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Policy Issues; Tax Extenders; Budget; Trade- Ag Economy; and, Regulations

Policy Issues

Damian Paletta and Mark Peters reported on the front page of today’s Wall Street Journal that, “A large number of Republican governors are pushing to reshape social-welfare programs with drug testing or other requirements, arguing that the new rules better prepare recipients for employment and assure taxpayers that the benefit money is well spent.

“Gov. Scott Walker of Wisconsin, fresh off his re-election, said he would propose his state join several others in mandating drug screening for people seeking nutrition or cash assistance. Utah Republicans want to require that certain residents allow the state to assist them in finding a job if they want to collect benefits through Medicaid, the health-care program for low-income and disabled Americans. Indiana Gov. Mike Pence is proposing Medicaid recipients kick in at least a few dollars a month as a condition for receiving benefits.”

The Journal writers noted that, “The drug-test push is part of a wave of changes that Republican governors are eyeing for Medicaid, cash assistance, unemployment and nutrition assistance, programs run jointly by federal and state governments.”

Paletta and Peters also explained that, “Drug-screening rules, though they have disqualified relatively few people from benefits, have proved to be the most contentious. Earlier this month, a federal appeals court struck down a 2011 Florida law that required drug screening for people seeking benefits through the Temporary Assistance for Needy Families program, saying the requirement was unconstitutional and that the state hadn’t demonstrated that recipients have more of a drug problem than the general population.

This year, the U.S. Agriculture Department blocked a drug-screening requirement in Georgia for the state’s food-stamp program, which it oversees.”

Philip Brasher reported yesterday at Agri-Pulse Online that, “Four newly elected Republican senators, including Iowa’s Joni Ernst and Nebraska’s Ben Sasse, will be joining the Senate Agriculture Committee for the new Congress.

David Perdue of Georgia and North Carolina’s Thom Tillis are the other two new GOP members, providing some geographic balance.

“But the committee’s battles in the new Congress will be less geographically based, as they often are with farm bills, and more ideological in nature. The committee’s to-do list includes reauthorizing child nutrition programs and the Commodity Futures Trading Commission. The new Republicans on the committee are staunch conservatives.”

Mr. Brasher added that, “Republicans will have an 11-9 majority, the reverse margin from the current Congress.

“Both parties have finalized committee assignments. Republicans have yet to formally announce chairmanships of committees or subcommittees. But Pat Roberts of Kansas is in line to chair Agriculture, while Mississippi’s Thad Cochran, Agriculture’s current ranking member, will take over the chairmanship of Appropriations.

“The Agriculture Committee’s Democratic lineup will stay the same except for the loss of [Iowa’s Tom Harkin] and John Walsh of Montana. The committee’s current chairwoman, Debbie Stabenow of Michigan, will become ranking member.”

Meanwhile, Jacob Bunge reported in today’s Wall Street Journal that, “The U.S. agricultural industry is crafting a framework for launching new biotech seeds in an attempt to avoid the types of trade disruptions blamed for hundreds of millions of dollars in losses over the past year.

“Groups representing seed companies, grain traders and farmers aim to agree next year on a set of practices that could help U.S. farmers plant new genetically modified crop varieties while steering those harvests away from countries that have yet to approve the crops for imports, officials said.”

Tom Zacharias, the president of National Crop Insurance Services, was a guest on yesterday’s AgriTalk radio program with Mike Adams where the conversation focused on crop insurance issues.

During yesterday’s discussion, Dr. Zacharias noted that, “I think if you look over the last couple of years, we’ve faced some headwinds. Take the situation in 2012 with the extensive drought we had in the Midwest. Last year when you had the swing in prices and a lot of the revenue policies kicked in, so there were indemnities paid there, so the last couple of years have not met expectations for the private sector. That said, again, these companies are in business for the long run, so we’re optimistic for ’14 to see how returns come out. But companies have made long-term investments, and so they require a long-term adequate return on their capital.”

Mike Adams queried: “How concerned are you that these private companies will say it’s not a good return for us and start pulling out of the program?”

Dr. Zacharias explained that, “Well, I think you just have to pay attention to the signals we’re seeing. Hopefully, again, in ’14 we have a bit of a turnaround. But it’s important for the private sector to remain viable. If you look at where this farm bill is taking us, the availability for farmers to have different risk management options, affordability, that part of the program remains very much intact. But we need both farmers and the insurers to see reasonable returns in this business to help manage the risk.”

On the immigration issue, David Nakamura reported on the front page of today’s Washington Post that, “President Obama is bracing for a political and legal battle with Republicans next year over his executive actions on immigration, but as he seeks to rally support against the anticipated assault, a lingering frustration among some Latinos could mean renewed pressure on him to do even more to protect illegal immigrants.”

“But as he attempts to shift the burden back to the GOP, Obama continues to face tough questions from Hispanic activists about why he had not done more and done it sooner. Of particular concern to the advocates are those who were left out of the new deportation protections,” the Post article said.


Tax Extenders

Ramsey Cox reported yesterday at The Hill Online that, “Senate Majority Leader Harry Reid (D-Nev.) is warning senators they could be in session until Thursday, as Democrats seek to complete their final work before adjourning for the year…[A]side from the nominees, Reid has said he also wants to complete work on a package of tax breaks and potentially the Terrorism Risk Insurance Act, which provides businesses a government backstop in the event of a terrorist attack.”

A tweet yesterday from CQ Now indicated that, “Tax extenders legislation is the last item on Senate agenda & may not get a vote until Tuesday or Wednesday, aides and lobbyists said.”

Senator Heidi Heitkamp (D., N.D.) discussed the tax extender issue yesterday during a radio interview with Mick Kjar (Ag News 890, Fargo, N.D.); to listen Sen. Heitkamp’s remarks on this issue, just click here (MP3- 1:49).


Budget- “CRomnibus”

Rebecca Shabad reported yesterday at The Hill Online that, “Public schools will now be banned from serving ‘Chinese chicken’ to students because of a provision in the $1.1 trillion spending bill Congress passed last week.

“Two House appropriators [Reps. Rosa DeLauro (D., Conn.) and Chellie Pingree (D., Maine)] on Monday applauded the inclusion of the provision, which bans schools from buying chicken raised in the U.S. and processed in China for school lunches.”


Trade- Agricultural Economy

Vicki Needham reported yesterday at The Hill Online that, “A top Senate Republican said on Monday that tackling trade policy represents a way for a Republican-controlled Congress and the White House to work together on an ambitious agenda.

“Sen. Orrin Hatch (R-Utah), who is expected to take the helm of the Senate Finance Committee, said passing trade promotion authority (TPA) is not only an avenue to completing two massive trade deals — the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP) — but is a place where Republicans can work with President Obama.”

Bloomberg writer Aya Takada reported yesterday that, “Shinzo Abe’s re-election victory allows him to accelerate agricultural reforms and push ahead with a free-trade deal unpopular with farmers, according to analysts including one of the Japanese prime minister’s former advisers.

Abe will probably allow Japanese negotiators to make concessions on farm tariffs during the U.S.-led Trans-Pacific Partnership free-trade talks, said Masayoshi Honma, agricultural and resource economics professor at the University of Tokyo. He will also move to weaken the influence of JA-Zenchu, Japan’s largest agricultural lobby and strongest TPP opponent, said Honma, who advised Abe during his first term as prime minister.”

The article added that, “Abe will allow his negotiators to propose cutting beef tariffs to less than 10 percent from the current 38.5 percent, said Nobuhiro Suzuki, professor of global agricultural sciences at the University of Tokyo.

Japan’s negotiators will also probably accept the U.S. proposal to eliminate taxes on whey imports and create non-tariff quota for U.S. rice imports of about 100,000 metric tons a year, said Suzuki, who worked for the agriculture ministry for 14 years.”

University of Illinois agricultural economist Darrel Good indicated yesterday at the farmdoc daily blog (“Corn Price Strength Continues”) that, “March 2015 corn futures traded to a high of $4.115 on December 15, the highest level since July 10 and $0.80 above the low reached on October 1. The average spot cash price at South-Central Illinois elevators was reported at $3.785 on December 12, $1.01 above the low on October 1.

A number of factors have contributed to the strength in corn prices over the past six weeks. First, the USDA’s October and November production forecasts were well below the expectation of nearly 15 billion bushels that was being widely discussed in early October. A second supportive factor comes from prospects for corn consumption that have improved modestly since September. The USDA now projects 2014-15 marketing year corn consumption at 13.67 billion bushels, 65 million bushels above the September projection. The recent pace of consumption in some categories, however, has been above the average rate projected for the year. That pace has contributed to the post-harvest strength in both futures prices and basis levels.”

After additional analysis, yesterday’s farmdoc update stated that, “The pace of corn consumption for ethanol production and the magnitude of export sales suggest that consumption for the year in those categories will reach, or perhaps exceed, the USDA projections. Substantial uncertainty about the magnitude of feed and residual use of corn will persist until the release of the USDA Grain Stocks report on January 12.

“A third factor that may have contributed to the more recent strength in corn prices is speculation that the USDA’s production estimate to be released on January 12, 2015 may be smaller than the current forecast of 14.407 billion bushels. Expectations of a smaller production forecast reflect, in part, modest yields reported for late-harvested corn in parts of Iowa and the northern Corn Belt. In addition, the corn market is revisiting the issue of the magnitude of planted and harvested acreage of corn this year. Questions about the accuracy of the current USDA National Agricultural Statistics Service (NASS) forecasts of planted and harvested acreage stem from the small corn acreage relative to NASS acreage forecasts that had been reported to FSA through November. This was discussed in detail in the November 17 issue of this newsletter.”

Yesterday’s update concluded by noting that, “The January 12 USDA stocks and production estimates will settle much of the uncertainty about 2014-15 marketing year corn supplies. For now, corn prices are expected to remain firm to slightly higher.”

Reuters news reported late last week that, “Cargill Inc told customers supplies of corn sweetener are ‘limited’ for 2015 and withdrew all outstanding offers, according to a letter obtained on Friday by Reuters from a sugar industry source.

“Cargill gave no reason for the move in the letter and a company spokesman did not immediately respond to requests for comment.”

In news regarding livestock issues, Scott Calvert reported yesterday at The Wall Street Journal Online that, “The USDA has modest expectations for 2015. It forecasts 125,000 head of cattle will be exported—above this year’s estimated 115,000 but well below recent years in which totals neared 200,000. The agency notes that many Russian importers still have debts from previous purchases.

“[Jay Truitt, Washington representative of the Livestock Exporters Association] said he expects the market to bounce back. Overseas farmers still covet the genetic strength of U.S. cows, he said.”

Meanwhile, Bloomberg writer Jen Skerritt reported yesterday that, “Poultry processors in British Columbia are striving to find enough turkeys for Christmas tables after avian influenza wiped out thousands of birds destined for the holiday feast.

“Suppliers in Canada’s westernmost province are bringing in birds from other parts of the country to ‘make sure that no Christmas table will be without a turkey,’ said Michel Benoit, general manager of Vancouver-based BC Turkey Farmers.”

And Bloomberg writer Aya Takada reported yesterday that, “Japan began culling about 4,000 chickens in a farm on the southern island of Kyushu after discovering the nation’s first outbreak of bird flu in eight months, according to the Ministry of Agriculture, Forestry and Fisheries.”

With respect to land values, Marcia Zarley Taylor indicated yesterday at the DTN Minding Ag’s Business blog that, “Iowa land values tumbled 8.8% between October 2013 and September 2014 in the Realtor Land Institute’s latest survey, Iowa realtor Steve Bruere pointed out earlier in the conference [the DTN-The Progressive Farmer Ag Summit 2014 in Chicago last week.]

“‘So to buy or not to buy. Like Shakespeare, that is the question,’ [Farm Credit Services of America CEO Doug Stark] said. ‘Bids are so erratic, you don’t know how some sales will fall out.’ The problem is that land prices seem to be moving all over the board, with Southeast Iowa setting a new high in the last few weeks while auctions further west ran about 40% lower than a year earlier, FCS America’s appraisers report. Bruere had two auctions in early December that brought about 15% less than what he would have expected a year earlier.”

Veronica Rocha reported yesterday at the Los Angeles Times Online that, “Southern Californians will get drenched this week with three storms before the weekend, the National Weather Service said Monday.”

The article explained that, “The storms hitting this week resemble typical winter storms and will not be as windy, wet or dangerous as last week’s storm, said meteorologist Eric Kurth of the National Weather Service in Sacramento.

“When it arrives in Southern California later Monday, the first storm system is expected to bring one-quarter to three-quarters of an inch of rain to Los Angeles and Ventura counties.”

And during her radio interview yesterday with Mick Kjar, Sen. Heidi Heitkamp (D., N.D.) also discussed transportation issues, to listen to this portion of yesterday’s conversation, just click here (MP3- 1:49).



Lydia Wheeler reported yesterday at The Hill Online that, “The Agriculture Marketing Service is considering a rule that would exempt all certified organic growers, sellers and handlers from having to pay for product promotions under the commodity promotion law.

“The exemption would cover all ‘organic’ and ‘100 percent organic’ products certified under the National Organic Program regardless of whether the person requesting the exemption also produces, handles, markets, or imports conventional or nonorganic products.”

In a separate update at The Hill yesterday, Lydia Wheeler reported that, “Sen. Orrin Hatch (R-Utah), a longtime advocate for regulatory reform, has introduced the Searching for and Cutting Regulations That Are Unnecessarily Burdensome Act of 2014, better known as the SCRUB Act.

“The bill, sponsored by Rep. Jason Smith (R-Mo.), advanced to the House floor following a 17-10 vote in the Judiciary Committee in June.

The legislation would establish a bipartisan BRAC-style commission to review existing federal regulations and identify rules that should be repealed.”

Reuters writer Douwe Miedema reported yesterday that, “MF Global has agreed with the Commodity Futures Trading Commission to settle charges of wrongdoing during the collapse of the futures brokerage, which left a $1.6 billion shortfall in customer accounts, a court document showed

“But Jon Corzine, the former New Jersey governor and U.S. senator, could still object to the agreement, the document showed, and so could the other individual defendant, MF Global’s former Assistant Treasurer Edith O’Brien.”

Keith Good