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Farm Bill; Budget Developments; and, the Ag Economy

Farm Bill

David Rogers reported yesterday at Politico that, “The Farm Bill’s top four negotiators met Wednesday and authorized staff to step up discussions on the commodity title in anticipation that the full House-Senate conference could begin the last week of October.

“The meeting, hosted by House Agriculture Committee Chairman Frank Lucas in his Longworth offices, was the first since the House finally appointed its conferees last Saturday.

“Present were Senate Agriculture Chairwoman Debbie Stabenow (D-Mich.) and her ranking Republican, Mississippi Sen. Thad Cochran, as well as Minnesota Rep. Collin Peterson, the ranking Democrat on the House side.”

Mr. Rogers noted that, “Lucas and Stabenow anticipate that Congress will be out of session next week, meaning the earliest a full conference can meet is the week of Oct. 27.”

The Politico article added that, “‘Having leadership muck around in this is not helpful,’ Peterson told POLITICO. ‘It could go either way. These guys could exact a pound of flesh out of us because of what’s happened to them with the budget: ‘We’re going to take it out on the farm bill.’”

“‘It could go the other way: ‘We’ve had enough of this we’re going to back off.’ It’s hard to know how it is going to play but I’m concerned about this.

“‘I’m going to be as helpful as I can try to get this done.’”

Ron Hays, of the Oklahoma Farm Report and Radio Oklahoma Network, spoke yesterday with Chairman Lucas about the mechanics of the Farm Bill conference and other farm policy variables.

An audio replay and summary of the Chairman’s remarks from yesterday can be found here, while an unofficial FarmPolicy.com transcript of the conversation with Ron Hays and Chairman Lucas is available here.

Chairman Lucas explained that, “But there are still areas of contention that have to be worked out. For instance, the Senate is still very focused on a one-size-fits-all kind of commodity safety net, something that looks to me like would probably work very well in the Midwest if you’re a corn or bean farmer, but perhaps won’t work so well for the rest of us. The House perspective still is that a farm bill needs to work for all commodity groups in all regions. That’s why the phrase ‘choice’ is so important, giving you options to pick from. We’ve got to work that difference out.”

The Oklahoma Republican added that, “The Senate is very focused on their version of conservation compliance, tying access to the government programs to how you farm. The Senate is very focused on their AGI limits, deciding at what level of income you have to pay more to participate in crop insurance, targeting the resources, deciding who is too big to be a farmer, in essence. I even had some of those instructions on the floor as I was going to conference, in a voice vote, a nonbinding resolution offered by the Budget Committee chairman, Mr. Ryan from Wisconsin.

So it’s the safety net, and it’s just how much do we let the federal government tell farmers and ranchers how to farm. Those are the questions. I believe we can overcome all of this. I’m going to be insistent that we have a safety net we can all be a part of. But before this is over with, whether it’s conservation compliance— and I’m proud to see a couple of the big farm organizations now have reversed their role in that to support of that program—or the AGI limit, I still have this funny idea that farmers should be allowed to farm, and the resources should follow the production. But those things have to be worked out, Ron, and they’re real philosophical issues that cut to the core.”

Also on the conservation compliance issue, Rep. Kevin Cramer (R., N.D.) indicated this week that, “North Dakota Farm Bureau has been opposed to linking crop insurance to conservation compliance since day one, and it is assuring to see the national organization following their lead. Farmers are already required to meet conservation standards if they choose to receive assistance through commodity, conservation, or credit programs. American Farm Bureau is rightly concerned about the negative consequences of adding a new layer of red tape to crop insurance. I welcome the decision as a positive sign of momentum as negotiations start in conference committee.”

On the issue of permanent law, Chairman Lucas noted yesterday in his discussion with Ron Hays that, “On the other issue, on permanent law, this is just a philosophical debate that I’m having with all the lobbyists here in the nation’s capital…[I]t gets harder and harder and harder to address the non-social welfare side of the farm bill, the things that actually raise the food every time.

“My personal perspective, and the committee agreed with me, and the floor agreed with me of the United States House, that if we could craft good long-term policy, that we would be better off to lock that in, to establish that as the new baseline, than to constantly fall back to ’38 and 1949 law.”

Chairman Lucas explained that, “I like certainty.  I like to take as many uncontrollable variables out of the field as possible.  The position the Senate’s taken is very strong. I don’t know that it’s possible— even my ranking member, Mr. Peterson, is very focused on maintaining permanent law. But just understand from my perspective, if we could create the language I believe we can, that we can live with for a long time, it’s better to have that locked in than to risk a day when we can’t pass another farm bill and some President and some leader in the Senate and some Speaker in the House say we can’t go back to 1938 and simply run, as a part of another bill, an instruction to repeal all of the old permanent law. That’s more dangerous to me than having good policy that we could live with for the next ten years in place. But it generates less business for a lot of people.”

More specifically on the permanent law issue, Bill Tomson reported yesterday at Politico that, “Leaving the old farm bill laws in place could result in doubling the retail price of milk and force the government to buy up domestic dairy products, but don’t get rid of them when passing a new farm bill, two big agriculture groups warn in separate letters [available here and here] to recently named conferees.”

The Politico article noted that, “The second main concern the Farm Bureau points out to conferees is the threat of separating food stamp and other nutrition policy reform in the farm bill. A provision in the House farm bill would ensure that the nutrition title of the 2013 farm bill expires two years earlier, in 2016, than the rest of the five-year bill, which would expire in 2018.”

Mr. Tomson added that, “The Farm Bureau is also telling conferees they should support a controversial measure in the House bill that would prohibit states from exerting their farming rules on agricultural products that come from other states. This controversial provision was added to the House bill via an amendment by Rep. Steve King (R-Iowa), one of the House farm bill conferees, who told POLITICO he’s optimistic the measure will make it into the final iteration of the 2013 farm bill.”  [Note: a transcript and video replay of the discussion on this amendment from the House Farm Bill markup can be found here].

Mary Kay Thatcher, Senior Director of Congressional Relations at the American Farm Bureau Federation spoke yesterday with Greg Akagi of the Kansas Ag Network about Farm Bill issues.

Ms. Thatcher specifically addressed the permanent law issue and the linking of the commodity title and nutrition title (audio clip – MP3- one minute), as well as overall spending levels on the nutrition title (SNAP) (audio clip– MP3- one minute) during yesterday’s discussion.

Meanwhile, Farm Bill Conference Committee Member Rep. Rodney Davis (R., Il.) spoke about policy related issues yesterday on WDWS radio (Champaign, Il.)- audio replay here.

An update yesterday at the National Sustainable Agriculture Coalition Blog indicated that, “Eight Senators today sent a letter to Senate Agriculture Leadership signaling their strong objection to language contained in the House version of the Farm Bill that would severely restrict the U.S. Department of Agriculture’s (USDA) ability to ensure fair and competitive livestock and poultry markets under the Packers and Stockyards Act.

“Co-authored by Senators Jon Tester (D-MT) and Chuck Grassley (R-IA), the letter urges Senate farm bill conferees to reject the House language, which would prohibit USDA from doing almost anything to address deceptive, fraudulent, retaliatory, and anti-competitive practices by the highly concentrated meatpacking and poultry processing sectors.”


Budget Developments

Lisa Mascaro, Michael A. Memoli and Brian Bennett reported yesterday at the Los Angeles Times Online that, “Congress gave final approval late Wednesday to a budget compromise, ending a 16-day government shutdown and averting the possibility of a default on the nation’s bills, as a bitter partisan stalemate concluded with Republicans conceding defeat.”

The article stated that, “In the House, 87 Republicans joined 198 Democrats to pass the bill. The three top members of the GOP leadership — Boehner, Majority Leader Eric Cantor of Virginia and Majority Whip Kevin McCarthy of Bakersfield — were among those voting aye. But 144 Republicans, more than 60% of the conference, opposed them, including Budget Committee Chairman Paul D. Ryan of Wisconsin.”

Note that Janet Hook and Kristina Peterson reported in today’s Wall Street Journal that, “In the Senate, 54 members of the Democratic caucus were joined by 27 Republicans in voting for the bill. They included Sen. Mitch McConnell (R., Ky.), the Senate GOP leader, and Senate Majority Leader Harry Reid (D., Nev.). Eighteen Republicans voted no.”

The LA Times article stated that, “In brief remarks at the White House after the Senate vote, [President] Obama promised to sign the bill immediately and start reopening government agencies.”

During his remarks, President Obama stated that, “In fact, there are things that we know will help strengthen our economy that we could get done before this year is out. We still need to pass a law to fix our broken immigration system. We still need to pass a farm bill.”

In discussing details of the budget outline, the LA Times writers explained that, “The measure provides funding to keep the government running through Jan. 15 and authorizes back pay for furloughed federal workers.

“It allows borrowing to continue through Feb. 7, but the Treasury could use so-called extraordinary measures to temporarily pay bills after that date. So the next debt ceiling crunch probably would not occur until spring.

“The temporary nature of the agreement all but ensures another budget battle this winter, unless a House-Senate conference committee established by the deal can work out an agreed-upon spending plan. The panel has until Dec. 13 to come up with one. The goal would be to avert another round of automatic ‘sequester’ cuts that many in both parties want to avoid. Congress did not give federal agencies the flexibility that some lawmakers had sought for handling that next round of cuts.”

The LA Times article also stated that, “The measure includes $2 billion for completion of locks and dams on the Ohio River in Illinois and Kentucky.”

In more detail on the budget conference committee contained in yesterday’s agreement, Ginger Gibson reported yesterday at Politico that, “A key element of the deal reached to reopen the government and hike the debt ceiling is that both chambers must go to a budget conference. The conference committee will be tasked with agreeing to budget numbers and crafting a bipartisan deal to address long-term deficit reduction… [T]he conference committee has until Dec. 13 to reach an agreement.”

The Politico article noted that, “[Senate Budget Chairwoman Patty Murray (D-Wash.)] and Rep. Paul Ryan (R-Wis.), the chairman of the House Budget Committee, will have breakfast Thursday morning, she said after the vote. The two will discuss how to move forward in the negotiating process, she said.”

Both the Senate and the House named budget conferees last night. (Note that Senate Ag Committee Chairwoman Debbie Stabenow (D., Mich.), who also serves on the Budget Committee, will be a part of this conference).

Damian Paletta reported yesterday at The Wall Street Journal Online that, “It could be the deficit breakthrough that many Democrats and Republicans have sought since 2011.

“Or it could be just another budget bust.

“Whatever the result, all eyes are quickly shifting from the debt-ceiling and government-shutdown fight to the prospect of a new round of budget negotiations—this time by a group of Democrats and Republicans who will try to reconcile separate budget documents passed by the House and Senate this year.”

The Journal article explained that, “A central focus for both parties in the committee would be adjusting the across-the-board spending cuts known as the sequester, which began March 1 and are scheduled to reduce spending further in January. Mr. Ryan, of Wisconsin, and Ms. Murray, of Washington, also have suggested they are interested in reaching a broader deal overhauling taxes and, potentially, health-care spending, though those issues have proved divisive in recent years.

But there is no guarantee the parties will be able to bridge their differences, with Democrats saying more tax revenue is needed to bring down deficits and Republicans opposing additional revenue, saying savings could be found in spending cuts.”

Likewise, Jonathan Weisman and Ashley Parker reported in today’s New York Times that, “But there were no guarantees that Congress would not be at loggerheads again by mid-January, and there is deep skepticism in both parties that Representative Paul D. Ryan of Wisconsin and Senator Patty Murray of Washington, who will lead the budget negotiations, can bridge the chasm between them.”

Also, Bloomberg writers Laura Litvan and Allan Holmes reported today that, “If you thought shutting down the U.S. government was tough, just wait until agencies try to open again for business.

“The legislation passed by Congress last night to raise the debt ceiling and fund the government into 2014 will bring hundreds of thousands of federal workers back to their jobs and reopen national parks and museums. Yet it may be weeks or even months before the government resumes issuing loans, payments and contracts at a normal pace.”


Agricultural Economy

Yesterday, the Federal Reserve Board released its Summary of Commentary on Current Economic Conditions. Commonly referred to as the “Beige Book,” the report included several observations with respect to the U.S. agricultural economy.  A summary of the portion of yesterday’s report discussing the ag economy has been posted here, at FarmPolicy.com Online.

Meanwhile, Reuters writer Laura Zuckerman reported yesterday that, “Ranchers in South Dakota who lost large parts of their cattle herds to a winter storm are not asking for blankets or food to help them recover. They want pregnant cows and heifers of breeding age, said a group organizing donations on Tuesday.”

And with respect to trade issues, Stan Ryan, a corporate vice-president of Cargill, indicated in an a column posted yesterday at The Wall Street Journal Online that, “Asia’s economic growth is undoubtedly a good thing, but it does pose new challenges. Among the most pressing right now is how the continent will feed itself. Solutions are not in short supply, although policy makers need to be willing to adjust their approach to the problem.”

Mr. Ryan noted that, “One of the less effective food policy choices for any country is pursuit of food self-sufficiency. The perils of this approach can be seen in Indonesia. Jakarta’s efforts to block and limit live cattle and packaged beef imports to spur local production resulted in dramatically lower supplies on store shelves and prices that were more than double those in Malaysia and Thailand.

Asia should not attempt to be totally food self-sufficient. More than half of the world’s people reside in Asia, but it does not have anywhere near half of the cultivatable land. Given this fact, as well as food consumption changes that are occurring as economic progress results in higher demand for meat and dairy protein, self-sufficiency is an unsustainable path to Asian food security.

“Instead, free trade is the solution. Indonesia discovered this when, in response to its beef shortage, the government allowed more imports, leading to increased supplies and lower prices. China has met skyrocketing demand for soybean meal and soybean oil via higher soybean imports, while domestic production has remained flat. As a result, Chinese consumers enjoy a greater variety of lower-priced foods and farmers reap better returns by focusing on rice, wheat and corn.”

Keith Good