FarmPolicy

December 13, 2019

Farm Bill; Ag Economy; Biotech; and, Immigration

Farm Bill

The “Washington Insider” section of DTN (link requires subscription) reported on Friday that, “One of the program areas watched carefully in the farm bill debate was cotton, since the United States is still accused of failing to comply with the 2004 World Trade Organization case it lost to Brazil. Advocates argue that the final version of the farm bill changes to U.S. cotton subsidies to insurance and thus should comply. They also argue that since the changes have the stated goal of promoting a negotiated settlement to the longstanding dispute, the proposal should not be considered as illegally protectionist.

“In fact, Brazil is in the driver’s seat in this dispute since it won the earlier WTO case, but it has not yet taken a formal position on the bill. Still, a number of U.S. observers note that that Brazilian officials made plain their opposition to the new bill’s proposals by pointing out objectionable provisions and emphasizing that the farm bill still contains a substantial volume of trade-distorting subsidies for U.S. cotton growers.

“Separately, Brazilian Foreign Minister Luiz Alberto Figueiredo also told U.S. Trade Representative Michael Froman in a Jan. 30 meeting that Brazil was evaluating the bill to see if it protects Brazilian interests. In addition, the minister told the press that his government has not ruled out retaliation as a possibility.”

The DTN update stated that, “So, Brazilian officials are telling the press that their government will prepare a report on the farm bill to be presented to CAMEX, the group of Brazilian ministers that is responsible for deciding whether to retaliate. CAMEX is scheduled to meet next on Feb. 20, they note.

“And, by the way, observers also point out that the details of the farm bill are only one element that Brazil appears to be taking into account as it considers whether to settle the dispute or pursue the trade retaliation authorized in 2009. The other main factor is whether, once the new farm bill is enacted, the U.S. government will resume the $12.25 million in monthly payments to a Brazilian cotton fund as agreed in 2010.   Those payments stopped in October.”

Friday’s “Washington Insider” section added that, “At this time, the final farm bill does not continue the payments although it does stipulate that Brazil can have more flexibility to use the money the United States already has paid once the dispute is settled. Specifically, the farm bill states that the funds could then be used for research if it is conducted in collaboration with USDA research agencies or with colleges, universities and research foundations located in the United States.

“It appears that this concept has not impressed the Brazilians — and the visiting cotton growers made clear during January meetings in Washington that they had little interest in using the money for research. In fact, the Brazilians say they want to use the U.S. funds to offer loans and financing to Brazilian cotton producers for their operations.”

After a more detailed analysis of the cotton provisions in the new Farm Bill, the DTN update pointed out that, “In spite of these controversial elements, the U.S. cotton industry continues to assert that the Brazilians are now satisfied by the changes in the program, while others contend that this dispute is still underway — and that the next steps may include massive sanctions against U.S. products. Given that view, and the long history of this case, it is quite amazing that USDA has not stepped in to clarify the issues and the relevant positions — and, perhaps push participants toward realistic solutions.

“This continued festering certainly weakens U.S. position on other ongoing trade issues in both the Atlantic and Pacific,” the DTN item said.

Recall that in a tele-conference with reporters last month, House Ag Committee Ranking Member Collin Peterson (D., Minn.) was asked: “…[D]o you think the provisions in the [the new Farm Bill] are enough to avoid any potential retaliation [from Brazil]?”

Rep. Peterson stated: “Well, the cotton industry thinks that it is, and I defer to their judgment. They know more about cotton than I do. I had the Brazilians in my office a week ago, maybe two weeks ago. The issue is you can’t find out from them what they would accept. That’s part of the problem. You cannot pin them down. They complain about anything you try to do, which I think is kind of disingenuous, because the Brazilians are subsidizing their farmers more than we’re subsidizing ours. The problem is ours runs afoul of the WTO rules, which are ridiculous in the first place, and their subsidies are in a different category or they’ve got an exception because they’re a developing country, which they’re not.

“So I told the Brazilians, well, you guys do whatever you want, but this is our answer. You wanted us to get rid of Step 2, we got rid of it. We’re reforming the program. And so they kind of said, well, okay… First they were worried we were going to even never get a bill done, and then what was going to happen. I said, well, wait and see what…we get the bill done, take a look at what’s in there, come back and talk to us after that. So that’s kind of where it was left at.

But my judgment is you’re never going to satisfy those people no matter what you do.”

Also with respect to cotton, Leslie Josephs reported in today’s Wall Street Journal that, “U.S. farmers are expected to plant more cotton this spring than they did last year and reap a crop almost one-quarter larger than the previous harvest, an industry group said.

Farmers hope to benefit from prices that have gained more than 7% from a year ago, but the projected production increase from the world’s biggest cotton exporter could reverse that price rally.”

The Journal article explained that, “This spring, U.S. growers will likely plant 11.26 million acres with cotton, an 8.2% increase from last year, and reap a crop of 16.37 million bales, more than 24% bigger than this season’s, according to a survey of farmers conducted by the National Cotton Council, the industry group, presented over the weekend.

“The forecast is a turnaround for the U.S. cotton market and could boost global supplies of the fiber. Many U.S. cotton farmers last year opted to grow other crops such as corn and soybeans after cotton prices fell in 2011 and 2012.

“Coupled with inclement weather, in 2013 that led to the smallest U.S. harvest in four years and pushed up prices.”

And Glen Chase reported yesterday at Arkansas Online (Arkansas Democrat-Gazette) that, “Arkansas’ row crop farmers are expected to add cotton acreage in 2014 as they sort out how the new farm bill will affect their overall operations over the next five years.

But growers and analysts said planting decisions are going to be dictated by prices for commodity crops such as soybeans, rice and corn, rather than the terms of the bill, which ends direct payments in favor of insurance-style programs that will either protect growers from prices that drop below production costs, or cover loss from growing conditions that damage yields.

“‘Ultimately, the farm bill isn’t going to dictate how many acres are planted. You’re going to see people make decisions on what they’re going to plant based on market conditions and what the various commodities are commanding by price,’ said Andrew Grobmyer, executive vice president of the Agricultural Council of Arkansas.”

Mr. Chase added that, “Matt King, an economist with the Arkansas Farm Bureau, agreed that commodity prices will drive planting decisions.”

Meanwhile, in other Farm Bill related issues, Pete Kasperowicz reported on Friday at The Hill’s Floor Action Blog that, “A dozen House Republicans say people who use federal food stamps should be required to show a photo ID when they use their electronic benefit cards (EBCs) to buy groceries.

“Rep. Matt Salmon (R-Ariz.) introduced the SNAP Verify Act, which is aimed at reducing the amount of fraud that he said is leading to hundreds of millions of dollars in wasted food aid each year. Salmon said the Supplemental Nutrition Assistance Program (SNAP), informally called the food stamp program, is aimed at helping people in need, and that Congress must ensure those benefits are not being diverted.”

 

Agricultural Economy

Tony C. Dreibus reported on Friday at The Wall Street Journal Online that, “Corn prices rose to a four-month high, fueled by expectations that a government crop report Monday will project lower domestic stockpiles of the grain.

“Corn futures climbed 0.3%, completing a third consecutive week of gains, as traders speculated that a recent increase in export demand for U.S. supplies will prompt the U.S. Department of Agriculture to trim its supply forecast for the 2013-14 season by 1% to 2%.”

The Journal article noted that, “Export sales have picked up recently, as a sharp decline in prices has made corn from the U.S.—the world’s largest producer and shipper of the grain—more attractive to overseas buyers. Corn prices tumbled 40% in 2013, to a three-year low, driven by a record U.S. crop of 14 billion bushels.”

With respect to livestock issues and the bitter temperatures this winter, an update Friday from the University of Missouri Extension stated that, “The cold winds and snow make hay feeding an almost daily challenge for farmers, says Rob Kallenbach, MU Extension forage specialist. Cold and wind increase nutritional demands for body maintenance.

“Cows in spring-calving herds should be gaining body weight. That includes the developing calf, but also a deposit of body fat that will supply milk for the newborn calf.

Some farmers find they must feed twice the usual bales of hay. To maintain cows’ body condition, farmers are feeding supplemental grain rations.”

The extension update noted that, “For crop and forage farmers, an ominous sign is lack of soil moisture. The dry condition has been building since last summer. Snow did not mitigate that long-term trend toward dryness in most of northern and central Missouri, [Pat Guinan, state climatologist, University of Missouri Extension] says.

“The National Drought Monitor for January shows ‘abnormally dry’ to ‘moderate drought’ across the northern half of Missouri.”

Also with respect to the cold weather, Alan Blinder and Clifford Krauss reported in Saturday’s New York Times that, “In the midst of one of the great natural gas drilling booms in the nation’s history, millions of Americans are struggling with a problem that is chilling their bones.

There is not enough propane, a byproduct of natural gas production and crude oil refining, to heat their homes and keep their farms running. Even while production of the fuel is up 15 percent over a year ago, inventories are now nearly 50 percent lower than last winter, and many Southerners and Midwesterners who depend on the fuel are angry and confused.”

The Times article stated that, “Hundreds of miles to the southeast, at the Del-Ray Ranch here in Calhoun County, Ala., the concerns were just as intense in the state’s $15 billion a year chicken business. Ray Bean began his week with the realization that the propane supply that helps him and his wife raise more than 500,000 chickens a year had dwindled to nothing.”

And Ana Campoy reported in today’s Wall Street Journal that, “‘The propane shortage has been a crisis for thousands of families and farmers in Minnesota and across the region,’ Sen. Al Franken, who represents the North Star State, said in a statement. He has been asking various federal agencies to help route more propane to places in need.”

Meanwhile, higher levels of snow could also be beneficial in some parts of the country.

Lauren Abdel-Razzaq reported on Friday at The Detroit News Online that, “The record snowfall across the region [Michigan], which has frustrated residents, snarled traffic and pushed road commission budgets to the limit, could actually be a boon for farmers as they transition into their spring planting season.

“This winter, Metro Detroit has received more than 59 inches of snow, according to the National Weather Service.

“‘Snow is never bad. Not for farmers,’ said Dale Mohler, an agricultural forecaster for Accuweather. ‘Snow will melt and eventually it will help boost the soil moisture.’”

On the other hand, Bloomberg writer Elizabeth Campbell reported yesterday that, “Record-high U.S. beef prices offer little comfort to California rancher Kevin Kester, whose family has been raising cattle since 1867. He’s just trying to avoid losing his herd to the state’s worst drought ever.

“The dry spell withered pastures on Kester’s 22,000-acre ranch near Paso Robles, 175 miles (282 kilometers) north of Los Angeles, forcing him to sell 20 percent of his cows to avoid extra hay-feeding costs. He hasn’t added young cattle at a time of year when he usually buys several thousand. Without rain in the next 60 to 90 days, Kester said he’ll sell all his cows.”

More specifically on the Californian drought, Lenny Bernstein reported in today’s Washington Post that, “Without help from the heavens, Joe Del Bosque figures that 2014 will be the last year before many family farmers in California’s vast San Joaquin Valley begin to go bankrupt.

“And 2014 is going to be bad. Really bad. Del Bosque has 2,000 acres scattered across several farms west of Fresno, near Firebaugh. He will leave 500 to 700 acres unplanted because there is no water for his crops.

“That’s about 650,000 boxes of cantaloupe, regular and organic, he won’t be harvesting come July — about $3 million worth of produce, he estimated. It’s a few hundred workers, most of them migrants, he won’t be hiring. It’s money that won’t be spent in grocery and hardware stores in small towns across the region that produces half of the country’s homegrown fruits and vegetables. It’s a lot of schools with empty seats as farm workers looking for jobs move on with their families.”

Today’s article added that, “The Republican-controlled U.S. House passed a bill to help the region last week, but the White House threatened to veto it. Democrats say it would cut back environmental protections. President Obama is scheduled to visit Fresno on Friday to promote federal efforts to help farmers and others.”

Also, The Washington Post editorial board opined today that, “Republicans, meanwhile, have blamed the severity of the [California drought] crisis on ‘man-made water problems,’ pointing the finger at environmentalists who several years ago pushed for some water to go toward protecting and restoring threatened habitats in the San Joaquin Delta. On Wednesday, the GOP House passed a bill sponsored by Republicans from California’s Central Valley that would reallocate water toward agriculture and away from sustaining flows in the delta. California farmers grow half the nation’s fruit and vegetables. Current policy places fish ahead of families in this crucial sector of the state economy, Republicans contend, and they want to use the federal involvement in California water management to change that. This is not a new idea for them; they have been trying to push through this same water plan for practically as long as the policy has been in place.

“In reality, says California Natural Resources Agency official Richard Stapler, the GOP plan would hinder state efforts to ensure its 60-year-old water management system will continue operating well enough to provide water to many of those, not just fish, with legitimate needs. Things are so bad that saltwater could intrude into the system if there is not enough fresh water flowing through the delta, making things worse. Gov. Jerry Brown (D) blasted the GOP effort, insisting that he and other state leaders should have the flexibility to respond to the water crisis without unwanted ‘help’ from Washington.

We agree; federal politicians should be cautious about interfering before harmonizing their plans with Mr. Brown’s; that also goes for Democrats in Congress, who will probably hash out a compromise bill with their GOP counterparts.”

 

Biotech

Reuters writer Roberta Rampton reported on Friday that, “Syngenta AG, the world’s largest crop chemicals company, has commitments to sell its entire supply of a genetically modified corn variety that is not approved by China, U.S. Agriculture Secretary Tom Vilsack said on Friday.

“Vilsack said whether or not China eventually approves the corn, known as Agrisure Viptera or MIR 162, it was still being sold and that Syngenta has ‘basically have sold out’ of its supply for the 2014 growing season.”

The article noted that, “‘We have been working with the Chinese to try to get their regulatory process to be more accepting of biotechnology,’ Vilsack told reporters on Air Force One during a flight to Michigan.”

Donnelle Eller reported yesterday at The Des Moines Register Online that, “America’s love affair with fried foods could get a healthful boost from DuPont Pioneer’s new Plenish soybean.

“The Johnston-based seed giant is betting big — $150 million — that oil from its Plenish soybeans will replace the partially hydrogenated oil used to crisp our fries and keep our cookies, crackers and chips fresh.”

The Register article explained that, “The soybeans also represent Pioneer’s first move in using genetic modification to build better foods for consumers, not just to improve yields for farmers or make plants more resistant to pests or other stresses. It could help win over some critics of the company’s genetically engineered seeds.”

 

Immigration

Jonathan Weisman and Ashley Parker reported in Saturday’s New York Times that, “As House Republicans embarked late last month in luxury buses for their retreat on the Eastern Shore of Maryland, their ears were already ringing with angry phone calls. Heritage Action, the political arm of the conservative Heritage Foundation, was imploring its members to flood the Capitol with warnings to accept ‘no amnesty.’”

The article explained that, “When House Republicans gathered on Jan. 30 to actually read and discuss Mr. Boehner’s principles on immigration reform, his was already a losing battle.”

Saturday’s article stated that, “Since October’s government shutdown, Mr. Boehner has been in open warfare with outside conservative groups, dealing them one loss after another: reopening the government, winning overwhelming passage of a budget deal they opposed, then a trillion-dollar spending bill they loathed, and this week, securing a new agriculture law that largely kept the food stamp program intact over the objections of conservatives.

But on immigration, the groups flexed their collective muscles. Heritage Action and the Heritage Foundation rushed to claim credit. So did Tea Party Patriots and the conservative activist L. Brent Bozell and his ForAmerica group, which called for a clean sweep of the House Republican leadership if it moved forward on the issue.”

Meanwhile, Mike Lillis reported yesterday at The Hill’s Briefing Room Blog that, “Hoping to break the impasse over immigration reform, Sen. Charles Schumer (D-N.Y.) on Sunday floated a compromise proposal that would delay the implementation of any changes beyond President Obama’s tenure.”

Laura Meckler reported in today’s Wall Street Journal that, “Michael Steel, a spokesman for Mr. Boehner, shot the idea [from Sen. Schumer] down. ‘The suggestion is entirely impractical, since it would totally eliminate the president’s incentive to enforce immigration law for the remainder of his term,’ he said Sunday.”

Keith Good

Comments are closed.