FarmPolicy

November 1, 2014

Farm Bill; Ag Economy; Budget; and, Climate Issues

Farm Bill

Brett Neely reported on Friday at Minnesota Public Radio Online that, “While several key [Farm Bill] issues remain unresolved despite more three years of work on the bill, one of the latest roadblocks is a disagreement about how the federal government should provide a safety net to dairy farmers with GOP House Speaker John Boehner publicly challenging policies long pushed by U.S. Rep. Collin Peterson, D-Minn., the top Democrat on the House Agriculture Committee.”

Mr. Neely explained that, “Peterson wants to establish an insurance program to protect farmers from fluctuations in the cost of feed and what he calls a market stabilization program that would encourage farmers to reduce production when prices drop too far.

“‘The only thing we’re saying is that if you’re taking government help and the market gets oversupplied and so it starts costing the government money, that that cost should be put on the dairy farmers, not on the taxpayers,’ Peterson told MPR News.”

Friday’s update noted that, “‘I’ve fought off the supply and management ideas for 23 years that I have been in Congress, and my position hasn’t changed.  And Mr. Peterson and others are well aware of it,’ said Boehner at a press conference on Thursday.

“The House ultimately rejected Peterson’s proposals when it passed its version of the farm bill in 2013, but the Senate included them in its version of the bill.”

The MPR item pointed out that, “Peterson said he had bent over backward to accommodate concerns about the dairy program by making it voluntary, establishing narrowly defined triggers to ensure the programs would not disrupt the markets and offering to let a dairy stabilization fund expire after three years.

“‘We already compromised three times on dairy. He’s compromised zero times,’ said Peterson. ‘So that’s the problem.’”

Mr. Neely indicated in his update that, “Peterson went on to argue that Boehner was the one creating roadblocks for the bill as the Senate bill contained Peterson’s language and all four House and Senate agriculture committee chairs and ranking members had initially signed off on the new dairy programs. House Agriculture Committee chairman Frank Lucas, R- Okla., has since sided with Boehner, saying that a final bill cannot make it to the floor without the Speaker’s consent and that it cannot contain the market stabilization program.

“‘This is not me holding this up, me having this unilateral fight with Boehner,’ said Peterson. ‘This is actually between Boehner and the Senate more than it is between me and Boehner, so I couldn’t fix this if I wanted to.’”

The Wall Street Journal editorial board stated in today’s paper that, “On Thursday, the Speaker indicated that a conference report including supply management won’t come for a vote. Mr. Boehner’s intervention is a public service. If Congress can’t improve farm policy, the more principled Members at least can avoid making it worse.”

An update last week at from the International Dairy Foods Association (IDFA) indicated that, “Although Representative Collin Peterson (D-MN), one of the four principal negotiators, has continued his efforts to include a new program that will periodically impose government limits on milk supplies, the Speaker of the House John Boehner (R-OH) recently informed the conferees that he will not allow a Farm Bill that includes such a policy to pass the House of Representatives.”

The update noted that, “With the so-called stabilization program seemingly off the table, news reports are saying that the conferees are seriously considering a compromise proposal that would provide dairy farmers with the option of participating in either the existing Milk Income Loss Contract (MILC) program or the new margin insurance program that was included in both the Senate dairy title and the Goodlatte-Scott amendment that is now the House dairy title. This proposal was revealed several weeks ago by two economics professors, John Newton and Cam Thraen, of Ohio State University’s department of Agricultural, Environmental and Development Economics.

“In The Dairy Safety Net Debate of 2013 Part II, Questions and Answers, the professors say combining a modified MILC program with a revised margin insurance program would hold down taxpayer costs and provide a better way forward for dairy than proposals offered by the House and the Senate.”

In Part I of the series, the authors said the Dairy Market Stabilization Program (DMSP), approved by the Senate but opposed by the House, would cause implementation inequities, create regional disparities and hurt efficient, well-managed farms the most. They also concluded that producer response to the DMSP would arguably limit its effectiveness and potentially prolong the duration of low margins,” the IDFA update said.

DTN Political Correspondent Jerry Hagstrom reported on Friday that, “After watching farm-bill talks get derailed this week over dairy policy, conferees are considering a compromise for milk producers.

The proposal would give dairy farmers a choice between a continuation of the current Milk Income Loss Contract payments or the new margin insurance program. The plan would drop the controversial provision that the dairy farmers call market stabilization and processors call supply management, DTN has learned.

“The compromise proposal originated with Cameron Thraen, a professor at Ohio State University, and John Newton, an OSU doctoral degree candidate, said a source following the negotiations. The source noted that the small dairy farmers would be more likely to continue MILC payments while the large producers would opt for the margin insurance because they have gotten only limited assistance under the MILC program, which limits the amount of production on which payments are made.”

Mr. Hagstrom added that, “Sen. Tom Harkin, D-Iowa, said in a separate call that ‘a more definitive statement on the farm bill’ is likely next week. Harkin said a delay isn’t too much of a concern even if deliberations carry into next week or Jan. 20, the week of the MLK holiday. The bill would then be completed in early February.

“‘I don’t think that would be absolutely fatal,’ he said.

“Harkin indicated Boehner could have his hands full trying to sway Peterson and Sen. Pat Leahy, D-Vt., to surrender on any dairy issues.”

Also on Friday, House Majority Leader Eric Cantor (R., Va.) released the weekly schedule for the House.  Farm Bill related issues were not included on the schedule.

In other Farm Bill developments, Mike Lillis reported on Friday at The Hill Online that, “A bipartisan proposal to cut food stamps by $9 billion would likely pass the lower chamber with support from Democrats, Rep. Steny Hoyer (D-Md.) said this week.

“‘If that is the figure, and if other matters that are still at issue can be resolved, I think the bill will probably pass, and it will pass with Democratic — some Democratic — support,’ Hoyer said Thursday during the taping of C-SPAN’s ‘Newsmakers’ program, which will air Sunday. ‘Not, certainly, universal Democratic support. … But I think it will pass.’”

Todd Kuethe and Jonathan Coppess of the University of Illinois indicated in an update posted on Friday at the farmdoc daily blog (“Mapping the Fate of the Farm Bill: A Closer Look at SNAP”) that, “The popular notion as to why food assistance programs are included in the farm bill is that they primarily benefit urban populations and in order to gain enough political support for commodity programs the farm bill must contain both. This notion is supported by the history of U.S. farm policy, but empirical evidence shows that many congressional districts with high SNAP participation rates are rural. Even though there are many constituents in rural districts who benefit from SNAP, the program’s key political support remains in urban areas.”

Also on the nutrition issue, Niraj Chokshi reported on Friday at the GovBeat Blog (Washington Post) that, “Delays in handing out food stamps in North Carolina have been so bad for so long that the federal government could pull funding.

“More than 6,000 households had been waiting more than three months on benefits, a United States Department of Agriculture regional director noted in a Dec. 11 letter to the North Carolina Department of Health and Human Services. Keep it up, the official warned, and the state could lose federal funding.”

Bloomberg writers Alan Bjerga and Derek Wallbank reported yesterday that, “First, California voters said chickens need more space to live.

“Now California lawmakers say the state’s stores can only sell eggs next year from hens raised in roomier quarters, and that’s got producers nationwide worried the law will cut into their profits.

“This chicken-and-egg dilemma could pose a risk to the rewrite of federal farm and nutrition programs, now nearing completion after two years of negotiations, because one member of Congress wants to resolve the issue with legislation.”

Yesterday’s article added that, “‘Our founding fathers established what’s become a 50-state free-trade zone,’ Representative Steve King of Iowa, a Tea Party-backed Republican whose state leads the U.S. in egg production. ‘We cannot have trade wars started by unconstitutional state legislation that’s designed to be trade protectionist.’

“King said California’s policies are an unconstitutional infringement of state commerce and is pushing Congress to overturn the rule using the multi-year farm bill. King is getting support from cattle farmers too, who are worried that if farmers are required to treat chickens better, pigs and cattle will be next.

“Animal-welfare advocates to constitutional scholars say King’s effort may encourage encroachment on state’s rights.”

And Urban C. Lehner, DTN Editor Emeritus, indicated at his blog yesterday that, “Other glimmers of [Farm Bill] hope: The conferees seem to have compromised on one of the toughest issues of principle—food-stamp cuts. They’re at least discussing a compromise on another, the Senate’s proposal to cut milk production when prices tumble.

“Fair enough, but it’s one thing to reach a deal in conference and quite another to get it enacted by the full House and Senate. However beneficial passing legislation might be for the party’s electoral prospects, many Republicans will reject the conferees’ compromises on principle. And however well it places a party for a general election, the middle of the road is a dangerous place for any Congressman in the primaries.

The more Republican votes the conference report loses, the more Democratic votes will be needed and the more leverage Democrats will have to hold the bill hostage. If they don’t get what they want on issues like extending unemployment benefits, some Democrats may see advantage in letting the farm bill die. For one thing, food-stamp spending would continue at current levels.”

Also yesterday, Daniel Looker reported yesterday at Agriculture Online that, “American Farm Bureau President Bob Stallman expressed hope Sunday that Congress will soon finish a farm bill and legislation to authorize lock and dam repairs, and he called on those legislative leaders to pass immigration reform.”

 

Agricultural Economy

On Friday, the USDA’s National Agricultural Statistics Service (NASS) released its Crop Production 2013 Summary report, which stated that, “Corn for grain production is estimated at a record 13.9 billion bushels, down slightly from the November 1 forecast but 29 percent above 2012. The average yield in the United States is estimated at 158.8 bushels per acre. This is down 1.6 bushels from the November forecast but 35.4 bushels above the 2012 average yield of 123.4.”

The NASS update added that, “Soybean production in 2013 totaled 3.29 billion bushels, up 1 percent from the November 1 forecast and up 8 percent from 2012. United States production is the third largest on record. The average yield per acre is estimated at 43.3 bushels, 0.3 bushel above the November 1 forecast and 3.5 bushels above last year’s yield.”

Incorporating the NASS production estimates, the World Agricultural Outlook Board also released its monthly World Agricultural Supply and Demand Estimates (WASDE) report on Friday.

A summary of key variables for corn from the WASDE report is available here, while a soybean summary can be found here.

The WASDE report noted that, “The projected 2013/14 season-average farm price for corn is unchanged at the midpoint with the range narrowed to $4.10 to $4.70 per bushel…[and]…The 2013/14 U.S. season-average farm price forecast for soybeans is narrowed 25 cents on both ends of the range to $11.75 to $13.25 per bushel based on prices reported to date.”

NASS released its Grain Stocks report on Friday, which stated that, “Corn stored in all positions on December 1, 2013 totaled 10.4 billion bushels, up 30 percent from December 1, 2012.”

And in its Winter Wheat Seedings report on Friday, NASS indicated that, “Winter wheat seeded area for 2014 is expected to total 41.9 million acres, down 3 percent from 2013.”

Gregory Meyer reported on Friday at The Financial Times Online that, “Corn prices jumped after the world’s biggest grower reported slightly less supply than expected.

“The publication of several US government grain reports on Friday sent corn futures rising as much as 4 per cent in Chicago and appeared to mark a bottom for previously weak prices.”

The FT article stated that, “Corn performed the worst of any commodity in the main futures indices last year, falling almost 40 per cent.

“Prices had set records above $8 per bushel in 2012 as the worst drought in decades stunted the previous US crop.”

Tony C. Dreibus and Jeffrey Sparshott reported on Friday at The Wall Street Journal Online that, “Corn prices jumped 5%, the biggest single-session gain in eight months, after federal forecasters unexpectedly cut their estimate for U.S. production in 2013, citing lower yields.

“Soybean futures also rose Friday, while wheat prices dropped to the lowest level in more than three years.”

The Journal writers explained that, “Last year’s corn crop was still by far the largest in U.S. history, shattering the previous record of 13.1 billion bushels in 2009. The huge harvest, which came just one year after a severe drought battered the Farm Belt, triggered a 40% decline in U.S. corn futures last year, making it the worst-performing U.S. commodity.

“The USDA, in a series of closely watched crop reports Friday, also unexpectedly lowered its outlook for corn stockpiles at the end of the 2013-14 season in August by 9% to 1.631 billion bushels. Analysts had forecast the inventories estimate would rise to 1.844 billion bushels. The government boosted the amount of corn it expects to be used to feed livestock by 2%.”

In more specific news regarding livestock, Kelsey Gee reported on the front page of Saturday’s Wall Street Journal that, “A virus that kills young pigs is roiling the U.S. pork industry, boosting prices in the $9 billion hog-futures market and threatening to create more pain for food shoppers.

“The disease, which has spread to farms in 22 states, is cutting into pork supplies and prompting some traders and investors to wager that hog prices could set records this year. Lean-hog futures rose to a seven-week high a week ago and are up 6% since mid-December.”

In trade related developments, Hiroko Tabuchi reported in Friday’s New York Times that, “The recent debate over how much Japan should open up its agricultural sector to join a proposed free trade group led by the United States, the Trans-Pacific Partnership, is opening up new rifts in Japan, rifts that defy traditional urban-rural divides. Increasingly, urban Japanese — and even some farmers — are questioning exactly what those tariffs protect.

“Japan has signed only a few limited free trade agreements, thanks to its tough stance on agricultural tariffs. Consumers pay more than twice the global average price for rice, and four times more for wheat.”

The article added that, “Kazuhito Yamashita, an agricultural expert at the Canon Institute for Global Studies in Tokyo, said that at Trans-Pacific Partnership negotiations Japan could be forced to offer concessions to the Americans on some farm products, like wheat and sugar. Japan could even expand the small quota of rice imports it accepts each year to appease the United States and other rice producers.

“‘But Japan will never free up its rice market in the real sense,’ he said. ‘There are too many vested interests.’”

Former U.S. Trade Representative Robert Zoellick indicated in an opinion item in today’s Wall Street Journal that, “President Obama has tiptoed on trade, but he is moving in the right direction. He may hesitate when he recognizes that results require actions. Republicans should be pushing the president to deliver—and to make 2014 the year the U.S. reclaimed global leadership on trade.”

And the Senate Finance Committee will hold a hearing on trade related issues on Thursday.

In news regarding biofuels, Christopher Doering reported in Saturday’s Des Moines Register that, “Congress is unlikely to muster enough support in 2014 to repeal or significantly roll back a controversial measure requiring ethanol to be mixed into the nation’s gasoline supply, lawmakers say.”

And with respect to biotech issues, Reuters writer Christopher D’Angelo reported on Saturday that, “Three of the world’s largest agrichemical companies have filed a lawsuit in Hawaii to try to block a new law enacted on the island of Kauai that tries to limit the planting of biotech crops and the use of pesticides.

DuPont, Syngenta and Agrigenetics Inc., a company affiliated with Dow AgroSciences, which is a unit of Dow Chemical, filed suit Friday in the U.S. District Court in Honolulu, Hawaii. The suit claims the action in Kauai is unconstitutional.”

 

Budget

David Rogers reported yesterday at Politico that, “House-Senate negotiators have substantially narrowed their differences over a $1.1 trillion governmentwide spending bill and are closing in on a deal that the leadership hopes can be filed by Monday night and moved quickly through Congress this week.”

“The timetable remains tight. The current stopgap continuing resolution, which has kept agencies operating thus far, is due to expire Wednesday. To avert any threat of a shutdown, a three-day extension through Saturday will be taken up by the House, possibly Tuesday. And once the omnibus is filed Monday, [House Appropriations Committee Chairman Hal Rogers (R-Ky.)] and [Senate Appropriations Chairwoman Barbara Mikulski (D-Md.)] believe that leaves sufficient time to complete floor debate on the giant package,” the Politico article said.

 

Climate Change

Laura Barron-Lopez reported on Friday at The Hill’s Energy Blog that, “Top environmental officials will testify at a Senate committee hearing next week on President Obama’s climate plan.

“The Environment and Public Works Committee will review federal efforts in line with Obama’s agenda to address climate change.”

Keith Good

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