FarmPolicy

September 23, 2019

Farm Bill; Ag Economy; and, CDC Report

Farm Bill- House Nutrition (SNAP) Measure

David Rogers reported yesterday at Politico that, “New independent estimates Monday night show that as many as 3.8 million people would lose their food stamp benefits in 2014 under a House Republican plan to tighten eligibility and end state waivers for able-bodied adults who are unemployed.

“The Congressional Budget Office numbers paint a darker picture than the GOP has admitted to thus far. The contradictions – which continued to play out Monday afternoon — add to the tensions surrounding what is already a bitter fight over the nutrition title of the House farm bill.

“According to the CBO, 1.7 million people would be forced off the rolls in the coming year if the state waivers are repealed as proposed by Majority Leader Eric Cantor (R-Va.). Another 2.1 million would be dropped in 2014 as a result of the tighter eligibility rules backed by the GOP.”

Mr. Rogers explained that, “In both cases, the impact would decline as the economy improves and more jobs become available. But on average, CBO estimates that a total of 2.8 million people would lose their benefits over the next decade, and another 850,000 households will see an average reduction of about $90 a month in benefits.

“The net 10-year savings for the government would be approximately $39 billion, nearly double what was first recommended by the House Agriculture Committee in June and far in excess of what the full Senate has approved.

“Nonetheless, Cantor has been the driving force behind the 109-page substitute nutrition title — even at the risk of the larger farm bill. The whole legislative process is quite extraordinary with the Virginian operating as almost a committee of one.”

[FarmPolicy.com Note: A brief Democrat summary of the House nutrition measure is available here, and for a look at “some interesting provisions with some interesting stories behind them” in the nutrition proposal, see this article from Roll Call].

The Politico article added that, “Agriculture Chairman Frank Lucas (R-Okla.) retains jurisdiction and is listed as the sponsor on documents filed with the House Monday afternoon. But Cantor and his staff have dominated the preparation, and their work product will go to the House floor without ever being subject to any real legislative markup.

“Toward this end, the House Rules Committee announced it will meet on the nutrition bill Wednesday in anticipation of votes by the end of the week. Whip counts suggest it will be a closely-fought contest given the strength of the Democratic opposition. And the severity of the cuts is also causing concern among rank-and-file Republicans with low-income rural communities in their districts.”

AP writer Mary Clare Jalonick reported yesterday that, “It is unclear whether the Republican leaders have enough votes for passage. Democrats have lined up solidly in opposition, and some moderate Republicans have indicated they may not be able to stomach the cuts.

“Even if the bill does pass, the cuts are unlikely to become law. The Democratic Senate passed a farm bill in June with one-tenth of the cuts in the House bill, or about $400 million a year, and President Barack Obama has strongly opposed any major cuts to the program.

“The House bill also would tighten eligibility standards and try to reduce the rolls by allowing states to require drug testing for recipients.”

Ms. Jalonick noted that, “Minnesota Rep. Collin Peterson, the top Democrat on the House Agriculture Committee, called the bill ‘unnecessary and divisive.’

“‘Even if this bill is defeated, as it should be, I worry the debate will eliminate any remaining goodwill needed to pass a farm bill,’ Peterson said.”

Emma Dumain reported yesterday at Roll Call Online that, “The House is set to consider legislation this week to cut $40 billion from nutrition programs over 10 years in yet another test for House GOP leaders still licking their wounds from the defeat of their original incarnation of the farm bill earlier this summer.

“This time, however, at least one of their chief antagonists will be staying mostly on the sidelines.

The Club for Growth, an influential conservative advocacy group that took some of the credit for successfully lobbying Republican lawmakers to oppose the farm bill, told CQ Roll Call on Monday it did not plan to ‘key vote’ the nutrition bill, even though ‘it’s clear that it’s part of an overall charade to remarry food stamps with farm subsidies that we oppose,’ said spokesman Barney Keller. A key vote is used in scoring members’ bona fides before an election.”

Ms. Dumain added that, “On Tuesday, Democratic Reps. Rosa DeLauro of Connecticut and Jim McGovern of Massachusetts, along with Congressional Black Caucus Chairwoman Marcia L. Fudge, D-Ohio, will join food aid activist and celebrity chef Tom Colicchio on Capitol Hill for a press conference to set the party’s tone for the week ahead.”

Also yesterday, National Farmers Union President Roger Johnson indicated that, “Separating nutrition programs from the farm bill was a mistake from the very beginning. Consideration of H.R. 3102, a politically charged bill that would hurt those in our society who most need help, unnecessarily complicates the farm bill process.”

 

Farm Bill- Crop Insurance

Dr. Tom Zacharias, President of the National Crop Insurance Services, was a guest on yesterday’s AgriTalk radio program with Mike Adams were the discussion focused on crop insurance issues.

Dr. Zacharias indicated yesterday that, “Farmers are not paid to buy crop insurance.  Farmers pay for crop insurance.  They spent about $4 billion of their own money in 2012 for premium, and last year when we had the catastrophic drought through the Midwest, before those deductibles kicked in, farmers absorbed just under $13 billion in uninsured losses.

“There’s no subsidy in the traditional sense of the word.  Farmer premium is discounted, which makes crop insurance affordable.  Farmers only receive an indemnity in the case of an insured loss.  That’s the loss adjuster goes out and verifies these claims.  These claims are subject to audits and additional reviews.”

Dr. Zacharias noted that, “As far as the companies that deliver the program to the farmers, these are publicly traded companies… Companies that provide crop insurance, they’re not guaranteed a profit.  If you look at reports and studies that we’ve been associated with, compared to the property casualty industry, crop insurance returns for the industry are more volatile than standard insurance lines.  Companies lost money last year, so I don’t think they think of this as a guaranteed profit.”

He also pointed out that, “There are and were $12 billion in funding reductions to crop insurance since the 2008 farm bill.”

Also in his discussion yesterday with Mike Adams, Dr. Zacharias explained that, “The flow of funds in the crop insurance business are transparent and publicly available.  You can go out to RMA’s website and you can track what the gain and loss situation is.  It’s reported.  You can track the administrating and operating expenses.  CBO does budget projections and shows the historic costs of the program.”

If you look at the experience of a state like Illinois in particular, they went years without a major loss, and then this past year I think their loss ratio was over 450%,” Zacharias noted.

 

Farm Bill- Title I

Reuters writer Charles Abbott reported yesterday that, “The new U.S. farm bill might violate World Trade Organization rules against trade-distorting subsidies, major U.S. business groups said on Monday in an appeal to lawmakers to revamp the bill, which is already facing slim odds of passage.

“An adverse decision by the WTO could expose U.S. exports to retaliatory tariffs if there is a challenge. It would be an ironic turn, since the farm bill was intended in part to resolve a WTO ruling against U.S. cotton subsidies.

“Leaders of the Senate and House Agriculture committees had no immediate response on Monday to the assertion by the U.S. Chamber of Commerce, National Association of Manufacturers and National Foreign Trade Council.”

Chris Clayton reported yesterday at the DTN Ag Policy Blog that, “In general, lawmakers have increasingly thumbed their noses at possible WTO cases, which has led in recent years to $147 million in annual payments to Brazil because of the upland cotton case. The legal battles over country-of-origin labeling rules also are directly linked to a WTO decision.

“The business groups asked House and Senate ag leaders to examine both the Senate’s Adverse Market Payments program and the House Price Loss Coverage target-price program. Those programs ‘run substantial risk of violating obligations the United States has undertaken’ as part of the WTO for the same reasons a WTO panel found the U.S. noncompliant in the upland cotton case.”

Mr. Clayton noted that, “The full report drafted for the Chamber of Commerce can be viewed at http://dld.bz/…

 

Agricultural Economy

University of Illinois Agricultural Economist Darrel Good indicated yesterday at the farmdoc daily blog (“Corn and Soybean Production – Some Unfinished Business”) that, “The USDA’s September corn and soybean production forecasts were reasonably close to the average trade guesses reported before the release of the September Crop Production report. Corn prices drifted lower following the report, reflecting expectations of a crop large enough to allow some rebuilding of stocks. Soybean prices initially moved higher after the forecasts were released, reflecting expectations of smaller forecasts in future reports. Prices have now returned to pre-report levels.”

After additional analysis, yesterday’s update stated that, “At this juncture, there is a high probability that the 2013 U.S. corn crop will be large enough to result in a meaningful increase in stocks by the end of the current marketing year. Prospects of ample supplies point to an average marketing year farm price in the mid $4.00 range. Cash prices would be expected to follow a typical large-crop pattern of establishing lows at harvest time followed by modest increases that would about cover the cost of storage.

Soybean prices are expected to remain high relative to corn prices, with a marketing year average farm price in the high $12.00 range. The price pattern for soybeans may follow more of a short-crop pattern, however, particularly if the production forecast declines in October. Such a pattern would point to the highest prices at harvest and declining prices as consumption adjusts and the South American crop advances.”

Cheri Zagurski and Emily Garnett reported yesterday at DTN (link requires subscription) that, “The nation’s corn crop was 4% harvested as of Sept. 15, according to USDA’s latest weekly Crop Progress report. That compares to a five-year average of 10%…Crop condition worsened slightly with one percentage point moving out of the good category and into the very poor category.”

Soybean condition worsened with 18% of the crop rated very poor to poor compared to 16% last week,” the DTN article said.

Emily Garnett reported late last week at DTN (link requires subscription) that, “From the Deep South to the West Coast, cotton acres have contracted sharply in the past decade. While the top-producing states of Georgia and Texas have maintained their acreages, planted acres in Arkansas declined 69%; California, 60%; Louisiana, 75%; Mississippi, 73%; Tennessee, 55%; and Alabama 27%. Most of those states posted record or near-record lows in 2013.

“National acres vacillated between 13 million and 16 million for much of the 1990s and early 2000s, before dropping to 9.2 million in 2009. After a brief recovery in 2011 and 2012, they have slipped back to 10.3 million for 2013.

“Now, low market prices, uncertain global demand, agronomic challenges and towering equipment costs have some questioning cotton’s return.”

The article noted that, “Much of the textile industry has moved overseas where labor is cheap, plentiful and, in some countries like China, subsidized, said Gary Adams, the vice president of economic analysis for the National Cotton Council.

“At the turn of the century, the domestic textile industry used more than 10 million bales of cotton fiber; now it’s closer to 3.5 million bales, Adams said. The U.S. exports around 75% of its cotton production, leaving cotton farmers more vulnerable to the rise and fall of global markets.”

Meanwhile, Andrew E. Kramer reported in today’s New York Times that, “American farmers are getting an unexpected windfall from a contentious fight between Russia and Belarus, a former Soviet splinter state.

The subject of the fight is potash, a fertilizer. The score so far: One imprisoned Russian business executive, the disintegration of a once-effective cartel that kept world potash prices high and political tension between the two countries.

“What is being called the ‘fertilizer war’ is the latest of numerous trade and economic spats between Russia and Belarus, whose leaders, though presiding over similar autocratic political systems, do not get along personally, Russian political analysts say. Aleksandr G. Lukashenko, president of Belarus, and Vladimir V. Putin, president of Russia, by most accounts detest each another. Their feelings have spilled over into the fertilizer business.”

Today’s article noted that, “The price for granular potash in the Midwest has fallen to around $400 a ton, from $420 before the announcement on July 30.

“‘Optimists say that every cloud has a silver lining,’ Ed Lotterman, a columnist for The Idaho Statesman, wrote of the wobbling cartel. ‘It isn’t hard to find one in the recent potash industry upheaval that sent the stock of several fertilizer producers down by a fourth. What is bad for them is great news for U.S. farmers.’”

Meanwhile, Roman Olearchyk and Emiko Terazono reported yesterday at The Financial Times Online that, “Fifty years ago, inspired by a visit to the US cornbelt, Nikita Khrushchev’s grand plan to grow corn across the Soviet Union resulted in devastating crop failures and food shortages. Today, however, in one ex-Soviet state, his vision may be realised.

“This year, Ukrainian farmers are harvesting their largest corn crop, and as Serhiy Didyk, who farms on the steppes of central Ukraine, said: ‘Khrushchev’s dream of producing vast quantities of corn on our land is finally becoming reality.’

“With its rich black soil, Ukraine has historically been known as the ‘breadbasket of Europe’. Already a large wheat supplier to the Middle East, now Ukraine’s corn acreage is expanding as well, as it offers higher profits and faces far less state regulation than wheat markets. And unlike past efforts for mass production of the grain, these days better quality seeds, fertiliser and pesticides, and favourable weather have boosted yields.”

Also, Shawn Donnan reported this week at The Financial Times Online that, “India and the US are backing away from a fight over food security and a new Indian food distribution programme for the poor that had been seen as a big stumbling block to reaching a global trade deal this year.

Roberto Azevêdo, the new head of the World Trade Organisation, called on member countries last week to break a deadlock in negotiations towards a three-pronged ‘Doha lite’ agreement due to be signed at the trade body’s biennial ministerial meeting in Bali in December.”

The FT article stated that, “Rather than both sides shaping up for a fight over how big government food-buying and distribution programmes for the poor are administered, the consensus has moved towards negotiating the terms of a ‘peace clause’. This would see negotiations continue for a set time, during which critics of the Indian and other programmes agree not to file a case challenging them to the WTO. The compromise was first proposed by China at a meeting this month.”

 

CDC (Center for Disease Control) Report

Betsy McKay reported in today’s Wall Street Journal that, “More than two million people in the U.S. develop infections every year that are resistant to antibiotics, and at least 23,000 of them die as a result, according to a government report Monday that called for aggressive steps to counter a worsening public health problem.”

The Journal article noted that, “The CDC called for more judicious use of antibiotics, better surveillance of resistant bacteria, the development of new drugs, and new tests that can pinpoint resistant bacteria quickly.”

A news release yesterday from Rep. Louise M. Slaughter (D., N.Y.) indicated that, “To stop the growing antibiotic resistance crisis, Congresswoman Slaughter has introduced the Preservation of Antibiotics for Medical Treatment Act (PAMTA), which would stop the routine overuse of antibiotics in food-animals and preserve eight classes of antibiotics for human use, while allowing exceptions to treat sick animals.”

Keith Good

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