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House Ag Hearing; Appropriations; Farm Bill; Ag Economy; CFTC; and, RFS

House Ag Subcommittee Hearing– Impact of EPA Water Rule on Agricultural Producers

DTN Ag Policy Editor Chris Clayton reported yesterday that, “The controversial waters of the United States rule continues to reflect a lack of clarity when it comes to agricultural exemptions and the relationship USDA will play in helping producers avoid needing permits and other regulatory demands.

Robert Bonnie, USDA’s undersecretary for Natural Resources and Environment, testified Thursday before the House Agriculture Subcommittee on Conservation, Energy and Forestry in a contentious hearing in which House members from both parties criticized the perceived federal ‘land grab.’”

Mr. Clayton pointed out that, “The hearing came as legislation was introduced by 30 Republican senators on Thursday specifically to block EPA and the Army Corps from finalizing the water of the U.S. rule.”

The DTN article stated that, “House Ag Committee Ranking Member Collin Peterson, D-Minn., questioned why all conservation practices were not listed. Some practices such as water drainage management were not among those 56 exempted practices. ‘That’s going backwards from what we are doing now,’ Peterson said.

“Further, Peterson said the Army Corps of Engineers already ‘has gone off the reservation’ by telling people that virtually all waters in the Prairie Pothole region will be regulated so federal agencies can restore wetlands. Peterson added there already seems to be differences in the way different Corps offices will interpret the proposed rules [Related audio clip (MP3- 1:51)].

“‘That dog doesn’t hunt,’ Peterson said. ‘I just don’t see where we are going with this.’” [Related audio clip (MP3- 1:09)].

Yesterday’s update added that, “Bonnie noted the issue of defining waters of the U.S. has always been a concern to agriculture. ‘We do think what we have done here is increase the number of exemptions on a voluntary basis using conservation practices that are very popular with landowners,’ Bonnie said. He added, ‘We hope this will be seen as an opportunity for agriculture.’”

Jacqui Fatka reported yesterday at Feedstuffs Online that, “Members of agricultural groups as well as members of the House Agriculture Committee came to the conclusion during a hearing June 19 on the interpretive rule that what was intended to provide clarity for farmers could in fact increase the risk of litigation, create more confusion for farmers, cause a disincentive for implementing conservation practices and could erode the valued relationship that currently exists between farmers and NRCS officials.”

Also at yesterday’s hearing, Rep. Kristi Noem (R., S.D.) indicated that, “If this rule provides that kind of certainty for the agriculture industry, I am baffled, because none of the agriculture industry wants this. Nobody is in favor of it.” (Related audio clip (MP3- 1:34)).

And Rep. Kurt Schrader (D., Ore.) noted that, “With all due respect Mr. Bonnie this is a nightmare. This is probably one of the worst, egregious examples of government overreach I have ever seen in my lifetime.” (Related audio clip (MP3- 4:30)).

A news release yesterday from the American Farm Bureau Federation (AFBF) stated that, “A new Environmental Protection Agency rule will illegally expand EPA jurisdiction to millions of acres of once-unregulated farm land, exposing farmers to fines and penalties for ordinary farming activities, the [AFBF] told Congress today.”

And an update yesterday from the National Cattlemen’s Beef Association noted that, “Coupled with the proposed rule expanding the jurisdictional reach of the EPA and the Corps under the Clean Water Act, the interpretive rule will increase liability for farmers and ranchers.”


Appropriations Issues

Niels Lesniewski reported yesterday at Roll Call Online that, “The Senate’s appropriations process seemed to fall apart Thursday afternoon as the first fiscal 2015 ‘minibus’ found itself with flat tires.

“Senate Majority Leader Harry Reid, D-Nev., and Minority Leader Mitch McConnell, R-Ky., had one of their all-too-familiar floor exchanges Thursday afternoon, during which Reid proposed an agreement to take up the three-bill spending package with an amendment process that would require 60 votes for amendments to be adopted.”

Ramsey Cox reported yesterday at The Hill Online that, “Senate leaders could not agree Thursday on an amendment process to a “minibus” spending bill that aims to fund parts of the government after September.

“Senate Majority Leader Harry Reid (D-Nev.) tried to get unanimous consent to hold votes on germane amendments to the three appropriations bills as long as passage was held to a 60-vote threshold.”

The Hill update explained that, “The Senate is now officially considering H.R. 4660, a $120 billion ‘minibus’ spending bill that funds the departments of Agriculture, Commerce, Justice, Transportation and Housing and Urban Development. But it seems unlikely that progress will be made on the legislation until an amendment process agreement is reached.”

Meanwhile, Lenny Bernstein reported earlier this week at The Washington Post Online that, “First lady Michelle Obama vowed again Wednesday to fight attempts to delay enforcement of school lunch nutrition standards, expressing surprise and regret at proposals in Congress that would allow some school districts to seek waivers from requirements that they offer more healthful fare.

“‘I find myself surprised that we’re here,’ Obama told a handful of health and medical reporters in her office, ‘because just a few years ago, everybody was around the table celebrating this victory, that school nutrition standards had been improved for the first time in 30 years. And everyone was on board.’”

And House Appropriations Ag Subcommittee ranking member Sam Farr (D., Calif.) tweeted yesterday that, “91% of schools are meeting the new, healthier school lunch requirements. Don’t let House Republicans undo that progress. ‪#SaveSchoolLunch

Betti Wiggins, the executive director of the Detroit Public Schools Office of School Nutrition, indicated in a recent column at The Detroit News Online that, “The 2010 Healthy, Hunger-Free Kids Act is about far more than the simplistic partisan framing offered by news outlets. The school lunch reforms represent a solid value proposition for the nation. As leaders responsible for the well being of children, whether we are parents, in Congress, school nutrition officers, in food business or at USDA, we must steal our focus away from the process of change to instead emphasize the positive outcomes enabled by the new policies.”


Farm Bill

A news release yesterday from Rep. Rosa DeLauro (D., Conn.) indicated that, “Today, U.S. Representatives [DeLauro] and Matt Cartwright (PA-17) introduced the Vegetables Are Really Important Eating Tools for You (VARIETY) Act in order to expand the Healthy Incentives Pilot (HIP) to the entirety of the Supplemental Nutrition Assistance Program (SNAP).”

In addition, Ohio State University agricultural economist Carl Zulauf noted yesterday at the farmdoc daily blog (“2014 Farm Bill: Overlap between PLC and Crop Insurance”) that, “This article addresses the potential for overlap that can exist between crop insurance and the Price Loss Coverage (PLC) program option in the 2014 farm bill. To provide perspective, the historical overlap that existed between target prices and crop insurance prices from 1974 through 2006 is examined. The article ends with summary observations including implications for policy and the upcoming farm program decision by farmers.”

An update yesterday at the National Sustainable Agriculture Coalition blog stated that, “The U.S. Department of Agriculture (USDA) has released a new report updating Congress on USDA’s Risk Management Agency (RMA) progress towards completion of organic price elections for all insurable organic crops.  USDA has improved crop insurance offerings for organic farmers, but report makes it clear there is still a lot more work to do.”

Meanwhile, Claire Delpeuch, Antoine Leblois and Ben Shepherd indicated yesterday at The Guardian Online that, “The US is hooked on cotton subsidies. Although the most recent farm bill seeks to bring them into line with world trade rules following a lost World Trade Organisation (WTO) dispute with Brazil, the politics of change are extremely challenging.

“Cotton producing countries in west Africa took a different approach from Brazil in challenging those egregious subsidies. They opted to wage a political campaign, rather than a legal battle. This legitimate diplomatic attempt to solve the issue of cotton subsidies in the Doha Round has, however, failed due to a general stalling of the negotiations, and unwillingness on the part of WTO members to single out this issue for rapid and independent treatment.

“Nonetheless, the landscape today looks very different from when subsidies where at their peak in the mid 2000s. In 2005, US subsidies to cotton were estimated to be well above $3bn while in 2012, thanks mostly to higher world prices, to which US subsidies are reactive, the corresponding figure was about half a billion. In the EU, subsidies were significantly decoupled from cotton production in 2006, and production has declined. Although US and EU policies remain unfair to cotton producers abroad and still introduce a substantial distortion into the world cotton market, the size of that distortion is greatly reduced from its previous dizzying heights.”

ALSO, it was one year ago today that the Farm Bill failed to pass on the House floor (related picture of House Ag Committee Chairman Frank Lucas (R., Okla.).)


Agricultural Economy

Reuters writer Tom Polansek reported yesterday that, “U.S. veterinarians are warning that outbreaks of a deadly pig virus will climb this autumn after a summertime hiatus, likely killing another 2.5 million pigs over the next 12 months and amplifying an increase in pork prices.

“Concerns persist about the expected jump in infections of Porcine Epidemic Diarrhea virus (PEDv) despite assurances from U.S. Agriculture Secretary Tom Vilsack on Wednesday that the nation is likely ‘on the other side’ of the disease due to approval of the first vaccine directly available to farmers.”

Meanwhile, Caitlin Owens reported yesterday at the Los Angeles Times Online that, “California’s drought conditions have worsened over the past week with the percentage of the state suffering from the highest category increasing, the National Weather Service said Thursday.

“‘Exceptional’ drought conditions have spread in Central California since a week ago, weather officials said. Areas in Northern California have also moved into this category since last week, according to the U.S. Drought Monitor.”

Jesse Newman reported in today’s Wall Street Journal that, “The Environmental Protection Agency is weighing an emergency request by Texas regulators to allow cotton farmers to deploy a controversial herbicide, marking a new front in the war on ‘super weeds’ that has divided agricultural groups and environmentalists.

“The Texas Department of Agriculture asked the EPA last month for an exemption to permit growers to douse fields this summer with propazine—a chemical little-used in U.S. agriculture—to control an invasive plant known as palmer amaranth, or pigweed.”

Yesterday, USDA’s National Agricultural Statistics Service (NASS) released a report titled, “Agricultural Land Values Final Estimates 2009-2013; ” the NASS report included this table of land values for portions of the U.S. Corn Belt.

In trade related news, Vicki Needham reported yesterday at The Hill Online that, “A top House Republican said Thursday that wrapping up work on the Obama administration’s ambitious trade agenda will be impossible without trade promotion authority (TPA).

“House Ways and Means Committee Chairman Dave Camp (R-Mich.) said that trade promotion authority, also known as fast-track, must be passed before finalizing any major agreements such as the Trans-Pacific Partnership (TPP).”

And in a separate Hill update yesterday, Vicki Needham pointed out that, “Treasury Secretary Jack Lew said Thursday that a massive trade agreement between the United States and the European Union is needed to boost growth on both sides of the Atlantic.”


CFTC- Commodity Futures Trading Commission

Gregory Meyer reported today at The Financial Times Online that, “A meeting on commodities regulation held in Washington this week at times felt like an argument among lexicographers.

“The words ‘hedger’ and ‘speculator’ have long had agreed definitions in commodities markets, so much so that the Commodity Futures Trading Commission publishes them in its online glossary.

“But as the agency, prodded by the US Congress, attempts to impose a new rule constraining speculators, the yin-yang nature of these two types of traders is blurring into grey.”

The FT article noted that, “The CFTC discussed meanings with traders, lawyers and an academic inside its headquarters on Thursday. The debate was kicked off by one commission official who asked: ‘When is it speculation versus when is it hedging?’”

“The questions become particularly thorny on the question of ‘cross-commodity’ hedging, or trading one commodity in relation to another. The rule would require the two commodities to move with a positive correlation of 80 per cent before traders could claim exemptions,” the FT article said.

And Cristina Marcos reported yesterday at The Hill Online that, “Rep. Louise Slaughter (D-N.Y.) argued Thursday that the Commodity Futures Trading Commission (CFTC) measure on the floor this week would lead to another economic crisis.

“The bill, H.R. 4413, would reauthorize the agency through 2018 and includes other provisions to reform its regulatory process.

“‘Unfortunately, the legislation passed out of the Rules Committee last night is a backdoor attempt to undo some of the reforms and a precursor to another financial crisis,’ Slaughter, the top Democrat on the House Rules Committee, said during preliminary floor debate.”

The update added that, “But House Rules Committee Chairman Pete Sessions (R-Texas) said Democrats’ arguments were overblown. He noted that the House Agriculture Committee approved the bill unanimously.

“‘This is not about deregulating or doing away with something or defunding somebody,’ Sessions said. ‘This is not about causing some market crash or failure.’

The legislation is expected to hit the House floor Friday.”


Biofuels- Renewable Fuel Standard (RFS)

Myke Feinman reported yesterday at DTN that, “EPA likely will not issue final 2014 Renewable Fuels Standard volume requirements this week as the agency had planned, a National Biodiesel Board spokesman said Thursday.

“EPA, the administrator of the RFS, had previously announced the 2014 Renewable Volume Obligation rule for refiners, blenders and importers would be finalized by Friday, June 20.

“‘Clearly, the rule won’t be finalized tomorrow (Friday),’ Ben Evans, director of public affairs and federal communications for the NBB, told DTN on Thursday.”

Keith Good