January 29, 2020

Farm Bill- Policy Issues; Ag Economy; EPA; and, Political Notes

Farm Bill- Policy Issues

Farm broadcaster Don Wick, of the Red River Farm Network, interviewed Secretary of Agriculture Tom Vilsack yesterday where the discussion focused on the Farm Bill.  An unofficial transcript of yesterday’s interview is available here, while an audio replay can be heard here.

Mr. Wick asked Sec. Vilack about recent Farm Bill stakeholder meetings and what was gleaned from the discussions.  Sec. Vilsack noted that, “I think what we learned was, number one, people are anxious to get this implemented, and number two, that we have correctly identified the first thing that needs to get done, which is disaster assistance for our livestock producers, and number three, that producers are very anxious to get information about the other choices that they’re going to have to make in terms of crop insurance coverages and in terms of the safety net programs, which is why our focus, after we get the livestock disaster assistance programs up and going on or before April 15th so people can make application for the resources they need for losses they incurred in 2011, ’12 and ’13, we’re going to focus our attention on getting the informational materials out to folks across the country so that they can begin familiarizing themselves with the programs and begin making informed decisions about what they need to do.”

With respect to the livestock disaster program, Sec. Vilsack indicated that, “I check on this virtually every day and have received assurances that things have moved along to the point where we will be prepared to accept applications on or before April 15th, which is obviously good news.”

Sec. Vilsack added that, “So once we get the disaster assistance up and going, as I say, our focus is really going to be on deciding how to distribute the $3 million that Congress provided for educational materials on the new farm bill so that producers can begin, in the spring and summer of this year, learning more about the safety net programs, going to conferences that will be sponsored by a variety of organizations and land grant universities, and then ultimately, later in the fall, begin to make the important decisions for their operations.”

On the issue of conservation compliance and crop insurance, Sec. Vilsack explained that, “Well, the interesting thing about conservation compliance is that if you are participating in disaster programs or in any other of the safety net programs, you pretty much have that responsibility already in terms of what you can and cannot do on a wetland or what you need to do relative to highly erodible land and having a conservation plan.

That conservation compliance requirement referencing crop insurance really impacts a very, very small percentage of producers. We estimate it’s about 7,000 producers.”

And in response to a question about USDA Farm Service Agency (FSA) county offices, Sec. Vilsack pointed out that, “We want to have— perhaps there may be fewer offices, but we want them to be better. This isn’t about saving money, because any reduction of funding for offices that are consolidated would be poured back into improving the remaining offices. And also, looking at what is the role of FSA offices in the future.

In addition to the disaster programs and the farm programs, can they also provide additional advice and counsel to producers that are looking for new income sources, who might be interested in connecting to a local and regional food system, or might be interested in establishing a bio product processing facility to use some of the waste product that’s produced during the course of production, and how they might be able to combine it with some of their fellow farmers to produce something like that in a community that could create jobs.

I think FSA offices have a tremendous opportunity to be a one stop shop information center for USDA programs…”

Note that the House Ag Committee will hear from Sec. Vilsack this morning at a full Committee hearing, “To Review the State of the Rural Economy.”

University of Illinois agricultural economist Gary Schnitkey indicated yesterday at the farmdoc daily blog (“Estimated ACRE Payments for 2013”) that, “ACRE, or the Average Crop Revenue Election, is a revenue-based commodity program contained in the 2008 Farm Bill.  Farmers were allowed to extend enrollment in ACRE for the 2013 crop year.  This post provides estimates of state ACRE payments in 2013 for corn, soybeans, and wheat.  If ACRE pays, the payments will be made after September, 2014.  ACRE likely will make payments for corn in several Midwestern states.  ACRE is not projected to make payments for soybeans.  ACRE likely will not make wheat payments in Midwestern states.  ACRE payments are not projected for Illinois in corn, soybeans, or wheat.”

And a news release yesterday from Sen. Jeanne Shaheen (D., N.H.) stated that, “U.S. Senators [Shaheen] and Tom Coburn, M.D. (R-OK) this morning introduced legislation that would save taxpayers up to a billion dollars by capping federal crop insurance premiums for a select group of farm businesses. The bipartisan legislation would cap crop insurance premium subsidies at $70,000 per farm each year, resulting in savings that would reduce the deficit by approximately $1 billion over 10 years, according to agriculture policy analysts.”

In other Farm Bill related news, Teresa Watanabe reported on the front page of yesterday’s Los Angeles Times that, “It’s lunchtime at Washington Preparatory High School in Los Angeles, but 16-year-old Parrish Jackson has barely touched her turkey burger and apricots.

She’s dumping them into the trash can.”

The article added that, “And so it goes on hundreds of campuses in Los Angeles Unified, the nation’s second-largest school system, which serves 650,000 meals a day. Students throw out at least $100,000 worth of food a day — and probably far more, according to estimates by David Binkle, the district’s food services director. That amounts to $18 million a year — based on a conservative estimate of 10% food waste — which Binkle says would be far better spent on higher-quality items, such as strawberries or watermelon.”

Meanwhile, a news release yesterday from the House Budget Committee stated that, “Tonight the House Budget Committee approved the House Republican fiscal year 2015 budget, the Path to Prosperity. The House will consider the budget resolution on the floor next week.”

Ed Avalos, USDA Under Secretary for Marketing and Regulatory Programs, testified yesterday at the House Appropriations Agriculture Subcommittee where Subcommittee Chairman Robert Aderholt (R., Ala.) started off the questions by asking about biotechnology.  Chairman Aderholt specifically expressed concern that “the politics of biotechnology” may be interfering with the scientific review process.

To listen to Chairman Aderholt’s concern and question about the USDA approval process on this issue, just click here (MP3- 1:50).

Kevin Shea, the Administrator of the Animal and Plant Health Inspection Service provided perspective on this issue in his response to Chairman Aderholt, which can be heard here (MP3- 1:46).

In addition, Rep. Kevin Yoder (R., Kans.) brought up Country of Origin Labeling (COOL) and sought additional clarification about a pending World Trade Organization decision on this issue.  Under Secretary Avalos provided a detailed response to the question.  To listen to a portion of their exchange from yesterday’s hearing, just click here (MP3- 2:30).

And an update yesterday add Feedstuffs Online reported that, “[Under Secretary Avalos] announced that the agency is kicking off a national effort to reduce the devastating damage caused by feral, or free ranging, swine.  The $20 million program aims to help states deal with a rapidly expanding population of invasive wild swine that causes $1.5 billion in annual damage and control costs.

“‘Feral swine are one of the most destructive invaders a state can have,’ said Undersecretary Avalos.  ‘They have expanded their range from 17 to 39 states in the last 30 years and cause damage to crops, kill young livestock, destroy property, harm natural resources, and carry diseases that threaten other animals as well as people and water supplies. It’s critical that we act now to begin appropriate management of this costly problem.’”


Agricultural Economy

In other news regarding the swine industry, DTN writer Russ Quinn reported yesterday (link requires subscription) that, “Pork industry researchers are continuing to investigate the porcine epidemic diarrhea (PED) virus while the disease continues to spread across North America.

“Specifically, researchers are keeping a close eye on variants of the existing PED virus and watching another newly discovered virus, swine deltacoronavirus (SDCV), which could be the next big issue the pork industry will have to deal with.

“A PED case was discovered this week in Vermont, bringing the total number of states with the disease now to 28, according to Lisa Becton, director of swine health and research for the National Pork Board. PED was the main topic discussed at the swine committee meetings at the National Institute for Animal Agriculture’s 2014 Annual Conference held in Omaha, Neb., on Tuesday.”

The DTN article added that, “Paul Sundberg, vice president of science and technology for the National Pork Board, said he believes PED cases will fall this summer, as the PED virus is susceptible to heat, UV light and drying. Then, the virus numbers will ramp back up in the winter as hog buildings are closed back up in cooler weather. The big question he has is how many cases will be seen next winter.

“Hopefully, the numbers will be lower than this past winter, Sundberg said. This means management practices such as increasing biosecurity have helped to slow the spread of the disease.”

An update yesterday at Brownfield by Ken Anderson included an audio clip of remarks from Dr. Sundberg and the Brownfield item added that, “Experts estimate PEDv has killed four to five million piglets since last summer.”

For more on PEDv, see this 90-second overview from Monday.

In other developments, Shan Li reported yesterday at the Los Angeles Times Online that, “The ongoing drought in California could dampen employment growth in coming years and have a ripple effect on several industries in the state, according to a UCLA report released Wednesday…[C]alifornia’s employment could be suppressed about 0.2% during the next few years because of the drought, the report concluded.”

John Schwartz reported in today’s New York Times that, “Here in California’s Central Valley, researchers are trying to find assortments of bee-friendly plants that local farmers and ranchers can easily grow, whether in unusable corners and borders of their land or on acreage set aside with government support.

“Bees could certainly use the assist. Since 2006, the commercial beekeepers who raise honeybees and transport them across the country to pollinate crops have reported losing a third of their colonies each year, on average.

“Native species of bees, too, have been in decline. That is taking a toll on crops that rely on bees for pollination, including many nuts and fruits. The Department of Agriculture says that one of every three bites that Americans take is affected, directly or indirectly, by bees. They cause an estimated $15 billion increase in agricultural crop value each year.”

Also, Eduardo Porter indicated in yesterday’s New York Times that, “The list of present damages outlined by the United Nations panel [Intergovernmental Panel on Climate Change] — melting ice caps and rising sea levels, stressed water supplies, heat waves and heavy rains — underscored the risk if humanity does not figure out how to curb the use of fossil fuels that have provided the lifeblood for economic development since the time of Malthus.

“But what most stood out in the report from the panel, which gathers every few years to produce a synthesis of mainstream science’s take on climate change, was that it rolled straight into Malthus’s territory, providing its starkest warning yet about the challenge imposed by global warming on the world’s food supply.”

The Times item added that, “Indeed, the panel calculates that food demand is rising at a pace of 14 percent per decade. But it estimates that climate change is already reducing wheat yields by 2 percent each decade — compared with where they would be in the absence of climate change — and corn yields by 1 percent.”

And with respect to food demand, Gregory Meyer reported yesterday at The Financial Times Online that, “Leaders of two of the largest agricultural trading houses have outlined a more assertive role for China in global food commodities markets as Beijing steps away from its policy of grain self-sufficiency.

Soren Schroder, chief executive of Bunge, and Juan Luciano, president and chief operating officer of Archer Daniels Midland, both manage US-based companies with operations in large grain and oilseed imports into China.

“They said recent moves by China National Cereals, Oil and Foodstuffs Corp (Cofco) to take controlling stakes in foreign food trading houses recognised that the country will become more dependent on imports.”

The FT article noted that, “China already imports 69m tonnes of soyabeans annually, or two-thirds of globally traded supplies [related graph]. Imports of corn will treble to 22m tonnes in the next decade, the US Department of Agriculture estimates.

“In recent policy pronouncements, Beijing abandoned its traditional reluctance to look abroad for feed grains such as corn.”

Abheek Bhattacharya reported yesterday at The Wall Street Journal Online that, “When China’s largest pork distributor acquired America’s largest pork producer, it was a tasty match. Now the two are going to the public market to sanctify their union as the world’s top pork firm.

WH Group, the renamed Shuanghui International Holdings that acquired Smithfield Foods last year, is set for an initial public offering of up to $6 billion in Hong Kong, The Wall Street Journal reports. Shuanghui borrowed heavily to buy Smithfield, and the IPO proceeds will help pay down debt. That should leave a financially solid firm ready to harvest the gains of the combined operations [see a related graph on U.S. and Chinese pork consumption from the Journal article].”

Meanwhile, Stephanie Strom reported in today’s New York Times that, “Demand for meat alternatives is growing, fueled by trends as varied as increased vegetarianism and concerns over the impact of industrial-scale animal husbandry on the environment. The trend has also attracted a host of unlikely investors, including Biz Stone and Evan Williams of Twitter, Bill Gates and, most recently, Li Ka-shing, the Hong Kong magnate.

“‘I’ve tasted a few,’ Mr. Gates wrote in a multimedia piece on the Beyond Meat investment that was posted to his blog, ‘and they’re very convincing.’”

The article added that, “For whatever reason, the desire to replace meat proteins with proteins derived from plants is spreading, although the market is still minuscule. Mintel, a market research firm, reports that sales of meat alternatives grew 8 percent from 2010 to 2012, when sales hit $553 million.”

In trade related news, Vicki Needham reported yesterday at The Hill’s On the Money Blog that, “A Senate hearing to discuss the Obama administration’s ambitious trade agenda has been postponed so the panel can consider a slew of expired tax provisions.

“U.S. Trade Representative Michael Froman was set to testify before the Senate Finance Committee on Thursday but the hearing has been rescheduled for April 30 so the panel can deal with a tax extenders bill instead, according to a Wednesday statement.

“Froman is still expected to testify before the House Ways and Means Committee on Thursday morning.”

Forrest Roberts, the CEO of the National Cattlemen’s Beef Association, and Neil Dierks, the CEO of the National Pork Producers Council penned a column yesterday at Roll Call Online which stated that, “U.S. Trade Representative Michael Froman will give congressional lawmakers an update on the Obama administration’s trade agenda Thursday, including its efforts to close out Trans-Pacific Partnership negotiations. While that agreement is expected to be concluded in the coming months, U.S. agricultural groups are concerned that it may fall short of the comprehensive deal they had hoped for.

“That’s because Japan — one of 12 TPP countries and the key TPP market for a majority of U.S. agriculture — wants to exclude from the negotiations a number of ‘sensitive’ agricultural products, including beef and pork. That’s a non-starter for U.S. agriculture, which wants elimination of tariff and non-tariff barriers on all American farm products.”

The CEOs pointed out that, “Unfortunately, Japanese Prime Minister Shinzo Abe is under enormous political pressure to maintain tariffs on agricultural imports. The irony is that Japan’s agricultural sector represents less than 1 percent of the country’s gross domestic product, with rice accounting for half of that; and, by Abe’s own admission, it needs massive reform. The resolution of this internal struggle will determine the value of Japan’s membership in the TPP and, possibly, of the TPP itself.

Historically, support from the U.S. farm sector has been critical to ensuring congressional passage of implementing legislation for trade agreements, but that support likely won’t exist for a TPP agreement that does not eliminate tariffs on farm products.”


Environmental Protection Agency

A news release yesterday from the House Energy and Commerce Committee indicated that, “The House Energy and Commerce Subcommittees on Energy and Power and Environment and the Economy today held a joint hearing to review the Environmental Protection Agency’s Fiscal Year 2015 budget request. Members questioned EPA Administrator Gina McCarthy on EPA’s budget request and a range of activities within the agency’s purview, including power plant regulations, ozone standards, superfund cleanups, and the implementation of the Toxic Substances Control Act (TSCA) and the Renewable Fuel Standard (RFS).”


Political Notes

Paul Kane reported in today’s Washington Post that, “At 76, Sen. Thad Cochran could have easily retired this year rather than trying to battle through an ideologically divisive primary in pursuit of a seventh term. Instead, the Mississippi Republican decided it was worth the trouble, because he wants another chance at chairing a Senate committee.

“‘I think it’s very attractive. There are a lot of responsibilities, very serious stuff,’ Cochran said of the prospect of a GOP majority and his chance at heading one of two committees on which he has senior status.”

“Cochran, who briefly chaired the Senate Appropriations Committee, would like to return to the top post on the panel that controls more than $1 trillion in federal spending each year,” the Post article said.

Mr. Kane noted that, “Cochran is the ranking Republican on the Senate Agriculture Committee, but only because he hit his six-year limit as ranking member of the Appropriations Committee. In an interview Tuesday, Cochran said he would probably seek to oust Sen. Richard C. Shelby (Ala.), the ranking Republican on the Appropriations Committee, if Republicans claim the majority because Cochran has several years left on his limit to be chairman.

“Cochran said he might be able to live with the idea of being agriculture chairman if he is allowed to keep the plum Appropriations subcommittee spot, chairing the defense subcommittee and overseeing nearly $500 billion in annual Pentagon funds.

His first hurdle is clearing a June 3 primary from a conservative challenger who is critical of Cochran’s spending habits as an appropriator.”

Keith Good

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