FarmPolicy

April 23, 2017

Policy Issues; Ag Economy; Immigration; Biofuels; and, Regulations

Policy Issues

Philip Brasher reported on Friday at Agri-Pulse Online that, “A top lobbyist for food and beverage giant PepsiCo Inc. who was formerly a top aide to Senate Agriculture Chairman Pat Roberts is taking over as the Agriculture Committee’s chief of staff as it prepares to rewrite federal child nutrition policy.

Joel Leftwich, a native of Wellington, Kansas, worked for Roberts, R-Kan., as deputy staff director for the committee before becoming senior director for PepsiCo’s public policy and government affairs team in March 2013.

One of the committee’s main orders of business this year will be to reauthorize the law that sets standards for school meals and the Women, Infants and Children nutrition program. The programs have a broad impact on the food and beverage industry. First lady Michelle Obama has made it a top priority to preserve higher school nutrition standards that USDA imposed under the expiring law, the Healthy, Hunger-Free Kids Act.

The article noted that, “Sarah Little, who has worked for Roberts for 16 years, will be the committee’s communications director while continuing in the same role in the senator’s personal office. The committee staff also will include Wayne Stoskopf, who has been Roberts’ legislative assistant on agriculture, nutrition and water issues since June 2012.”

With respect to the House Ag Committee, a news release on Friday from the Office of the Democratic Leader indicated that, “Democratic Leader Nancy Pelosi announced today that the House Democratic Steering and Policy Committee voted to recommend the following committee assignments for 27 Democratic Members of Congress. The full Democratic Caucus will vote on the nominations next week.”

For the Ag Committee, the list included: Congresswoman Ann Kirkpatrick of Arizona, Congressman Pete Aguilar of California, and Congresswoman Stacey Plaskett of the Virgin Islands.

Also on Friday, the House Ag Committee’s Instagram page included two photo updates; this one pictured new Committee Chairman Mike Conaway (R., Tex.) and Secretary of Agriculture Tom Vilsack, with the caption, “I had a great meeting with Agriculture Secretary Tom Vilsack. We are both committed to working on behalf of our #farmers & #ranchers who feed & clothe America & the world.”

And this photo of Chairman Conaway and Ag Committee Staff Director Scott Graves included this caption: “Agriculture Committee Staff Director @ScottCGraves joined me @usdagov today. This was a productive start to what will be a good working relationship with Secretary Vilsack & his staff.”

Meanwhile, Rebecca Shabad reported on Friday at The Hill Online that, “Democrats on the Senate Appropriations Committee Friday announced the 12 subcommittee ranking members who will have some influence over federal spending in the new Congress…[T]he new ranking members include Sen. Jeff Merkley (D-Ore.), who will be on Agriculture, Rural Development, Food and Drug Administration.”

Philip Brasher reported on Friday at Agri-Pulse Online that, “In 2013, Jeff Merkley, D-Ore., unsuccessfully tried to use the debate over the farm bill to repeal an appropriations provision that critics dubbed the Monsanto Protection Act.”

Mr. Brasher explained that, “The provision, backed by the Agriculture Appropriations Subcommittee’s top Republican, Roy Blunt of Missouri, was intended to ensure that farmers could continue cultivating genetically engineered crops while their federal approval was being challenged in the courts. The provision has since expired.

As ranking Democrat on Agriculture Appropriations, Merkley will be well-positioned to resist pro-biotech policy riders favored by Republicans on the panel. USDA and FDA share regulation of biotech products with EPA. Republicans have not finalized their subcommittee chairmanships. Blunt, who represents Monsanto’s home state, could take over another panel, leaving Agriculture to be chaired by someone else, such as Jerry Moran of Kansas or John Hoeven of North Dakota.”

Mr. Brasher added that, “Colin O’Neil, director of government affairs with the Center for Food Safety, which has led several lawsuits challenging USDA biotech approvals, called Merkley ‘one of the food movement’s strongest allies in Congress.’”

In other developments, Roberto A. Ferdman reported last week at the Wonkblog (Washington Post) that, “The U.S. Department of Agriculture is preparing to release the latest version of the government’s influential dietary guidelines this year, and there could be a major change that accelerates the trend of Americans eating less meat.

“The guidelines, which are updated every five years, have traditionally advised Americans about healthy eating choices, eating choices which, until now, have only reflected what the government views as a diet that is healthy for humans. But the panel that advises the government is pushing for the recommendations to reflect what is healthy for the environment, too. Given the huge carbon footprint of meat production, making this change would almost certainly entail lowering the official, government-recommended intake of meat.”

The Post update noted that, “Just because the USDA’s advisory committee is discussing such recommendations doesn’t mean it will ultimately include them in its official findings, which are expected to be delivered to the Agriculture and Health and Human Services departments later this month.”

But Mr. Ferdman added that, “Reducing the recommended amount of meat consumption would reduce, among other things, the amount of meat the industry provides as part of the school lunch program. And overnight, the diets of millions of Americans would have less meat.”

On the issue of livestock production, and swine production particularly, Lee L. Schulz and Glynn T. Tonsor penned an interesting update recently at Choices Online titled, “The US Gestation Stall Debate.”

In part, the authors noted that, “[W]hen voters require practices that shoppers will not fully fund, it has an adverse effect on agricultural producers which, of course, leads to the observed added contention regarding requested production changes that arrive from sources not fully paying premiums to cover adjustment costs.”

On a separate issue, Coral Davenport and Mitch Smith reported in Saturday’s New York Times that, “President Obama came under new pressure on Friday to make a decision on the Keystone XL oil pipeline as the Nebraska Supreme Court cleared the way for its construction through the state and the House passed a bill to approve the project.

“The House vote of 266 to 153 in favor of the pipeline sends the measure to the Senate, which is likely to pass the bill in the coming weeks.”

The Times article noted that, “Mr. Obama has vowed to veto a bill from Congress approving the pipeline, and a White House spokesman said Friday that the veto threat still stood. But White House officials said that Mr. Obama would veto the measure not out of opposition to the pipeline itself, but because it would remove the president’s authority to make the decision and instead transfer that power to Congress.”

 

Agricultural Economy

University of Illinois agricultural economist Gary Schnitkey recently released updated crop budgets for Illinois.

In part, Dr. Schnitkey explained that, “This publication presents crop budgets for three regions in Illinois: northern, central, and southern Illinois…Budgets are prepared to include all revenue and all financial non-land costs.”

The budget paper noted that, “Subtracting non-land costs from revenue yields ‘operator and land return.’ This is the return remaining to pay for farmland and provide a return to the operator. In a cash rent situation, the payment for farmland is cash rent. If the operator and land return is $270 per acre and cash rent is $220 then the operator will have $50 of return.”

A budget for Central Illinois, high productive farmland from the paper is available here.

Dr. Schnitkey also released a video where he described the budgets in more detail; and last week, he tweeted this graph and noted that, “For central Illinois farmland, operator and land returns projected lower than average cash rent in 14 and 15.”

A news release Friday from University of Missouri Extension indicated that, “[University of Missouri Extension economist Joe Parcell] predicts that land values may soften briefly as commodity prices drop. However, low interest rates, low taxes and growing consumer confidence will keep prices steady, Parcell says.”

The release added that, “[MU Extension agricultural business specialist Karisha Devlin] said good cropland averaged an estimated $4,717 per acre in 2014. Pastureland values ranged from $1,751 to $2,672, up 7.2 percent from 2013 due to demand caused by higher beef prices.”

Kelsey Gee reported yesterday at The Wall Street Journal Online that, “U.S. hogs are trading at the lowest prices in nearly two years as herds recover from a deadly virus.

“The price slide is benefiting consumers, who are paying less for ham, bacon and other pork products, while investors are betting that futures will fall even further as more hogs grow to slaughter weight in the months ahead.”

In trade related news, Emma Dumain reported on Friday at Roll Call Online that, “President Barack Obama wants Congress to pass legislation that would give him the authority to negotiate a long-sought trade agreement with nearly a dozen countries in the Pacific region.

The problem is, a growing number of House Democrats don’t want to let him have it.”

Chris Clayton reported yesterday at the DTN Ag Policy blog that, “Agriculture Secretary Tom Vilsack and American Farm Bureau Federation President Bob Stallman held an hour-long town hall meeting Sunday at the AFBF annual meeting in San Diego, Calif.”

(Note that an overview and transcript of Mr. Stallman’s keynote address at the meeting can be found here).

Mr. Clayton added that, “Vilsack said it’s hard to negotiate with other countries when they don’t think the president has Trade Promotion Authority. The Obama administration is juggling the Trans-Pacific Partnership with South American and Asian countries, as well as the Transatlantic Trade and Investment Partnership in Europe.

“Without Trade Promotion Authority, Vilsack said trade negotiators are somewhat hamstrung, though they could negotiate a deal that hinges on Congress passing TPA.”

The DTN update quoted Sec. Vilsack as saying, “‘If we conclude that agreement — and it’s going to require us to have willing partners on the other side — a little more flexibility from Japan, for example, some life from the Canadians, at least in negotiations, to deal with dairy and rice, deal with pork and many other issues that are important, I think we can get enough votes from Congress to do Trade Promotion Authority and TPP (Trans-Pacific Partnership).’

He added, ‘It’s not going to be an easy lift.’”

And Atsuko Fukase reported yesterday at The Wall Street Journal Online that, “A former internal affairs ministry official backed by Japan’s powerful farm lobby won a gubernatorial contest in Saga prefecture Sunday, dealing a blow to Prime Minister Shinzo Abe ’s efforts to scale back the group’s power.

“Although Saga is one of the smallest prefectures in Japan, with a population of 835,000 and an economy largely centered on agriculture and fishing, the election has drawn national attention as the first real test of Mr. Abe’s clout on a number of issues, including the U.S.-led Trans-Pacific Partnership free-trade initiative…[T]he loss was likely to raise questions about how the prime minister will handle issues of health care, agriculture and broader business deregulation in the run-up to nationwide regional elections in April.”

 

Immigration

Laura Meckler and Kristina Peterson reported in Saturday’s Wall Street Journal that, “House Republicans said Friday they would vote in the coming week on an expansive rollback of President Barack Obama’s immigration policy, subjecting more illegal immigrants to deportation and unraveling policies that prioritize removing criminals and recent border crossers.

The package would attempt to undo not only Mr. Obama’s November move to shield millions of illegal immigrants from deportation, but also a 2012 action protecting young people brought to the U.S. illegally as children.

“Those changes will be offered as amendments to legislation funding the Homeland Security Department through September under a GOP leadership plan that took shape Friday.”

Ashley Parker reported in Saturday’s New York Times that, “The vote served as a signal of how far House Republicans, emboldened by their midterm election victory, would go to confront Mr. Obama. It is a move that carries peril because the provision related to the Dreamers had broad appeal in the Latino community, an increasingly influential voting bloc.

“Representative Matt Salmon, Republican of Arizona, said that the most conservative members supported the plan and that a handful of the more moderate members expressed concern.”

 

Biofuels

Jonathan Kingsman, the founder of sugar consultancy Kingsman and currently a consultant to Platts, a division of McGraw Hill Financial, indicated on Friday at The Financial Times Online that, “Low oil prices may be good news for the world’s oil consumers but they are bad news for the world’s biofuel producers.

“It was never intended to be this way. Back when governments first mandated legal minimums for biofuel content in transport fuels, ‘peak oil’ was on everyone’s lips and there was a general fear that oil prices could head towards $200 per barrel. Now that oil prices are closer to $50 those mandates are tougher to justify economically.”

The FT item noted that, “This year’s bumper corn crop in the US has helped those economics but corn prices have been drifting higher since October; margins for most US ethanol plants are now wafer-thin, if not negative.

“As for biodiesel, the closely watched benchmark for biodiesel profitability — POGO, the spread between palm oil versus gas oil, or diesel — has inverted.”

Mr. Kingsman added that, “The fall in the oil price comes at a time when governments generally are questioning their support for biofuels.

“In the US, producers have already been hit by the deferred decision to renew the $1 per gallon blender credit.”

 

Regulations

The House Majority Leader’s Weekly Schedule included H.R. 185Regulatory Accountability Act of 2015 (Subject to a Rule)- Sponsored by Rep. Bob Goodlatte / Judiciary Committee.

A news release last week from Rep. Collin Peterson (D., Minn.) noted that, “At the start of this Congress, [Rep. Peterson] and [Rep. Goodlatte] introduced H.R. 185, the Regulatory Accountability Act (RAA). This legislation requires federal bureaucrats to adopt the least costly method to effectively implement the law. Last Congress, the House of Representatives passed the RAA as part of a jobs and economic growth package.”

Cristina Marcos reported on Friday at The Hill Online that, “The House plans to reconsider a bill to amend the 2010 Dodd-Frank financial system overhaul, as well as a regulatory process reform measure.

“House Democrats derailed the Dodd-Frank bill on the second day of the new Congress when it was considered under suspension of the rules. The fast-track process requires a two-thirds majority, which Democrats prevented.

“The legislation will subsequently be considered under a rule requiring only a simple majority next week.”

Keith Good

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