FarmPolicy

December 18, 2018

Policy Issues; Ag Economy; Biotech; Regulations; and, Political Notes

Policy Issues

A news release yesterday from the House Ag Committee stated that, “Today, Chairman Frank Lucas held a public hearing to review the implementation of state pilot projects under the Supplemental Nutrition Assistance Program (SNAP) of the Agricultural Act of 2014. SNAP is designed primarily to increase the food purchasing power of eligible low-income households to help them buy a nutritional, low-cost diet. One of the reforms in the 2014 Farm Bill included new Employment and Training pilot projects. They allow for up to ten states to develop and test methods to help adults secure employment and job training and reduce their dependency on SNAP.”

Chairman Lucas noted at yesterday’s hearing that, “The Agricultural Act provides up to ten states, with up to $200 million, to operate pilot projects designed to help SNAP recipients prepare for and go to work. The law explains that the approved pilot projects must cover a range of geographic areas, include a mix of voluntary and mandatory participation, and include an assortment of methods designed to promote work.”

Ranking member Collin Peterson (D., Minn.) pointed out yesterday that, “The farm bill invested $200 million to develop and improve innovative approaches to SNAP employment and training. The bill provides USDA with very clear direction for implementing these pilots and ensures that funding will create sustainable jobs by requiring annual reporting on set performance goals.”

Sec. of Agriculture Tom Vilsack, the sole witness at yesterday’s hearing, noted in prepared remarks that, “We want to provide a safety net so that those who are in tough economic circumstances are able to put food on the table; at the same time, we also want to help people move towards self-sufficiency the right way – by helping them to secure and maintain jobs that pay well. These pilot projects offer us the chance to partner with states to develop and test strategies to help SNAP participants find jobs and increase their earnings.”

In related news, Jim Puzzanghera reported in yesterday’s Los Angeles Times that, “The poorest Americans, particularly those who are Latino, finally are showing signs of joining in the economic recovery as the nation’s poverty rate dropped significantly last year for the first time since 2006.

“The improving labor market drove the decrease in the rate to 14.5% from 15%, which was near the highest level in a generation, the Census Bureau said Tuesday.

“The number of people with year-round, full-time jobs rose by about 2.8 million to 105.8 million last year. The increase included nearly a million households with children under 18 years old, helping fuel the first significant drop in the child poverty rate in more than a decade.”

Also yesterday, AP writer Mary Clare Jalonick reported that, “Cuts to the nation’s food stamp program enacted this year are only affecting four states, far from the sweeping overhaul that Republicans had pushed, an Associated Press review has found.

“As a result, it’s unclear whether the law will realize the estimated $8.6 billion in savings over 10 years that the GOP had advertised.

“A farm bill signed by President Barack Obama in February attempted to save money by scaling back what lawmakers called a loophole in the food stamp program that entitles low-income families to more food aid if they participate in a federal heating assistance program. States were giving some people as little as $1 a year in heating assistance so they could get more food aid. It’s called ‘heat and eat.’”

Ms. Jalonick explained that, “As of now, the cuts will only affect Michigan, Wisconsin, New Jersey and New Hampshire. All but New Hampshire have Republican governors, and two of them have been mentioned as possible GOP presidential contenders — Wisconsin Gov. Scott Walker and New Jersey Gov. Chris Christie.”

Other issues beyond SNAP related topics also came up at yesterday’s House Ag Committee hearing.

Rep. Jim Costa (D., Calif.) asked Sec. Vilsack about “conservation compliance requirements that were transferred from direct payments– on any farming operation that may be receiving a crop insurance subsidy.”

Rep. Costa noted that, “We’re starting to hear concerns on how growers throughout California- over the new Farm Bill requirements linking the crop insurance participation to conservation requirements.”

To listen to this exchange between Rep. Costa and Sec. Vilsack on this issue, just click here (MP3- 1:32).

Also, Rep. Randy Neugebauer (R., Tex.) asked Sec. Vilsack about implementing Farm Bill provisions related to the actual production history (APH) in figuring crop insurance premiums (background on this issue available here).

To listen to this exchange, just click here (MP3- 1:11).

Philip Brasher of CQ / Roll Call, tweeted yesterday that, “Vilsack: partial implementation of APH provision could lead to ‘unwarranted’ premium increases. #farmbill #cropinsurance”

And in a more jovial exchange yesterday with Rep. Rodney Davis (R., Il.) about the start of the corn and soybean harvest, Sec. Vilsack noted that rail transportation issues are a concern and quipped that perhaps passenger cars could be used to haul grain if needed. Rep. Davis had indicated that he had just been at a transportation committee markup regarding passenger rail issues- related audio (MP3- 1:00).

Reuters news reported earlier this week that, “U.S. Agriculture Secretary Thomas Vilsack met with Warren Buffett last week to urge the billionaire investor to make sure his BNSF railroad is ready for an expected record corn and soy harvest this year.”

The article indicated that, “‘I said, ‘Warren, you’ve got to make sure that your railroad understands what’s going on here,’ Vilsack said he told Buffett during a 45-minute conversation. ‘There is pressure now, but as soon as this crop is harvested, there will be more pressure.’

“Speaking at a conference sponsored by Growth Energy, a biofuel trade group, Vilsack said BNSF was making ‘significant’ investments. ‘It’s a long-term issue.’”

In addition, Chris Clayton reported yesterday at the DTN Ag Policy blog that, “The Senate Commerce Committee took some action Wednesday to give more authority to the Surface Transportation Board to react to railroad delays that have plagued the upper Plains.

“The Surface Transportation Board Reauthorization Act (S. 2777) by Commerce Chairman John Rockefeller, D-W.V., and committee Ranking Member John Thune, R-S.D., unanimously passed the committee. According to a news release from Thune’s office, the bill would give the board more authority to work on rate disputes and service complaints.”

Mr. Clayton pointed out that, “Rail has become a chronic problem for grain elevators in the Plains and Midwest, leading to multiple hearings by the STB this year both in Washington and in the field, such as the recent hearing in Fargo, N.D. Farmers and grain elevators have complained about months-long delays getting grain cars. Thune moved quickly following the hearing to hold a Senate committee hearing and introduce legislation to deal with the problems.”

In other policy developments, Matt Fuller reported yesterday at Roll Call Online that, “After voting to give President Barack Obama the authority to arm and train Syrian rebels, the House passed legislation Wednesday to fund the government until Dec. 11, moving the bill to avoid a government shutdown and address Islamic State organizations to the Senate.

“House lawmakers voted 319-108 to pass the continuing resolution, with 143 Democrats joining 176 Republicans in support of the measure. 55 Democrats and 53 Republicans voted against the bill.

“A vote on the spending bill, which will continue government spending through Dec. 11 at a $1.012 trillion level, was delayed last week so lawmakers could attach a request from the president to give him Title 10 authority to fight the Islamic State group.”

Meanwhile, Ron Nixon reported in today’s New York Times that, “An increase in the number of overweight and out-of-shape service members who are unable to run long distances or perform physical tasks like push-ups poses a direct threat to the United States’ ability to defend itself, a group of retired military leaders fighting for improved childhood nutrition said Wednesday.

“The group, called Mission: Readiness, released a report that found that about 12 percent of active-duty service members were obese based on height and weight, a number that has risen 61 percent since 2002.”

Today’s article explained that, “In May, the House Appropriations Committee passed a spending bill that would allow school districts with lunch and breakfast programs operating at a loss to seek a one-year waiver on certain federal nutrition requirements. The full House is expected to take up the measure soon.

Some schools sought waivers because food-service officials said the new nutrition rules were too costly to carry out.

“But Admiral [Casey W. Coane, a retired Navy rear admiral and a member of Mission: Readiness] argued that the costs could be higher if Congress allowed schools to delay the rules.”

At yesterday’s House Ag Committee hearing, Rep. Rodney Davis (R., Il.) brought up school nutrition issues with Sec. Vilsack and stressed that some school districts in Illinois could use some “small flexibility within the program” when implementing new nutritional guidelines.

A portion of this discussion from yesterday can be heard here (MP3- 2:00).

Separately, Gautam Naik reported in today’s Wall Street Journal that, “The artificial sweeteners in diet soda, yogurt and other foods consumed by millions can raise the blood sugar level instead of reducing it, according to new experiments in mice and people.

“The provocative finding—made possible through a new avenue of research—is likely to stoke the simmering controversy over whether artificial sweeteners help or hinder people’s ability to lose weight and lower their risk of diabetes.”

 

Agricultural Economy

The Food and Agricultural Policy Research Institute (FAPRI) indicated in an update yesterday (“September 2014 U.S. Crop Price Update”) that, “Larger corn and soybean crops translate into lower projected 2014/15 prices for many grains and oilseeds. Corn prices drop to $3.50 per bushel, soybeans to $9.92 per bushel and wheat to $5.91. In all three cases, these projected prices are close to the midpoint of the price ranges reported in the September USDA World Agricultural Supply and Demand Estimates.”

Matthew Patane reported today at The Des Moines Register Online that, “Iowa’s cropland values fell during the last six months, pushed down by lower prices for corn, soybeans and other commodities.

“Cropland value fell 3.4 percent, according to an Iowa Realtors Land Institute report released Wednesday.

“Iowa’s cropland had an average value of $8,000 an acre as of Sept. 1, down from about $8,222.67 an acre in March. Those values only include tillable Iowa cropland, not pastures or timber.”

With respect to interest rates, another important variable impacting farmland values, Binyamin Appelbaum reported in today’s New York Times that, “The Federal Reserve is in no hurry to raise interest rates.

“The economic recovery has stayed on course in recent months, and the Fed’s policy-making committee said on Wednesday that it saw no reason to change its own plans, rejecting calls for a faster retreat from its long-running stimulus campaign.”

Meanwhile, the Department of Labor released its monthly Consumer Price Index report yesterday, which stated in part that, “The food index rose 0.2 percent in August after increasing 0.4 percent in July. The food at home index was also up 0.2 percent, with the six major grocery store food group indexes split between three increases and three declines. The index for meats, poultry, fish, and eggs rose 1.5 percent in August, the largest increase among the groups. The index for beef and veal rose 4.2 percent, its largest increase since November 2003. The index for dairy and related products rose 0.6 percent, and the cereals and bakery products index advanced 0.2 percent.”

The USDA’s Economic Research Service (ERS) tweeted this graph yesterday and noted that, “Grocery store #prices for beef, pork, and eggs are up as U.S. supplies decrease.”

In its Livestock, Dairy, and Poultry Outlook yesterday, ERS also indicated that, “Increasing forecasts for the current corn crop have put downward pressure on corn prices and have been a factor in the continuing increases in feeder cattle prices. As a result, break-even fed-cattle prices for feeder cattle placed on feed in August and beyond are moving above $160 per cwt.”

Third-quarter hog prices are expected to average $83-$84 per cwt, about 18 percent above a year ago,” the ERS report said.

 

Biotech

Reuters news reported yesterday that, “China, the world’s top buyer of distiller’s dried grains (DDGs), has failed to settle a row with the United States on how to eliminate genetically-altered content from a product worth $1.3 billion in trade so far this year, two industry sources said on Wednesday.”

Reuters writer Andrew Chung reported earlier this week that, “Major U.S. grain exporter Cargill Inc’s lawsuit against Syngenta AG over losses stemming from China’s rejection of genetically modified corn demonstrates how U.S. markets are becoming increasingly subject to foreign rules, legal experts said on Tuesday.

“Cargill sued Syngenta on Friday in Louisiana state court for ‘negligence’ in selling U.S. farmers a genetically modified seed that had not yet been approved for import in China.”

AP writer Mary Clare Jalonick reported yesterday that, “The Agriculture Department has approved the use of genetically modified corn and soybean seeds that are resistant to a popular weed killer.

“However, farmers won’t be able to take full advantage of the seeds until the Environmental Protection Agency issues a second ruling allowing the use of Enlist, a new version of the 2,4-D weed killer that’s been around since the 1940s. The EPA has said it will rule this fall on Dow AgroSciences’ application to market the chemical.”

And a news release yesterday from the American Soybean Association (ASA) noted that, “As the soybean and corn harvest hits full stride in much of the nation’s growing regions, the farmer-leaders of the [ASA] remind farmers to do their part by taking extra care to keep biotech traits that are not yet approved in key export markets out of normal grain marketing channels. For those soybean farmers that also produce corn, this includes keeping biotech corn traits that are not yet approved in China, such as MIR 162 and Duracade, out of normal commodity streams so that U.S. soybean shipments to China aren’t at risk of rejection due to the presence of unapproved corn traits.”

 

Regulations

Andrew Ackerman reported in today’s Wall Street Journal that, “The Commodity Futures Trading Commission took steps to ease postcrisis restrictions on government-owned electric companies and other utilities amid complaints new rules would make it harder to hedge against shifts in energy prices and other business risks.”

The House Ag Committee released an update yesterday titled, “Lucas & LaMalfa Praise CFTC Vote that Dials Back Regulatory Reach.”

 

Political Notes

Bloomberg writer Alan Bjerga penned an update yesterday that provided a detailed look at the House election campaign between Ag Committee ranking member Collin Peterson (D., Minn.) and his GOP opponent Torrey Westrom.

And James Hohmann reported yesterday at Politico that, “A surprising Quinnipiac poll out Wednesday puts Iowa Republican Senate candidate Joni Ernst ahead by 6 points among likely voters over Democratic Rep. Bruce Braley, 50 percent to 44 percent.”

Keith Good

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