FarmPolicy

December 22, 2014

Farm Bill; Biotech; Ag Economy; CFTC; and, Budget

Farm Bill Issues

Randy Koenen, of the Red River Farm Network, spoke with House Ag Committee Ranking Member Collin Peterson (D., Minn.) about the Farm Bill in an interview yesterday.

An audio replay of the discussion can be found here, while an unofficial FarmPolicy.com transcript of the Red River Farm Network conversation is available here.

Mr. Koenen queried: “All right, Collin, a snag in the dairy policy, huh?”

Rep. Peterson noted that, “Well, that’s the word that’s been put out, but that’s not what’s holding the bill up at this point.”

Rep. Peterson indicated that payment limits were holding up the Farm Bill, “We’ve been stuck on payment limits for a week.”

“Well, I mean, the dairy stuff has been worked out for three weeks, and before we left, you know, because I’m for it, Stabenow is for it, Cochran is for it, and Lucas was for it,” Rep. Peterson said.  “But then the Speaker started raising hell, and Lucas got nervous, so now he’s waffling. The problem for him is that the three of us are not.

“So, you know, whatever they want to say about it, they don’t have the votes to take the dairy stuff out of the bill. So it’s in there and it’s the right thing to do. So that’s been worked out.”

Rep. Peterson also noted that, “[Speaker Boehner is] not battling me, because it’s in the Senate bill. The Senate, Stabenow, Pat Leahy, the senior Democrat, and Cochran have said that if dairy isn’t in the bill, there isn’t going to be a bill. So it’s not Boehner and I, it’s Boehner and the Senate. And I told him that. I said you can say whatever you want about not bringing the bill up [with it] in the House, but the problem is the Senate is insisting on it. So, you know.

“And we already compromised three times on our side, and their side hasn’t compromised at all. So they can make it look like this is just between him and I— really, this is not…that’s not, you know. He could get me on his side; it wouldn’t do any good. The Senate is the problem, you know. And I, you know, have worked—I’ve been working on this for four years. I firmly believe that we have the right policy. And I’m not going to change because… But I’m not holding this up. If Lucas, Stabenow and Cochran change their position, they’ll outvote me, and it’ll be over. So it’s not just me standing in the way.”

On the payment limit issue, Rep. Peterson stated that, “This is a fight between the North and the South. What Grassley proposed doesn’t affect Iowa much, but it affects the South big time. And it could take the whole bill down.”

With respect to timing, in yesterday’s Red River Farm Network interview, Rep. Peterson stated that, “Well, I’m worried about this because we’re running out of time, because basically we’re not in session much after next week. And the longer this thing drags out, the more problems are going to surface. And, you know, I don’t know. I mean, it just doesn’t seem like the people that are in charge want to actually do this bill. They act like they don’t want a farm bill.”

Erik Wasson reported yesterday at The Hill’s On the Money Blog that, “Lawmakers are mulling a possible compromise to the dairy standoff that is holding up the farm bill, but dairy farmers aren’t buying it.”

“The compromise could allow farmers to choose between existing Milk Income Loss Contract (MILC) payments and the House version of a margin insurance program, but so far chief advocates for dairy farmers are resisting the idea,” Mr. Wasson said.

The Hill update added that, “One idea being floated was first developed by academics John Newton and Cam Thraen at Ohio State University.”

Mr. Wasson noted that, “The National Milk Producers Federation is not sold on the Ohio State proposal, however…[and]…A source said Sen. Patrick Leahy (D-Vt.), who was crucial to developing the MILC program in 2002 and to the Senate plan, does not support the compromise idea at this time.”

Paul Kane reported yesterday at The Washington Post Online that, “At issue is to what extent the government should step in to manage milk supplies and support dairy farmers during a downturn. Dairy farmers generally back more government help, but dairy processors — who use milk to make cheese, yogurt and ice cream — oppose the change. Boehner supports the processors and has threatened to block the bill from consideration in the House if it includes the program.

“But Democrats working on the bill insist that the program must be included to ensure the bill’s passage. ‘He’s just adamant that this isn’t going to be in there and there’s no way to compromise and there’s no discussion. ‘It’s my way or the highway.’ That’s his position. But that’s how we got in a lot of trouble around this place with people taking those kinds of positions,’ Peterson said, predicting that the bill will sail to passage with the dairy provision in place.

“‘Everybody wants this over with,’ Peterson said. ‘People are coming up to me to say, ‘I wasn’t sure I’d vote for this, but we need to get this over with.’ If we can just get this finalized and get it on the floor, it’s going to pass.’”

Meanwhile, Rep. Bill Owens (D., N.Y.) indicated yesterday that, “Instead of hosting press conferences and using inflammatory rhetoric, Speaker Boehner should work with members of both parties to get this [Farm Bill] done.”

And DTN Ag Policy Editor Chris Clayton reported yesterday (link requires subscription) that, “Agriculture Secretary Tom Vilsack suggested Monday one option for helping resolve the dairy conflict in the farm bill would be to allow USDA to buy some excess milk to stabilize prices for producers.

Vilsack spoke to members of the American Farm Bureau Federation who are holding their annual convention in San Antonio this week. As he has for the better part of two years, Vilsack spent most of his speech stressing the importance of a new farm bill and the difficulty getting any legislation through the current Congress.”

Mr. Clayton explained that, “The farm bill has been held up because of problems over a dairy supply management provision that Speaker John Boehner, R-Ohio, opposes. In talking about dairy issues, Vilsack said in a press conference after his speech that dairy producers need a system that helps producers realize when they are producing too much milk for the market.

“‘There are ways to do that, and I know the Speaker has concerns. So maybe we need to look for ways to get the processors out of that mix and figure out some other way to send that signal.’

“Vilsack noted that in other commodities, USDA can go in through the Commodity Credit Corp. and buy some of the surplus to help the market stabilize. ‘It’s a pretty good mechanism and has worked pretty well. So maybe there are ways to craft something like that. There has got to be a way to get there.’”

Bloomberg writer Alan Bjerga reported yesterday that, “The U.S. Department of Agriculture is preparing to implement an agriculture law not yet passed in Congress and isn’t planning to adjust for rules that may double milk prices in the absence of a law, Secretary Tom Vilsack said.”

The article added that, “‘Our focus is not on the permanent law, and it will not be on the permanent law, until it appears obvious to me that we’re not going to have a farm bill,’ [Vilsack] told reporters today at an American Farm Bureau Federation conference in San Antonio. ‘I am more optimistic that we are going to have a farm bill.’”

Mary Kay Thatcher, Senior Director of Congressional Relations at the American Farm Bureau Federation noted in a conversation yesterday on the AgriTalk radio program with Mike Adams that, “I think you could go out and talk to our dairymen across the country and you’d find almost a 50-50 split between people who, you know, they may not philosophically support supply management, but they don’t feel this program will work without it.  And I think it’s less of a regional issue than it is sort of the big guys against the small guys kind of philosophy.”

On a separate policy variable, Chris Clayton reported yesterday at the DTN Ag Policy Blog that, “Agriculture Secretary Tom Vilsack chuckled Monday when he was asked how his department would implement the King amendment if it were to be in the final version of the farm bill. He then indicated that by the time the provision goes into effect, he would be out of office.

“‘I won’t be secretary if that is contained in the bill because by the time you go through all the legal challenges that will occur — and there will be a lot because it’s not well drafted,’ Vilsack said.”

In news regarding nutrition issues, AP writers Brett Barrouquere and Dylan T. Lovan reported recently that, “Republican U.S. Rep. Hal Rogers, who represents the 5th Congressional District that includes Owsley County, [Kentucky] voted not to renew extra funding for the food assistance program that had been allocated as part of the federal stimulus in 2009 — a vote critics called a cutback — even though it affects about a third of his constituents. Rogers said the program is needed in eastern Kentucky, but is also badly in need of reforms to keep ‘scammers, lottery winners, gamblers and others who may be able to work’ out of the program. Rogers won re-election in 2012 with 84 percent of the vote.

“Conservatives are pushing cuts as they seek to target benefits to the neediest people, arguing that those who are truly hungry should have no problem getting assistance if they apply. The final bill will most likely crack down on states that give recipients $1 in heating assistance in order to trigger higher food stamp benefits. Republicans say anyone who truly qualifies for a higher benefit still can get it through SNAP.”

And Cameron Joseph reported yesterday at The Hill’s Ballot Box Blog that, “Rep. Jack Kingston (R-Ga.) is facing heat back at home for using taxpayer dollars to pay for staff lunches while criticizing school lunch programs for poor students.

“Kingston, who’s running for the Senate, stirred controversy in December for suggesting there ‘should be no such thing as a free lunch’ for poor children who receive federally funded lunches at school, saying they could ‘sweep the floor in the cafeteria’ in exchange for the food. Now, local media outlets are blasting him for his own free lunches.

“A television station in Kingston’s congressional district, WSAV, has found Kingston’s staff spent $4,200 of taxpayer money on free lunches in the last three years and $4,300 from outside groups, not counting expenses incurred on international trips.”

 

Biotech

Reuters writer Cary Gillam reported yesterday that, “The Grocery Manufacturers Association, which represents more than 300 food companies, is preparing a petition to the chief U.S. food safety regulator and a push in Congress to require changes in oversight and labeling of new genetically modified foods, an association leader said Monday.

“The double-pronged strategy, which the group expects roll out early this year, is aimed at squelching state-by-state efforts to mandate labeling of foods containing biotech crops, and at the same time setting a standard that among other things would authorize GMO foods to be touted as ‘natural.’”

Meanwhile, DTN Ag Policy Editor Chris Clayton reported yesterday (link requires subscription) that, “As social battles over biotechnology continue, the American Farm Bureau, USDA and the trade group BIO remain opposed to mandatory labels that would raise doubts about the safety of food from biotech crops.

“Agriculture Secretary Tom Vilsack told Farm Bureau members Monday that USDA is instead suggesting the Food and Drug Administration encourage food companies to develop quick response, or QR, codes that would allow people to use their smartphones to learn more information about the ingredients in a product. That’s a more reasonable option than a genetically modified organism, or GMO, label.

“‘We look at this a little different than other folks do. Our view is people are having a 20th century debate about a 21st century problem. Folks want to assess a label that suggests a product can or may contain GMOs. Our concern is that label may convey a different message, a message of uncertainty and potentially on safety,’ Vilsack said.” [Note: Related audio from Sec. Vilsack on this issue available here (MP3- 1:12)].

Christopher Doering reported in yesterday’s Des Moines Register that, “The opposition to biotech crops is slowing the approval by U.S. regulators of new genetically modified products that is hurting farmers, an official with a trade group representing seed manufacturers said Sunday.

Cathleen Enright, an executive vice president of the food and agriculture with the Biotechnology Industry Organization, told farmers the growing number of groups working to ‘create fear and malign’ our companies, coupled with more state ballot initiatives seeking to require mandatory labeling, have been noticed by states, regulators and political leaders.”

And Doug Finke reported recently at the Peoria Journal Star (Il) Online that, “[A]n Illinois lawmaker said he will pursue legislation this year requiring labels on foods with genetically modified ingredients.

“‘I’m dealing with this strictly as a consumer right-to-know bill,’ said Sen. Dave Koehler, D-Peoria. ‘I’m not saying yea or nay to the health risks. I’m saying consumers have a right to know and they can make up their own mind.’”

Also yesterday, Reuters news reported that, “The U.S. Supreme Court on Monday declined to hear an appeal by organic farmers and others seeking to require Monsanto Co to promise never to sue farmers if their fields inadvertently have plants containing the company’s patented genetically modified traits.

A company lawyer said Monsanto had not sued for inadvertent use of its biotech seeds and did not plan to, but that it would not make a blanket promise to that effect. Lower courts held that none of those who sued had been injured.”

 

Agricultural Economy

University of Illinois agricultural economist Darrel Good indicated yesterday at the farmdoc daily blog (“Corn Consumption Exceeds Expectations, Now What?”) that, “Another price factor that will become increasingly important is the likely magnitude of planted acreage of corn in the U.S. in 2014.  The market seems to be convinced that corn acreage will decline from that of 2013 as other crops, particularly soybeans, offer better profit opportunities. Forming expectations about acreage, however, is more complicated than in most years. First, planted acreage of corn in 2013 was two million less than reported planting intentions, due at least in part to spring weather that delayed planting in many areas. Second, the 8.3 million acres of total prevented plantings in 2013, along with the 1.6 million acre net decline in acreage in the Conservation Reserve Program and the 1.1 million acre decline in winter wheat seedings suggests that total acreage of spring planted crops will be much larger than in 2013.  With prevented plantings near a more normal 1.5 million acres and some decline in double-cropped soybean acreage due to fewer acres of soft red winter wheat, total acreage of spring planted crops could be 9.2 million acres larger than in 2013.  That provides opportunity for large increases in acreage of soybeans or other crops without a significant decline in corn acreage. Third, price relationships that should impact planting decisions continue to fluctuate so that producers receive changing signals about which crops the market prefers in 2014.  Projected prices for crop revenue insurance that will be established in February will provide some basis for producers to solidify their planting intentions.

“The information in last week’s USDA reports was friendly enough to halt the decline in corn prices, but does not point to a sustained rally yet this winter.  The USDA’s estimate of March 1 stocks and prospective plantings to be released on March 31 will provide for a re-assessment of price prospects.”

Also, Bloomberg writer Elizabeth Campbell reported yesterday that, “The deep freeze that swept across the U.S. last week, disrupting travel and boosting fuel use, is compounding stress on a shrinking domestic beef industry already struggling with high costs and weather shocks. While crops from oranges to winter wheat avoided major damage, the cold slowed the growth of livestock and extended a rally in Chicago cattle futures to a record, signaling higher beef costs for restaurants including McDonald’s Corp. and Texas Roadhouse Inc.”

 

CFTC- Commodity Futures Trading Commission

Tim Devaney reported yesterday at The Hill’s RegWatch Blog that, “The Commodity Futures Trading Commission is seeking to establish speculative position limits for 28 agricultural commodity futures and options contracts that had previously been exempt from such regulation, including milk, coffee, wheat, sugar, and corn.

“Excessive speculative trading has been blamed for contributing to the 2008 financial crisis. Officials believe that rules limiting speculative trading will lead to greater price stability in common food products. The CFTC is extending the comment period for the aggregation rule to Feb. 10.”

 

Budget

Janet Hook reported in today’s Wall Street Journal that, “House and Senate negotiators Monday unveiled a $1.012 trillion bill to fund the federal government for the next 8½ months, a compromise that marks a temporary ceasefire in the budget wars that have rocked Congress and the economy in recent years.

“The compromise restores some of the funding cut last year from domestic programs such as the National Institutes of Health and Head Start, but keeps overall discretionary spending lower than when President Barack Obama took office in 2009, when it totaled $1.013 trillion.”

David Rogers reported yesterday at Politico that, “To avoid any threat of a shutdown, the House will first take up a short extension of the current stopgap continuing resolution on Tuesday — moving the deadline back three days to Saturday. This should buy sufficient time for the House to act on the larger omnibus bill Wednesday. And Senate Democrats are hoping that there will be sufficient Republican support to avoid major battles over cloture Thursday and Friday.

“This remains a tight time frame, but the rewards are substantial for both parties. And there is a genuine hunger to build on the December budget deal and not risk another government shutdown akin to last October’s.

Already, a long-anticipated farm bill has gone off the tracks since lawmakers returned from the holidays. If the omnibus were to fail as well, it would be a huge black eye for both parties.”

More specifically with respect to agriculture, a news update yesterday from the House Appropriations Committee indicated  that:

Commodity Futures Trading Commission (CFTC) – Included in the bill is $215 million for the CFTC, which is $100 million below the President’s budget request.

Conservation Programs – The bill provides $826 million for the Natural Resources Conservation Service – virtually the same as the fiscal year 2013 enacted level – to help farmers, ranchers, and private forest landowners conserve and protect their land.

Farm Service Agency (FSA) – The legislation provides $1.5 billion for FSA, which is equal to the fiscal year 2013 enacted level. This funding will support the various farm, conservation, loan, and emergency programs for American farmers and ranchers, including loan authorizations in excess of $5.5 billion for farm ownership, farm operating, conservation and emergency loans.

Supplemental Nutrition Assistance Program (SNAP) – The bill provides for $82.2 billion in required mandatory spending – which is outside the discretionary funding jurisdiction of the Appropriations Committee – for SNAP. This program provides food assistance to more than 47 million Americans on average every month.

International Food Programs – The legislation contains $1.47 billion for “Food for Peace” grants, also known as the P.L. 480 – Title II program. This is $32 million above the fiscal year 2013 enacted level. The bill does not reflect the President’s budget request to move this program to the jurisdiction of the U.S. Agency for International Development (USAID). In addition, the legislation provides $185.1 million for the McGovern-Dole International Food Program that uses donated U.S. commodities to support education, child development, and food security.

Also, a news release yesterday from Sen. Mike Johanns (R., Neb.) indicated that, “[Sen. Johanns] today announced that his language restraining efforts by the Occupational Safety and Health Administration (OSHA) to expand their regulatory reach was included in a report accompanying the omnibus appropriations bill. Johanns’ language clarifies a more than three-decades-old provision legally prohibiting OSHA from regulating farms with fewer than 10 employees.”

Keith Good

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