FarmPolicy

July 31, 2014

Farm Bill; Ag Economy; Biofuels; Biotech; and, Immigration

Farm Bill: Dairy Issues- News Article Timeline

Ramsey Cox reported yesterday afternoon (12:32 pm) at The Hill’s Floor Action Blog that, “Sen. Richard Blumenthal (D-Conn.) raised his glass of milk Thursday on the Senate floor to celebrate a reported breakthrough in a deal on dairy in the farm bill negotiations.”

The Hill update noted that, “Blumenthal, who serves on the Senate Agriculture Committee, said he was ‘pleased’ that farm bill conferees were nearing a deal on dairy policies — the last issue that needed to be worked out in the bill.

“‘I am pleased they have reached a dairy compromise,’ Blumenthal said. But the senator didn’t reveal any details about the deal.”

A short time later (1:23 pm), Erik Wasson reported at The Hill’s On the Money Blog that, “The stalled farm bill is picking up momentum again, as negotiators try to resolve all remaining differences this week.

“House Agriculture Committee ranking member Collin Peterson (D-Minn.) said Thursday that farm bill negotiators are aiming to unveil the legislation next week and have it voted on during the last week of January, half of which is taken up by the Republican annual retreat.”

Mr. Wasson explained that, “The dispute is aimed at satisfying a demand by [House Speaker John Boehner (R., Ohio)] that no government milk supply management system is put into place. A compromise would keep a new proposed margin insurance scheme but move away from strict production controls, said Peterson, who has fought for the supply management provision.

“‘It’s a market-based signal that would be sent to farmers if we’re in an overproduction situation,’ he said. ‘It’s through the insurance premiums.’

“A source familiar with the talks said this could involve charging a co-payment for producers with high production.”

The Hill update added that, “The original Peterson proposal, known as the Dairy Security Act, would have reduced production by cutting subsidies to farmers who do not voluntarily reduce production when the margin between feed and milk prices falls deeply. The cut in subsidies of up to 8 percent would have been used by the government to buy up dairy products for donation to food banks.

Peterson said he did not like the proposal and was working to improve it but said [Sen. Ag Committee Chairwoman Debbie Stabenow (D., Mich.)] is taking the lead in the talks.”

David Rogers indicated in an updated article yesterday at Politico (1:43 pm) that, “Persons close to Speaker John Boehner said he is now more determined to get the bill done. ‘The speaker was emphatic,’ said one leadership aide of a recent meeting. And two other persons confirmed that Boehner is pushing internally to end the long fight.

“At the same time Agriculture Secretary Tom Vilsack has inserted himself to help House Agriculture Committee Chairman Frank Lucas broker a compromise on dairy policy.

Vilsack brings with him the expertise of the department’s chief economist Joseph Glauber, and after early skepticism, Minnesota Rep. Collin Peterson, Lucas’s ranking Democrat, signaled Thursday that he could live with the deal being developed on dairy policy.”

And later yesterday afternoon (2:09 pm), Kristina Peterson reported at the Washington Wire Blog (Wall Street Journal) that, “Lawmakers have nearly resolved the biggest of the remaining disputes stalling progress on a new, five-year farm bill, one of the key negotiators said Thursday.

“Rep. Collin Peterson of Minnesota, the top Democrat on the House Agriculture Committee, said he and House Speaker John Boehner (R., Ohio) had talked Wednesday and were likely to settle on a newly emerged contours of a compromise ending their impasse over how to refashion government support for the dairy industry.

“‘Given our discussion yesterday, from what I understand, it’ll probably be something neither of us will like, but can live with,’ Mr. Peterson said.”

The Journal update noted that, “One of four lawmakers working to merge farm bills passed by the House and Senate, Mr. Peterson said the compromise proposal would not include a controversial ‘supply management’ program fiercely opposed by Mr. Boehner, which could curb federal assistance to farms producing more milk at times when there is an oversupply of milk.

“Instead, there would be some tweaks to a new program approved by both chambers that would send dairy farmers payments at times of need, based on a formula that weighs the price of milk and the cost of their expenses. To prod the market into producing less milk if the government is sending out payments, farmers’ premiums might go up or the payments might be altered, Mr. Peterson said.

“‘It’s sending the right kind of market signals, but I’m not sure it’s strong enough,’ said Mr. Peterson, who cautioned he needed to see final details before signing off on any deal.”

Then later yesterday (3:26 PM CST), DTN Political Correspondent Jerry Hagstrom reported (link requires subscription) that, “House Agriculture Committee ranking member Collin Peterson said Thursday he believes a dairy program that he can accept is being worked out and that it will pave the way for House leadership to bring the farm bill to the floor the week of Jan. 27 and be finished before the House goes out of session on Jan. 29 when the Republican members go on their retreat.

“Peterson, D-Minn., told reporters off the House floor he has not seen the dairy language, but that he has gotten ‘verbal communication’ describing it to him.”

Mr. Hagstrom indicated that, “Peterson later issued a cautionary statement, however.

“‘I have not agreed to anything at this point and still support the Dairy Security Act,’ Peterson said in an email. ‘While the proposed concept at least appears to move in the right direction and may be something I could reluctantly support, without further details, a lot still needs to be worked out.’

Those details would presumably be worked out during the congressional recess that began for the House Thursday and will begin for the Senate Friday.”

Yesterday’s DTN update added that, “Peterson said the other big remaining farm bill issues — rules on payment limits and the definition of ‘actively engaged’ farmers — are ‘being worked on,’ but he is not involved in that debate.

“He added, however, that he believes ‘you cannot define the farmer. It is like trying to define cost of production.’

“The payment limits issue is ‘not a big deal’ to him, Peterson said, and Senate Agriculture Committee ranking member Thad Cochran, R-Miss., is very much involved in finalizing that issue.”

Meanwhile, a National Milk Producers Federation (NMPF) Statement yesterday on Status of Farm Bill Negotiations over Dairy Title From Jim Mulhern, President and Chief Executive Officer of NMPF, indicated that, “During the past four years that NMPF has worked to revise federal dairy policy, we have evaluated a variety of proposals against two key criteria: 1) does it provide an effective safety net for all of the nation’s dairy farmers?; and 2) does it protect taxpayers from the possibility of excessive program costs through the use of suitable incentives for those enrolled in the program?

“The resulting Dairy Security Act measure, contained in the farm bills approved by the House and Senate Agriculture Committees in 2012 and again in 2013, is a loss-prevention margin insurance program that meets those objectives.”

The NMPF item also noted that, “Unfortunately, the Speaker’s threat that he would not allow a vote on a farm bill containing the market stabilization program has effectively served to kill our proposal within the committee.

“We are now engaged in discussions with agriculture committee staff on an alternative approach to creating a dairy safety net that would contain inducements to help achieve a supply-demand balance and prevent catastrophic milk price collapses like we experienced in 2009.

“At this point, it is conceivable that an alternative mechanism could be developed, relying upon adjustments to the program’s margin insurance payout structure and participant premium rates, among other options. Any such approach must still offer an effective risk management tool to farmers, while containing suitable incentives to program enrollees to achieve cost controls. As always, the devil is in the details, and we will not support any program that does not effectively address the needs of our members throughout the U.S.

Also, the “Washington Insider” section of DTN pointed out yesterday (link requires subscription) that, “Most farm bill reporting in recent days has focused on dairy policy and the view of many that failure to find common ground on this issue is the reason the legislation remains in limbo. If a deal can be worked with regard to the next dairy program, the logjam could be broken. But there always is the possibility some other unreported disagreement could continue to stymie the legislative process.”

Note that Ed O’Keefe reported in today’s Washington Post (“Women are wielding notable influence in Congress”) that, “Next month, when attention will turn to passing a farm bill, Senate Agriculture Committee Chairman Debbie Stabenow (D-Mich.), who has spent three years working on the measure with House Agriculture Committee Chairman Frank D. Lucas (R-Okla.), will be at the center of the action. Leaders and aides in both chambers expect the bill to pass.”

The Post article added that, “Rep. Collin C. Peterson (D-Minn.), who has led farm-bill talks with Stabenow, Lucas and Sen. Thad Cochran (R-Miss.), said that having Stabenow in the room has made a difference. ‘I think she’s more tenacious, but more diplomatic, than a guy,’ he said.”

 

Farm Bill: Payment Limit Issue

A news release yesterday from Rep. Rosa DeLauro (D., Conn.) stated that, “[Rep. DeLauro] today urged members of the Farm Bill conference committee to keep the ‘actively engaged’ provision currently in the bill. If reopened, the loophole would allow multimillionaires to collect taxpayer subsidies by padding their payroll with people who have never stepped on the farm. A bipartisan majority of both the Senate and House of Representatives voted to keep this provision in place. A new estimate from the Congressional Budget Office showed that keeping the loophole closed would save $387 million over 10 years.”

 

Farm Bill: Nutrition

A news release earlier this week from Sen. David Vitter (R., La.) stated that, “[Sen. Vitter] introduced the Food Stamp Fraud Prevention and Accountability Act to require beneficiaries of the Supplemental Nutrition Assistance Program (SNAP) to show a valid photo ID when purchasing items with SNAP funding. Recent incidents in northwest Louisiana exposed flaws with the SNAP program’s Electronic Benefits Transfer (EBT) system, and Vitter’s legislation would prevent future fraud.”

 

Other Policy Developments- Budget

Nirmala Menon reported yesterday at The Wall Street Journal Online that, “U.S. lawmakers urged the U.S. Department of Agriculture to hold off on a contested U.S. meat-labeling rule until the World Trade Organization rules on a trade dispute between the U.S., Canada and Mexico.

“A delay would give Canadian livestock producers a temporary reprieve from the controversial changes.

“A brief section tucked into a spending bill passed by the U.S. House of Representatives Wednesday said the U.S. economy could suffer a $2 billion hit if Canada and Mexico make good on their threats to retaliate in a dispute over the country-of-origin labeling, or COOL, rule. The bill recommended that the Agriculture Department delay the rule’s implementation until the WTO rules on the matter.”

Note also that Janet Hook reported in today’s Wall Street Journal that, “Congress has turned to a new chapter in its long-running battle over the federal budget, as the Senate Thursday approved and sent to the White House a monumental spending bill that keeps the government running through September.

“The $1.012 trillion measure, designed to bring a fresh sense of order to the federal budget process, passed 72-26 just a day after the House passed it with similarly broad bipartisan support. The bill won the support of 17 Republicans, 53 Democrats and 2 independents. The president is expected to sign it.”

 

Agricultural Economy

Kelsey Gee reported yesterday at The Wall Street Journal Online that, “U.S. cattle futures settled at fresh all-time highs in nearly every contract at the close of the trading session, lifted by new peaks for wholesale beef and cash cattle prices.

“Supplies of slaughter-ready cattle remain historically small, forcing meat processors and, in turn, retailers, to pay up to fill orders for beef products.”

The U.S. Department of Agriculture’s Economic Research Service indicated yesterday in its Livestock, Dairy, and Poultry Outlook report that, “Winter storms and holidays have recently disrupted flows of cattle from feedlots to packers and have resulted in rapidly rising fed cattle and beef prices.”

Also yesterday, a news release from Rep. Jim Costa (D., Calif.) indicated that, “In light of California’s extreme dry conditions, Senator Dianne Feinstein, Senator Barbara Boxer, and Congressman Jim Costa called on President Obama to form a federal drought task force capable of coordinating a swift, decisive cross-agency response to the state’s looming water crisis. In a letter, the lawmakers also asked that the President move quickly to authorize a disaster declaration should California request a federal declaration.”

And Reuters writer Rod Nickel reported yesterday that, “Canada’s record canola and wheat harvests have clogged its rail arteries and overwhelmed its ports, sticking Glencore and other grain handlers with millions of dollars in shipping penalties and leaving farmers’ bins flush with crops worth less by the day.”

In other news, Melinda Beck and Amy Schatz reported yesterday at The Wall Street Journal Online that, “Years of warnings by health officials and grim news on the bathroom scale appear to finally be having an impact on the nation’s eating habits. While there is no sign the high level of obesity has fallen, Americans say they are consuming fewer calories and cutting back on fast food, cholesterol and fat.

“Working-age adults consumed an average of 118 fewer calories a day in the 2009-10 period than four years earlier, according to a study released Thursday by the U.S. Department of Agriculture.”

And with respect to trade, The Washington Post editorial board indicated today that, “America’s increasingly skewed income distribution is finally getting the attention it deserves. The bad news is that some people might use the issue to justify otherwise unjustifiable policy agendas. Case in point: Opponents of a free-trade agreement among the United States and 11 Pacific Rim nations are claiming that it will destroy U.S. jobs, thus exacerbating income inequality in this country, just as previous deals, such as the North American Free Trade Agreement, allegedly did.”

And a news release yesterday from the Senate Finance Committee stated that, “At a Senate Finance Committee hearing today Chairman Max Baucus (D-Mont.) emphasized the importance of renewing trade promotion authority (TPA) to help the Administration conclude trade agreements that would bring down trade barriers, open international markets for American manufacturers and create good-paying jobs in the U.S.”

 

Biofuels

A news release yesterday from Rep. Kristi Noem (R., S.D.) indicated that, “Today, [Rep. Noem] and Democratic Congresswoman Cheri Bustos (IL-17) led a bipartisan group of 30 Members of Congress in expressing concern over the Environmental Protection Agency’s (EPA) proposal to reduce the renewable volume obligations (RVOs) under the Renewable Fuel Standard (RFS).  This is the first time the EPA has proposed a reduction in the amount of ethanol to be blended in our nation’s gasoline supply.

In a letter to EPA Administrator Gina McCarthy, the Members of Congress said that reducing the amount of renewable fuels in gasoline could hurt rural economies, jeopardize American jobs, raise prices at the pump and deter investment in biofuels and biofuel infrastructure.  They asked that the EPA revise their proposal before the 60 day comment period ends on January 28th.”

Jonathan Coppess, of the University of Illinois, indicated yesterday at the farmdoc daily blog (“Evaluating EPA’s Arguments for RFS Waiver Authority”) that, “A previous post reviewed the leaked draft of EPA’s proposed rule setting the Renewable Fuel Standard mandates for 2014 and concluded that EPA was making novel use of the authority provided by Congress.  In November, EPA released the proposed regulation for public review and comment (the proposed rule can be found here).  In the proposed rule, EPA proposes setting the RFS mandates lower than the statutory levels and makes an argument in support of its interpretation that the general waiver authority allows it to do so.  This post evaluates EPA’s argument in support of this use of the general waiver authority.”

After the discussion, Mr. Coppess concluded yesterday’s farmdoc update by stating that, “The bottom line here, setting aside case law and parsing dictionary definitions, is really a matter of who gets to make this kind of decision about the RFSCongress or the Executive branch.  It is not about whether the blend wall is a problem; nor is it about the merits of having the blend wall regulate the year-to-year mandates.  The real issue is whether EPA is the proper player in our Constitutional system of government to design such a policy solution if one is necessary.  It is entirely possible that Congress understood the blend wall issues in 2007 when it created the RFS.  Congress may well have intended for the mandates in the statute to motivate or force the industry to find solutions for the myriad challenges facing renewable fuels, including the blend wall.  What we do know from the law is the clear intention that the RFS drive production of increasing amounts of renewable fuels to replace fuels derived from oil.  By using the blend wall in this manner, EPA may well be short-circuiting those goals and intentionsIt is therefore difficult to see how EPA is doing anything other than legislating a policy in place of – if not contrary to – Congress.  Whether the policy makes sense does not matter; the central issue is whether it is Constitutionally-acceptable for EPA to make this binding policy decision as it carries out the statute.  And this is the issue that may have to be eventually decided in the courts.”

And Zain Shauk indicated yesterday at the FuelFix Blog that, “The MAPCO Express filling station chain plans to offer the controversial E15 gasoline blend, which includes 15 percent ethanol, at up to 100 stations, it said this week.

“MAPCO Express spokesman Keith Johnson said the company hasn’t yet determined which locations or how many stations will offer E15 initially.

“MAPCO owns 362 convenience stores throughout the South, many of which offer vehicle fuel pumps. The stores are located in Tennessee, Alabama, Georgia, Virginia, Kentucky, Mississippi and Arkansas.”

 

Biotech

Reuters writer Cary Gillman reported yesterday that, “Four U.S. lawmakers joined with more than 200 food companies, organic farming groups, health and environment organizations and other groups on Thursday to urge President Barack Obama to require manufacturers to label food products that contain genetically engineered ingredients.”

 

Immigration

Laura Meckler and Kristina Peterson reported in today’s Wall Street Journal that, “House Republican leaders are preparing for the first time to endorse legal status for many of the 11 million people living in the U.S. illegally, a step that could jump-start the moribund immigration debate.

“As early as next week, House Speaker John Boehner (R., Ohio) and other GOP leaders will release a one-page set of principles outlining how they hope to overhaul the immigration system, people familiar with their plans say. It will stop short of offering the sort of path to citizenship endorsed by the Senate, but represents a major step toward what immigration advocates and Democrats have long sought.”

Keith Good

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