FarmPolicy

April 24, 2019

Rep. Neugebauer Discuses Cotton Issues with Secretary Vilsack

Categories: Farm Bill

A news release today from Rep. Randy Neugebauer (R., Tex.) stated that, “I appreciate USDA Secretary Vilsack for coming before the House Agriculture Committee today to provide an update on the state of the rural economy and specifically where things stand with the implementation of the 2014 Farm Bill. The USDA has jurisdiction over many issues that impact hardworking farmers in the 19th District, and I raised several concerns with the Secretary regarding issues affecting our cotton producers, including concerns with the relationship between marketing loan gains and the new payment limit, and China’s cotton program and its effect on the global price of cotton. I also voiced my objections to President Obama’s budget request which would dramatically increase the cost of crop insurance for producers of all crops in the 19th District and limit its viability. We cannot afford to move in that direction and the President’s budget request is dead on arrival in Congress. As Farm Bill implementation continues and deadlines are right around the corner, I look forward to working with Secretary Vilsack to ensure that we have a Farm Bill that works for the 19th District of Texas and our great nation.”

More specifically with respect to cotton and China, Rep. Neugebauer had this exchange with Sec. Vilsack:

Rep. Neugebauer:Ambassador Froman came to sit down with some of the members of the House Ag Committee last week and talked about what’s going on in the trade. And as you know, trade is extremely important to agriculture. And, you know, I think with the recent, I guess, defeat in WTO with cotton with the Brazil case, I think we were forced to kind of basically redraft our farm program, particularly for cotton producers.

And I think one of the concerns that a lot of the people in cotton have right now is, particularly with China, are they playing by the rules. And, you know, their policy is not very transparent, and they have a huge influence on the world price of cotton. And as you know right now the price is down. Can you kind of expand on what the department’s doing to help make sure that our friends in China are playing by the rules?

Sec. Vilsack: That’s a big challenge, Congressman. I would say that we’re heartened by the announcement today from the U.S. Trade Representative’s office that beginning the process within the WTO to raise questions about the export subsidies that China is engaged in [related Wall Street Journal article here]. And agriculture is one of the industries that was identified as being part of that effort. And certainly it’s fairly clear that they have been not necessarily playing by the rules in a number of areas.

We’ve also urged them in terms of their reserves, their cotton reserves, to have much greater transparency in terms of what they have and where they have it and what they’re going to do with it, because that obviously does, indeed, impact and create instability in the market, which we don’t need. This is an issue that’s raised in every meeting that we have with the Chinese, along with several other issues that we have with them.

I would say that we’ve also, in the last meeting I’ve had, we suggested that there needed to be a strategic dialogue with China, a much more in-depth dialogue and conversation about a variety of issues, from biotech, to regulatory processes, to subsidies, to the way in which they control markets. And they have agreed to this strategic dialogue. We will be submitting to them a proposed agenda, and the hope would be that that dialogue will begin this spring.

They are our number one customer, and so it’s—obviously we have to be sensitive to that. But at the same time, we want a science-based and rules-based system because if everyone plays fair, we’ll do just fine in that system. If we’re at a disadvantage, obviously that’s a problem. So I think we’re calling them out and we should.

Rep. Neugebauer: Thank you, Mr. Secretary.

Rep. Newhouse, Sec. Vilsack Discuss West Coast Labor Dispute

During the discussion portion of today’s House Agriculture Committee hearing to review the state of the rural economy, Rep. Dan Newhouse (R., Wash.) had a discussion with Secretary of Agriculture Tom Vilsack about the labor dispute at the West Coast ports that is harming agriculture exports and rural economies across the country.

A video replay of that conversation, as well as a transcript of a portion of remarks by Rep. Newhouse are available below.

Rep. Newhouse: Let me agree with one of your earlier statements. Our American farmers are some of the best farmers in the world, producing some of the best products in the world, which I’ve had the honor and privilege to represent in different venues, and I agree with that statement, and it truly is a privilege to represent agriculture in the United States of America.

Having said that, let me add to what some of my other colleagues are talking about as far as the labor dispute we are experiencing on the West Coast ports. Being from the state of Washington, this is a huge issue for us. You know, if we can produce the best products and can’t get them to our markets, what good is that? And just to personalize this a little bit, some of my friends, my farmer friends, are experiencing potential bankruptcies because of the slowdown at the ports, because of the labor disputes.

We are seeing, as you know, in Washington state we have a record apple crop this year, which we had plenty of challenges marketing, even without the labor problems. So that’s causing a huge upheaval in the apple industry. We’re seeing layoffs of people at warehouses, so loss of jobs. I’m seeing a tremendous loss in opportunities when it comes to marketing those applies in Asia and some of our primary markets.

We just can’t get the fruit there at particular times like the Chinese New Year, which is a huge marketing window for us we’re losing. Just daily I’m hearing stories about the hardships people are facing. Organic poultry producers are unable to get organic feed grains to…and are at the risk of losing their certification. So just huge implications all up and down the agricultural sector.

As you know, Washington state is very—I hate to use the word dependent—but we are very involved in exports. At least 30% of our crops are exported, but on some commodities it’s upwards of 90%, when you’re talking about hops or wheat. Potatoes, 40%. It’s a huge part of our economy.

Chairman Conaway, Secretary Vilsack Discuss Crop Insurance Issues

Categories: Farm Bill

During the discussion portion of today’s House Agriculture Committee hearing to review the state of the rural economy, Committee Chairman Mike Conaway (R., Tex.) had a detailed conversation with Secretary of Agriculture Tom Vilsack about crop insurance issues.

A video replay and transcript of that discussion is available below.

 

Rep. Conaway: Mr. Secretary, again thanks. Crop insurance clearly the backbone of our safety net. And, you know, for several budgets in a row the administration has proposed additional cuts on top of the money that was cut out in 2008, on top of the money that was cut out as a result of the SRA.

You’re on record with Politico saying that you think the returns are way too healthy. And trying to get at—I’m a CPA, and return on investment, and whether or not somebody’s making money, that’s a pretty mathematical computation, and there seems to be some differences of opinion. RMA thinks that they’re making in the 6% range, well south of the 14% cap that’s put into the farm bill.

We’ve had crop insurance, reinsurance folks come to us saying they’re exiting the business, they’re thinking legitimate, or very…making some very difficult decisions as to whether or not they can continue to allocate capital to this important initiative. It’s a public-private team that I think has driven the success of crop insurance. And so can you give us your thoughts on can RMA share with us just how they compute the numbers, and can we get a better sense of what, you know, why the administration believes that crop insurance folks are making too much money?

Sec. Vilsack: Well, first of all, Mr. Chairman, I certainly acknowledge the importance of crop insurance as a critical component to the safety net. Over $55 billion has been paid out since I’ve been Secretary in crop insurance payouts, so obviously it’s extraordinarily important. You know, it’s a balance between producers, insurance companies, and the taxpayer. And the reality is that both the General Accounting Office, our own Inspector General have raised questions and concerns about various aspects of the program.

What we have proposed in one reform is the preventative planning program. Essentially it creates a current disincentive for the planting of the second crop. We think that should be dealt with and addressed. In terms of the harvest price option loss coverage, that’s a question of whether or not we, or you, or us believe that the partnership should be more of a 50-50 partnership instead of a 65-35 partnership in terms of the level of subsidy.

Bottom line is I think you can look at any one year and you can make a conclusion about whether or not this is a profitable or not profitable enterprise. The reality is if you look at a long period of time—and I think it’s important because folks can point to a year where maybe it was net a loss, one or two years out of the last 15 or 16—we can also point to a place where that return on premiums was 34%, 32%, 32%. So you have to look at the longer, the long trend. And I think what we’ve found is that this enterprise can be actuarially sound at 12%. On balance, over history, the return has been somewhere between 14 and 17%. So it’s just a matter of the long-term. This is a healthy industry, and we’re seeing an expansion of the number of insurance policies and crops being insured, so I think the—

Rep. Conaway: You’re clearly seeing that, but you’re not seeing an expansion of the number of folks, and if this was such a profitable business, there would be folks trying to get in it. And what we’re being told is that there are folks getting out.

Sec. Vilsack: Well—

Rep. Conaway: So it seems like there’s some sort of a mindset at OMB that they don’t want a public-private partnership, they want this fully public, and that makes no sense to many of us.

Sec. Vilsack: Well, I don’t think that’s quite accurate—

Rep. Conaway: Which part?

Sec. Vilsack:   —Mr. Chairman. I think that OMB’s position and our position is that it’s a balance. It’s a proper balance and a partnership. When subsidies are as high as 65, 70, 80%, the question is, is that the right level.

Rep. Conaway: And those have been coming down.

Sec. Vilsack: They—

Rep. Conaway: And those early years—I mean, these guys are in the arena for today forward. And I, you know, I got the historical back look, but the trend’s in the wrong direction. And much of that happened before the 2008 Farm Bill as well as the reinsurance agreement that was done in 2011, so I’m hard pressed to be able to…for those previous years to be used as an excuse for the cuts.

Sec. Vilsack: Well, again, I think we’ve seen years where the profits have been pretty good and years when it’s not.

Rep. Conaway: All right, which year was that ? Which year was that post 2011?

Sec. Vilsack: Well, I can…I’ll get that to you.

Rep. Conaway: Okay.

Sec. Vilsack: I think it’s 2012, 2011-2012.

Rep. Conaway: All right, 2012 was a disaster drought year. But the other thing is I’d like to get, if we could, some sort of an agreement that whatever RMA’s using to drive the conversation, that that would be shared with the rest of us so we can see the numbers. That isn’t rocket science. This is premiums in, expenses out. What expenses get included in the number ought to be a part of the conversation. So I think we can at least start talk—rather than talk about what it ought to be, we ought to be talking about what it is and then talk about what it ought to be.

Sec. Vilsack: Well, I’m happy to provide you, but 2011 was 18%.

Rep. Conaway: Was what?

Sec. Vilsack: Eighteen percent.

Rep. Conaway: Yeah, and the 2011 was prior to the SRA renegotiation which stripped another $8 billion out of the system, so I got you on that. I understand the 2008, but I think this is an important industry. All of us believe that. Your statement is full of compliments to the crop insurance system. We need to keep it in business. And my personal opinion is we need to keep it as a public-private partnership, so I think—

Sec. Vilsack: I don’t disagree with that, Mr. Chairman. I think you’re right about that.

Rep. Conaway: Okay, thank you. My time has expired.

Committee on Agriculture Hearing: State of the Rural Economy, Ranking Member Peterson Opening Statement

Categories: Farm Bill

Opening Statement by Agriculture Committee Ranking Member Collin C. Peterson (D., Minn.)

Committee on Agriculture Hearing: State of the Rural Economy

February 11, 2015

As Prepared for Delivery

“Good morning. Thank you Chairman Conaway for holding today’s hearing and thank you Secretary Vilsack for joining us today. Welcome back to the Committee.

“Today we are looking at the rural economy which, over the past few years, has done very well. I think that’s partly why it was so difficult to get a new farm bill passed. It’s good we were able to get it done though because the farm bill provides a safety net to farmers during difficult times. With declining commodity prices and weather-related challenges across much of the country, its important these new programs are in place.

“Even with the budget savings the new farm bill provided, I remain concerned about attempts to reopen the bill, whether by making changes to crop insurance, SNAP or any other farm bill program. This is a very bad idea and could put everything we worked for in jeopardy. I hope that this Committee will remain united in opposition to additional cuts to farm bill programs. Quite frankly, the Agriculture Committee has done our work.

“With regard to USDA’s implementation of the farm bill, I’ve generally been pleased. We didn’t make this easy, some of the programs are more complicated then I would’ve liked, but it seems like things are on track. I look forward to the Secretary providing an update on the department’s progress.

“Again, I thank the Chair for holding today’s hearing, I look forward to hearing from the Secretary and I yield back.”

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Committee on Agriculture Hearing: State of the Rural Economy, Chairman Conaway Opening Statement

Categories: Farm Bill

Opening Statement: Chairman K. Michael Conaway (R., Tex.)

Committee on Agriculture Hearing: State of the Rural Economy

February 11, 2015

Remarks as prepared for delivery.

“Thank you Mr. Secretary for appearing before the Committee today. You are a very busy man, so we appreciate you taking the time to be here with us today. You have long enjoyed a good working relationship with this Committee, including with our previous Chairman, Mr. Lucas, and I look forward to continuing that tradition going forward.

Saturday marked the one-year anniversary of the signing of the Agricultural Act of 2014. As you know, economic conditions for many producers have changed dramatically since then, with commodity markets plunging by up to 50 percent. Drought and other natural disasters also resulted in disaster declarations in 33 states across the country last year. The net effect was an estimated 43 percent decline in net farm income over the past 2 years.

A good many producers are struggling to demonstrate to lenders that they can cash flow in order to secure credit and farm for another year. Adding to the anxiety of producers is the implementation of the Farm Bill where hard decisions with very significant consequences will have to be made in the coming weeks.

While the agricultural economy has been turned on its head, Mr. Secretary, you and your team have been hard at work implementing the 2014 farm bill, and I want to publicly thank you for the work your team has done thus far. I also want to thank you—and RMA Administrator Brandon Willis in particular—for your dogged determination in getting the APH Adjustment—now called the Yield Exclusion—implemented in time for spring-planted crops. That was a significant lift, and it did not go unnoticed.

While there have been a few bumps along the way—and to be certain, challenges remain—you and your team deserve to be commended for your work.

While I thank you for your hard work implementing the farm bill—including several improvements made to crop insurance—I must admit that I was disappointed to see the administration’s FY2016 budget proposal that slashes $16 billion from crop insurance—a reduction of over 17%. With commodity markets plummeting and producers struggling to find financing, now is precisely the wrong time to weaken crop insurance.

I would also note that, despite the economic turbulence in rural America, the Commodity Title of the Farm Bill is still slated to save taxpayers money relative to the old Direct Payment, and the cost of Federal Crop Insurance is also expected to decline. Moreover, overall Farm Bill savings anticipated during the Farm Bill debate remain intact under the January baseline.

We are at the beginning of a new Congress and a new year. And just like farmers don’t know what the year will bring in terms of weather and markets, we too can’t predict the twists and turns of the political process. But what we do know is that hard work always finds its reward. To that end, my colleagues and I look forward to rolling up our sleeves and getting to work.

Mr. Secretary, again thank you for being with us today. I look forward to your testimony.”

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Policy; Ag Economy; Trade; and, Biofuels – Wednesday

Policy Issues

Jerry Hagstrom reported yesterday at National Journal Online that, “When Agriculture Secretary Tom Vilsack testifies before the House Agriculture Committee Wednesday, he is likely to get some tough questions about the Obama administration’s views on food stamps and crop insurance–and the country will get a sense of just how difficult it will be for Congress to cut anything out of Agriculture Department programs.

“Congressional Republican leaders, including House Agriculture Committee Chairman Michael Conaway of Texas, have expressed enthusiasm for reining in the deficit through reconciliation, a budget tool that would require each authorizing committee to trim the programs under its jurisdiction, probably on a percentage basis.

But the Republican congressional focus is on cutting food stamps while the administration has proposed cutting crop insurance. Last week at the first of two crop insurance industry conferences here [Bonita Springs, Fla.], Mary Kay Thatcher of the American Farm Bureau Federation tied the two together, telling the Crop Insurance and Reinsurance Bureau meeting that proposals to cut food stamps put a ‘bull’s eye’ on crop insurance. Liberals will argue that if Congress is going to reduce the deficit by taking food away from children it should also cut farm subsidies, Thatcher said.”

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World Agricultural Supply and Demand Estimates- Brief Wheat, Corn and Soybean Highlights

On Tuesday the World Agricultural Outlook Board (WAOB) released its monthly World Agricultural Supply and Demand Estimates (WASDE) report, which included the following highlights:

Wheat– U.S. wheat ending stocks for 2014/15 are projected 5 million bushels higher as reduced exports more than offset an import reduction. Projected imports are lowered 20 million bushels to 160 million on pace to date. Projected exports are lowered 25 million bushels to 900 million on increased competition from EU and the recent strengthening of the dollar, which makes U.S. exports less competitive. Ending stocks are increased to 692 million bushels. The season-average farm price is lowered 5 cents on the low end and 15 cents on the high end to $5.85 to $6.15 per bushel.”

Corn– “U.S. feed grain ending stocks for 2014/15 are projected lower with reductions for corn, sorghum, and barley. Corn accounts for most of the reduction with projected use in ethanol production raised 75 million bushels on higher forecast 2015 gasoline consumption by the Energy Information Administration. Corn feed and residual use is projected 25 million bushels lower with the accompanying increase expected in supplies of distillers’ grains. Corn ending stocks for 2014/15 are reduced 50 million bushels. The projected range for the corn season-average farm price is narrowed 5 cents on both ends to $3.40 to $3.90 per bushel.”

All U.S. corn supply and demand variables from yesterday’s WASDE report are available in this table:

larger view here)

Soybeans– “The 2014/15 season-average soybean price range projection is unchanged at $9.45 to $10.95 per bushel.”

All U.S. soybean supply and demand variables from yesterday’s WASDE report are available in this table:

larger view here)

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The Economist- Why pigs are so important to China

From The Economist- “China has a seemingly insatiable appetite for pork. More than half of all the pigs in the entire world live there. Why are pigs so important to China?”

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