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Agriculture Appropriations; Drought Legislation; Regulations; and, Food Prices

Agriculture Appropriations, Farm Bill 

The House Appropriations Committee will meet on Thursday this week to markup the FY 2015 Agriculture Appropriations Bill.

Last week the House Agriculture Appropriations Subcommittee approved spending language that “would require the Agriculture Department to waive requirements to serve fruits, vegetables and low-sodium and low-fat foods for schools that can show their lunch programs are losing money” (The Hill, “House panel cuts school nutrition standards.”).

And recall that last Thursday, the Senate Appropriations Committee adopted fiscal year 2015 spending allocations for Agriculture.

David Rogers reported last week at Politico that, “[T]he [Sen. Appropriations] committee also opted for compromise and gave Agriculture Secretary Tom Vilsack some flexibility in addressing complaints from school districts regarding the level of whole-grain foods they must include in lunch and breakfast meals.”

Christopher Doering reported in Friday’s Des Moines Register that, “U.S. Secretary of Agriculture Tom Vilsack lashed out Thursday against critics seeking to weaken the country’s nutrition standards for school lunches, arguing that changes to the successful program would harm millions of students who depend on the meals.”

The Register article indicated that, “‘I don’t believe that politics and politicians should trump good policy and policy that’s established by experts when it comes to the future of our children. We intend to continue to aggressively promote and implement the Healthy, Hunger-Free Kids Act,’ Vilsack told reporters. The law, which led to the new guidelines, was passed in 2010.”

Mr. Doeing explained that, “The House Appropriations Committee is considering legislation that would allow schools demonstrating an economic hardship to seek a temporary waiver from compliance with certain nutrition regulations during the 2014-15 school year.

“The Senate Appropriations Committee responded Thursday with an approach seen by supporters of the meal programs as more reasonable. An amendment included in the bill from Sen. Tom Harkin of Iowa, a Democrat, would enable USDA to delay new, lower sodium standards if it determined that science does not support a reduction.”

In addition, Amie Parnes reported on Saturday at The Hill Online that, “First lady Michelle Obama is more aggressively wading into policy fights while expanding her portfolio.”

The Hill article explained that, “[Mrs. Obama] also made a rare foray into Capitol Hill politics earlier this week when House Republicans threatened to rollback the school lunch programs she fought hard to implement. The first lady promptly held a conference call to rally supporters against the spending bill that would allow schools to opt out of tougher nutrition standards in school meal programs.

“While senior administration officials say the first lady is not expected to head to the Hill and meet with lawmakers to discuss the nutrition standards, she will be taking up the battle in her own way.”

The article added that, “‘You’ll see a sustained level of engagement,’ one senior administration official said, adding that the White House will find creative and unique ways to push their strategy. ‘She’ll continue to bring this message to where the parents and kids are.’

On Tuesday, for example, Obama will participate in a discussion the school leaders and experts on school nutrition. As part of the talk, Obama will ‘stress the importance of students, parents, school officials, community leaders, and health advocates’ to help ‘protect and advance’ the progress that has been made in schools across the country, according to the White House.”

In an opinion item posted on Friday at Roll Call Online, Major Gen. Tracy Strevey Jr., stated that, “Four years ago, hundreds of retired admirals and generals formed a united front on the war against childhood obesity in support of the bipartisan Healthy, Hunger-Free Kids Act. As a result of that legislation, more than 90 percent of the nation’s school districts are successfully implementing nutrition standards that ensure students are offered appealing, nourishing school lunches.

“Unfortunately, we are now at a critical crossroads. Depending on what happens in the next few months, this effort will either stay on track for the good of students nationwide, or be derailed to satisfy special interests.”

In other policy news, the “Washington Insider” section of DTN reported on Friday (link requires subscription) that, “U.S. and Brazilian officials met yesterday in Washington and will continue today in what is being described as a last effort to resolve a long-running dispute over U.S. cotton subsidies, and concerns among some Brazilian government and cotton industry officials about the 2014 U.S. farm bill.

“U.S. officials claim that changes to the cotton program have resolved a World Trade Organization ruling that affirmed the illegality of some previous U.S. cotton program provisions. However, Brazilian cotton growers argue that new crop insurance provisions (STAX) actually are more trade-distortive than the direct payments that the new farm bill rescinded.”

The DTN update noted that, “Brazil reportedly is weighing whether to request a WTO compliance panel, as soon as next month to rule on its view of the farm bill. But sources say most Brazilian government officials want to settle this matter, perhaps through a payoff…[W]hether the problem will be resolved during the current round of meetings remains to be seen. But the fact that the two sides are still talking and not making incendiary public statements are good signs that an end may be in sight.”

 

Drought Legislation

Carolyn Lochhead reported on Friday at the Politics Blog (San Francisco Chronicle) that, “Sen. Dianne Feinstein’s 16-page drought bill passed the Senate by unanimous consent Thursday night, a remarkable political feat for California’s senior Senator. There was no committee hearing, public review or Senate floor debate. It was the product instead of months of closed-door negotiations with various interests, including House Republicans, who passed a drought bill in February that would override environmental laws, Bay Area Democrats, who voiced their concerns, and various stakeholders including farm groups.

“Feinstein told us last week that environmental groups ‘have never been helpful to me in producing good water policy.’

“Feinstein secured the assent of the leaders of the Senate Energy and Natural Resources Committee, which would have had jurisdiction: chairwoman Mary Landrieu, D-LA, and ranking Republican Lisa Murkowski, R-AK.”

In a press release on Thursday, Sen. Feinstein indicated that, “The next step is working with the House to determine what measures we can agree on to improve water supplies. My hope is that this process can proceed quickly and bypass many of the controversial issues that have been raised in the past. While we do need long-term solutions to the state’s water problems, the bill the Senate passed today authorizes immediate actions to help California, and I think that’s what we must focus on and reach agreement quickly.”

The news release noted that, “The Emergency Drought Relief Act is a narrowly-focused bill to address the most dire effects of drought in California. The bill leaves federal laws and regulations untouched—including the Endangered Species Act, the Clean Water Act and all biological opinions. Its goal is to cut red tape and increase operational flexibility for federal agencies.”

Meanwhile, Rep. Tom McClintock (R., Calif.) noted in a column in Saturday’s Wall Street Journal that, “Unrealistic laws like the Endangered Species Act administered by ideologically driven officials have now crossed from good intentions to dangerous policy, and the folly cries out for fundamental reforms.

“The House twice has passed such reforms, most recently in February. HR 3964 would pave the way for hundreds of thousands of acre feet of new water storage across California and promote fish hatcheries and predator control as simple and inexpensive alternatives to protect endangered species. Sadly, it remains bottled up in the Senate.

An administration that has never been shy about asserting executive powers has the authority to stop these releases through provisions in the Endangered Species Act that allow a committee of officials to suspend them. It has failed to do so.”

 

Regulations

A news release on Friday from Sen. Mike Johanns (R., Neb.) stated that, “[Sen. Johanns] today continued his work to stop the Environmental Protect Agency’s (EPA) attempts to expand their regulatory authority, particularly in agriculture sectors, without proper Congressional authorization.

Johanns and other Republicans on the Senate Agriculture Committee wrote EPA Administrator Gina McCarthy seeking answers on a wide assortment of environmental regulations planned by the Obama administration. He also sponsored several pieces of legislation designed to create more transparency and accountability at EPA, as well as lessen the economic impact of agency rules.”

Benjamin Goad reported on Friday at The Hill Online that, “A group of House Republicans accused the Environmental Protection Agency on Friday of shirking its responsibility to assess the economic impacts of proposed regulations that would expand federal oversight of smaller bodies of water.

GOP members of the House Small Business Committee, led by Chairman Sam Graves (Mo.), sent a letter to EPA Administrator Gina McCarthy, urging the agency to rescind the regulation until more analysis is completed.”

Also, Feedstuffs reported late last week that, “President Obama signed a proclamation designating a new monument in southern New Mexico that will cover nearly a half-million acres, the largest monument designation President Obama has made to date.

“The National Cattlemen’s Beef Association opposes the decision. Contrary to the White House’s claim of ranchers support, the designation encompasses 68% of public grazing lands and 9,000 head of cattle in Dona Ana County, threatening the livelihood of these family ranching operations.”

And in a separate Hill article on Friday, Benjamin Goad reported that, “The White House unveiled its semiannual regulatory agenda Friday, detailing its plans for thousands of rules in the pipeline at agencies across the federal government.

“The release is the fourth consecutive time that the Obama administration has issued its regulatory roadmap on the eve of a major federal holiday, as many Americans depart for long weekends and there is typically less media coverage.

“Formally known as the Unified Agenda, the document is an agency-by-agency list of rules in the works at some 60 departments and offices.”

The Hill article added that, “A cursory look revealed no major surprises. Regulations often take years to enact and most of the rules contained on the list have appeared on multiple editions.

“For instance, the June deadline for the Environmental Protection Agency’s proposal of regulations limiting greenhouse gas emissions remains in place, as does as a much-maligned Agriculture Department regulation allowing poultry plants to speed up production lines.”

 

Food Prices

Reuters writer Ros Krasny reported on Friday that, “The Department of Agriculture has warned of sticker shock facing home chefs on the eve of the Memorial Day holiday weekend, the unofficial start of the U.S. summer grilling season.

“The agency said conditions in California could have ‘large and lasting effects on U.S. fruit, vegetable, dairy and egg prices,’ as the most populous U.S. state struggles through what officials are calling a catastrophic drought.

“The consumer price index (CPI) for U.S. beef and veal is up almost 10 percent so far in 2014, reflecting the fastest increase in retail beef prices since the end of 2003. Prices, even after adjusting for inflation, are at record highs.”

More specifically, the USDA’s Economic Research Service (ERS) indicated on Friday that, “The food, food-at-home, and food-away-from-home CPIs are expected to increase 2.5 to 3.5 percent over 2013 levels. This forecast is based on an assumption of normal weather conditions; however, severe weather events could potentially drive up food prices beyond the current forecasts. In particular, the ongoing drought in California could potentially have large and lasting effects on fruit, vegetable, dairy, and egg prices, and drought conditions in Texas and Oklahoma could drive beef prices up even further.”

ERS added that, “Beef and veal prices increased 3 percent from March to April, following a 1.9-percent increase in March and a 4-percent increase in February. The beef and veal CPI is up 11.1 percent since April 2013 and has increased nearly 10 percent thus far in 2014.”

“The CPI for pork increased 3.2 percent in April, the biggest monthly increase since June 1996. Pork prices are up 9.4 percent since 1 year ago. Pork exports have increased, and domestic demand for pork is also up due to record-high beef prices and consumer perceptions of pork as a close substitute for beef. The Porcine Epidemic Diarrhea Virus (PEDV) has destroyed a small percentage of hogs in the U.S. at the time of this update. However, PEDV—a significant source of risk for hog ranchers—is likely to be driving producers to reduce their herd numbers to reduce costs and minimize losses in the event of widespread PEDV. ERS now forecasts pork prices to increase 3 to 4 percent in 2014.”

ERS also noted that, “The dairy CPI increased 0.5 percent last month and is up 2.8 percent from this time last year. While milk price inflation slowed somewhat in April, milk prices have risen significantly over the past six months, and inflation has now picked up for many prices in the dairy category, particularly cheese.”

Jacob Bunge and Kelsey Gee reported on the front page of Saturday’s Wall Street Journal that, “Surging U.S. beef prices are helping to revive a meat product that all but disappeared two years ago.

Finely textured beef, dubbed ‘pink slime’ by critics, is mounting a comeback as retailers seek cheaper trimmings to include in hamburger meat and processors find new products to put it in.”

The Journal article added that, “The resurgence is being driven, in part, by an aversion to something many consumers and companies find even less pleasant than the pink-slime nickname: red-hot prices. Prolonged drought in the southern Great Plains has shrunk U.S. cattle supplies to historic lows. The retail price of ground beef soared 27% in the two years through April to a record $3.808 a pound, according to the U.S. Bureau of Labor Statistics.

“That means serious sticker shock for U.S. consumers preparing to fire up their barbecues for Memorial Day weekend—the traditional start to the summer grilling season. The week leading up to the Monday holiday is typically one of the biggest sales periods for ground beef, with an estimated 160 million pounds likely to be sold during that stretch this year, according to CattleFax, a Colorado-based research firm.”

For more information on food prices, see this one-minute FarmPolicy.com video overview from earlier this month.

Keith Good