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Sunday Afternoon Update: Policy Issues; Trade; Ag Economy; Biotech; and Regulations

Policy Issues

A news release on Friday from USDA’s Farm Service Agency stated that, “Agriculture Secretary Tom Vilsack announced today that a one-time extension will be provided to producers for the new safety-net programs established by the 2014 Farm Bill, known as Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC). The final day to update yield history or reallocate base acres has been extended one additional month, from Feb. 27, 2015 until March 31, 2015. The final day for farm owners and producers to choose ARC or PLC coverage also remains March 31, 2015.”

Also on Friday, Senate Ag Committee Chairman Pat Roberts (R., Kan.) stated that, “‘USDA heard the concerns directly from producers earlier this week at our first Committee hearing and took action as a result,’ Chairman Roberts said. ‘I would encourage all producers to visit their local FSA office as soon as possible to make sure they have enough time and information to make these important decisions.’”

Reuters writer Christine Stebbins reported on Friday that, “Crop insurance price guarantees for U.S. corn, soybeans and spring wheat in 2015 will fall 10 percent or more based on futures settlement prices for February, grain analysts said on Friday.

“The U.S. Department of Agriculture’s (USDA) Risk Management Agency (RMA), which oversees the multibillion-dollar crop insurance program, by law uses the average price in February for harvest-time grain futures contracts to set the ‘floor’ price that private insurers must guarantee farmers who sign up…[B]ased on Friday’s futures closes, the RMA is expected to set the floor price for corn at $4.15 a bushel, down 10 percent from last year’s $4.62, and for soybeans at $9.73 a bushel, down 14 percent from last year’s $11.36.”

The article noted that, “The crop insurance guarantees are important not just for farmers, but for their bankers and suppliers. The rates also inform on farmer incentives for which crops to plant.

“‘From a cashflow standpoint, $4 corn and $9 beans keep most people afloat,” said Darrel Good, a farm economist at the University of Illinois. ‘Margins are tight, but it’s certainly not the end of the world.’

“After years of record production and prices, U.S. grain farmers have seen the markets come back to earth. They continue to wrestle with stubbornly high costs, from seed and fertilizer to land rents and equipment.”

Also at last week’s Senate Ag Committee hearing, producers pointed to the importance of crop insurance as a key risk management tool and noted that, “But crop insurance is not a way to get rich, it’s a matter of survival, and very small differences in the way that crop insurance is supported make the difference for a lot of small family farmers, whether or not they survive.”

An update on Friday at FarmPolicyFacts.org indicated that, “The critics of U.S. farm policy should feast their eyes on a new study that puts into perspective what America’s farmers are up against on the global market. While the U.S. made sweeping reforms and cuts to farm policy in the 2014 Farm Bill, its competitors were busy ramping up trade-distorting subsidies for their own producers. For some countries, support price levels for certain commodities have increased by more than 100 percent over the last decade, according to the report.

“The nations in question include Brazil, China, India, Turkey, and Thailand – all member countries of the World Trade Organization (WTO). The report, which was sponsored by U.S. commodity organizations including the USA Rice Federation and is an update of a 2011 study, explains that ‘these countries are major producers, consumers, and in many cases, exporters of agricultural products, the effects of [their] policies are felt globally.’”

On Friday, the House Appropriations Subcommittee on Agriculture continued its review of the USDA budget and heard testimony from Natural Resources Conservation Chief Jason Weller.

Among the topics covered in the discussion portion of the meeting were: NRCS use of drones, wetlands determinations and farmer appeals, and the Regional Conservation Partnership Program. Highlights from the hearing have been posted at FarmPolicy.com.

With respect to the ongoing California drought, some farmers in the Golden State received grim news on Friday when officials indicated that federal water sources would not be available for a second year in a row. House Ag Committee member Jim Costa (D., Calif.) summed up the impact by saying that, “What has been devastating to this point will now become catastrophic.”

Additional background on the drought and the significant impact of this policy development can be found at FarmPolicy.com.

On Friday, in an unexpected and somewhat chaotic fashion, the House approved a one-week extension of the budget for the Department of Homeland Security. The ongoing dispute stems from executive branch action on immigration, which House GOP members are intent on modifying.

More broadly, the disorderly fashion of Friday’s vote has raised concern about the ability of Congress to capably tackle issues like trade and tax reform as the new Congress moves forward- details at FarmPolicy.com.

After the full House Ag Committee and Nutrition Subcommittee held hearings on the SNAP program last week, on Thursday, the Conservation and Forestry Subcommittee will “review the definition of ‘waters of the United States’ proposed rule and its impact on rural America.”

Meanwhile, a front page article in Sunday’s Des Moines Register (“Bruce Rastetter: The quiet, fierce man behind ag summit”) noted that, “[Mr. Rastetter] has also emerged as one of the leading Republican financial contributors in Iowa over the past decade and will stand in the national spotlight Saturday as organizer of the inaugural ‘Iowa Agricultural Summit’ for presidential hopefuls.”

And Kathie Obradovich reported in Sunday’s Des Moines Register that, “Don’t expect U.S. Sen. Ted Cruz to shuck his opposition to the ethanol-friendly Renewable Fuel Standard when he comes to the Iowa Ag Summit next weekend.”

 

Trade

Chris Clayton reported on Friday at DTN (link requires subscription) that, “Following a theme he’s revisited throughout his tenure as agriculture secretary, Tom Vilsack is effectively working as the White House’s legislative whip trying to drum up support for Trade Promotion Authority.

“Every speech and every appearance eventually touches on getting Congress to quickly authorize Trade Promotion Authority so the White House can close the deal on the 12-country Trans-Pacific Partnership.”

Mr. Clayton added that, “On Friday, Vilsack held a press call with a pair of former ag secretaries to make the case for TPA and then talked about the importance of trade when he addressed roughly 2,000 farmers and agricultural industry leaders at Commodity Classic in downtown Phoenix.”

The DTN update stated that, “With Vilsack on the Friday morning call were Ann Veneman and Dan Glickman. Veneman, who was agriculture secretary during President George W. Bush’s first term, reiterated Vilsack’s message. ‘Trade agreements are essential to expand agricultural exports,’ Veneman said. She added, ‘Trade Promotion Authority is essential for that to happen.’

“Glickman, who served under President Bill Clinton and also was a congressman from Kansas, noted there is a bipartisan mix of both support and opposition to Trade Promotion Authority. He called the effort to get TPA done ‘a tough row to hoe’ but a necessary one nonetheless.”

A news release from USDA on Friday stated that, “A bipartisan group of former U.S. Agriculture Secretaries, representing all past Administrations from those of President Jimmy Carter to President George W. Bush, today issued the following open letter urging Congress to pass Trade Promotion Authority.”

A news release from Rep. Adrian Smith (R., Neb.) on Friday noted that, “Last week, I joined an eight-member congressional delegation led by Ways and Means Chairman Paul Ryan to promote trade in three Asian nations participating in Trans-Pacific Partnership (TPP) negotiations. In Singapore, Malaysia and Japan, we met with senior government officials and American and local business leaders in an effort to advance the U.S. trade agenda and strengthen ties with these countries.”

The release added that, “The Japanese also made it clear they do not want to make final offers until Congress passes Trade Promotion Authority (TPA), adding to the need for us to act quickly on this effort. For America to get the best possible deal in trade negotiations, passing TPA is the essential first step.”

And a Ways and Means Committee news release from late last week noted that, “Farmers and ranchers are rallying behind the bipartisan effort to pass trade promotion authority.”

 

Agricultural Economy

On Friday, USDA released its monthly Agricultural Prices report, which showed a large drop in the price of cotton, milk and hogs, while corn and soybean prices held steadyadditional details and graphs available here.

And Donnelle Eller provided an interesting look at recent government reports on the price of beef on the front page of the Business Section of Sunday’s Des Moines Register- A summary of the article and additional analysis is available here, at FarmPolicy.com.

 

Biotech

Reuters writers Mayank Bhardwaj and Krishna N. Das reported on Friday that, “Monsanto’s Indian subsidiary expects to submit final trial results for its genetically modified (GM) corn to lawmakers within a year for the government to then decide on a commercial launch, the company’s country head said on Friday.

“India does not currently allow the growing of GM food crops but the government of Prime Minister Narendra Modi, keen to improve farms’ productivity, has encouraged open field trials after a five-year de facto ban.”

 

Regulations

Timothy Cama reported on Friday at The Hill Online that, “The House Rules Committee will vote next week on a bill to prevent the Environmental Protection Agency (EPA) from using ‘secret science,’ setting up a likely vote on the House floor.

“The committee said will vote on the bill Tuesday, which would allow a probably vote in the full House Wednesday.”

Keith Good