FarmPolicy

June 30, 2015

Last Report: Personal Note; Ag Economy; Trade; and, Regulations

Personal Note

I remember the time in 2002 I tried to explain to my wife an idea I had about summarizing newspaper articles relating to farm policy issues for busy people at work who didn’t have time to read as much as they wanted to.

Now the time has come to stop writing the daily reports.

Thanks so much to the over 200 individuals who took time the past couple of weeks to share with me their appreciation for the reports; here are reflective examples of what these very thoughtful notes from readers said:

“Everyone always says ‘make sure you get the farm policy update’ because everyone knows it’s the best.”

You’ve been a must-read for thousands.”

“I’ve shared your site with dozens of people over the years, always saying ‘sign up for Farmpolicy.com. It is the very best source for ag news anywhere.’ This is one of the few places where information is gathered and shared without commentary.”

“Your willingness to provide this early-morning update day after day, without fail, has been a wonderful contribution.”

“I have marveled at the discipline and effort required to bring ‘farm policy’ to my east coast desk early in the day.”

“Your daily surveys are the best-written, most comprehensive, and most objective news source that I have seen for a long time.”

“In addition, your integrity in reporting is deeply appreciated. There is a lot that gets said in ag circles, and you screened out the chaff. Your accuracy in reporting was always highly valued as well. Only you could have provided that unique combination of an ag economist, an ag attorney, and a journalist. The ag community has richly benefited from your dedication and commitment to FarmPolicy.com.”

“Distilling the information from numerous sources, sites, and newspapers is an overwhelming task that you accomplished with great professionalism. What you provided was accurate, complete, and extremely valuable.”

And Rep. Adrian Smith (R., Neb.) tweeted yesterday: “Thank you to Keith Good for his years of ‪#ag reporting. Sad to see ‪@FarmPolicy end, but I wish him all the best in his new chapter.”

Thanks to all for reading FarmPolicy.com.

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Thursday Morning Update: Ag Economy; Trade; and, Regulations

Remember, FarmPolicy.com ends tomorrow.

Agricultural Economy

Adam Nagourney reported on the front page of today’s New York Times that, “Gov. Jerry Brown on Wednesday ordered mandatory water use reductions for the first time in California’s history, saying the state’s four-year drought had reached near-crisis proportions after a winter of record-low snowfalls.

“Mr. Brown, in an executive order, directed the State Water Resources Control Board to impose a 25 percent reduction on the state’s 400 local water supply agencies, which serve 90 percent of California residents, over the coming year. The agencies will be responsible for coming up with restrictions to cut back on water use and for monitoring compliance. State officials said the order would impose varying degrees of cutbacks on water use across the board — affecting homeowners, farms and other businesses, as well as the maintenance of cemeteries and golf courses.

“While the specifics of how this will be accomplished are being left to the water agencies, it is certain that Californians across the state will have to cut back on watering gardens and lawns — which soak up a vast amount of the water this state uses every day — as well as washing cars and even taking showers.”

Today’s article explained that, “Owners of large farms, who obtain their water from sources outside the local water agencies, will not fall under the 25 percent guideline. State officials noted that many farms had already seen a cutback in their water allocations because of the drought. In addition, the owners of large farms will be required, under the governor’s executive order, to offer detailed reports to state regulators about water use, ideally as a way to highlight incidents of water diversion or waste.

Because of this system, state officials said, they did not expect the executive order to result — at least in the immediate future — in an increase in farm or food prices.”

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Wednesday Update: Ag Economy; Policy; and, Regulations

Reminder: Only two FarmPolicy.com reports left.

Agricultural Economy

A news release yesterday from USDA’s National Agricultural Statistics Service (NASS) stated that, “For a second year in a row, U.S. growers are raising the bar on soybean acreage. Growers across the United States intend to plant an estimated record-high 84.6 million acres of soybeans in 2015, [related graph], according to the Prospective Plantings report released today by [NASS].”

Yesterday’s release added that, “NASS today also released the quarterly Grain Stocks report to provide estimates of on-farm and off-farm stocks as of March 1. Key findings in that report include:

“- Corn stocks totaled 7.74 billion bushels, up 11 percent from the same time last year. On-farm corn stocks were up 13 percent from a year ago, and off-farm stocks were up 7 percent.

“- Soybeans stored on farms totaled 1.33 billion bushels, up 34 percent from March 1, 2014. On-farm soybean stocks were up 60 percent from a year ago, while off-farm stocks were up 18 percent.”

University of Illinois agricultural economist Darrel Good indicated yesterday at the farmdoc daily blog (“USDA Stocks and Acreage Estimates Smaller than Expected for Soybeans and Larger than Expected for Corn”) that, “Compared to pre-report expectations, the March 1 soybean stocks and 2015 planting intentions estimates represent modestly friendly surprises. On the other hand, the stocks and planting intentions estimates represented modestly negative surprises for the corn market. Part of the negative corn price response to the estimates likely reflects inflated trend yield estimates for 2015 and perhaps an incorrect interpretation of the pace of feed and residual use during the first half of the marketing year. Attention will now turn to spring weather and planting progress.”

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Tuesday Morning Update: Policy; Ag Economy; Trade; Immigration; and, Regs

Note: FarmPolicy.com ends publication on Friday.

Policy Issues

An interview with House Ag Committee Ranking Member Collin Peterson (D., Minn.) aired on yesterday’s AgriTalk radio program with Mike Adams.

The interview, which focused on the Farm Bill, trade, regulations, and biotech issues, was recorded last week and was conducted before a group of Farm Bureau members from Missouri, Minnesota, Iowa, and Texas.

An unofficial FarmPolicy.com transcript of the AgriTalk interview is available here.

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AgriTalk Transcript: House Ag Committee Ranking Member Collin Peterson

House Ag Committee Ranking Member Collin Peterson (D., Minn.) was a guest on Monday’s AgriTalk radio program; the conversation with Mike Adams focused on the Farm Bill, trade, regulations, and biotech issues.

The interview that aired on Monday’s program was recorded last week and was conducted before a group of Farm Bureau members from Missouri, Minnesota, Iowa, and Texas.

This is an unofficial FarmPolicy.com transcript of that discussion.

Mr. Adams: Last week in Washington, D.C., had an opportunity to talk with Congressman Collin Peterson, Ranking Member of the House Ag Committee. We talked about a number of issues, starting off with how he feels it’s going with the new dairy program, and was he happy with the signup.

Rep. Peterson: Well, I think relatively. You know, I think we could have had a higher turnout, but—or signup—but coming off one of the best years in dairy for a long time, and I think people looking at what’s going to happen this year, kind of figuring, well, might be payments, there might not, so they decided, some people decided to forego it. I think you’re going to see a lot more people sign up, the way things are looking, for next year.

And that’s one good thing about the dairy program: you don’t have to lock in for five years, you can sign up every year. And given what’s been going on, I think I’m not as worried as I was about us not having the program in there to try to limit production, if it gets out of control. It looks like that’s not going to be necessary anyway, so that was a maybe a fight we didn’t need to have.

Mr. Adams: We’ve had a lot of talk here this afternoon about trade. You have expressed some concerns about trade deals, and making sure that we’re protected. When you see what’s happening with TPP and the ongoing debate over TPA, what are your thoughts?

Rep. Peterson: Well, you know, I opposed NAFTA vigorously, and we had it defeated for a while. We were told, at the time, that we were going to have twice as many ag exports in NAFTA as we had imports, and what I predicted ended up happening—we had twice as many imports as we had exports under NAFTA. We had a problem in sugar that we’ve somewhat resolved now, but we had to work through that.

So one of my big issues with the TPP is that we finally solved some of the problems that were caused by NAFTA, and if we don’t solve it in the TPP, we’ll never solve it. And one of the biggest problems is dairy. And it’s Canada dairy. A lot of people aren’t focused on this, and a lot of people don’t even know about it.

But in the NAFTA, we allowed the Canadians to keep their supply management system. And so if you dairy farm in Canada, you are making a lot of money, considerably more than you make in the United States. Also, when we try to sell dairy products to Canada, there’s a tariff, but when they sell to us there’s no tariff. So the result of that has been, because the Canadian system can’t grow, and they’re making all this money in these co-ops, we now have the Canadian co-ops in Quebec owning—they’re No. 1 and 3 in ownership of dairy processing in the United States. That’s the effect of what we did.

And it’s got to be fixed, or at least get on a path to be fixed, in this deal for me to support it. So that’s one of my main issues. Also it applied—poultry and eggs are also supply managed in Canada. I’m not as familiar with the economics of that as I am of dairy. But that’s the big issue.

Another big issue is getting access in the Japanese market for beef and rice. Now, Froman sat in my office and said we will get a pathway or get changes in the Canadian supply management system, and we will get access to the Canadian rice and beef market or we won’t have a deal. And I said, well, you’re saying to me that we’re not going to have a deal, because I am very skeptical that the Canadians will be able to agree to anything in the supply management area.

Mr. Adams: RFS. We’re waiting for that announcement from EPA. Are you getting any feeling one way or another where they’re going with it?

Rep. Peterson: I don’t know. I’ve had so many meetings with the White House, with the EPA. You know, we have some speculation, I guess, but it could be wildly off. I don’t know, it just looks to me like maybe they’re going to lock in for three years and around 14.4 billion, but I really don’t know. We’re going to have to wait and see what they come out with.

I hope they don’t screw up the ethanol industry. That would be…you know, we’ve finally been able to balance the marketplace in corn and get the pricing situation at a more reasonable level. But if they screw up the RFS and we lose ethanol in this country, we’ll be back to $2 corn, and that ain’t gonna work very good with the prices that we got, land and inputs right now.

Mr. Adams: Is this EPA out of control?

Rep. Peterson: Yes. [Laughter.]  [Applause.] Well, and, you know, the problem is they don’t understand a lot of these issues. They just don’t. This Waters of the U.S., I’ve had Gina McCarthy in my office three times. She thinks she’s helping you. I just want you to know. And she sincerely believes that, that she’s somehow or another clarifying the wetland determinations with what she’s doing.

And she doesn’t know enough about all the problems that we’ve been through to understand that what they’re doing is putting, actually, one more chink in the thing that we never will get this determined, you know, so I don’t know. It’s…I don’t know what you do to fix this, but it’s a big problem.

Mr. Adams: We were talking with the Chairman earlier. Is this Congress willing to step in and stop funding things like WOTUS if they keep pushing it?

Rep. Peterson: Yeah, I think so. I think the first thing we’re going to try, as I understand it, is to use the Congressional Review Act, which has never been used, but it was put in place some years ago, with my support, that says that the Congress can stop a rule within 60 days after the final rule is published. So the first thing that I think we’re going to try to do is we’re going to bring it up under the Congressional Review Act. I think we can pass…or stop it in the House. I don’t know about the Senate, but, you know, hopefully we can do it over there, too.

If we aren’t able to do that, then we’re going to try to deal with it in the Appropriations Committee, somehow or another. We have a bill, you know. We’re going to try any way we can. We’ve got to stop this. This is a bad idea.

We still haven’t—in Minnesota, I don’t know about the rest of the country—but we still haven’t resolved the blue dots and yellow dots from the ’85 Farm Bill. We’ve still got people out there that haven’t gotten determinations from that. And we’ve got four agencies deciding what a wetland is, and in Minnesota we’ve got a wetland law at the state level, so you’ve actually got five people, and you can’t ever figure out what the bottom line is. So, you know, we don’t need this. This is just going to be a big problem.

Mr. Adams: We have a major lawsuit in Iowa over runoff. Regardless of how this turns out on this particular one, is this the future, we’re looking at this type of litigation and threat of litigation moving forward for farming?

Rep. Peterson: I don’t know. I mean, we…the way we’ve set up some of the, you know, the NEPA law, National Environmental Policy Act, you know, these things that have been put in place back in the ‘70s, Endangered Species, these things need to be overhauled, because they’re basically set up to help people that want to sue and try to change the policy through lawsuits and so forth, and there just needs to be more balance put into it.

Frank Lucas and I last week passed the Science Advisory Act for the EPA, and there was another bill that Lamar Smith had on the secret science bill that we passed last Congress, too. You know, in the EPA, I mean, I had the local guy back home come to the Rotary Club and go after me because I was trying to get a balanced, scientific advisory committee at the EPA, that this was going to destroy the environment.

And I said, well, this advisory committee has no authority to do anything, they’re strictly advising the administrator; why wouldn’t you want to hear all points of view? Why would you want to limit it to a bunch of egghead professors, which is what they’ve done, and three-fourths of the people that are on this advisory committee are getting grants from the EPA to tell them what they already want to hear. And then you wonder why the thing is screwed up? You know, but anyway. [Applause.]

Mr. Adams: One more question and we’ll turn it over to the audience.

Rep. Peterson: I’m not running for President. [Laughter.]

Mr. Adams: Yeah. [Laughs.] Well, we cleared that up. Okay, all right. Biotech labeling. National standards or leave it up to the states?

Rep. Peterson: Well, we need a voluntary label, national. We need to preempt these states from setting their own, you know, own laws. The last thing we need is to have 50 different states have 50 different labels. That’s not workable. And we had a good hearing yesterday. We got some people criticized it.

But, you know, the reality is, you know, I’ve told some of these big companies that if Vermont is successful with this appeal to their lawsuit, and they are allowed to go ahead with their labeling law, I wish that these big companies would just not sell to Vermont, and let them understand what the effect of what they’re doing is.

The same thing in California. I don’t want them to fix the egg problem. If those people created that problem, and I hope they run out of eggs, and I hope eggs go to 20 bucks a dozen, you know, so people figure out what’s going on, you know, so… [Applause.]

Mr. Adams: Congressman Collin Peterson, Ranking Member of the House Agriculture Committee, speaking last week before a group of Farm Bureau members from Missouri, Minnesota, Iowa, and Texas.

[End of recording.]

Sunday Update: Policy Issues; Ag Economy; and, Biofuels

Reminder: Only four reports left, FarmPolicy.com ends Friday.

Policy Issues

Reuters writer Christine Stebbins reported on Friday that, “U.S. farmers will have another week to enroll in the government’s new subsidy programs under the five-year farm bill, with the deadline extended to April 7, the U.S. Department of Agriculture said on Friday.

“The final day for farmers to update their crop acreage and yield history, the first step to qualify for the new subsidies, will be extended to April 7. The farmers had already had the deadline to update their acreage data extended by one month to March 31.”

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AgriTalk Transcript: Senator Marco Rubio

Senator Marco Rubio (R., Fla) was a guest on Thursday’s AgriTalk radio program with Mike Adams, where the conversation focused on immigration, trade, and regulation.

This is an unofficial FarmPolicy.com transcript of their discussion.

Mr. Adams: Welcome back to AgriTalk here in Washington, D.C. Yesterday I had the opportunity to talk with Florida Senator Marco Rubio. We had an exchange back and forth, difference of opinion on Cuba. We also talked a number of ag issues. But I started off asking Senator Rubio does he have any plans, any announcements coming about possibly running for President.

I have to start off—I mean, you’ve got a great setting here, this is going to be on the radio—we keep a pretty good secret. We wouldn’t let it get out of this room. Do you want to make any announcements while you’re here?

Sen. Rubio: Yes, I do. I do. I saved a bunch of money by switching to Geico. [Laughter.] That’s actually not true, I’m still on State Farm, but I thought it was funny, you know. [Laughter.]

Mr. Adams: Be careful Brian Williams, in how you tell your stories now, okay? We don’t want you to get in trouble. Well, we’re so glad that you are with us. And let’s just talk for a little bit and then we’ll open it up to the audience. We just heard from Chairman Conaway his thoughts on how we can address the immigration issue. I know you’re very involved in this.

We look at it in this group, I think, two different ways. Obviously we want to get some kind of resolution nationally, but there’s also the ag labor component to this we’re trying to get resolved as well. How do we approach it? Does it have to be all or nothing or can it be piece by piece?

Sen. Rubio: Well, a couple points. First of all, it’s a critical issue with regards to workforce, and that’s true all over the country. Virtually, there’s no sector—there are some mechanized sectors in agriculture, but by and large agriculture is reliant upon labor. And I’ve actually met some of these folks, both in Florida and in other parts of the country, in South Carolina very recently, in a peach operation, that are dealing with labor problems.

We need a reliable system that allows us to bring to this country, on a seasonal or year-round basis, temporary workers who want to work in agriculture, but do not want to be here permanently—and those are millions of people. And there’s a recognition of that in this country. I think there is a broad recognition of that, that we need to address that. The problem is that it has been wrapped up in the broader issue of immigration, which is much more complex.

Now I would start by saying there’s a significant amount of people in this country illegally who quite frankly never want to be citizens, do not want to be permanent residents, they just want to work for nine months out of the year, or six months, or eight months, they want to go back home for a period of time, and they want to come back again next year when their labor is needed. But they’re afraid to leave because if they do, they’re going to have to sneak back in again next year, so they stay. Because again, we don’t have a cost effective program that works for every part of agriculture, and that has to be fixed.

I personally worked on negotiating the differences out there between different ag groups across the country, those who represent farm workers, on a program as part of the comprehensive approach. But the lesson of 2013 and our efforts is that you’re not going to be able to deal with something like immigration in one massive piece of legislation. And the primary reason for it is because there is the belief in this country, increasingly, rightfully so, that any massive piece of legislation will never follow through on the enforcement pieces.

And so if you do something to deal with ten million people that are here illegally, unless you enforce the law, you’re going to have ten million more a decade from now, and people aren’t prepared to do that. So I think the key to doing anything on immigration is to prove to the American people that we’re serious about enforcing our immigration laws, but as part of that, one of the things that would really relieve the pressure is to have a system that allows people to come here legally and work when their labor is necessary, and return back to their home country, and return again in the future if their labor is needed again, as it will be. And so I do have hope that we can deal with that.

And if we were only dealing with that issue, I think we could make tremendous progress. The problem has been that many advocates for immigration reform want it all or nothing, because they’re afraid that the minute agriculture gets what it wants, it will stop lobbying on behalf of immigration reform; the day technology companies get what they want, they’ll stop lobbying, and so forth, so they want to hold everyone together as a coalition, and that’s been the impediment.

Mr. Adams: The next topic—and I assume you and I are probably going to disagree on this—I just disagreed with Chairman Conaway, so…

Sen. Rubio: Yeah, okay.

Mr. Adams: Let’s talk Cuba. The President’s pushing to open up Cuba. Agriculture groups want to do more trade with Cuba. How do you feel about it?

Sen. Rubio: Well, first of all, there are agricultural goods that are allowed to be sold in Cuba, but they’re not allowed to do it on credit, and there’s a reason why: they don’t pay. And that’s a big problem. The second point I would make is the following. My interest in Cuba—this is my only interest in Cuba. I want Cubans to be free in a democracy.

I believe, in addition to my personal connection to the issue, I believe it is bad for the national security of the United States to have an anti-American dictatorship 90 miles from our shores. I’ll support any policy towards Cuba that achieves that goal.

I do not believe that a unilateral opening to Cuba will achieve that goal, for the following reason: there is no such thing as the Cuban economy. The entire Cuban economy is owned by the Cuban government, primarily the Cuban military, through a holding company by the name of GAESA, G-A-E-S-A. They own everything. They own the hotels, they own the farms, they own everything.

To do business with Cuba requires you to do business with the military dictatorship. And doing business with them is not a two-way street. It is they will pick and choose who they allow in, what they allow in on their terms, and they will not allow anything in that could provide any sort of democratic opening on the island, which is what I primarily care about in terms of the future of the Cuban people.

And that’s my concern, that you’re going to have a leadership transition, because the actuarial tables tell you that the current leaders, who are all over 80 something years of age, will not be there forever. And I want us to have leverage to be able to say if you want a better relationship with the United States, we need to see these things: we need to see independent political parties, we need to see the ability of people to organize themselves and speak openly, and have freedom of the press, and so forth. If you give these things away without any of those openings, what leverage do you have in the future for that?

And here’s one more point I would make. Every single piece of farmland in Cuba today, every major agricultural property in Cuba today was once owned by a private owner, including American companies. They were stolen. They were confiscated. There’s $7 billion worth of American claims on the island of Cuba that we were never compensated for.

If you allow the import—this is the reverse of perhaps what the farm bureaus around the country want—if you allow the import of agricultural goods from Cuba to the United States, you are allowing them to traffic in stolen goods. They stole someone’s farm, they stole someone’s equipment, and they’re now going to make a profit off what they stole without compensating, including American companies—United Fruit Company—but also individuals.

You know, my family comes from a farming background in Cuba. They weren’t landowners, they were sharecroppers. They grew tobacco. But that property today is completely in the control of the Cuban government. There’s no profit motive. That’s why Cuban cigars are no longer any good. But the point being that that’s a factor that no one’s talking about. There are $7 billion worth of claims that are completely uncompensated.

Imagine if someone came in and stole your farm and 15 years later, they are growing crops on that farm and selling it to the country you went to for a profit, using the things you…your land, your equipment, what you invested in. That’s another part of it we haven’t discussed.

Mr. Adams: In case you do have aspirations for another job somewhere down the line, what would you say to agriculture? Many in agriculture and other parts of the country not really familiar with you or your policies or what you would push for if you got that new job. What can you tell this group about your ag positions?

Sen. Rubio: Well, first of all, as I said, I have a family connection. My grandfather was the single greatest influence on my life growing up, and it all entailed…you know, he was one of 17 children. Was a labor program, I guess, that they were undergoing, but… [Laughter.]  He was the only one that couldn’t work on the [field]. He had polio when he was six years old, so he actually went out and learned how to read and write, and struggled because he was disabled from polio.

But nevertheless, Florida is an enormous agriculture state. People associate Florida with real estate, no income tax, and Walt Disney World. All are great—and beaches. But we have an enormous ag component. And it’s one that’s endangered by a number of things.

First of all, by unfair trade practices that we see, whether it’s dumping of tomatoes from Mexico or some of the other issues. But the other issue we’ve really begun to face is both environmental regulations from the EPA—we had a [numeric] nutrient content fight a year ago where they basically tried to come in and impose standards that would make the water even cleaner than what comes out of your tap, in some instances, on agriculture.

And the other threat we face is invasive species. And in particular we’re having a problem now—we’ve got a [canker] problem in Florida that almost wiped out the citrus industry, and now we have a greening problem that actually—the canker ruined the fruit, the greening destroys the trees.

And the problem with losing agriculture is when you lose agricultural land and it becomes developable now because it becomes the highest, best use, you can never get it back. Once someone builds a multifamily housing complex on a piece of agricultural land, you can never come back ten years later and turn it back into farming. And that’s a major problem. You lose the capacity to grow food and to feed your people.

We take that for granted in the United States. We have a lot of people in this country that, when you ask them where does food come from, they’ll say the supermarket. They don’t realize that someone had to grow it. And we take for granted that we have a plethora of food and that we have it in what’s basically still affordable in comparison to the rest of the world, although prices have gone up a little bit, but not necessarily because of agriculture’s fault. And we take that for granted. Food security is even more important than energy security in terms of the future of our country. And if you lose the capacity to feed your people, not to mention export and provide products to others, you lose a major component of your economy.

So what are the threats from government in that regard? The first, of course, is these environmental regulations. The second, for example, is the interpretation of existing law from regulatory agencies like the Waters of the United States issue that we’re trying to address in the budget.

And the third role government can play is with basic research. This greening issue, as I pointed out, is something that the University of Florida, through a program called [IFAS], has been doing round the clock research to try to fix. If we don’t fix that issue, it is not unforeseeable that in less than a decade we will have no Florida citrus left. That, to me, is unimaginable for a state so identified with oranges and grapefruits.

And last is I think it’s important for us to open up free and fair trade with allies and partners around the world. It has to be on terms that are fair. So I believe in the Trans-Pacific Partnership, but that means that we need to have a deal with Japan that allows us to sell beef and other products into their markets. I think it’s important for these deals. It’s good for us to have millions of people around the world that can afford to buy what we grow, millions of people in the consumer class.

But it has to be on terms that are fair to the American agriculture sector, because I can tell you many of our agricultural products have to compete against other nations that heavily subsidize their industries and have zero environmental or labor regulations over their head compared to ours. And if they can undercut our growers, wipe them out, put them out of business, they then control the global market and can charge us anything they want, and as I said, we lose the growing capacity.

Mr. Adams: See, he can talk ag. There we go. All right. [Applause.]

[End of recording.]

AgriTalk Transcript: Secretary of Agriculture Tom Vilsack

Secretary of Agriculture Tom Vilsack was a guest on today’s AgriTalk radio program with Mike Adams where the discussion focused, in part, on the Farm Bill, trade issues, and the proposed Dietary Guidelines.  An unofficial FarmPolicy.com transcript of the discussion with Sec. Vilsack is available below.

Mr. Adams: Welcome back. We’re at USDA, talking now with Secretary of Agriculture Tom Vilsack. We appreciate your time, Mr. Secretary. We know you have a lot going on. We just have a limited amount of time, so we want to touch on as many areas as we can. We have a deadline coming up next Tuesday for signup in the farm bill. We just talked with Deputy Secretary Harden, who said you monitor the signup. Are you happy with the way it’s going?

Sec. Vilsack: I am, Mike. We’ve got 95% of the acres reallocated and yields adjusted for 95% of the farms that we expect to participate in that part of it, and about 85% have already made elections on ARC and PLC, which is a significant increase. We’re seeing day-to-day two or three or four percent increase, so we are very pleased with where we are.

And we want to remind folks that if you don’t sign up before the end of the deadline, then the election will be made for you, you’ll be in the PLC program, but you won’t be entitled to benefits in 2015, so we really encourage people to get this work done. And all you need to do is get on the registry, get your appointment set up, and that qualifies.

Mr. Adams: So you do not anticipate, at this point, the need or even the consideration of an extension of that deadline in any way?

Sec. Vilsack: We’re going to look at this from day to day. I’ve talked to our team about maybe the opportunity for flexibility. But given the pace of what we’re seeing, it may not be necessary.

Mr. Adams: But that’s still a possibility?

Sec. Vilsack: It’s still a possibility.

Mr. Adams: Okay, so we’ll watch that as far as as we get closer to that deadline next Tuesday. When would you make that call if there was an extension?

Sec. Vilsack: Probably the end of this week.

Mr. Adams: And of this week.

Sec. Vilsack: Yeah.

Mr. Adams: Okay, all right. While we’re here, let’s also talk about trade, because that’s a very hot issue, the talk of TPA and how that impacts, of course, deals like TPP. Where do you think that stands, and getting that message out about the importance of TPA? Because there still seems to be a reluctance by some to go with that. How important is it?

Sec. Vilsack: Mike, farmers need to get engaged in this conversation. They need to make sure their members of Congress and their senators understand how important this is for them personally and for agriculture generally. Thirty percent of our ag sales trade related, roughly equivalent to our net farm income, so if we don’t have export opportunities, we’re not going to make as much money.

This TPP opportunity is a huge opportunity to expand to an increasing middle class in Asia—five hundred and twenty-five million consumers, middle class consumers today in Asia. In just 15 years it’ll be 3.2 billion. It’s a huge opportunity for us. We anticipate $123 billion impact on our overall economy from TPP. Ag is roughly 9% of exports. You can do the math. So we’re talking about hundreds of millions, if not billions of dollars of opportunity. This is critically important.

Last point. If we don’t do this, China will. I’d rather have us lead the effort on labor, and environment, and enforcement mechanisms, and IP protection, and agriculture than having the Chinese lead that effort.

Mr. Adams: A concern about Japan. Will they come down on their tariffs? Will they play ball with the other partners in this? What are you hearing?

Sec. Vilsack: We’ve had progress with Japan. Still work to do. Our Canadian friends less flexible and less willing to negotiate. Part of it, I think, is that we don’t have TPA in place. Those that we’re negotiating with are assuming that, under the current situation, any trade agreement would be subject to modification or amendment by Congress. That’s 535 people that could weigh in on this. We can’t have that if we want to conclude these negotiations in a timely way. We need to get Trade Promotion Authority done.

Mr. Adams: I want to talk about these proposed dietary guidelines. A lot of concern, especially in the livestock industry, that red meat is going to be phased out of the school lunch programs. You’re going to be very much involved in making these final determinations. You have said it’s about health, it’s about nutrition, not about environment. What can you tell us about how this process is going to play out?

Sec. Vilsack: Well, the first thing is we extended the comment period because we want to make sure people have an opportunity to weigh in on this. And I want to reassure people who are listening to this program and reassure the ag community that I understand what my job is. My job is not what the experts on the panel, Scientific Advisory Panel, had. They had freedom to basically opine about a lot of different things. And some of the things that they brought up are appropriate to have discussions about, perhaps not in the context of dietary guidelines, but in the context of overall where are we headed in agriculture.

My job, based on the statute, based on the law, I took an oath to follow the law, follow the Constitution. That oath basically says even if I want to talk about other things, I have to look at dietary and nutrition. That’s what we ought to be deciding these guidelines on, and that’s what I intend to make sure that I do. Obviously I can’t speak for the full process because Secretary Burwell’s got a very important role to play as well.

Mr. Adams: You’ve come out with the definition “actively engaged” as far as those that can receive farm program benefits. Senator Grassley says it’s a step in the right direction. He would like to see it go farther. Tell us about how you came up with this particular definition and who you see it applying to.

Sec. Vilsack: I think we’ve probably hit it just about right because the folks who wanted more strict restrictions are not happy, the folks who feel maybe we’ve gone a little bit too far are not happy, so I suspect we’ve hit it right. Look, Congress directed us to do this, but also limited us in terms of what we could do. It said you can’t do this relative to family farms, you don’t have to do it relative to corporations, so all that’s left are joint ventures, limited partnerships and general partnerships, roughly 1,500 operations throughout the United States. There we said the default position is one actively engaged manager.

Now if you’ve got a complex or a large operation, you might be able to make the case, if you were to adequately document that case, to have more than one, but you can’t have any more than three. And I think that’s a reflection of the flexibility that we need relative to the nature of agriculture generally, but also tightening up what was a very significant loophole where we had ten, 15, 20 different people saying because I was on a conference call and made a decision to buy this or that, or to plant this or that, I’m somehow actively engaged. We want to get it back to a system that we can defend.

Mr. Adams: We’re almost out of time. Coexistence. Can we achieve that, do you think, in agriculture?

Sec. Vilsack: I think we have to. Now I may be the only person in America that believes that, but look, GMOs are here to stay. We need them if we’re going to feed the world. Organic is a high value proposition. If we want young people to get engaged in this business and be able to do it from scratch, organic is a way to do it without having to buy 1,000 acres and have the capital costs associated with it. So to me coexistence is about making sure that all options are on the table for folks.

Mr. Adams: Very good. So we watch this week for any announcements on the deadline for the signup, but right now you feel pretty good about the way it’s going.

Sec. Vilsack: Absolutely.

Mr. Adams: Very good. Thank you, Mr. Secretary.

Sec. Vilsack: Thanks, Mike.

Mr. Adams: Secretary of Agriculture Tom Vilsack, as we wrap up our broadcast here at USDA.

[End of recording.]

Wednesday Morning Update- Policy Issues; Trade; and, the Ag Economy

Note: Thanks very much to the many readers who have expressed how much they have enjoyed the FarmPolicy newsletter over the years. The numerous Emails and tweets from readers about the newsletter ending next week have been extraordinarily gracious and very much appreciated.

Policy Issues

Philip Brasher reported yesterday at Agri-Pulse that, “Republicans and Democrats slammed the Agriculture Department over allegations of abuse at a livestock research facility in Nebraska and accused agency officials of stonewalling lawmakers’ requests for information.

“‘It sounds like it was a house of horrors that was going on there,’ said Rep. Tom Rooney, R-Fla., referring to allegations about the U.S. Meat Animal Research Center contained in a New York Times article published in January.

“Rooney, one of several members of the House Agriculture Appropriations Subcommittee who grilled USDA officials about the issue, said the allegations cast the cattle industry in a bad light. The idea that the research highlighted in the article was undertaken at the industry’s request was ‘bull-you-know-what,’ Rooney said.”

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Tuesday Morning Update: Policy Issues; and the Ag Economy

Policy Issues

Lydia Wheeler and Tim Devaney reported yesterday at The Hill Online that, “The House Agriculture Committee will examine the costs and impacts of mandatory biotechnology labeling laws at a hearing Tuesday morning.

“Lawmakers are pushing for a federal law that would require manufacturers to label all genetically engineered foods and any food products that contain genetically engineered ingredients.

“The Genetically Engineered Food Right-to-Know Act, which Rep. Peter DeFazio (D-Ore.) introduced in the House and Sen. Barbara Boxer (D-Calif.) introduced in the Senate, would direct the Food and Drug Administration to enforce the new rule.”

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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.”

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Friday Morning Update: Ag Economy; Policy- Trade Issues; and, Regulations

Agricultural Economy

Reuters writer Christine Stebbins reported yesterday that, “Drought pressures will increase in California and western areas of the United States this spring even as the dry season begins, the government’s Climate Prediction Center said on Thursday.

“‘Periods of record warmth in the West and not enough precipitation during the rainy season cut short drought relief in California this winter and prospects for above-average temperatures this spring may make the situation worse,’ Jon Gottschalck, chief of the Operational Prediction Branch at the Climate Prediction Center, said in issuing its spring outlook.

“The center, a division of the National Oceanic and Atmospheric Administration, also said rivers in western New York and eastern New England have the greatest risk of spring flooding in part because of heavy snowpack coupled with possible spring rain.”

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Thursday Morning Update: Budget- Policy Issues; Trade; and, the Ag Economy

Budget- Policy Issues

Janet Hook and Kristina Peterson reported in today’s Wall Street Journal that, “House and Senate Republicans have resurrected efforts to curb spending for Medicare and other safety-net programs, releasing budgets this week that bring government entitlements back to the center of political conversation.

“The Senate GOP budget released Wednesday calls for saving $5.1 trillion over 10 years, including $4.3 trillion by repealing the Affordable Care Act and curbing entitlement programs such as Medicare, Medicaid and food stamps.”

The Journal article noted that, “Each chamber will vote on its own budget, before merging them and voting on a unified budget setting overall spending levels for the fiscal year. The policy proposals described in the budgets aren’t binding and stand little chance of becoming law under Mr. Obama, but they send a message about GOP priorities.”

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Drought Issues Continue in California- LA Times Front Page

A pair of articles on the front page of Wednesday’s Los Angeles Times highlighted additional variables relating to ongoing drought concerns in the Golden State.

Bettina Boxall reported that, “Parts of the San Joaquin Valley are deflating like a tire with a slow leak as growers pull more and more water from the ground. The land subsidence is cracking irrigation canals, buckling roads and permanently depleting storage space in the vast aquifer that underlies California’s heartland.

“The overpumping has escalated during the past drought-plagued decade, driving groundwater levels to historic lows in some places. But in a large swath of the valley, growers have been sucking more water from its sands and clays than nature or man puts back for going on a century.

They are eroding their buffer against future droughts and hastening the day, experts warn, when they will be forced to let more than a million acres of cropland turn to dust because they have exhausted their supplies of readily available groundwater.”

The article noted that, “Until last year, California didn’t have a statewide groundwater law, making it an outlier in the West. The legislation, intended to end unsustainable groundwater use, won’t do that any time soon. Agricultural interests opposed the regulations, which call for the creation of local groundwater agencies that have more than two decades to fully comply.

“In the meantime, it’s easier for growers to keep pumping than rein in their use. ‘Telling people they have to stop irrigating is a huge economic thing,’ said Charles Burt, chairman of the Irrigation Training and Research Center at Cal Poly San Luis Obispo. ‘Guys are going to get their guns out. If you were farming, you wouldn’t take that very lightly.’

When Burt compares the annual groundwater overdraft in the valley with crop water usage, he figures that 1 million to 1.5 million acres will go out of production in coming years. ‘There are just more straws in there than there is water,’ he said. ‘It’s been going on for a long time.'”

Wednesday’s article added that, “The greatest subsidence related to groundwater extraction ever recorded in the U.S. is on the valley’s west side, where the water table plunged 400 feet in the early and mid-20th century. The accompanying soil compaction caused an area southwest of Mendota to sink more than 28 feet. In a now famous 1977 photo, Poland stood by a telephone pole affixed with signs far above his head indicating where the ground had been in 1955 and 1925.

“The subsidence largely stopped and groundwater levels rebounded in many areas after the arrival of federal and state irrigation deliveries, which provided growers with cheaper, better water.

But even when the water table recovers, subsided basins can’t hold as much water as they did previously. Soil compaction can permanently reduce the pore space between clay particles, leaving less room for groundwater.”

Ms. Boxall explained that, “It is the economics of having to go deeper and deeper for groundwater that will ultimately force growers to retire land. It’s not that the Central Valley’s thick aquifer will run dry. Scientists estimate that it holds roughly 800 million acre-feet of water that seeped deep into the valley’s sands and clays over millenniums from streams and rivers swollen with runoff from the neighboring Sierra Nevada and coastal ranges.

Farmers will instead run out of water they can afford to pump.”

In a separate article on the front page of today’s LA Times, Ms. Boxall reported that, “With California heading into another parched year, state officials Tuesday beefed up emergency drought regulations, directing urban agencies to limit the number of days residents can water their yards.

“The move is expected to have little or no effect in most major Southern California cities, which already have watering restrictions. The statewide effects are difficult to gauge, as regulators don’t know how many local agencies lack limits.”

Wall Street Journal writer Jim Carlton also reported on this development and noted that, “State officials said they felt compelled to adopt the new rules, and extend others passed last summer, including a ban on allowing sprinkler runoff into streets, because of the growing severity of one of California’s worst droughts. Reservoirs in the state sit at less than 60% capacity following a fourth consecutive dry winter, which has left the state’s mountain snowpack at a record low of less than 20% of the historical average.

“Officials said that while Californians have largely heeded Gov. Jerry Brown’s calls to conserve more—saving enough since last June to meet the needs of a city of two million for a year—it hasn’t been enough. In part, the water managers are frustrated by statewide surveys that show a declining conservation rate recently after initial strong compliance.”

Meanwhile, Adam Nagourney reported in Wednesday’s New York Times that, “The rainy season drove into California in December with wet and windy promise: soaking rain, snow, dark gray skies and a flash of hope that the drought that has scorched this region had run its course. And then came January — with record high temperatures and record low rainfall.

And now, as the end of the official rainy season approaches — this state gets 90 percent of its water from December through April, most of it in December and January — California is facing a punishing fourth year of drought. Temperatures in Southern California soared to record-high levels over the weekend, approaching 100 degrees in some places. Reservoirs are low. Landscapes are parched and blighted with fields of dead or dormant orange trees. And the Sierra Nevada snowpack, which is counted on to provide 30 percent of the state’s water supply as it melts through early summer, is at its second-lowest level on record.”

The New York Times article also included a link to this video:

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Wednesday Morning Update: Policy- Budget Issues, Ag Economy; and, Regulations

Budget- Policy Issues

Jonathan Weisman reported in today’s New York Times that, “House Republicans called it streamlining, empowering states or ‘achieving sustainability.’ They couched deep spending reductions in any number of gauzy euphemisms.

“What they would not do on Tuesday was call their budget plan, which slashes spending by $5.5 trillion over 10 years, a ‘cut.’

The 10-year blueprint for taxes and spending they formally unveiled would balance the federal budget, even promising a surplus by 2024, but only with the sort of sleights of hand that Republicans have so often derided.”

The Times article added that, “The House Budget Committee will formally draft the budget on Wednesday, as Senate Republicans unveil their counteroffer. Like the House version, the Senate’s will balance in 10 years, aides to Republicans senators said. Like the House, the Senate will include language to help lawmakers repeal or reshape the Affordable Care Act this year. How the two chambers resolve their differences could be a central drama in Washington throughout the spring.”

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Senate Appropriations Ag Subcommittee Hearing with Sec. Vilsack

The Senate Appropriations Ag Subcommittee heard testimony on Tuesday from Secretary of Agriculture Tom Vilsack about the FY16 USDA budget request.  During the discussion portion of hearing three key issues were discussed relating to Dietary Guidelines, Crop Insurance and Bird Flu.

Subcommittee Chairman Jerry Moran (R., Kan.) indicated in his opening statement yesterday that, “Agriculture remains one of the bright spots in our nation’s economy, supporting more than 16 million jobs nationwide and forming the backbone of our rural communities. American farmers and ranchers are the best at what they do when given the opportunity to compete on an even playing field.

“After a long, arduous process and a great deal of economic uncertainty, Congress enacted the Agricultural Act of 2014 one year ago. The Farm Bill authorized sweeping changes to commodity and crop insurance programs, consolidated and reinforced conservation efforts, and reauthorized vital research and rural development programs. Agriculture is Kansas’s #1 industry – directly responsible for 37% of the state’s economy. Enactment of a new Farm Bill was welcome news for producers, research institutions, and rural communities in my home state.”

Sec. Vilsack indicated that, “The Department has completed implementation of many new Farm Bill authorities. This includes major new safety net programs providing certainty to American agricultural producers going into the 2015 crop year. We have made available over $5 billion in critical assistance to producers across the country since sign-up for the disaster programs began on April 15, 2014. Significant new crop insurance protections were also made available. America’s new and beginning farmers and ranchers, veteran farmers and ranchers, and women and minority farmers and ranchers were given improved access to credit.”

Sec. Vislack pointed out that, “The Administration strongly supports the Supplemental Nutrition Assistance Program (SNAP) and other critical programs that reduce hunger and help families meet their nutritional needs. SNAP is the cornerstone of the Nation’s nutrition assistance safety net, touching the lives of millions of low-income Americans, the majority of whom are children, the elderly, or people with disabilities. SNAP kept over 5 million people, including nearly 2.2 million children, out of poverty in 2013. Recent research has shown that SNAP not only helps families put food on the table, but it has a positive long-term impact on children’s health and education outcomes. We also support the ongoing implementation of the Healthy, Hunger-Free Kids Act. Over 90 percent of schools report that they are successfully meeting the new nutrition standards, serving meals with more whole grains, fruits, vegetables, lean protein and low-fat dairy, and less sodium and fat.”

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