FarmPolicy

July 16, 2019

Sunday Update- Budget-Policy; Ag Economy; and, Regulations

Budget- Policy Issues

An update on Friday at the National Sustainable Agriculture Coalition (NSAC) Blog stated that, “This week the House and Senate Budget Committees each passed their Fiscal Year 2016 budget resolutions on party line votes.

“Each Committee’s resolution will now go to the floor of the House and Senate for consideration. This will likely take place next week with final passage targeted for the end of the week.”

The NSAC update explained that, “Budget resolutions provide the blue print for the appropriations process that will take place in the coming months. They set binding top line spending caps for the House and Senate Appropriations Committees.

“Budget resolutions may also include ‘budget reconciliation’ instructions, which instruct certain Committees to meet specific deficit-reduction targets through reductions in mandatory spending. Only the House Budget Committee’s version contains reconciliation instructions to the Agriculture Committee.”

Friday’s update added that, “Last week we previewed the strong indications around Capitol Hill that the 2014 Farm bill would face large cuts as part of the budget resolution’s reconciliation instructions. As it turned out, efforts like this letter from nearly 400 groups, including NSAC, opposing the reopening of the farm bill seemed to have had an effect.

The Senate Budget Resolution did not include any reconciliation instructions to the Agriculture Committee, and the House Budget Committee’s resolution contained a relatively small cut of $1 billion over 10 years. That amounts to 0.1% for total farm bill spending.

“As the House budget resolution heads to the floor for consideration, NSAC released a statement encouraging the House to follow the Senate and remove its reconciliation instructions to the Agriculture Committee.”

Also on Friday, the Center on Budget and Policy Priorities (CBPP) indicated in an update that, “The House Budget Committee’s budget plan would convert the Supplemental Nutrition Assistance Program (SNAP, formerly known as the Food Stamp Program) into a block grant beginning in 2021 and cut funding steeply — by $125 billion (34 percent) between 2021 and 2025. Cuts of this magnitude would end food assistance for millions of low-income families, cut benefits for millions of households, or some combination of the two. The prior Budget Committee chairman, Paul Ryan, proposed similarly deep SNAP cuts in each of the last four House budgets.”

The CBPP update pointed out that, “As Figure 1 indicates, SNAP spending has started to fall as a share of GDP, and the Congressional Budget Office (CBO) projects that SNAP will return to close to pre-recession levels as a share of GDP once the economy fully recovers. The program does not contribute to the nation’s long-term budget problems because it is projected to grow no faster than the economy over time.”

Pam Fessler reported on Friday on National Public Radio’s “Morning Edition” program that, “When it comes to the food stamps — or SNAP benefits as they’re now called — there are few areas where Republicans and Democrats agree. But getting some of the 46 million people now receiving SNAP into the work force is one of them.

“Last year Congress approved $200 million for states to test the best way to move people into jobs. And today, the Obama administration is announcing grants to 10 states to do just that.

“Agriculture Secretary Tom Vilsack says the demonstration projects should help able-bodied recipients take advantage of an improving economy.”

The NPR update stated that, “The projects vary greatly. Vermont plans to target hard-to-employ individuals, like those who are homeless or have criminal records, for special help getting work. Mississippi will give recipients a four-week intensive job readiness course. Vilsack says the goal is to find which methods work best and apply them nationwide.”

House Ag Committee Chairman Mike Conaway (R., Tex.) indicated on Friday that, “I am pleased the Secretary has announced the selection of the 10 work pilots created by Congress in the 2014 Farm Bill. Innovative approaches, like the range of those to be tested in these pilot projects, will help able-bodied SNAP recipients climb the economic ladder. The Farm Bill also requires that these pilots be rigorously evaluated to quantify their effects. I look forward to including ongoing progress updates from pilot states and their corresponding evaluations in the Committee’s thoughtful and thorough review of SNAP. I am committed to making sure that SNAP recipients are not trapped by the program and are able to reach their full potential.”

Meanwhile, USDA’s Economic Research Service (ERS) released a report on Friday titled, “The Food Assistance Landscape FY 2014 Annual Report.”

In the report, “ERS uses preliminary data from USDA’s Food and Nutrition Service (FNS) to examine trends in U.S. food and nutrition assistance programs through fiscal 2014 (October 1, 2013 to September 30, 2014) and ERS data to examine trends in the prevalence and severity of household food insecurity in the United States through 2013.”

A news release on Friday from Rep. Steve King (R., Iowa) noted that he re-introduced the “No Hungry Kids Act,” H.R. 1363.  The release explained that, “The United States Department of Agriculture (USDA) has released new standards that have left children across the nation hungry during the school day because of calorie rationing. The ‘No Hungry Kids Act’ repeals this USDA rule that created the new standards, prohibits the USDA’s upper caloric limits, and protects the rights of parents to send their children to school with the foods of their choice.”

An opinion column in Saturday’s New York Times by Thomas A. Farley and Russell Sykes noted in part that, “By one estimate, at least $1.7 billion a year in SNAP benefits is spent on sugary drinks alone — more than the entire budget at the Centers for Disease Control and Prevention for the prevention of obesity, diabetes, coronary heart disease, stroke and cancer. But it is hard to blame families for using SNAP benefits to buy unhealthy food, when their options are mostly junk.

“What can be done? The Agriculture Department last year found that giving users an extra 30 cents in benefits for every dollar they used for fruits and vegetables increased fruit and vegetable consumption by 26 percent, but the department hasn’t gone further with this idea.”

In other policy news, Barrett Kirwan indicated in an update on Friday at the Policy Matters Blog (“Who Benefits from Agricultural Subsidies?”) that, “Based on field-level estimates, it appears that landlords do receive some of the subsidy benefits through higher rental rates, but they receive far less than economists would have expected. We find that using farm-level data from the most widely used farm-level data set, ARMS, overestimates the incidence considerably. Using a new, field-level data set that, for the first time, precisely links subsidies to land parcels, we show that farm-level data lead to considerably biased estimates: Where farm-level estimates suggest an incidence of 39–84 cents of the marginal subsidy dollar, field-level estimates from the same farms indicate that landlords capture just 14–25 cents.”

Ron Nixon reported in Saturday’s New York Times that, “In 2008, faced with increased competition from Vietnam and China, catfish producers in the United States did the unthinkable: They asked for more regulation of their industry.

“Congress concurred and agreed to move the inspection of foreign and domestically produced catfish from the Food and Drug Administration to a more rigorous program at the Agriculture Department. The process, however, has dragged on for nearly seven years.”

Mr. Nixon added that, “Now, as the Obama administration prepares to finalize the inspection regulations, domestic catfish farmers may have received more than they bargained for, experts say.

More rigorous inspections could cost an already beleaguered industry millions of dollars to comply, potentially driving more catfish farmers out of the business and costing hundreds of jobs in the rural South, said John Sackton, a seafood industry analyst.”

 

Agricultural Economy

Marcia Zarley Taylor reported on Friday at DTN that, “Some sky-high cash rents are coming back to earth. For the first time this century, Corn Belt cash rents are beginning to recede, particularly in areas where 2014 sub-par yields pounded local farm incomes last fall.”

The DTN article noted that, “If history is any guide, cash rents don’t decline very much or very often. Since 1981, Corn Belt states tracked by the Chicago Federal Reserve only experienced three years when cash rents dipped more than 10% annually — all of them in the midst of the Farm Credit Crisis. Average rents in Iowa, Illinois, Indiana and Wisconsin slid 10% in 1985, another 15% in 1986 and 13% in 1987, according to the Fed. The last time the district’s average cash rents backtracked at all was a 1% drop in 1999. Since 2006, however, average Illinois cash rent costs have more than doubled to nearly $300 per acre.”

Bloomberg writer Jen Skerritt reported on Friday that, “Farmers in Canada, the world’s top canola producer, will probably be able to sow grain and oilseed crops early this year because warmer-than-usual weather is forecast for the spring.”

Tony Barboza reported on Friday at the Los Angeles Times Online that, “Lawmakers are proposing emergency legislation, state officials are clamping down on watering lawns and, as California enters a fourth year of drought, some are worried that the state could run out of water.

State water managers and other experts said Thursday that California is in no danger of running out of water in the next two years, even after an extremely dry January and paltry snowpack. Reservoirs will be replenished by additional snow and rainfall between now and the next rainy season, they said. The state can also draw from other sources, including groundwater supplies, while imposing tougher conservation measures.

“‘We have been in multiyear droughts and extended dry periods a number of times in the past, and we will be in the future,’ said Ted Thomas, a spokesman for the California Department of Water Resources. ‘In periods like this there will be shortages, of course, but the state as a whole is not going to run dry in a year or two years.’”

Reuters writers P.J. Huffstutter and Krista Hughes reported late last week that, “‘Huge amounts’ of American beef are bypassing China’s import bans, a top U.S. trade official said this week, even as the Chinese government cracks down on agricultural smuggling.

“The meat enters through Hong Kong, Deputy U.S. Trade Representative Robert Holleyman said at the National Lieutenant Governors Association conference on Wednesday.

“U.S. beef is currently barred from mainland China because of previous cases of bovine spongiform encephalopathy, also known as mad cow disease. U.S. trade officials have been trying to get China to lift the ban, but with little success.”

Also with respect to China, Michael Meyer penned a column in Sunday’s Los Angeles Times titled, “China’s Marxist communal farming makes way for agribusiness.”

The AP reported on Sunday that, “Milk prices that were at record-high levels in 2014 have abruptly plunged this winter, bringing new economic pressures on the region’s dairy farmers.

“Milk prices that exceeded $24 per 100 lbs. — roughly 9 gallons — at times in 2014 have dropped into the $15 range, reminding farmers of 2009, the year prices fell below $12 and many farms lost money.”

And USDA’s National Agricultural Statistics Service noted on Friday in its monthly Cattle on Feed report that, “Cattle and calves on feed for slaughter market in the United States for feedlots with capacity of 1,000 or more head totaled 10.7 million head on March 1, 2015. The inventory was 1 percent below March 1, 2014 [related graph].”

 

Regulations

Tennille Tracy reported on Friday at The Wall Street Journal Online that, “The Food and Drug Administration signed off on genetically modified varieties of apples and potatoes, and for the first time suggested the products might need to carry a label to inform consumers about the ways in which they’re different from conventional varieties.”

The Journal article stated that, “Both the apple and the potato differ from the existing roster of genetically modified crops in that they provide benefits to consumers. Other modified crops, like corn and soybeans, are made to withstand certain pesticides, making them easier for farmers to grow.”

The FDA is still deciding whether to require labels on the apple or potato, alerting consumers to the traits that make them different from conventional varieties. The agency is unlikely to require a label that identifies the products as being modified,” the Journal article said.

Keith Good

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