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Policy Issues; Ag Economy; Biotech; Trade; and, CFTC

Policy Issues

A news release yesterday from the House Ag Committee stated that, “Today the House Committee on Agriculture sent its Budgets Views and Estimates Letter for Fiscal Year 2016 to the House Budget Committee. In the letter, Committee members urged Budget Committee Chairman Tom Price to take into account that with the Farm Bill the Agriculture Committee made a significant contribution to deficit reduction with the passage of the Farm Bill, which Congressional Budget Office (CBO) estimated at the time would save $16 billion over 10 years. Despite a steep decline in commodity prices the CBO estimates that taxpayer savings remain intact.

“‘The Farm Bill is working as it was intended to work, meeting our objectives with substantially fewer resources,’ Committee members wrote in the letter. ‘From our perspective, we believe that the Committee on Agriculture has done its duty for now with respect to deficit reduction and that areas constituting the other 98 percent of the Federal budget ought to be looked to first for any additional savings being sought this Congress.’”

Chairman Michael Conaway (R., Tex.) noted yesterday that, “As we discussed with Secretary Vilsack just yesterday, farm country is facing some troubled economic conditions, and regulatory burdens and trade and tax uncertainties are only making the situation worse. We ask that the Budget Committee take these factors, as well as our Committee’s work ahead, into consideration when determining from which congressional committees and mission areas any future budget savings should come.”

Ag Committee ranking member Collin Peterson (D., Minn.) pointed out yesterday that, “As the letter states, CBO has estimated that the 2014 Farm Bill would save $16 billion over 10 years; $23 billion when you count sequestration. We were the one Committee that actually stepped up to the plate and reduced the budget deficit. Frankly, I would argue that we have done our part when it comes to deficit reduction.

“Despite this savings and the efforts of the Agriculture Committees, agriculture programs continue to come under attack. The Administration recently proposed cuts to the crop insurance program and I anticipate, given what we have seen in the past, that the Republican budget will also propose similar cuts. It’s important to remember that the purpose of farm bill programs is to provide a safety net during tough economic times, whether for farmers facing falling commodity prices or consumers struggling to put food on the table.”

An update yesterday from the American Soybean Association (ASA) noted that, “Following a letter today from the House Agriculture Committee to House Budget Committee Chairman Tom Price (R-Ga.) urging that the budget panel take into account the sizable savings previously contributed by the farm bill when weighing future cuts under a potential budget reconciliation measure, [ASA] President Wade Cowan expressed ASA’s full support for the agriculture committee’s request.

“‘Soybean farmers worked very hard to pass what we believe to be a fair and well-balanced farm bill that addresses our need for certainty, while still allowing the market to drive soybean production, as it should. In helping to craft the bill, ASA supported measures that shore up the farm and food safety net while contributing to more than $16 billion in spending reductions. What resulted from that work is a nutrition, conservation and risk management bill that represents just 2 percent of federal spending. Digging deeper, the combined cost of crop insurance and commodity programs in the farm bill are less than one third of one percent of the federal budget.’”

Meanwhile, an update yesterday from Sen. Jeff Flake (R., Ariz.) indicated that, “[Sen. Flake], U.S. Rep. John J. Duncan, Jr. (R-TN) and U.S. Sen. Jeanne Shaheen (D-NH) today introduced the bipartisan, bicameral Harvest Price Subsidy Prohibition Act. The bill would save taxpayers $19 billion over 10 years by eliminating subsidies for a costly but little-publicized profit guarantee known as Harvest Price Option (HPO).

“Unlike traditional crop insurance plans that protect farmers from unanticipated losses, these taxpayer-subsidized harvest price plans actually guarantee that farmers don’t miss out on unanticipated profits.

“The bill would not prohibit the U.S. Department of Agriculture from offering HPO profit guarantee plans, provided that individual policyholders pay the full insurance premium. The bill would do nothing to limit, reduce or alter subsidies associated with traditional crop insurance plans.”

A statement yesterday on behalf of the American Association of Crop InsurersCrop Insurance and Reinsurance Bureau, and National Crop Insurance Services indicated that, “This is just another example of agriculture opponents trying to erode the risk management tools on which farmers depend.  Anything that weakens the crop insurance system ultimately harms rural America and the men and women who feed, clothe, and fuel the country.

“Congress strengthened crop insurance in the bipartisan 2014 Farm Bill because it minimizes taxpayer risk exposure, requires farmers to help fund the infrastructure, and utilizes private-sector efficiency.  Any attempt to reopen this just-completed legislation to undermine the affordability, availability, and viability of crop insurance should be opposed.”

More specifically with respect to conservation, a news item yesterday from the Theodore Roosevelt Conservation Partnership pointed out that, “A diverse and growing coalition representing more than 1,200 groups dedicated to balanced natural resources policy today urged congressional leaders to implement a 2-percent increase in funding for key conservation, outdoors and historic preservation programs in fiscal year 2016.

America’s Voice for Conservation, Recreation and Preservation issued its request following two years of level funding for coalition priorities provided by the Murray-Ryan Bipartisan Budget Act of 2013. In budgets being considered for FY 2016, natural resource conservation, outdoor recreation and historic preservation programs could be subject to disproportionate cuts – an outcome that the AVCRP coalition is committed to avoiding.”

And a news release yesterday from USDA stated in part that, “[USDA] today issued a report showing that since 2010 USDA and its partners in the Sage Grouse Initiative (SGI) have worked with private landowners to restore 4.4 million acres of habitat for sage-grouse while maintaining working landscapes across the West. USDA also announced today that, through the provisions of the 2014 Farm Bill, it will invest in new sage-grouse conservation work over the next four years.”

 

Agricultural Economy

An update yesterday at FarmPolicy.com pointed to two recent Federal Reserve Bank reports (Chicago and St. Louis) regarding farmland values; an article in today’s Wall Street Journal stated that, “The [Federal Reserve] reports spotlight an overall slowdown in the U.S. farm economy and in the appreciation of farmland prices.”

Jacob Bunge reported yesterday at The Wall Street Journal Online that, “Pilgrim’s Pride Corp. expects a boom in the U.S. chicken industry to go on as restaurants’ and grocery stores’ demand for poultry outpaces meatpackers’ efforts to boost production… [A]nalysts have anticipated growing profits and sales among U.S. poultry processors. Back-to-back bumper U.S. corn and soybean crops have cut the price of feed, which are among the biggest costs for poultry producers, while constrained supplies of beef and pork have made chicken attractive to restaurants and a better value in grocery stores.”

Also yesterday, Reuters writers Sybille De La Hamaide and Valerie Parent reported that, “Low prices and fading competition have put European barley exports on track to hit a record, led by a strong flow of French shipments to China, analysts said.

European barley has also benefited from China’s move to diversify animal feed supplies after restricting U.S. corn imports on concerns about possible contamination with genetically-modified crops.”

An update yesterday at the U.S. Drought Monitor noted that, “This U.S. Drought Monitor week saw improvements along the West Coast as a series of strong Pacific storms produced substantial rainfall accumulations in northern California and western portions of Oregon and Washington. The storms were the first significant precipitation event to affect California since mid-December… Overall, the storms had little impact on the well-below-normal snowpack conditions across the Sierra Nevada and Cascades ranges.”

A tweet yesterday from NOAA’s National Climatic Data Center noted that, “Feb 10: Extreme drought reduced in northwest California ‪#CAdrought ‪http://www.drought.gov  ‪#DroughtMonitor

Also yesterday, Richard Marosi reported at the Los Angeles Times Online that, “The Mexican government and Wal-Mart, the world’s largest retailer, have announced steps to improve the lives of the nation’s farmworkers, two months after a Los Angeles Times investigation detailed labor abuses at Mexican agribusinesses that supply major U.S. supermarket chains and restaurants.”

 

Biotech

Chris Clayton reported yesterday at the DTN Ag Policy blog that, “Rep. Mike Pompeo, a Republican from Kansas, lashed out Thursday at three Democrats in Congress for introducing a bill that would require labeling foods that have ingredients from biotech crops. The congressmen said lawmakers should ‘stop listening to celebrity chefs and well-heeled ‘activists,’ and start really caring about those less fortunate.’

“Sens. Barbara Boxer of California and Richard Blumenthal of Connecticut introduced a bill in the Senate and Rep. Peter DeFazio of Oregon introduce a bill in the House. The bills are called the Genetically Engineered Food Right-to-Know Act. The bills would require labeling for foods that contained ingredients from biotech crops and require FDA oversight. The lawmakers introduced the same legislation in the prior Congress, but it did not go anywhere.”

 

Trade

Vicki Needham reported yesterday at The Hill Online that, “Trade advocates are digging deep into the numbers to make their case for approving trade promotion authority (TPA) and the Obama administration’s broader trade agenda.

“Three groups on Thursday released reports bolstering their case that new global deals include higher standards than previous pacts like the oft-cited 1994 North America Free Trade Agreement, which has been blamed for U.S. job and wage losses.

“Third Way, the U.S. Chamber of Commerce and the National Association of Manufacturers — long-time proponents of trade negotiations with Europe, Latin America and Asia — detailed their evidence that new trade deals, like the Trans-Pacific Partnership (TPP), will actually help the nation’s workers and businesses of all sizes.”

Toko Sekiguchi reported yesterday at The Wall Street Journal Online that, “Prime Minister Shinzo Abe is vowing to push forward with efforts to decentralize farm lobbies that have long supported his party, as he accelerates broader structural changes to revitalize Japan’s economy.

“‘We can no longer hold off on an all-encompassing agricultural reform,’ Mr. Abe said Thursday at the top of a policy speech to mark the beginning of a new parliamentary session. He called on farmers to ‘brand and cultivate overseas markets,’ underscoring his intention to build support to open up the farm sector to prepare for Japan’s participation in the U.S.-led Trans-Pacific Partnership free trade pact.”

On a separate trade issue, Keith Laing reported yesterday at The Hill Online that, “Ports along the West Coast are closing for four days over the Presidents Day holiday weekend due to a labor standoff, threatening the flow of cargo packages to cities across the U.S.”

A news release yesterday from Ag Committee member Dan Newhouse (R., Wash.) stated that, “Today, [Rep. Newhouse], Dave Reichert (R-WA), Kurt Schrader (D-OR) and Jim Costa (D-CA) introduced a House Resolution expressing the sense of Congress that the current contract negotiation between the Pacific Maritime Association (PMA) and the International Longshore and Warehouse Union (ILWU) must come to swift conclusion. The resolution also states that in the event of a strike or lockout, the Administration must intervene to end the dispute to protect American workers and the national economy.”

An update yesterday from Western Growers yesterday noted that, “Western Growers President and CEO Tom Nassif issued a statement today calling on President Obama to intervene in the negotiations to bring about a prompt resolution of the ongoing dispute between the Pacific Maritime Association (PMA) and the International Longshoreman and Warehouse Union (ILWU) workers.  Fresh fruit and vegetable exports continue to face serious deliverability issues in the wake of the dispute that has disrupted international commerce and threatens daily financial losses that could run into the billions.”

In other trade related news, Tim Devaney reported yesterday at The Hill Online that, “The longstanding Cuba trade embargo would end under new legislation in the Senate.

“Sen. Amy Klobuchar (D-Minn.), along with a bipartisan group of lawmakers, introduced a bill Thursday that would pave a way for American companies to do business in Cuba.

“The Freedom to Export to Cuba Act would strike down decades-old laws that prohibit U.S. businesses from trading with or operating in Cuba.”

An update yesterday from the American Soybean Association (ASA) noted that, “[ASA] welcomed legislation introduced today by [Sen. Klobuchar] and backed by a bipartisan group of senators including Sens. Michael Enzi (R-Wyo.), Debbie Stabenow (D-Mich.), Jeff Flake (R-Ariz.), Patrick Leahy (D-Vt.), and Dick Durbin (D-Ill.) that would end the United States’ trade embargo with Cuba.”

 

Commodity Futures Trading Commission (CFTC)

The House Ag Committee indicated yesterday that, “Today, the House Committee on Agriculture held a hearing to review the futures, options, and swaps markets that the Commodity Futures Trading Commission (CFTC) oversees. Chairman K. Michael Conaway urged CFTC Chairman Timothy Massad to make sure the agency’s rules both protect end-users and ensure well-functioning financial markets.”

Statements at yesterday’s hearing from Chairman Conaway and ranking member Peterson can be found here and here; while some remarks from Rep. Randy Neugebauer (R., Tex.) can be found here.

Sarah Gonzalez reported yesterday at Agri-Pulse that, “Committee ranking member Collin Peterson, D-Minn., told Massad that one of the things his constituents are most upset about is the lack of jail-time given to executives of large firms that lost millions of customer funds in market scandals in recent years. For example, a federal court fined commodities brokerage firm MF Global $1.2 billion after placing risky bets in European markets, going bankrupt in 2011 and losing millions of its customers’ funds, but its supervisors have not been criminally charged.

“Rep. David Scott, D-Ga., said putting ‘some of the crooks in jail’ will be ‘the foremost way to gain the confidence of the American people.’

“Massad said that ‘holding individuals accountable, putting people in jail, is one of the most important ways we can send a clear message,’ but he added that handing out jail time required action by other agencies.”

Keith Good