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Farm Bill; Ag Economy; Biofuels; and, Biotech

Farm Bill- Policy Issues

A news release on Friday (“U.S. Sugar Producers Set Sights on Foreign Subsidies”) indicated that, “With a strong five-year sugar policy at their side, U.S. sugar producers are now setting their sights on addressing the foreign sugar subsidies that make U.S. sugar policy necessary. That’s according to Jack Roney, director of economics and policy analysis for the American Sugar Alliance (ASA), who spoke today at the USDA Agricultural Outlook Forum.

“‘U.S. sugar producers are among the most efficient in the world, and we would thrive in a global freemarket, if one existed,’ he explained. ‘But historically, sugar has been and continues to be the world’s most distorted commodity market because of foreign subsidization. Something must be done about it.’

“Roney says that sugar producers are so serious about addressing foreign subsidies that, even after passage of a five-year Farm Bill, they still remain willing to give up U.S. sugar policy if other countries will end their direct and indirect market-distorting policies.”

Friday’s update noted that, “This idea is encapsulated in the ‘zero-for-zero’ sugar initiative introduced by Congressman Ted Yoho (R-FL). His resolution, H.Con.Res. 39, would instruct the administration to work through the World Trade Organization to target the foreign sugar programs, then would advocate for an end to U.S. policy once a free market forms. ASA has urged lawmakers to co-sponsor the resolution.

“‘This subsidy cease-fire is particularly important today as major sugar exporters are increasing their subsidies and making the market situation worse,’ Roney said. ‘If we’re serous about a free market, the time has come for all countries to come to the table and for all countries’ policies to be on the table.’”

The update added that, “Not everyone is supportive of this zero-for-zero approach. Large candy companies shunned the free-market idea and instead have lobbied for the unilateral disarmament of U.S. policy.”

Also with respect to sugar, Alexandra Wexler reported in today’s Wall Street Journal that, “Sugar prices are climbing as projections from industry groups add to anxieties that there might be less of the sweetener to go around.

Global sugar production could fall for the first time in five years, the International Sugar Organization said last week. The news pushed sugar prices to an 11-week high.”

And The Washington Post editorial board opined today that, “But what about public health? The distress, diminished quality of life and premature deaths associated with obesity, diabetes and other related ailments demand a government response. Eliminating the subsidies for corn would raise the price of corn syrup, which might help. Eliminating the sugar program, though, would lower the price of that ready substitute for corn syrup. Obviously, the government shouldn’t stop there.

“An effective anti-obesity policy would include taxes on certain bad-for-you foods, which would tend to discourage unhealthy habits without objectionable restrictions on consumer choice. This is preferrable to current sugar policy, which nudges prices up but channels the difference to companies that haven’t earned it, in part because the federal Treasury would benefit from the tax revenue.”

Meanwhile, an update Friday at WSET-TV Online (Lynchburg, Va.) reported that, “Congressman Robert Hurt [R., Va.] met with local farmers today as he wrapped up his ‘District Work Week’ tour.”

“ABC 13 also asked the congressman about the ‘Farm Bill’ the president recently signed, which aims to provide help to rural communities.

“‘I don’t think there is anything in the farm bill more important than crop insurance and that is risk management,’ Hurt said. ‘Farmers across our district were glad we finally did get a farm bill passed.’”

Joseph Morton noted yesterday at the Omaha World-Herald Online that, “The new farm bill will cost about $1.4 billion less per year in commodity supports compared with current policies, but will increase federal crop insurance funding by about $570 million annually, the nonpartisan Congressional Budget Office predicts.”

And Michael Brindley reported on Friday at New Hampshire Public Radio Online that, “During a visit to Bartlett Farm in Concord Friday, U.S. Senator Jeanne Shaheen [D., N.H.] said the recently-passed Farm Bill will provide support to New Hampshire’s dairy farms.”

“With the new farm bill, Shaheen says small dairy farms like Bartlett’s will get more protection,” the update said.

Scott Waltman reported on Saturday at the Aberdeen News (S.D.) Online that, “There are some helpful programs and fair savings in the latest farm bill, but Sen. John Thune, R-S.D., says Congress could have done better…[F]or instance, Thune said, the bill has payment limits — caps on how much ag producers can collect from various farm programs in a year — but they’re higher than he would have preferred.”

The article added that, “Reauthorization of the livestock disaster program [in the Farm Bill] was vital, Thune said, especially considering that an early blizzard in October killed some 43,000 animals.”

And McClatchy writer Chris Adams reported on Friday that, “All the jawboning about the big farm bill was over two weeks ago, when Congress finally passed the $956 billion package.

But for America’s farmers, the decisions are just beginning. And they could get complicated.

“‘The tricky thing for farmers is that they are being asked to pull out their crystal balls,’ said Jonathan Coppess, an agriculture policy professor at the University of Illinois. ‘Where do you think prices will be for the next five years?’” [See related update last week at the farmdoc daily blog, “Agriculture Risk Coverage and Price Loss Coverage in the 2014 Farm Bill.”]

The article added that, “If farmers think prices will go one way, they might choose the program behind Door No. 1. If they think they’ll go another way – or that they’ll drop, but not that much – they might choose the program behind Door No. 2. And, well, there’s also Door No. 3 to consider.

“‘They’ve got to sort it all out – and I hate to use the word gamble, but it’s hard to know exactly what the prices will do,’ Coppess said.

“This is the result of the farm bill signed by the president earlier this month after months of delays and wrangling.”

Denver Post writer Colleen O’Connor reported on Friday that, “The farm bill, better known for funding things such as food stamps and farm subsidies, is also the rural bill. It funds the USDA Rural Development program, a venture capitalist for rural America which helps build or support such community essentials as fire stations, schools, libraries and medical clinics. More than $400 million flowed into Colorado in fiscal 2013.

“‘It’s critical to the fabric of rural Colorado,’ said U.S. Sen. Michael Bennet, a Democrat on the Senate’s Agriculture Committee who also served on the Farm Bill Conference Committee. ‘This program enables people to have access to resources they’d otherwise not have.’”

The article noted that, “‘So many of our rural towns, particularly the one-stoplight towns, are (dominated) by small business,’ said U.S. Rep. Cory Gardner, R-Yuma. ‘The local grain operator and the hospital are usually the biggest (places), but the rest are businesses with one or two people.’”

In more specific news regarding nutrition, a news release late last week from Rep. Randy Neugebauer (R., Tex.) indicated that, “[Rep. Neugebauer], a senior member of the House Committee on Agriculture and a member of the Farm Bill Conference Committee, spearheaded a letter to the Texas Workforce Commission, requesting that Texas take part in a pilot program to help families on food stamps find employment.

“The pilot program was included in H.R. 2642, commonly known as the Farm Bill, the first legislation to reform the Supplemental Nutrition Assistance Program (SNAP) since the Welfare Reform Act of 1996.”

Also last week, USDA’s Economic Research Service released a report titled, “The Food Assistance Landscape: FY 2013 Annual Report.”

And Dan Friedman reported late last week at The New York Daily News Online that, “Ninety-eight congressional Democrats wrote Agriculture Secretary Tom Vilsack this week asking him to delay until the fall food stamp cuts set to start hitting low-income Americans in March.

“That’s 27 more than the number who had signed on to the letter organized by Sen. Kirsten Gillibrand [D., N.Y.] when we reported on it Monday.”

The article stated that, “But an Agriculture Department spokeswoman Courtney Rowe, said agency officials will have to review the request to determine if Vilsack has the power to delay the cuts.”

In other policy news, Coral Davenport reported in yesterday’s New York Times that, “President Obama’s annual budget request to Congress will propose a significant change in how the government pays to fight wildfires, administration officials said, a move that they say reflects the ways in which climate change is increasing the risk for and cost of those fires.”

The Times article indicated that, “The proposal will ask Congress to pay the costs of fighting extreme wildfires in the same way it finances the federal response to disasters like hurricanes and tornadoes, the officials said. When unpredictable events like Hurricane Sandy are destructive enough to be declared disasters by the president, the Federal Emergency Management Agency is authorized to exceed its annual budget and draw on a special disaster account. The account is adjusted each year to reflect the 10-year average cost of responding to such events.

Mr. Obama’s budget proposal would create a similar exception for the Interior and Agriculture Departments, which have agencies that are responsible for wildfire response. In recent years, as wildfires have become more frequent and intense in the Western United States, the cost of fighting the fires has soared.”

Ms. Davenport added that, “While there is intense resistance from Republicans and some Democrats in Congress to most of Mr. Obama’s climate policies, the wildfire funding proposal has bipartisan support. His proposal is based on a Senate bill sponsored by Senators Ron Wyden, Democrat of Oregon, and Michael D. Crapo, Republican of Idaho. A similar bill in the House also has bipartisan support. A coalition of environmentalists, sportsmen and timber producers has lobbied in favor of the bill.”

And Evan Halper reported this weekend in the Los Angeles Times that, “In 2010, after a years-long campaign, food-safety activists persuaded Congress to give the FDA authority to regulate farm practices. The next year, an outbreak of food poisoning that killed 33 people who ate tainted cantaloupes put pressure on the FDA to be aggressive.

Now, farmers are discovering that the FDA’s proposed rules would curtail many techniques that are common among organic growers, including spreading house-made fertilizers, tilling cropland with grazing animals, and irrigating from open creeks.

“Suddenly, from small family operations nestled in the foothills of Appalachia to the sophisticated organic-grower networks that serve Los Angeles and San Francisco, the farms that celebrity chefs and food-conscious consumers jostle to buy from are facing an unexpected adversary.”

 

Agricultural Economy

Bloomberg writer Alan Bjerga reported on Friday that, “The five-year boom in U.S. farmland values probably will end this year amid a decline in profits and crop prices that may disrupt the rural economy.

“Higher interest rates and falling income stalled gains in prices last year, Jason Henderson, an agricultural economist at Purdue University in West Lafayette, Indiana, said today at an event held by the U.S. Department of Agriculture in Arlington, Virginia. Land values had soared 37 percent since 2009.

“‘I’ve seen more stories about failed sales’ when farms don’t sell for the asking price, suggesting a sluggish market, Henderson said. ‘A plateau in farmland values is what we’re seeing going forward.’”

Christopher Doering reported on Friday at The Des Moines Register Online that, “The federal government said Friday U.S. farmers will plant a record corn crop and a bumper soybean crop in 2014.

“The U.S. Agriculture Department said farmers will harvest 13.985 billion bushels of corn and 3.55 billion bushels of soybeans during the upcoming season. Yields are expected to average 165.3 bushels per acre for corn and 45.2 bushels per acre for soybeans.”

Also Friday, AP writer Scott Smith reported that, “Without a lot more rain and snow, many California farmers caught in the state’s drought can expect to receive no irrigation water this year from a vast system of rivers, canals and reservoirs interlacing the state, federal officials announced Friday.

“The U.S. Bureau of Reclamation released its first outlook of the year, saying that the agency will continue to monitor rain and snow fall, but the grim levels so far prove that the state is in the throes of one of its driest periods in recorded history.”

The AP article added that, “California officials who manage the State Water Project, the state’s other major water system, have already said they won’t be releasing any water for farmers, marking a first in its 54-year history.”

Bettina Boxall reported in yesterday’s Los Angles Times that, “A warming climate is shrinking the Sierra Nevada snowpack that acts as a natural reservoir. And although it is unclear exactly how climate change will affect precipitation levels in California, rising temperatures mean farm fields and suburban yards will dry out more quickly.”

In a positive development, the AP reported yesterday that, “Meteorologists forecast a pair of storms that could dump several inches of rain on parched cities and croplands throughout California in the coming week, bringing welcome news to a state that has just endured its driest year in recorded history.

“Although the rain won’t be enough to end the drought, the National Weather Service projected Sunday that the precipitation could nearly double the amount of rainfall in parts of Los Angeles and the San Francisco Bay Area this year.”

From an international perspective, Ellen Barry reported in yesterday’s New York Times that, “A current of dread runs through this farmland, where women in jewel- colored saris bend their backs over watery terraces of rice. In Andhra Pradesh, the southern state where [Latha Reddy Musukula] lives, the suicide rate among farmers is nearly three times the national average; since 1995, the number of suicides by India’s farmers has passed 290,000, according to the national crime records bureau, though the statistics do not specify the reason for the act.

India’s small farmers, once the country’s economic backbone and most reliable vote bank, are increasingly being left behind. With global competition and rising costs cutting into their lean profits, their ranks are dwindling, as is their contribution to the gross domestic product. If rural voters once made their plight into front-page news around election time, this year the large parties are jockeying for the votes of the urban middle class, and the farmers’ voices are all but silent.”

And in trade related news, DTN Political Correspondent Jerry Hagstrom reported on Friday (link requires subscription) that, “U.S. Trade Representative Michael Froman signaled late Thursday that the Obama administration plans to convince Congress to pass trade promotion authority by negotiating such a strong Trans-Pacific Partnership Agreement that members will want to give the administration the authority to finish it.

“‘We’ll have the votes, provided we bring back a good agreement. Our focus now is to bring back a good agreement, including in agriculture,’ Froman said in a speech during the Agriculture Department’s Agricultural Outlook Forum dinner shortly before he took off for a negotiating session in Singapore.

“Asked about how to convince Senate Majority Leader Harry Reid, D-Nev., to support trade promotion authority, Froman said he is spending a lot of time on Capitol Hill with both parties ‘laying the foundation for what we hope will be broad bipartisan support.’”

Meanwhile, James Politi reported on Friday at The Financial Times Online that, “US business groups attacked Japan and Canada for resisting tariff cuts in sensitive sectors, particularly agriculture, on the eve of a critical meeting of ministers negotiating a trade agreement among 12 Pacific Rim nations.

“In a letter to Michael Froman, the US trade representative, more than 40 lobby groups supporting the Trans-Pacific Partnership said this week they were ‘very concerned’ that the two countries seemed unwilling to offer ‘comprehensive market access liberalisation’.

“‘[Japan and Canada] seem intent on preserving the status quo for their most protected sector,’ said the letter, organised by the Emergency Committee for American Trade.”

 

Biofuels

Donnelle Eller and Christopher Doering take a closer look at issues regarding biofuels on the front page of yesterday’s Des Moines Register, “New ethanol industry blooms in Iowa, but it could soon be uprooted.”

In part, the article noted that, “But just as a new industry for Iowa is about to take root, a proposed change in government policy could limit demand for ethanol and send new plants and jobs to other countries. Think Brazil, China or European nations…The U.S. Environmental Protection Agency has proposed reducing the amount of renewable fuel that must be blended into the fuel supply that powers American vehicles. The EPA says it’s bending to market realities: The mandates were too aggressive and hard to reach, given that autos have become more fuel-efficient.”

 

Biotech

Late last week the USDA’s Economic Research Service (ERS) released a report titled, “Genetically Engineered Crops in the United States.”

An ERS summary of the report noted that, “Genetically engineered (GE) crops (mainly corn, cotton, and soybeans) were planted on 169 million acres in 2013, about half of U.S. land used for crops. Their adoption has saved farmers time, reduced insecticide use, and enabled the use of less toxic herbicides. Research and development of new GE varieties continues to expand farmer choices.”

And Reuters writer Tom Polansek reported on Friday that, “Archer Daniels Midland Co, one of the world’s top grain traders, said on Friday it will not accept crops containing a new genetically modified Syngenta AG corn trait until major importers approve the strain.

“ADM said it will not take any commodity with Syngenta’s Agrisure Duracade trait for domestic processing or export, joining rivals Cargill Inc and Bunge Ltd which have signaled they will limit their handling of the product.”

Keith Good