FarmPolicy

April 23, 2019

CBO, FAPRI March Baseline Updates

On Monday, the Congressional Budget Office (CBO) released its updated baseline Budget Projections for 2015 to 2025.

A brief overview of CBO’s January baseline projections can be found here.

Also on Monday, the Food and Agricultural Policy Research Institute (FAPRI) released its latest baseline-briefing book.

David Rogers reported on Monday at Politico that, “Fresh projections for the new farm bill Monday show a greater participation rate — and higher costs — associated with a Senate-backed revenue loss program championed by Midwest corn and soybean producers.

“A revised farm baseline prepared by the Congressional Budget Office shows a decided shift in this direction from just months ago. A second report from the Food and Agricultural Policy Research Institute at the University of Missouri projects that the program’s costs will jump by nearly $1.7 billion, or 81 percent, above what FAPRI had previously predicted for the 2015-2016 marketing year.”

Mr. Rogers explained that, “Proponents of the program, formally known as Agricultural Risk Coverage or ARC, argue that it is still more efficient than traditional counter-cyclical, price support programs. And in fact, both the FAPRI and CBO numbers show that the ARC payments to corn farmers will drop off significantly in three to four years.

“Nonetheless, the infusion of so much government money up front is sure to invite criticism. CBO projects that total payments to corn and soybean producers from ARC alone will be $3.37 billion in fiscal 2017 — when the big subsidies come due for the government.

“That is 38 percent higher than what this sector collected in 2014 under the old system of direct cash payments to producers.”

The Politico article pointed out that, “It’s still a bit of a guessing game as to how many farmers will sign up for ARC vs. PLC, but the combined costs in the early years are striking.

“In the case of corn and soybeans, CBO is projecting most producers will go in the direction of ARC, but thousands will opt for PLC instead, accounting for another $1.47 billion in costs in fiscal 2017.

When added to the ARC subsidies, the corn and beans sector is expected then to receive a total of $4.8 billion in government payments in fiscal 2017. That’s nearly double what the direct payments were for these two crops in 2014.”

And Philip Brasher reported on Monday at Agri-Pulse that, “The new farm programs for grain and oilseed growers will pay them up to $7 billion annually over the next few years, surpassing what they would have received through the old system of direct payments, according to new forecasts released Monday.”

After additional analysis of the updated CBO and FAPRI reports, Mr. Brasher pointed out that, “After 2018, ARC payments decline dramatically as the five-year moving average begins to reflect the drop in commodity prices. FAPRI economists estimate that ARC payments will drop from $3.1 billion in fiscal 2018 to $1.8 billion in 2019 and then to $1.2 billion the following year.

PLC payments, on the other hand are expected to peak at $2.8 billion in fiscal 2018 and drop to $2.4 billion the following year, according to FAPRI.

Both CBO and FAPRI estimate that the cost of the federal crop insurance program, which has been expanded with new products under the 2014 farm bill, including a new policy for cotton, will hover around $8 billion a year.”

More broadly, the FAPRI update stated that, “Lower prices have resulted in a large decline in crop producer income and could result in significant federal spending under new programs established by the 2014 farm bill. After reaching record levels in 2014, most livestock sector prices are also expected to decline in 2015. As a result, net farm income is projected to fall sharply.”

Average projected corn prices recover to $3.89 per bushel for the 2015/16 marketing year in response to reduced U.S. production. Wheat and soybean prices both fall in 2015/16, to $5.17 per bushel and $9.29 per bushel, respectively, given continued large global supplies,” FAPRI said.

In addition, CBO’s outlook for the SNAP program is available here, while the CBO’s outlook for child nutrition programs can be found here.

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Clarity Sought in USDA Wetland Determinations- Sen. Heitkamp

Categories: Farm Bill

A news release on Monday from Senate Ag Committee member Heidi Heitkamp (D., N.D.) stated that, “[Sen. Heitkamp] today called on the U.S. Department of Agriculture (USDA) to clarify how it is making offsite wetland determinations on farmers’ land in North Dakota and across the country, and improve certainty for farmers and their operations for the upcoming growing season.

“The Natural Resources Conservation Service’s (NRCS) State Offsite Methods allow it to make wetland determinations without being physically present on farmers’ land. However, its new proposed methods have not provided additional clarity for farmers in how the NRCS conducts this process. Heitkamp pressed USDA Under Secretary for Natural Resources and Environment Robert Bonnie to improve how the NRCS communicates with farmers relating to wetland determinations and conservation compliance, which impact what farmers may do with their land.”

Recall that on February 27, the House Appropriations Subcommittee on Agriculture held a budget hearing and heard testimony from USDA- Natural Resources Conservation Service (NRCS) Chief Jason Weller.

During the discussion portion of this hearing, the issue of remote wetlands determination came up.

Specifically, Rep. David Young (R., Iowa) had the following exchange with Chief Weller:

Rep. David Young: “Last year the NRCS proposed updating the way it conducts wetlands determinations in the prairie pothole states, you know, Minnesota, Iowa, North Dakota, South Dakota. How will the wetland determination proposal affect producers, and when there is a review, will there be an ability for folks to have a second request for review and a second opinion if they disagree with the determination you make?”

Mr. Weller: “Yes. So first starting with what a producer hopefully will experience with us. What we’re proposing is bringing a modern, up-to-date, scientifically driven approach to doing what we’re calling off site determinations. This is a practice we’ve had at NRCS for decades. But what we didn’t have in the prairie pothole region is a consistent approach across all four states. So depending on where your property was, you had a different approach that we needed to update.

“So what this means, though, is actually, at the end of the day, when we implement this—because we were just seeking comments on this approach so far—is better service for a producer. So right now, as you know, there’s been a backlog, particularly in North and South Dakota, but Iowa as well. And in a lot of cases it’s because it’s on site determinations. It takes staff time. When you do an off site determination, you’re using remote sensing technology, you know, photography, LIDAR coverage, other techniques to really do equivalent, if not a more accurate determination approach.

The bottom line is time savings. So the average number of times it takes to do an off site determination is six hours. The average number of hours it takes to do on site is at least 14 hours. Many of them are 40 hours. And that doesn’t count all the driving time. When you break that down in dollars and cents, if you just say, take—you assume 30 bucks an hour for like a field technician to go out and do it, that equates to about 170 bucks to do an off site determination. When you do on site it’s like over $400 a determination, on average.

But when you multiply that over like South Dakota, where they have 2,500 determinations in the backlog, that’s the difference between $300,000 over a million dollars. And when it comes down to that kind of expenditure, when you add that up across four states, you’re talking real money. And that’s money I’d rather employ back in the field to provide, you know, technical assistance to producers as opposed to investing it in a way that we can be more efficient.

“So to your question about what happens for the producer, the first approach would be the off site determinations, which will be much more efficient. They’ll get determinations made quicker. It’s a preliminary determination. If they don’t like the determination, they can then appeal it and they can then request an on site determination.

“If they don’t like the on site determination from the field staff, they can then appeal that to the state office. If they don’t like the state office determination, they can then appeal that to the national appeals division. So there’s absolutely all these protections for a producer. We’re not changing any of that, how that works. We’re actually just trying to streamline it and get the determinations made faster and cheaper.”

Today’s news update from Sen. Heitkamp added that, “Last August, Heitkamp brought Bonnie to North Dakota, calling on him to improve consistency and predictability on wetland determinations and to have him hear firsthand how uncertainty surrounding wetland regulations affects farmers in the state.”

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Updated: New Research Halted at U.S. Meat Animal Research Center Until New Procedures Adopted, OIG Follow Up

Categories: Food Safety

Recall that back on February 13, the House Appropriations Subcommittee on Agriculture held a budget hearing and heard testimony from USDA Inspector General Phyllis Fong.

During the hearing, Subcommittee Chairman Robert Aderholt (R., Ala.), Subcommittee ranking member Sam Farr (D., Calif.) and Rep. Chellie Pingree (D., Maine) all referenced a recent New York Times article from January that focused on animal production research procedures and operations at a federal facility in Nebraska. The lawmakers expressed support for the IG to investigate some of the issues raised in the Times article in more detail.

The lawmakers noted that:

Chairman Aderholt: “In closing, I do want to thank you for agreeing to review the New York Times allegation about the U.S. Meat Animal Research Center in Clay Center, Nebraska. The article described research and attitudes that seem to be pretty much in…pretty inconsistent with the conscientious, the hardworking scientists and the staff that work there and that we have at the Agricultural Research Service. Your assistance in auditing the claims included in the article and reviewing the current conditions, practices and policies would be very helpful to us.”

Ranking Member Farr: “And I want to echo what the chairman said on the animal treatment center, and I’m sure it’s going to open up a lot of issues with a lot of university research areas, but it’s worth looking into. I know California has required all the research institutions in the state universities to change all their caging and animal husbandry practices to bring in humane practices, state-of-the-art humane practices. It’s very expensive to bring it all up, but they did it, and I think that’s probably something that we in Congress ought to look at.”

Rep. Pingree: “I want to just add my voice to the choruses of concern around a very troubling New York Times story that was mentioned about animal research, so I’m hopeful that we’re going to do some more investigating into that. And obviously many of the concerns that were raised in that story about the spending of taxpayer dollars and humane treatment basically bordering on the bizarre, in fact in some of the things that were being researched, in my opinion, and even more importantly, completely counter to what the consumer is looking for today. I mean, the market is growing in humanely raised and, you know, different levels of treatment for animals, so why the taxpayer dollars is being spent in something that’s clearly inappropriate practice I think raises a lot of questions. So just want to add my concerns along with the chair and the ranking member.”

Reuters writer P.J. Huffstutter reported this morning that, “No new research projects will be allowed to begin at the U.S. Meat Animal Research Center until stronger procedures are put into place and improved animal welfare standards are implemented by the center’s oversight staff, U.S. Department of Agriculture Secretary Tom Vilsack said in a statement Monday.

“Vilsack also ordered that USDA staff update electronic record-keeping practices at all facilities, to ensure all animals are being appropriately monitored and cared for.”

DTN Ag Policy Editor Chris Clayton reported on Monday that, “A panel of outside researchers declared in a draft report Monday they found no evidence of current animal abuse or mistreatment at a USDA animal and meat research facility in Nebraska.

“Despite no evidence of current animal abuse, USDA still ordered any new research projects at the facility not be started until some new procedures are implemented.

“The report examined current practices at USDA’s Meat Animal Research Center outside of Clay Center, Neb., following allegations in the New York Times of animal abuse at the facility. The article in January sparked outrage from some animal-rights activists and led Agriculture Secretary Tom Vilsack to call for a quick review of the facility.”

Mr. Clayton added that, “A four-member panel visited the research center over a two-day period Feb. 24-26 and gave the facility a clean bill of health. ‘Without exception, the panel observed healthy and well-cared-for animals,’ the panel’ report stated. ‘As a rule, animals were handled with care and professionalism by dedicated staff members. No instances of animal abuse, misuse or mistreatment were observed.'”

The report released Monday didn’t specifically address allegations made in a New York Times article in January about death losses and animal care at the facility,” the DTN article said.

Joe Duggan reported on Monday at the Omaha World-Herald Online that, “The panelists found ‘no evidence’ of animal welfare training for those who work at the center. In addition to ordering such training, Vilsack also required center officials to more clearly define their long-standing partnership with the University of Nebraska-Lincoln when it comes to animal welfare.

“‘It is imperative that all USDA research activities be carried out in a manner consistent with our high standards of humane and responsible treatment of animals in our care,’ Vilsack said.”

Also on Monday, with respect to the USDA’s Inspector General, P.J. Huffstutter reported that, “The U.S. Agriculture Department’s Office of the Inspector General has assembled an audit team and plans to begin field work this month in an inquiry of the government’s key livestock study center amid media reports of animal welfare abuse, the agency told Reuters on Monday.

“OIG officials currently are ‘determining the scope and objectives of their planned audit inquiry‘ into the U.S. Meat Animal Research Center (USMARC) facility in Nebraska, the agency said.”

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