ad hoc Federal Disaster program based on their experience over the past 30 years. However, under ad hoc disaster aid, it is unlikely that regulators would allow ag banks and Farm Credit to use it as collateral. Under a premium cost share program, the crop insurance coverage provides over $100B of coverage to repay loans and cover lost expenses.”

Radio Oklahoma Network farm news director Ron Hays recently discussed crop insurance issues with Dr. Barnaby; an audio replay and recap of their discussion was posted on Friday at The Oklahoma Farm Report Online.

In the update, Dr. Barnaby noted that, “Early on in the 2012 year when the drought was on the way in the Corn Belt there were a number of sources floating around saying it was going to cost the taxpayers $40 billion. That was an impossible number from the get go and people should have known better. But it got reported in the press and, after awhile, nobody ever challenges the number. Then, later, when it became clear it wasn’t going to be that much, then the story in the press was that it was going to cost taxpayers over $17 billion. Well, when you net out all the numbers, it’s closer to $12 billion and then you put into perspective that’s one time in 20 years. That’s not every year. In fact, you have years in the other direction where premiums exceed claims and the government costs are very small in those years.”

Chris Clayton pointed out on Friday at the DTN Ag Policy Blog that, “What is happening with crop insurance should be expected. For more than a decade, direct payments have taken the beating in farm policy debate as everyone noted that people collect direct payments regardless of price or circumstance. Crop insurance, however, does require both a farmer share of the premium and some form of financial loss to generate a payment. But as sparring takes place on the House floor over cutting SNAP by $4 billion a year, defenders of crop insurance can expect to look and act much like the guy on the mat in mixed-martial arts bouts trying to protect himself from both head and body blows at the same time.

“The hits will keep on coming until a final farm bill finally gets to the president’s desk.”

 

Additional Policy Issues

Ben Goad reported on Saturday at The Hill’s RegWatch Blog that, “Food safety advocates are assailing House Republicans for including a controversial carve-out for biotechnology companies in a government funding bill.

“The stopgap spending bill, which has an uncertain future in the House, would leave intact the so-called ‘Monsanto Protection Act’ that allows biotechnology companies to sell genetically modified seeds, even if a court has blocked them.”

Kimberly Kindy reported in Saturday’s Washington Post that, “A top food safety official at the USDA says that a pilot program for inspecting pork is working well, defending the experimental procedures being used in five hog plants around the country.

Phil Derfler, deputy administrator for U.S. Department of Agriculture’s Food Safety and Inspection Service, said in an interview with Meatingplace, the meat industry’s trade magazine, that government inspectors are making more checks for contamination under the pilot program, called the Hazard Analysis and Critical Control Point-based Inspection Models Project (HIMP).”

 

Biofuels

The New York Times published an article on the front page of yesterday’s paper by Gretchen Morgenson and Robert Gebeloff (“Wall St. Exploits Ethanol Credits, and Prices Spike”) which stated that, “It was supposed to help clean the air, reduce dependence on foreign oil and bolster agriculture. But a little known market in ethanol credits has also become a hot new game on Wall Street.

“The federal government created the market in special credits tied to ethanol eight years ago when it required refiners to mix ethanol into gasoline or buy credits from companies that do so. The idea was to push refiners to use the cleaner, renewable fuel, or force them to buy the credits.

“A few worried that Wall Street would set out to exploit this young market, fears the government dismissed. But many people believe that is what happened this year when the price of the ethanol credits skyrocketed 20-fold in just six months, according to an analysis of regulatory documents and interviews with more than 40 people involved in the market, including industry executives, brokers, traders and analysts.”

Keith Good