Farm Bill- Policy Issues
A news release yesterday from USDA indicated that, “The [USDA] announced today that farmers and ranchers can sign-up for disaster assistance programs, reestablished and strengthened by the 2014 Farm Bill, beginning Tuesday, April 15, 2014. Quick implementation of the programs has been a top priority for USDA.”
And Daniel Looker reported yesterday at Agriculture.com that, “Agriculture Secretary Tom Vilsack told members of North American Agricultural Journalists in Washington, DC, Monday that farmers should be able to begin comparing the farm bill’s new commodity programs this summer ‘so that producers will have a good three or four months to analyze and assess these programs to make the best possible decision for their particular operation.’
“Vilsack told Agriculture.com that he expects that farmers will be able to sign up for programs before the end of this calendar year.
“Vilsack said that online decision-making tools and materials for Extension educators should be available in a month or two.”
Also with respect to the new Farm Bill, David Blandford, a professor of agricultural and environmental economics at Penn State University, indicated recently at the International Centre for Trade and Sustainable Development Online that, “Crop insurance has become a much more prominent feature and the insurance concept has been extended to other areas, for example to milk production.
“For the 2014/15 crop year farmers will have a choice of being covered under two different commodity programmes. The first is the price loss coverage (PLC) scheme – essentially a deficiency payments programme – in which payments are made if crop prices fall below predetermined levels. The second is the agricultural risk coverage (ARC) scheme, which provides payments to farmers when revenues fall below a benchmark figure calculated using country or farm average yields. Producers have the option to update the area and yield of crops on their farms used in determining payments when they enroll in the scheme of their choice.
“Layered on top of these commodity provisions are a range of crop insurance options.”
Dr. Blandford pointed out that, “The shift towards an insurance-based approach in the new farm bill is the most striking feature of the legislation, but the provisions are far removed from those allowed under Annex 2 – the green box – of the WTO Agreement on Agriculture for government participation in income insurance and safety-net programmes.
“The small losses in revenue compensated through traditional crop insurance and new schemes such as SCO [Supplemental Coverage Option] and STAX [Stacked Income Protection Plan] mean that these do not qualify for the green box as being minimally distorting for production and trade. Consequently, subsidies provided under US safety-net programmes must be notified to the WTO under the aggregate measurement of support (AMS). With high commodity prices in recent years notified support under the product-specific category of the AMS has been relatively low. For their part, insurance subsidies have accounted for virtually all of the US$9 billion of support notified under the non-product-specific AMS category. But that is substantially less than 5 percent threshold of the total value of agricultural production which would require such support to be counted against the US total AMS commitment of US$19.1 billion.”
In other developments, a news release yesterday from the National Farmers Union (NFU) indicated that, “Last week [NFU] President Roger Johnson submitted testimony to the U.S. Senate Subcommittee on Agriculture Appropriations, outlining NFU’s priorities for Fiscal Year 2015 funding for agricultural programs.
“Johnson’s testimony reiterated NFU’s top appropriations priorities, as previously submitted to the U.S. House of Representatives. Three of NFU’s main requests are to reject legislative riders or targeted funding restrictions for Country-of-Origin Labeling (COOL), oppose legislative riders that would undermine the U.S. Department of Agriculture’s ability to write rules to provide greater fairness for livestock sellers and poultry growers, and fully fund 2014 Farm Bill energy programs at their maximum authorized levels.”
And with respect to nutrition issues, Michelle Healy reported yesterday at USA Today Online that, “Over a lifetime, the medical costs associated with childhood obesity total about $19,000 per child compared with those for a child of normal weight, a new analysis shows.
“The costs are about $12,900 per person for children of normal weight who become overweight or obese in adulthood, according to the analysis by researchers at the Duke Global Health Institute and Duke-NUS Graduate Medical School in Singapore and published online Monday in the journal Pediatrics.”
Also yesterday, DTN writer Cheryl Anderson reported (link requires subscription) that, “The implementation of a Food and Drug Administration plan to phase out use of antibiotics in livestock for food production is not expected to have serious financial implications for U.S. livestock producers.
“On Dec. 11, 2013, FDA announced implementation of the plan and asked the animal pharmaceutical industry to withdraw such drugs from production, as stated in its Guidance for Industry No. 213. In addition, FDA is requiring oversight by a veterinarian for use of antibiotics.”
The DTN article added that, “DTN Livestock Analyst John Harrington agreed the production impact of the new requirements will be minimal.”
“‘Using antibiotics for growth promotion is not as widespread as most people think,’ [Ron Phillips, vice president of legislative and public affairs for the Animal Health Institute] said. ‘They are much more widely used for therapeutic treatment, prevention and control.’”
“Harrington said the excessive, unnecessary use of antibiotics for humans plays a far bigger role in the creation of dangerous, antibiotic-resistant bacteria. He said Denmark completely banned the feeding of antibiotics to livestock more than 10 years ago, but has not seen any significant reduction in resistant bacteria,” the DTN article said.
Rep. John Conyers Jr. (D., Mich.) and Michael Shank indicated in a column yesterday at Roll Call Online that, “This year, food security is set to suffer another big setback, and the culprit could not be cuter: honeybees. Last winter, America’s beekeeping industry lost nearly half of all its bee colonies. And the numbers keep falling. Last summer, in the largest bee kill on record, more than 50,000 bumblebees were killed in Oregon as a direct result of exposure to an insecticide applied to trees for cosmetic purposes.”
The column added that, “Going forward, saving America’s pollinators must be an immediate priority for us. As Jeff Pettis of the USDA’s Agricultural Research Service Bee Research Laboratory noted in a congressional briefing recently, reducing pesticide use on bee-attractive crops and by homeowners would be a good start.
“Additionally, America should also follow Europe’s lead with a two-year ban on these insecticides. (Germany and Italy have banned them for several years already.) Legislation in Congress — introduced by Conyers and Rep. Earl Blumenauer, D-Ore. — would do this very thing, saving our honeybees, our food supply and America’s economic interdependence with these threatened pollinators.”
Environmental Protection Agency (EPA)-Biofuels, Clean Water Act
DTN Ag Policy Editor Chris Clayton reported yesterday (link requires subscription) that, “EPA will take into consideration increases in gasoline use when the agency finalizes changes to the Renewable Fuels Standard [RFS] later this spring or early summer, EPA Administrator Gina McCarthy said Monday.
“McCarthy and Agriculture Secretary Tom Vilsack each spoke Monday to members of the North American Agricultural Journalists. McCarthy’s discussion centered mainly on the proposed EPA rule setting the volume of renewable fuels for 2014 as well as the proposed rule redefining ‘waters of the U.S.’ subject to regulation under the Clean Water Act.”
Mr. Clayton noted that, “McCarthy told the ag reporters she understands why people are raising concerns about the RFS. The agency is now reviewing more than 200,000 comments on the proposed RFS rule. The goal is to issue the rule in late spring or early summer, she said. The ‘overarching goal’ of EPA’s rule is to ‘put the RFS on a manageable path forward,’ and ensures ‘realistic growth in renewable fuels,’ she said.”
The DTN article stated that, “McCarthy spent more time explaining EPA’s stance on its proposed rule to redefine ‘waters of the U.S.’ under the Clean Water Act. The rule’s intent is to clarify the types of waters requiring regulatory oversight. McCarthy said she believed the rule will provide more clarity ‘especially to the agricultural community.’
“‘Let me be clear that it is not a land grab,’ she said. ‘The Clean Water Act doesn’t regulate land use. What it does regulate is the quality and integrity of waters that are important to all of us.’
“The rule applies to ‘navigable waters’ but McCarthy notes that the rule goes upstream from those navigable waters ‘that could have a significant impact on the biological, chemical or physical integrity of navigable waters.’ That is what is guiding the development of the proposal, she said.”
Daniel Looker reported yesterday at Agriculture.com that, “The EPA’s new proposed rule for defining ‘waters of the U.S.’ does not mean the agency is regulating common farm practices, EPA Administrator Gina McCarthy said at the annual meeting of North American Agricultural Journalists in Washington, DC, Monday.
“McCarthy insisted that for most farming practices, the rule doesn’t change what farmers are already doing that is exempt from regulation under the Clean Water Act.”
In other news relating to biofuels, Reuters writer Ayesha Rascoe reported yesterday that, “Federal judges on Monday pressed the Obama administration to explain delays that have plagued its implementation of the U.S. biofuel mandate, as the government attempted to fend off an oil industry challenge to renewable fuel use targets.
“In a case before the U.S. Court of Appeals for Washington D.C., the American Petroleum Institute and the American Fuel and Petrochemical Manufacturers argued the 2013 biofuel use targets should be thrown out because the administration acted ‘arbitrarily and capriciously’ when it issued the targets nearly nine months after its legislative deadline.”
The article noted that, “‘At some point, don’t these deadlines mean something?’ Judge [Thomas] Griffith asked at the hearing.
“The ruling on the 2013 targets could have broad implications for the biofuel mandate going forward. The EPA’s final 2014 quotas are due out in June, about seven months behind schedule.
“The Renewable Fuel Standard requires increasing amounts of biofuels to be blended into U.S. gasoline and diesel supplies each year through 2022 and was designed at a time fuel demand was also expected to rise.”
And Vicki Needham,Bernie Becker and Erik Wasson reported yesterday at The Hill’s On the Money Blog that, “House Ways and Means Committee Chairman Dave Camp (R-Mich.), seeking to give tax reform one big last push before he heads for the exits, began his examination of a slew of expired and expiring on tax breaks on Tuesday.
“The Ways and Means panel will specifically look at the so-called tax extenders for business that Camp kept in the broad tax reform draft he released in February.”
Bob Stallman, the president of the American Farm Bureau Federation is one of the witnesses at today’s Ways and Means hearing.
The Hill update pointed out that, “Senate Finance Committee Chairman Ron Wyden (D-Ore.) has decided to take a more traditional path on the provisions, pushing legislation through his committee last week that would extend almost all of the expired incentives through 2015.”
DTN’s Chris Clayton noted last week 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…[F]or 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.”
Richard Volpe, an economist at USDA’s Economic Research Service (ERS), indicated yesterday in an Amber Waves (ERS) update that, “Recent retail food price increases of 6.1 percent in 2008 and 4.6 percent in 2011 put food prices in headlines and raised concerns about food price inflation. However, taking the long-term view, food price inflation has been falling, on average, over the past several decades. Since 2010, food prices have risen by an average of 2.1 percent a year. Adjusting for inflation, many consumer staple foods, including a large number of fruits and vegetables and bread, are cheaper today than they were 20 or 30 years ago.
“This 2.1-percent annual rise in retail food prices contrasts dramatically with the 1970s when the all-food Consumer Price Index (CPI) increased by an average of 8.1 percent per year, led by increases of 14.5 and 14.3 percent in 1973 and 1974. In the 1980s, the all-food CPI increased by an average of 4.6 percent per year—a steep reduction from the food price inflation of the 1970s. Throughout the 1990s and 2000s, the all-food CPI was comparatively stable, averaging between 2 and 3 percent inflation per year. Annual food price inflation has only exceeded 4.6 percent once since the end of the 1980s, in 2008 [related graph].”
Also yesterday, a news release from Sen. Al Franken (D., Minn.) indicated that, “[Sen. Franken] is pressing the U.S. Department of Agriculture (USDA) to quickly step up efforts to prevent further incidence of the fast-spreading Porcine Epidemic Diarrhea (PED) virus that has already killed millions of pigs in Minnesota and across the country, and to provide help to producers already hit by the disease.
“In a letter to Agriculture Secretary Tom Vilsack, Sen. Franken urged quick action by USDA to help producers detect PED in their herds and to develop countermeasures such as drugs and vaccines to battle the virus. He also pressed for USDA to provide relief to producers already hit by the virus and to work with other federal agencies who may be able to bring resources to effectively address the PED crisis.”
An update yesterday from USDA’s Radio News Service (“Will Hog Producers Get Compensated for P.E.D. Losses?”) noted that, “There are lots of unanswered questions about the P.E.D. virus situation. One of them is what could be done to help compensate producers for their losses from this virus?” To listen to the one-minute overview, which includes remarks from Sec. of Agriculture Tom Vilsack, just click here.
Purdue Agricultural Economist Chris Hurt indicated yesterday at the farmdoc daily blog (“Pork: PEDv Losses Not As Large As Expected”) that, “The headline for the last USDA Hogs and Pigs report could have been: ‘PEDv Losses Not as Large as Expected.’ A week later, spring and summer lean futures are down nearly $10 per hundredweight, or about eight percent.
“For the pork industry, the USDA’s March Hogs and Pigs report was the most anticipated in decades. The report was the first national comprehensive measure of baby pig losses over the past six months due to the PED virus and the harsh winter. USDA received data from 6,100 pork operations across the country that were randomly surveyed in early March. As such, it is the broadest measure of the losses from an unbiased source.
“Analysis of the report numbers suggests the nation’s baby pig death loss over the past six months was about five percent. In contrast, one widely circulated report from an investment firm had predicted an 11 percent loss for pigs coming to market in 2014, with peak losses exceeding 20 percent for late summer marketings.”
Dr. Hurt added that, “An additional contributor to fewer pigs per litter could have been the harsh winter weather. It is not possible to sort out how much of the lower rate is due to PEDv and how much is due to unusual weather.”
Bloomberg writer Aya Takada reported yesterday morning that, “The most deadly outbreak of a hog virus in 18 years in Japan is raising pork prices and may boost imports from the biggest buyer, supporting a record rally in Chicago…[T]he U.S., Canada, South Korea and Taiwan have also reported outbreaks. More than 5,000 cases have been reported in the U.S., according to the National Animal Health Laboratory Network. American pork production may drop by the most in three decades this year, Rabobank International estimates. Futures climbed 49 percent last quarter, the biggest rally in 15 years, as the virus threatened U.S. production.”
Separately, a news release yesterday from Rabobank indicated that, “Rabobank has published a new report on the global beef industry, forecasting continued strong market fundamentals and continued strong global demand led by the Chinese market.
“In the report, Rabobank’s Food & Agribusiness Research team says that beef market fundamentals remain positive, with prices driven up across the globe in Q1 2014 by firm demand as well as further tightening supply due to drought-induced herd retention in the U.S. and adverse weather conditions in Brazil and Australia – the three main beef exporters.”
James Hansen and Fred Gale, economists at USDA’s Economic Research Service (ERS), indicated yesterday in an Amber Waves (ERS) update that, “Each year, USDA prepares ten-year projections of global agricultural supply, demand, and trade. In each projection, China—with its large population, rapid economic growth, and anticipated dietary change—is a key component. Since at least the 1980s, agricultural analysts have anticipated that China’s dietary transition to a more meat-rich diet would have important impacts on world agricultural markets.
“The latest USDA projections again foresee dietary transition in China. Past projections overstated the pace of change, but there are signs of robust demand for meat and feed grains as China moves into a new stage of development [related graph].”
With respect to crops, Bloomberg writer Megan Durisin reported yesterday that, “Corn fell for the first time in three sessions in Chicago on the outlook for warmer weather that may boost planting in the U.S., the largest grower and exporter.”
Meanwhile, Chuin-Wei Yap reported today at The Wall Street Journal Online that, “China will allow large-scale imports of Brazilian corn, Chinese product-safety authorities said on Tuesday.
“The deal, signed by the General Administration of Quality Supervision, Inspection and Quarantine and its Brazilian counterpart on March 31, marks another step in Chinese efforts to diversify the suppliers of its corn imports, more than 90% of which currently comes from the U.S.”
And a news release yesterday from the National Pork Producers Council (NPPC) indicated that, “With U.S. Trade Representative Michael Froman in Japan this week and that country recently concluding a free trade agreement with Australia, the [NPPC] today again called on Japan to eliminate all tariff and non-tariff trade barriers for U.S. agricultural products as part of the ongoing Trans-Pacific Partnership (TPP) trade talks.”
A statement yesterday on the agreement between Japan and Australia, National Cattlemen’s Beef Association (NCBA) president Bob McCan noted in part that, “NCBA is deeply concerned that the Bilateral Trade Agreement between Japan and Australia does not call for full tariff elimination. This Bilateral Agreement undermines the long-standing goals and principles that are the base of the Trans-Pacific Partnership (TPP).”
Commodity Futures Trading Commission (CFTC)
A news release yesterday from the House Ag Committee indicated that, “Reps. Frank Lucas, Collin Peterson, K. Michael Conaway, and David Scott today introduced H.R. 4413, the Customer Protection and End-User Relief Act. This legislation is a bipartisan effort to reauthorize and improve the operations of the Commodity Futures Trading Commission (CFTC), as well as address concerns relating to protecting customers from another market failure such as MF Global and Peregrine Financial. It is the product of a multi-year process that included hearing perspectives from market participants, end-users, futures customers, and the CFTC.”
The release added that, “The text of the bill can be found here. A summary of the legislation can be found here. The House Agriculture Committee will consider the legislation during a business meeting scheduled for Wednesday, April 9 at 10 am ET.”