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Farm Bill- Policy Issues (Hearings); Tax Extenders; Ag Economy; and, CFTC- Friday

Farm Bill- Policy Issues: House Ag Committee Hearing

The House Ag Committee held a hearing yesterday “to review the state of the rural economy,” and heard from Secretary of Agriculture Tom Vilsack.

In conjunction with the hearing, a news release yesterday from USDA indicated that, “Agriculture Secretary Tom Vilsack today announced significant progress on implementing the Agricultural Act of 2014 (the 2014 Farm Bill), which President Obama signed into law on February 7 . The 2014 Farm Bill reforms agricultural policy, reduces the deficit, and helps grow the economy.”

The update noted that, “USDA also launched a website that provides details on Farm Bill implementation in one convenient location and the Economic Research Service launched a website highlighting some of the economic implications  of the new programs and provisions.

“In the weeks since enactment, USDA held 12 outreach and listening sessions to share information and hear from stakeholders on the 2014 Farm Bill implementation process.”

Committee Chairman Frank Lucas (R., Okla.) noted at yesterday’s hearing  that, “Right now, the committee is rightly focused on ensuring proper implementation of the Agricultural Act of 2014.  We will be watching these efforts closely.  Communications between your staff and committee staff have already begun and I was encouraged that you announced early that implementing livestock disaster assistance is a top priority.  Livestock producers have suffered through multiple years of drought and were operating for a long time without a safety net in place.”

Chairman Lucas added that, “Providing regulatory relief for our producers is another priority.  I am concerned about the administration’s regulatory initiatives that can harm the health of production agriculture and rural America.  These initiatives often, but not always, originate at other agencies by people who have no frame of reference for how farmers produce our nation’s food supply.

“The latest example of this disconnect is the Environmental Protection Agency’s recent proposed rule to redefine the scope of waters protected under the Clean Water Act.  Under this proposal, small streams and ditches would be regulated even if they are miles away from navigable waters, even if they are dry most of the time.  This is an expansion of power that defies common sense and puts the livelihoods of our agricultural producers in jeopardy.”

Ranking Member Collin Peterson (D., Minn.) indicated yesterday that, “As the Chairman indicated, today’s hearing is focused on the rural economy. The rural economic outlook remains positive in many parts of the country, even as commodity markets are starting to decline and weather challenges persist.

“Of course now, we need to make sure we don’t do anything to screw this up. People who don’t understand agriculture and are driven more by political ideology are the biggest threats to the rural economy. The Ryan budget  proposes an additional $23 billion in cuts to the farm safety net and turns SNAP into a block grant while the EPA at times seems intent on regulating farmers out of business.”

At the hearing yesterday, which lasted almost three hours, lawmakers covered a variety of policy topics.

Rep. Randy Neugebauer (R., Tex.) discussed concerns about USDA Farm Service Agency (FSA) office organization, Sec. Vilsack indicated that no FSA office closures are expected in 2014.  The conversation on this topic from yesterday can be heard here (MP3- 2:00).

A news release yesterday from Rep. Steve King included a portion of the Iowa Republican’s exchange with Sec. Vilsack on the Renewable Fuels Standard.

Sec. Vilsack stated that, “I would say a couple things Congressman, first of all I am a strong believer in the Renewable Fuels Standard and I know it’s controversial, even in this committee, but I believe it is important to have for jobs, for stabilizing farm income, for reducing our reliance on foreign oil and for providing consumers choice and less expensive gas.”  Sec. Vilsack, a former Iowa governor, added that, “So I think we need it. I think that the EPA has a very interesting situation where the basis of that standard was established on the belief that we would as a country continue to use more and more gasoline with more fuel efficient vehicles and with a difficult economy at times. That has not been the case. But since the EPA rendered its initial projections, gasoline use has increased and we wanted to make sure the EPA was aware of that because we think that could have an impact on what they ultimately decide.”

Christopher Doering reported yesterday at The Des Moines Register Online that, “Agriculture Secretary Tom Vilsack said Thursday a recent uptick in gasoline consumption should be considered by the Environmental Protection Agency when it determines how much renewable fuels should be blended into the motor fuel supply this year.

“The EPA, which oversees the country’s Renewable Fuel Standard, proposed in November cutting the fuel requirement in 2014 to 15.2 billion gallons of ethanol and other biofuels, 3 billion gallons less than Congress required in a 2007 law. It would mark the first-ever drop in the Renewable Fuel Standard that requires refiners to blend ever increasing amounts of biofuels into the nation’s gasoline supply through 2022.”

Rep. King and Sec. Vilsack also discussed an Amendment that was part of the House Ag Committee Farm Bill, the “Protect Interstate Commerce Act,” which was aimed at a California law specifying production methods for eggs sold in the state.  The amendment was not part of the final Farm Bill, but litigation from several states on the California law has been brought forth.   Yesterday’s conversation on this issue is available here (MP3- one minute).

And a news release yesterday from Rep. King noted in part that, “[Rep. King] released the following statement after the Iowa House of Representatives passed House Resolution 123. The resolution requests that California repeal the unconstitutional law which limits the sale of eggs in that state. Governor Branstad has also joined a multi-state lawsuit against California’s action.

“‘I appreciate the bipartisan effort of the Iowa House in taking another step forward in ensuring we protect both Iowa and American famers and producers, including egg producers, from California’s unconstitutional overreach,’ said King.”

Rep. Joe Courtney (D., Conn.) highlighted immigration at yesterday’s hearing, and commented on this issue by saying: “As far as I am concerned, that’s the elephant in the room.”  (related audio -MP3- one minute).

Meanwhile, Rep. Richard Nolan (D., Minn.) brought up the recent development regarding U.S. sugar producers filing an antidumping case against Mexico with the U.S. International Trade Commission and U.S. Department of Commerce.

Sec. Vilsack noted: “I’ve got to be candidate with you Representative, from my perspective it’s a bit ill timed.”  (related audio MP3- 1:20).

On a separate issue regarding biotechnology at the House hearing, an update yesterday from USDA Radio News Online noted that, “The Agriculture Secretary says it still takes too long to get new GMO crop varieties through the approval process.”  To listen to this one-minute audio recap from USDA, just click here.

Also, Rep. Bob Gibbs (R., Ohio) used his time at yesterday’s hearing to highlight the recent EPA water proposal on the Clean Water Act- related audio (MP3- 2:28).

And AP writer Hope Yen reported today that, “Industry groups and more than a dozen GOP senators are urging the Obama administration to reconsider plans to regulate many of the nation’s streams and wetlands, saying the proposed rule hurts economic activity and oversteps legal bounds.

“In a letter Thursday, the senators faulted the Environmental Protection Agency for announcing a proposed rule last week before the government’s peer-reviewed scientific assessment was fully complete. They are calling on the government to withdraw the rule or give the public six months to review it, rather than the three months being provided.”

In other policy developments yesterday, a news release from Sen. Heidi Heitkamp (D., N.D.) indicated that, “U.S. Senators [Heitkamp] and Susan Collins (R-ME) today introduced legislation to give our nation’s schools greater access to the tools and resources they need to offer healthy food options for students.

“While federal nutritional standards for meals served in schools have increased considerably in recent years, many school kitchens were built decades ago and lack the basic equipment necessary to prepare wholesome foods. According to the Pew Charitable Trusts, 74 percent of school districts in North Dakota need at least one piece of kitchen equipment to better serve healthy meals. But the median cost to meet the new lunch requirements is approximately $18,000 per school in the state.”

 

Senate Appropriations Agriculture Subcommittee Hearing

The “Washington Insider” section of DTN reported yesterday (link requires subscription) that, “Beef and dairy producers and the feed industry are noting concerns about the Food and Drug Administration’s proposed regulations for animal feed.

“The National Cattlemen’s Beef Association, the National Milk Producers Federation (NMPF), and the American Feed Industry Association say the proposed rule is overly prescriptive and would make it more difficult to use spent grains from the brewing process as animal feed. The groups said they will lose a competitive source of feed, and that prices will go higher because the feed industry will have to comply with the coming more stringent rules.

The rule proposes to make safety practices in animal feed manufacturing the same as those required for human food. The agency has said it will revise the proposed rule, and will likely reissue it later this summer. The draft regulations were issued under the Food Safety Modernization Act (FSMA), which gave the FDA broad new authority to regulate food.”

Yesterday, the Senate Appropriations Subcommittee on Agriculture held a hearing with FDA Commissioner Margaret A. Hamburg and Subcommittee Ranking Member Roy Blunt (R., Mo.) brought up the spent grains issue and discussed it in some detail.

To listen to yesterday’s conversation with Sen. Blunt and Commissioner Hamburg, just click here (MP3- 2:55).

Subcommittee Chairman Mark Pryor (D., Ark.) also discussed animal feed related variables with Dr. Hamburg and inquired about an exception to a rule for some animal producers and its possible application for producers who use contract growers, particularly in poultry and swine production- related audio (MP3- one-minute).

 

Ways and Means Committee Hearing- Trade Issues

Barney Jopson and Shawn Donnan reported yesterday at The Financial Times Online that, “The US has accused Japan of blocking progress on a trade deal between 12 countries on the Pacific Rim by not allowing open access to its markets for agricultural products and motor vehicles.

“In his most critical comments yet on Japan, Michael Froman, the top US trade official, said: ‘We can’t have one country feeling entitled to take off the table and exclude vast areas of market access while the other countries are all putting on the table more ambitious offers.’”

The FT article noted that, “Japan wants to maintain – or phase out slowly – tariffs on five agricultural products including rice, beef, and pork that it has declared ‘sacred. The two countries also disagree on what is needed for the three big US carmakers to compete on a level playing field with Toyota, Nissan and others.

“At a congressional hearing on Thursday [video replay], Mr Froman, the US trade representative, said he had told Japan that it was not living up to its commitment to help create a ‘high-standard, ambitious, comprehensive’ agreement.”

Yesterday’s article added that, “Dave Camp, the Republican chairman of a House of Representatives committee that handles trade, told Mr Froman that if a country was not willing to support an ambitious trade deal, then ‘we should complete TPP without that country and allow it to join later, if and when it is ready to make the necessary commitments.’”

Reuters writer Krista Hughes reported yesterday that, “‘It’s time for Japan to step up to the plate,’ Froman told the House Ways and Means Committee during a three-hour hearing on the U.S. trade policy agenda.

“Washington’s frustration at the slow progress in formal negotiations on the TPP, a centerpiece of President Barack Obama’s push to expand the United States’ presence in Asia, is growing as talks enter their fifth year.”

In prepared remarks yesterday, Ambassador Froman also pointed out that, “We will also utilize the U.S.-Brazil Agreement on Trade and Economic Cooperation as a productive mechanism for dialogue between our two countries. In 2014, we will work to continue to grow our exports and deepen our trade and investment policy engagement with Brazil. In addition, we will continue to pursue with Brazil a long-term mutually agreeable solution to the WTO dispute on cotton, preventing costly retaliatory counter-measures from damaging American consumers and exports.”

Rep. Adrian Smith (R., Neb.) questioned Amb. Froman about non-tariff trade barriers at yesterday’s hearing, a video replay of this exchange is available here.

 

Senate Finance Committee- Tax Extenders

Chris Clayton reported yesterday at the DTN Ag Policy Blog that, “The Senate Finance Committee approved a long list of tax extensions that included key provisions for the biofuels industry as well as the wind industry.”

Mr. Clayton noted that, “Senate Finance Committee Chairman Ron Wyden, D-Ore., said the bill should help deal with the stop-and-go nature of tax extensions in recent history, though he also acknowledged the need for a comprehensive tax-reform plan.”

The DTN update added that, “For biofuels, the bill includes:

The $1.01 per gallon Cellulosic Biofuels Producer Tax Credit through 2015, which is scored to cost $55 million.

The $1 a gallon Biodiesel tax credit as well as the 10-cent a gallon agri-biodiesel producer tax credit.”

A replay of yesterday’s markup is available here.

 

Agricultural Economy

A recent update from the U.S. Drought Monitor indicated that, “Despite short-term gains, the long-term deficits across the region [the west] remained substantial. According to the California Department of Water Resources, California’s snowpack has increased since the first snow survey on January 3rd, but the latest survey results show California’s snow-water equivalent is only 32 percent of the average April 1st measurement when the snowpack is generally at its peak level prior to spring melt.”

The update added that, “In the southern Plains, continued short-term precipitation deficits, declining range and pasture conditions, and areas of below-normal streamflow activity led to expansion of areas of Moderate Drought (D1) and Severe Drought (D2) in the eastern half of Kansas and central Oklahoma where areas of Severe Drought (D2) pushed eastward. Temperatures were generally near-normal to slightly above-normal in the southern portions of the Plains during the past week [related map].”

Bloomberg news reported yesterday that, “China, the world’s largest pork consumer, has put ‘temporary restrictions’ on imports of U.S. pigs to prevent a swine disease from spreading to its herds, according to the Livestock Exporters Association of the USA.

China isn’t issuing more import permits for U.S. pigs until the countries agree on testing protocol for porcine epidemic diarrhea virus, said Tony Clayton, president of the group. China can resume importing ‘fairly quickly’ as long as ‘the U.S. agrees to some kind of testing protocol,’ Clayton said.”

And Reuters writer Michael Hirtzer reported yesterday that, “China canceled purchases of 221,400 tonnes of U.S. corn last week, the U.S. Agriculture Department said on Thursday, bringing the total to more than 1 million tonnes of corn rejected since November in a dispute involving a biotech variety not approved by the No. 3 buyer of U.S. grain.

The corn cancellations come amid trade reports that China also was suspending approval of shipments of dried distiller’s grains, or DDGs, a corn-based ethanol byproduct used as animal feed.”

Meanwhile, the Food and Agriculture Organization of the United Nations (FAO) released its monthly Food Price Index yesterday. The index was up for the second month in a row, and a brief one-minute recap of the index is available here.

 

Commodity Futures Trading Commission (CFTC)

The Senate Ag Committee has scheduled a Business Meeting on April 8, at which recent CFTC nominees will be voted on.

And Reuters writer Jonathan Stempel reported yesterday that, “Former customers of MF Global Holdings Ltd’s bankrupt brokerage will recoup all $6.7 billion they are owed following the completion of a payout that will begin on Friday, its trustee said.

“Nearly 26,500 former commodities and securities customers of the MF Global Inc brokerage will share in the payout, which will be made over the next several weeks, the trustee, James Giddens, said on Thursday.”

Keith Good