FarmPolicy

January 29, 2020

Farm Bill- Policy Issues; Ag Economy; Regs; Biofuels; and, Transportation

Farm Bill- Policy Issues: Nutrition, Title I

Earlier this week on The Rachel Maddow Show (MSNBC- television), Secretary of Agriculture Tom Vilsack was asked about the minimum wage and noted that, “When you raise the minimum wage, you raise wages for 28 million Americans. About 50 percent of those Americans make less than $35,000 a year. A substantial percentage of those folks live in rural communities that I care deeply about. You raise those wages, you are absolutely going to move people out of the need for SNAP or as much SNAP as they`ve been currently receiving, the food stamps.”

Elaborating on the SNAP program, Sec. Vilsack noted that, “[B]ecause the recent farm bill, there was a conversation about potentially reducing food stamps by $40 billion. That didn`t go anywhere and it ended up being a very small reduction and many governors around the country are figuring out ways to even avoid that reduction…[S]ixty-six percent of people receiving food stamps are one of three types of individual. You`re either a child, a person with a disability, or a senior citizen. Add the 7 percent that are veterans, and you have nearly three quarters of the people receiving food stamps, not any politician is going to want to cut support for children, for senior citizens, for people with disabilities and veterans.

And then when you realized that 42 percent of food stamp recipient families are earning some kind of wage, that only 8 percent of all food stamp recipients are receiving cash welfare, this is really about the working poor. That`s why raising the minimum wage will help move people out of SNAP and out of dependence on that food assistance program.”

And in a discussion on Wednesday at the Council on Foreign Relations, Sec. Vilack pointed out that, “[In] 1996, hardly anybody receiving food assistance was actually working. They were primarily on cash welfare, they were senior citizens, or people with disabilities.”

Sec. Vilsack added that, “Today, 42 percent of the households receiving SNAP have at least one person working. And those that aren’t working could very well be senior citizens or people with serious disabilities or children, and therefore, not likely to be able to work. In fact, two-thirds of all recipients are disabilities, senior citizens, or children.

“So we’ve seen a significant change of who it is who receives SNAP, so that today only eight percent of SNAP beneficiaries are receiving cash welfare. On 8 percent-92 percent are not. At the same time, the number of people in the SNAP program today who have no gross income and no net income has doubled.

“So you’ve got a situation where people are requiring SNAP because they are in the workforce and not making a lot. And you’ve got people that have been looking for work for a long time and don’t have any income at all who require help. And that’s one of the reasons why you’ve seen numbers increase.”

Also on SNAP participation, Sec. Vilsack noted that, “And the other reason you’ve seen numbers increase is because there’s been a concerted effort to reach out to people who have historically qualified for SNAP, but who have never received the benefits of the program because states have not done as good a job of reaching out to them and making sure that people are aware of the program.”

Sec. Vilsack was asked, “So what percentage of Americans were eligible to receive food stamps actually received them?”

The former Iowa governor noted that, “Today it’s roughly, almost 80 percent. When I became Secretary, it was about 72 percent. In 2002, it was just a shade over 50 percent. So there has been an increase in the numbers primarily because we’ve done a better job of reaching out to people historically of — always been qualified for the program, but never accessed the program because they didn’t know about it.

“And three states stand out in particular — when I became Secretary — Florida, Texas, and California all were underperforming in terms of participation in the program and we’ve had major efforts in all three of those states. And that has driven the numbers up.”

Also on the nutrition issue, a news release yesterday from Sen. Al Franken (D., Minn.) stated that, “On Thursday, Sen. Franken—a member of the Senate Education Committee—introduced the Expand School Meals Act, which would help to expand eligibility for free school meals to students who are currently offered reduced-price meals. Similar to other school nutrition proposals, this policy would be phased in over several years, starting by supporting states that are already offering more kids free meals.”

In other Farm Bill news, an update yesterday at the farmdoc daily blog by Ohio State University agricultural economist Carl Zulauf (“State Distribution of Direct vs. Net Crop Insurance Payments, 2004-2013”) indicated that, “The 2014 farm bill replaced direct payments with risk management programs.  Moreover, a key farm safety net policy and political factor is the distribution of program payments by stateThis post therefore examines the distribution by state of direct payments and net crop insurance payments for the 2004-2013 crops.”

The farmdoc update added that, “The 5 states with the largest share of direct payments over the 2004-2013 crops were Iowa (9.9%), Illinois (8.8%), Texas (7.9%), Kansas (6.5%), and Nebraska (6.5%).  In comparison, the 5 states with the largest share of net crop insurance payments were Texas (16.7%), North Dakota (8.5%), Kansas (8.4%), Iowa (7.9%), and Illinois (7.5%).  While 4 states appear in both lists, their shares differ, notably for Texas.

“A similar picture emerges when all states are examinedFor 32 of 49 states (Alaska was not included), the crop insurance share was within plus or minus one percentage point of the direct payment share.  Hence, for these states, the share of payment did not differ by much for direct and net crop insurance payments.  Eleven states had a difference of 1.5 or more percentage points (a ‘+’ sign means insurance share exceeded direct payment share):  Texas (+8.8%), North Dakota (+4.1%), South Dakota (+3.3%), Kansas (+1.9%), California (-1.8%), Louisiana (-1.9%), Iowa (-2.0%), Ohio (-2.1%), Minnesota (-2.9%), Nebraska (-3.0%), and Arkansas (-3.8%).  These differences may be large enough to be a potentially meaningful shift in the distribution of payments by state, provided the future distribution of net crop insurance payments is similar to the 2004-2013 distribution.”

Tim Devaney reported yesterday at The Hill’s RegWatch Blog that, “Friday’s edition of the Federal Register contains new rules;” the update added that, “The U.S. Department of Agriculture is looking to expand insurance coverage for pear producers, while at the same time reducing the program’s vulnerability to fraud.

“The USDA’s Federal Crop Insurance Corporation announced the proposed changes Thursday, which would go into effect during the 2015 crop year.

“‘Currently, pears that are knocked down to the ground by wind, or that are frozen and cannot be packed or marketed as fresh pears are considered culls,’ the agency wrote in the Federal Register. ‘The proposed quality endorsement will include all insured causes of loss, therefore, damage caused by wind or freeze will be covered.’”

 

Agricultural Economy- TPP (Japan), China, U.S. Drought

In his remarks earlier this week at the Council on Foreign Relations, Sec. Vilsack also discussed trade issues and pointed out that, “On the Trans-Pacific Partnership side, it is about access — market access. And the Japanese have a multitude of lines of tariffs in terms of market access to basic commodities and then products that are made from basic commodities. And they have a very powerful farming and agricultural interest in that country, which every government needs to be concerned about protecting.

So they’ve taken a very hard line on market access. It makes it very difficult for us to enter into an agreement with the Japanese on all other issues if they continue to take a hard line on market access. The discussion and recent decision they made to have a separate agreement from Australia on beef, for example, suggests how difficult this is going to be because their tariff reduction for Australia was not all that significant, at least from our perspective.”

Sec. Vilsack added that, “So there is a possibility that we have an agreement. We have a possibility that there’s no agreement. There’s a possibility that we have an agreement but Japan is not part of it. And only time will tell which of those alternatives ultimately occur. But I would concur with you — bottom-line, it would be better for us to have a good agreement than no agreement. But it would be better for us to have no agreement than a bad agreement.”

Meanwhile, an update yesterday at the International Centre for Trade and Sustainable Development reported that, “Japan has increased its trade-distorting support to farmers, according to new figures for 2010-2012 that the country has reported to the WTO.”

Yesterday’s update noted that, “Japan has traditionally been hesitant to liberalise its agricultural sector, which has created friction during the 12-country Trans-Pacific Partnership talks. The US has been one of the most vocal advocates for increased agricultural market access in countries such as Japan, and many trade observers say this issue is the biggest hurdle for concluding the negotiations.”

Jonathan Soble reported yesterday at The Financial Times Online that, “An impasse between the US and Japan over import tariffs means Barack Obama’s visit to Tokyo this month looks unlikely to yield the prize that some had hoped for: the key to uniting a dozen Pacific Rim economies in one trade zone.

Michael Froman, the US trade representative, left Tokyo on Thursday after two days of talks that failed to bridge what both sides described as significant disagreements over trade barriers, in particular Japanese import duties on agricultural products.”

The FT article noted that, “US negotiators appear resigned to Japan keeping some barriers on imports to rice, the most sensitive and protected of its agricultural products. But they have taken a tougher line on the other ‘sacred’ items – in part, they suggest, because powerful US farmers would kill any deal that did not give them much freer access to Japanese markets.”

Mitsuru Obe reported in today’s Wall Street Journal that, “Japan wants to protect its own farm products, including rice and beef, while the U.S. is demanding full access for its agricultural goods. At the same time, the U.S. is reluctant to cut tariffs on Japanese vehicles.”

The Journal article added that, “Further clouding the outlook is uncertainty over whether Mr. Obama will be able to gain ‘fast-track’ authority from Congress, which would enable the administration to conclude the trade talks swiftly and prevent Congress from inserting amendments. Senator Rob Portman (R., Ohio), who served as U.S. trade representative under former President George W. Bush, said he has heard from Japanese officials in Washington that Japan is reluctant to make big concessions without the fast-track legislation because of concerns that Congress could end up asking for more later.”

In other developments, Reuters writers Naveen Thukral and Niu Shuping reported yesterday that, “Chinese importers have defaulted on at least 500,000 tonnes of U.S. and Brazilian soybean cargoes worth around $300 million, the biggest in a decade, as buyers struggle to get credit amid losses in processing beans.

“Three companies in the eastern province of Shandong had defaulted on payments for shipments as they were unable to open letters of credit with banks, trade sources said on Thursday.”

Lucy Hornby reported yesterday at The Financial Times Online that, “A glut of soy in China due to severe outbreaks of bird flu is likely to reduce demand for imports this summer from the world’s largest consumer, with reports of defaults on some cargoes already rattling markets.

“China’s imports of soy, an important source of poultry and livestock feed, surged 33 per cent in the first quarter to 15.35m tonnes, customs data showed on Thursday.”

The FT article noted that, “Coupled with unexpectedly weak demand as bird flu outbreaks destroyed poultry flocks in Shandong, Zhejiang and other provinces, China is now sitting on excess stocks of soy. Weak soy meal prices put stress on soy crushers. At current spot prices, a crusher processing soybeans into cooking oil and soy meal would lose about $100 for each tonne processed.”

Meanwhile, Prudence Ho reported yesterday at The Wall Street Journal Online that, “The Chinese pork producer that bought Smithfield Foods Inc. in a landmark deal is planning to raise up to $5.3 billion from its Hong Kong initial public offering, according to a term sheet seen by Wall Street Journal Thursday, in what could be the world’s biggest IPO in a year.

“The management of the company and bankers firmed up the deal structure for WH Group, formerly known as Shuanghui International Holdings, early Thursday morning. The pork firm is selling 3.66 billion shares, of which 20% are current shares from existing shareholders, in an indicative price range of 8-11.25 Hong Kong dollars each, it said in the term sheet.”

And in the U.S., Tom Lutey reported yesterday at the Billings Gazette (Montana) Online that, “Two Montana pig farms have been hit by a deadly virus that has killed millions of piglets nationally in less than a year.”

And an update this week at the U.S. Drought Monitor noted that, “Even with the delayed spring, the departures from normal precipitation for the year are starting to reach 4 inches below normal from southern South Dakota into eastern Nebraska as well as eastern and central Kansas. Drought conditions were expanded in southeast Nebraska so that D1 now includes the entire region. In South Dakota, D0 was expanded into the southern portions of the state and including all of north central Nebraska as well [related graph].”

A news release yesterday from Sen. Dianne Feinstein (D., Calif.) indicated that, “On February 11, [Sen. Feinstein] introduced the California Emergency Drought Relief Act with Senators Barbara Boxer, Jeff Merkley and Ron Wyden. The bill included provisions to help farmers, businesses and communities suffering from devastating drought conditions.

“In order to address Republican concerns, on April 1 a revised, bipartisan bill was introduced that removed direct spending from the bill and included provisions to help other Western states.”

Sen. Feinstein indicated that, “Any drought bill will require 60 votes to move through the Senate. Since the bill was first introduced in February, my staff has worked around the clock to find five Republicans votes necessary to reach that number. We are very close to 60, but we’re not there yet.”

Eric Morath reported yesterday at The Wall Street Journal Online that, “A drought in California and other parts of the U.S. has curtailed crop production.

“‘The drought may well drive up produce and milk prices in the U.S.,’ said Ricky Volpe, an Agriculture Department economist. ‘A very typical response is to see import prices rise.’

“The gain could be a leading indicator of escalating prices at grocery stores, he said.”

 

Regulations- GMO Labeling, Livestock Emissions

Reps. Mike Pompeo (R-Kan.) and G.K. Butterfield (D-N.C.) indicated in a column this week (“Keeping America’s food supply safe”) at The Hill Online that, “Every major health organization has determined GMOs have no health effects. Italian scientists recently reviewed nearly 2,000 different studies of GMOs — failing to find a single credible study indicating that GMOs are unsafe or different from foods grown without this technology.

“That hasn’t stopped opponents of GMOs, who have undertaken efforts in some states to use labeling laws as a way to malign your food and make life harder for farmers. These efforts are irresponsible, ill-informed, and would impact our ability to grow safe, affordable food for America’s families.”

Reps. Pompeo and Butterfield introduced legislation this week that “would nullify efforts in multiple states to require labeling of genetically modified foods.”

Also yesterday, a news release from Sen. Mike Johanns (R., Neb.) stated that, “U.S. Sens. [Johanns] and Deb Fischer (R-Neb) and several of their Republican colleagues today called on the Department of Agriculture (USDA), Department of Energy (DOE) and the Environmental Protection Agency (EPA) to stop pursuing regulations on livestock emissions. If enacted, the new regulations could cost medium-sized dairy farms up to $22,000 and medium-sized cattle farms up to $27,000 annually.”

The release noted that, “On March 28, 2014, the President released his Climate Action Plan ‘Strategy to Reduce Methane Emissions.’ The proposal calls on the USDA, DOE, and EPA to develop a plan in the coming weeks that would reduce dairy sector methane greenhouse gas (GHG) emissions by 25 percent by 2020. If this plan leads to heavy-handed regulations or mandatory guidelines, farmers and ranchers would likely face a steep increase in production costs. Currently, EPA is prevented from regulating GHG emissions associated with livestock production through an annual appropriations rider that expires at the end of each fiscal year.”

 

Biofuels

Timothy Cama reported yesterday at The Hill’s Energy Blog that, “Rep. Peter Welch (D-Vt.) urged his colleagues to remove a corn-based ethanol mandate from the Renewable Fuel Standard (RFS), saying the mandate hurts a diverse range of people and businesses including farmers, small engine users and restaurants.”

 

Transportation

Reuters writer Rod Nickel reported yesterday that, “Three Canadian grain handlers said this week that they will expand facilities to handle the country’s crops, after a record-smashing harvest overwhelmed the transportation system.”

And a news release yesterday from the American Soybean Association (ASA) noted that, “The [ASA] emphasized the importance of addressing rail service issues and their negative impacts on soybean growers, at a public hearing before the Surface Transportation Board on Thursday.”

An update yesterday from the National Farmers Union (NFU) indicated that, “Today [NFU] President Roger Johnson testified before the U.S. Surface Transportation Board (STB) at a public hearing on service problems in the U.S. rail network. South Dakota Farmers Union member DuWayne Bosse is also scheduled to testify, and Montana Farmers Union and North Dakota Farmers Union submitted written testimony to the STB.”

And a news update yesterday from Sen. John Thune (R., S.D.) stated that, “Following the increased number of South Dakota shippers experiencing significantly reduced rail service, [Sen. Thune], Ranking Member of the Senate Committee on Commerce, Science, and Transportation and a member of the Senate Agriculture Committee, today delivered remarks at a hearing before the Surface Transportation Board (STB) regarding the impact the disruptions in rail service have had on South Dakota farmers, ethanol producers, and other small business owners who relying on rail service.”

Keith Good

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