FarmPolicy

November 19, 2019

Immigration; Policy Issues; Ag Economy; Tax Extenders; and, Regulations

Immigration

Brian Knowlton reported earlier this week at The New York Times Online that, “President Obama, in an interview broadcast on Sunday, said he rejects Republican criticism that he has exceeded his authority in moving to spare millions of undocumented immigrants from deportation, adding that he has been ‘very restrained’ in his use of executive authority.

“Angry Republican lawmakers have accused Mr. Obama of unconstitutional, even imperial, overreach. They have pointed to past remarks in which he himself suggested that his powers to act were limited.”

The Times article added that, “Mr. Obama has framed his action not as an amnesty for some undocumented immigrants but as a directive, in part, to federal agencies to focus their attention on those with criminal records, not on law-abiding, taxpaying, longtime immigrants. In all, about five million of the estimated 11 million undocumented immigrants would be protected.”

Kristi Boswell, Director of Congressional Relations for the American Farm Bureau Federation, was a guest yesterday on the AgriTalk radio program with Mike Adams, where the conversation focused on immigration issues (audio replay here, MP3- 10:18). An unofficial FarmPolicy.com transcript of yesterday’s discussion is available here.

In part, Ms. Boswell indicated that, “And from Farm Bureau’s perspective, what [President Obama] announced last week, and frankly, just any executive action, can’t go far enough for our agriculture needs. And that’s why we focus and have continued to focus throughout this time on convincing Congress to take steps to pass responsible, long-term immigration reform.”

Ms. Boswell also noted that, “From the deferred action side of this, the work authorization that the President is granting, because of the nature of our workforce, 50 to 70% of which is unauthorized, it’s likely that there will be farm workers that benefit from this. We are not sure, at this time, how many. We’re not sure how many will even take the opportunity for a temporary status.”

Looking ahead, Ms. Boswell pointed out that, “I do suspect, knowing where the Republican conference has been this past Congress, that they’ll approach this in a more piece-by-piece fashion. I do think that there’s a strong possibility that they do act. I think leaders in the party in both chambers recognize the importance of this issue and want to find substantive solutions. But I would look for a more piece-by-piece approach. And we are going to make sure that the piece-by-piece approach includes a solution for agriculture.”

And with respect how this issue continues to impact agricultural producers, Ms. Boswell noted that, “It’s still very humbling any time I go out and talk to farmers, and the politics of this are so challenging. And you look at their faces and they don’t care about the politics. They don’t care. They want a labor force. They need access to a legal labor force. They want that stability. And that’s something that I try to continually convey to members of Congress, and stop letting politics highjack this. It’s real. It’s real life, and people are losing their fruits and vegetables in the field because of labor, and that’s not right.”

 

Policy Issues

Daniel Looker reported yesterday at Agriculture.com that, “If you thought the public debate about the cost of crop insurance ended when the 2014 farm bill was passed early this year, think again. Monday, the Minnesota-based group, the Land Stewardship Project, released the first of three white papers to show ‘How a Safety Net Became a Farm Policy Disaster.’

“The paper, ‘Crop Insurance-The Corporate Connection,’ looks at the $90 billion projected overall ten-year cost of the program and the amount going to cover administrative costs of crop insurance companies, which is now capped at $1.3 billion a year.”

Mr. Looker explained that, “The study, which was based mainly on USDA online reports that were accessed this month, shows that the second-biggest portion of federal costs for crop insurance, administrative reimbursements to insurers, accounted for 21% of all costs in recent years. Premium subsidies for farmers accounted for 72%.

“LSP said Monday that, ‘As a result of the significant subsidies crop insurance corporations receive, they consistently generate profits that are considered far above the reasonable rate of return as calculated by economic experts. Between 1989 and 2009, crop insurance companies averaged a 17% return on equity at a time when the ‘reasonable’ rate was under 13%, according to an analysis done for the USDA. In 2009 alone, crop insurers enjoyed an astounding 26% rate of return, more than double what was considered reasonable by the industry standard for that year.’”

In response to the LSP paper, David Graves, the President of the American Association of Crop Insurers indicated yesterday that:

Although the white paper released today (November 24, 2014) by the Land Stewardship Project (LSP) entitled “Crop Insurance—the Corporate Connection” may be a “new” analysis for the author, the study is based on some very, very old data—1989-2009. This study is reminiscent of other work that “hand-picked” data to analyze rather than conducting a comprehensive and up-to-date review of the crop insurance program. To this point, it is very strange the LSP study did not consider or even acknowledge the two high profile and major changes the Federal government made to the crop insurance program since 2009, which came on the top of $6 billion in cuts made by Congress in the 2008 Farm Bill. Following the changes after 2009, two large crop insurance companies, including one named in the LSP study—John Deere Insurance Company—have reported losing huge sums. John Deere reported losses of almost $5 million in 2010, almost $20 million in 2011, almost $30 million in 2012 and over $35 million in 2013. As a result of these losses, John Deere has appointed Citi to auction its “misfiring” crop insurance business. The parent of the other crop insurance company has sold it as well.

What changed after 2009? The government’s so-called renegotiation of the financial terms of the Standard Reinsurance Agreement (SRA) in 2010 cut about $6 billion in support of sales and serving of the program. A year or so later, the government changed the rating methodology, which reduced premium revenue and again reduced under writing gains. Rather than leaving the public to conclude that returns to delivery of the program is high, as the LSP study does, including program data post-2009 would have shown returns in recent years have averaged under 5 percent. Returns to insurance services below 5 percent are extremely low, if not dangerously low, for maintaining the many contributions of private capital.

However, agriculture production is not just any industry. It certainly is not an ordinary industry. Agriculture is subject to natural laws for which there are no “on and off” switches to regulate production, up or down, and it is a very high risk activity. Given the dedicated, serious and continuous work by hundreds if not thousands of contributors to the modern program since 1981, including Members of Congress, Secretaries of Agriculture and other administration officials, crop insurance industry representatives, farmers and university researchers, suggests the “current” program deserves the very best in analytical reviews. Following completion of the 2014 Farm Bill, crop insurance is the premier risk management for our nation’s farmers, ranchers and growers. It must remain available, affordable and viable across the entire nation, regardless of size, enterprise or any other production characteristic, not only for the benefit of farmers, but consumers as well.

In other news, Daniel Enoch reported yesterday at Agri-Pulse Online that, “Almost 2,500 applicants will receive disaster assistance aid through the USDA’s Emergency Assistance for Livestock, Honeybees, and Farm-Raised Fish Program (ELAP), according to the USDA.

“The aid will cover losses suffered from Oct. 1, 2011, through Sept. 30, 2013, USDA said Monday in a news release. ELAP, reauthorized in the 2014 Farm Bill, provides disaster relief to producers mentioned in the program’s title not covered by other programs.”

A news release yesterday from Sen. Tammy Baldwin (D., Wis.) noted that, “[Sen. Baldwin], a strong supporter of Wisconsin’s agriculture economy and co-chair of the Congressional Cranberry Caucus, today applauded U.S. Department of Agriculture Secretary Tom Vilsack’s announcement of a purchase of up to 68 million pounds, or 680,000 barrels, of cranberries. The announcement comes after Senator Baldwin led a bipartisan letter advocating for cranberry growers in Wisconsin and across the country.”

Also yesterday, Bloomberg writer Megan Scudellari reported that, “Schoolchildren aren’t exactly gobbling up the healthy lunches they were meant to eat under a national nutrition program, two new studies suggest.

Students purchasing school lunch only select a fruit or vegetable about half the time, and even then, the majority of them don’t eat even a single bite, according to research from the Johns Hopkins Bloomberg School of Public Health.”

 

Agricultural Economy

The USDA’s Economic Research Service (ERS) indicated recently that, “[ERS] will release a new forecast for calendar year 2014 farm income, assets, debt, farm business performance, and the outlook for farm operator households on November 25, 2014 at 11:00 AM. This is the third forecast for 2014, and it will incorporate new information on production expenses, land values, and the outlook for commodities.

“ERS Economist, Mitch Morehart, will present Farm Financial Forecasts and take questions from the audience in this exclusive USDA webinar on Tuesday, November 25 at 11:45 am. The presentation will last approximately 30 minutes with questions and answers immediately after.”

The AP reported yesterday that, “Sen. Kirsten Gillibrand [D., N.Y.] will be in western New York to tour areas hit by historic snowfall last week and now bracing for floods.

“She’ll meet with Erie County Executive Mark Poloncarz at the Emergency Operations Center Cheektowaga Monday morning to discuss extensive damage to the area and resources needed from the federal government for recovery.

Then she’ll head to Zittel Family Farm in Eden, a major regional producer, to discuss agricultural damage.”

Veronica Rocha reported in yesterday’s Los Angles Times that, “This year is on track to be the warmest year on record for California — and the entire planet — according to a new report.

“Temperatures in California for the first 10 months of the year averaged 4.2 degrees above the state’s 20th century average, according to the report released Thursday by the National Climatic Data Center.”

The article noted that, “In the midst of the warming trend, California continues to struggle with its severe drought [related graph].

Eric Luebehusen, a meterologist with the U.S. Department of Agriculture, said in the latest U.S. Drought Map, released Thursday, that ‘the 2014-15 Water Year has afforded little — if any — drought relief to California.’”

Laura Barron-Lopez reported yesterday at The Hill Online that, “A number of future climate change impacts like extreme heat and sea level rise will be ‘unavoidable’ even if global leaders start slashing greenhouse gases right away, according to a report from the World Bank.

“The new study says ‘even with very ambitious mitigation action’ past and estimated emissions from industrial sources have the planet on a set path toward a 1.5 degree Celsius temperature increase by mid-century.”

Meanwhile, Purdue University agricultural economist Chris Hurt indicated yesterday at the farmdoc daily blog (“Hog and Pork Prices Return to Reality”) that, “When historians look back on hog prices in 2014, they are going to ask, ‘What was going on?’ Hog and pork prices were launched to almost unexplainable heights by concerns over reduced pork supplies from PED in the spring and summer. More recently, prices have been in descent and now have returned to more realistic levels.”

Dr. Hurt added that, “The most profitable year on record will be 2014, with estimated profits near $55 per head. Those will remain strong for the first three quarters in 2015, averaging around $44 per head, before tailing off to around $10 per head in the final quarter. Profits for the entire year of 2015 are still expected to be $36 per head which would be the third highest profit year of the last 26 years dating back to 1990.

“High hog prices and lower costs are the keys to current profitability. Estimated annual costs of production have dropped from a high of $67 per live hundredweight in the drought year of 2012 to $56.50 for this calendar year and to $52 anticipated for 2015. Notably, corn prices declined sharply in the fall of 2013, but meal prices did not decline overall until the fall of 2014 (with some nearby supply shortages still to work through). So, 2015 will be the first calendar year when both corn prices and meal prices have moderated, dropping feed costs to five year lows.”

In transportation news, Bloomberg writers Thomas Black and Jennifer Kaplan reported last week that, “BNSF Railway Co., the railroad owned by Warren Buffett’s Berkshire Hathaway Inc., plans to spend a record $6 billion next year to help speed trains and improve service crimped by surging grain and oil shipments.”

Cassandra Sweet and John W. Miller reported in yesterday’s Wall Street Journal that, “Saying they are running short on coal, electric utilities from Minnesota to Texas are trying to pressure Warren Buffett ’s BNSF Railway Co. to speed up deliveries on its congested tracks before the worst of the winter weather hits.”

The Journal writers explained that, “U.S. rail shipments of oil and other petroleum products jumped 13% this year through October compared with year-ago levels, while coal shipments inched up less than 1%, according to the U.S. Energy Information Administration. Rail shipments of grain rose 15% because of an above-average harvest [related graph].”

A news release yesterday from Sen. Heidi Heitkamp (D., N.D.) stated that, “Senators [Heitkamp] and John Hoeven today announced that BNSF Railway will accelerate steps to enhance rail safety in a stretch of track through Casselton, N.D. that has been the site of two derailments within the last year. The delegation, which has been pressing BNSF officials to take timely and substantive measures to mitigate the likelihood of accidents in the region, welcomed the railroad’s actions.”

 

Tax Extenders

Justin Sink reported yesterday at The Hill Online that, “The White House on Monday appeared to throw cold water on an emerging deal in Congress on extending tax breaks, saying reports were ‘not promising.’

“‘The reports suggest that there may be some in Congress who want to provide tax relief to businesses and to corporate insiders but not ensuring that those benefits are shared by middle-class families,’ White House press secretary Josh Earnest said.

“‘So certainly the administration would not be supportive of a package that provided relief to corporations without providing relief to middle-class families.’”

And Bernie Becker reported yesterday at The Hill Online that, “Treasury Secretary Jack Lew said Monday that a deal to restore expired tax breaks that did more to help business interests than working families would be ‘the wrong approach.’”

 

Regulations

Sabrina Tavernise and Stephanie Strom reported on the front page of today’s New York Times that, “The Food and Drug Administration will announce sweeping rules on Tuesday that will require chain restaurants, movie theaters and pizza parlors across the country to post calorie counts on their menus. Health experts said the new requirements would help combat the country’s obesity epidemic by showing Americans just how many calories lurk in their favorite foods.

“The rules will have broad implications for public health. As much as a third of the calories that Americans consume come from outside the home, and many health experts believe that increasingly large portion sizes and unhealthy ingredients have been significant contributors to obesity in the United States.”

Also on the FDA action, Brady Dennis reported on the front page of today’s Washington Post that, “Chain restaurants and other establishments will have one year to comply with the regulations. Owners of vending machines will have two years to post calorie information for each item inside the machines on nearby placards, posters or digital displays.”

A news release yesterday from Rep. Rosa DeLauro (D., Conn.) stated that, “[Rep. DeLauro] today urged Office of Management and Budget (OMB) Director Shaun Donovan to finalize two pending food safety rules. The Mechanically Tenderized Beef Products rule and a rule regarding added solutions in meat and poultry products must be finished before the end of this year otherwise they will be delayed until at least 2018, due to U.S. Department of Agriculture (USDA) requirements on labeling meat and poultry products.”

And Shawn Zeller indicated in a recent article in the Los Angles Times that, “Never in the annals of tough public policy decisions has so much rested on the fate of a chickenlike bird known for its feisty mating ritual. But advocates on both sides of the endangered species debate are anxiously awaiting the Fish and Wildlife Service’s decision, due next year, on whether to declare the greater sage grouse as endangered, or at least threatened.

“Environmental advocates have been pressing for nearly a decade for such a designation, which would force restrictions on development in the bird’s range. They cite threats to the bird’s habitat brought about by livestock grazing and invasive weeds, drought, and urban and energy development. The government believes the bird’s numbers are down 30 percent since the mid-1980s, to as few as 200,000, and that its historic range has been cut by more than half.

“Still, the range that remains 257,000 square miles across 11 Western states is enormous. Those states and the industries thriving there, including oil, gas, solar and wind energy firms, are worried about having to steer their plans around protecting the grouse.”

***

Lastly today, Sara Wyant indicated yesterday at Agri-Pulse Online that, “Agri-Pulse is pleased to announce the appointment of Philip Brasher as a senior editor, based in Washington, D.C., effective Dec. 1.

“‘We are very excited to have a talented veteran journalist like Phil join us full-time in Washington,’ said Sara Wyant, Agri-Pulse Editor and Publisher. ‘Phil is one of the most knowledgeable food and agriculture policy journalists in the nation. He will help us continue to expand our Capitol Hill coverage, drawing upon expertise and relationships built in a career on Capitol Hill spanning two-and-a-half decades.’”

Keith Good

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