A news release yesterday from Rep. Mike Conaway (R., Tex.) indicated that, “[Congressman Conaway] issued the following statement after the House Republican Steering Committee selected him as the 50th chairman of the House Committee on Agriculture.
“‘I am humbled and honored to be selected as the 50th chairman of the storied House Committee on Agriculture. The work that farmers and ranchers do is part of our country’s foundation. They feed, fuel, and clothe our nation. I look forward to building on the bipartisan work of the chairmen who have led this committee for the past two centuries.
“‘I represent, and love, rural America. It’s the backbone of our country. The values and concepts that make America great are stored in rural America, and I want to protect that. There are fewer and fewer voices representing rural America, and I am honored to be one of those voices. That is my overarching drive as the Committee moves forward.’”
Joby Warrick reported in today’s Washington Post that, “The Obama administration has no intention of backing down on major environmental initiatives to fight climate change and improve air and water quality, EPA chief Gina McCarthy said Monday, dismissing Republican threats to thwart proposed regulations by starving the agency of money.”
The Post article noted that, “McCarthy appeared to be rejecting statements by Sen. Mitch McConnell (R-Ky.), the presumptive Senate majority leader in the next Congress, who last week accused President Obama of waging war against the coal industry and vowed to fight the administration’s environmental proposals ‘in any way that we can.’”
“McConnell joined other key Republican lawmakers in suggesting that the new Congress would use its budget authority to block controversial proposals intended to scale back greenhouse-gas emissions and reduce pollution levels in air and water,” today’s article said.
“The average price of ‘quality’ farmland in the St. Louis Fed’s district, which includes parts of Illinois, Kentucky and Mississippi, gained 11.8% from the second quarter to its highest level since the bank launched its survey of agricultural conditions two years ago.
“The findings contrasted with reports Thursday from other Fed banks in the Midwest that showed declines in their districts’ farmland values in the third quarter, as falling U.S. crop prices pinched demand for cropland.”
Legislative Agenda: Keystone, Budget- Immigration Link, and Trade
Ashley Parker and Jeremy W. Peters reported in today’s New York Times that, “As newly victorious and recently vanquished members of Congress descended Wednesday on Capitol Hill, defeated Democrats trudged in for some of their final votes, ebullient Republicans toured their new digs, and the denouement of Election Day continued to play out as the House and the Senate scheduled dueling votes to try to influence the outcome of the lone unresolved Senate race in Louisiana.
“But Wednesday’s activities — or lack thereof — after a six-week absence from the Capitol underscored how much inertia still rules. Despite larger fights over funding the government, operations in Syria, and executive action on immigration, the only votes in the Senate on Wednesday were procedural steps on a pair of federal court nominees.”
A news release yesterday from USDA’s National Agricultural Statistics Service (NASS) indicated that, “According to the November Crop Production report released today by [NASS], corn production is expected to reach 14.4 billion bushels this year, up 3 percent from 2013 [related graph]. Soybean production is forecast at 3.96 billion bushels this year, up 18 percent from 2013 [related graph]. Both crops are on target for record-high yields and production. Based on conditions as of November 1, yields for corn are expected to average 173.4 bushels per acre, down 0.8 bushel from the October forecast, but 14.6 bushels above the 2013 average. As for soybeans, yields are expected to average a record high 47.5 bushels per acre, up 0.4 bushel from October and up 3.5 bushels from last year.”
The WASDE report included this overview table of corn supply and demand variables, and stated that, “Projected corn ending stocks are lowered 73 million bushels. The projected range for the season-average farm corn price is raised 10 cents on each end to $3.20 to $3.80 per bushel.”
Likewise, yesterday’s WAOB report included this overview table of soybean variables, and explained that, “Soybean and soybean product prices for 2014/15 are unchanged from last month. The U.S. season-average soybean price range is projected at $9.00 to $11.00 per bushel. Soybean meal and soybean oil prices are projected at $330 to $370 per short ton and 34 to 38 cents per pound, respectively.”
With respect to wheat, yesterday’s WASDE update added that, “The projected range for the 2014/15 season-average farm price is narrowed 10 cents on both the high and low end to $5.65 to $6.15 per bushel.”
Policy Issues: Farm Bill; Tax Extenders; and Budget
Pat Westhoff, the director of the Food and Agricultural Policy Research Institute at the University of Missouri, indicated in a column on Saturday at the Columbia Daily Tribune (Mo.) Online that, “Our current set of farm and food policies only can be understood in the context of past budget debates. Although many other factors will drive future farm policy decisions, it’s a safe bet that budgetary concerns will continue to play a central role.
“In 2011, Congress was considering a large budget deal, and the leaders of the House and Senate committees in charge of writing farm legislation put together a package designed to reduce federal spending on farm and nutrition programs by $23 billion over the next 10 years.
“That budget deal fell apart, but the agricultural and nutrition provisions that were intended to be part of that deal became the basis for what eventually became the 2014 farm bill. Indeed, the final farm bill still targeted the same $23 billion in savings initially proposed more than two years previously.”
Broad Policy Issues- Budget, Taxes, Immigration, and Trade
Budget, and Taxes
Lori Montgomery and Ed O’Keefe reported in today’s Washington Post that, “Before ceding full control of Congress to the GOP in January, Senate Democrats are planning to rush a host of critical measures to President Obama’s desk, including bills to revive dozens of expired tax breaks and avoid a government shutdown for another year.”
The Post writers explained that, “Republican leaders, too, are inclined to clear the legislative decks of must-pass bills so they can start fresh in January, when they will have control of both chambers of Congress for the first time in eight years. Leaders from both parties are due at the White House for a lunch Friday to begin discussing the parameters of the possible in a new era of Republican domination.”
Today’s article noted that, “House and Senate negotiators have been at work for weeks on a comprehensive bill to fund federal agencies through next September, and aides said they hope to bring the measure to a vote before the Dec. 11 deadline.
“Some conservatives are agitating for a temporary measure that would allow Republicans to revisit agency funding levels when they take charge early next year. But Republican leaders, including Sen. Mitch McConnell (Ky.), would rather get the bills for fiscal 2015, which began in October, out of the way so they can focus on crafting a budget for fiscal 2016.”
Post Election Policy Issues: Farm Bill, Tax Extenders, and Food Labeling
AP writer Steve Karnowski reported yesterday that, “U.S. Rep. Collin Peterson anticipates being able to work out compromises on agricultural issues in the next Congress, but said Wednesday he has concerns about the makeup of the next Senate Agriculture Committee.”
The article noted that, “Peterson worked closely with the Republican chairman of that committee, Rep. Frank Lucas of Oklahoma, to assemble and pass a compromise 2014 farm bill earlier this year. He doesn’t foresee any problems developing a similarly good working relationship with whoever replaces Lucas, who is term-limited under House GOP rules. Peterson said…[R]epublicans will take control of the Senate in 2015, and Kansas Sen. Pat Roberts, who survived a re-election fight, is considered to be the leading candidate to become the next chairman of the Senate Agriculture Committee, Peterson said. He pointed out that Roberts used his position as chairman of the House panel in 1996 to pass the ‘Freedom to Farm’ act, which was designed to wean farmers off subsidies in exchange for more flexibility in deciding what to grow. Roberts also voted against this year’s farm bill.
“‘He has made some noise about opening up the farm bill if he gets to be chairman, which is a very bad idea, and puts everything we worked for in jeopardy,’ Peterson said.”
Mr. Karnowski added that, “Peterson’s priorities in the next Congress will include implementing the farm bill; reviving stalled legislation to reauthorize the Commodity Futures Trading Commission through 2018, which passed the House but has not come up in the Senate; a five-year transportation bill; and changes to immigration law to address the need for more farm workers.”
“The Environmental Protection Agency has proposed a rule that it says will clarify which streams and waterways are shielded from development under the Clean Water Act, an issue that remains in dispute even after two U.S. Supreme Court rulings.
“Agriculture groups and farm-state politicians call the proposed rule a power grab that would allow the government to dictate what farmers can do on their own land. They said the rule is an example of governmental interference by bureaucrats who don’t know as much as farmers and ranchers do about how to be good stewards of their land.”
Michael R. Crittenden reported in today’s Wall Street Journal that, “Lawmakers returning to Capitol Hill on Monday hope to quickly deal with a government funding measure and several other must-address items before decamping to the campaign trail ahead of November’s midterm elections.
“After a five-week summer break, legislators have given themselves a tight window to pass a stopgap measure to keep the government running beyond Sept. 30, as well as decide how to handle other-deadline driven issues such as the U.S. Export-Import Bank and a long-standing moratorium on Internet access taxes.”
Yesterday’s Crop Production report from the USDA’s National Agricultural Statistics Service (NASS) noted that, “Corn production is forecast at 14.0 billion bushels, up 1 percent from 2013. Based on conditions as of August 1, yields are expected to average 167.4 bushels per acre, up 8.6 bushels from 2013. If realized, this will be the highest yield and production on record for the United States [related graph].”
The report added that, “Soybean production is forecast at a record 3.82 billion bushels, up 16 percent from last year. Based on August 1 conditions, yields are expected to average a record high 45.4 bushels per acre, up 2.1 bushels from last year. Area for harvest in the United States is forecast at a record 84.1 million acres, unchanged from June but up 11 percent from last year [related graph].”
A summary of key variables for corn from yesterday’s WASDE report is available here, while a soybean summary can be found here.
The WASDE update noted that, “The projected season-average farm price for corn is lowered 10 cents at both ends of the range to $3.55 to $4.25 per bushel…[and]… The U.S. season-average soybean price for 2014/15 is forecast at $9.35 to $11.35 per bushel, down 15 cents on both ends.”
Ed O’Keefe reported in today’s Washington Post that, “House Budget Committee Chairman Paul Ryan (R-Wis.) introduced a budget proposal Tuesday that would cut more than $5 trillion in federal spending over the next decade, primarily by effectively repealing President Obama’s signature health-care law and greatly reducing funding for social programs.”
The Post article noted that, “Congress approved a bipartisan two-year budget agreement late last year, but Ryan said he drafted a separate proposal because the current plan ‘is nowhere near what we need’ to cut spending.”
Mr. O’Keefe added that, “But any fighting between Democrats and Republicans on spending will not result in the deadline-driven fiscal crises of recent years. Although the GOP-controlled House is expected to debate and pass Ryan’s plan, it will serve only as a political show vote because Democrats, who control the Senate, do not plan to propose or vote on a budget plan.”
On Friday, Sec. of Agriculture Tom Vilsack testified before the House Appropriations Subcommittee on Agriculture regarding the fiscal year 2015 budget.
A video replay of the hearing is available here (part one), and here (part two).
Below are some highlights from the Appropriations hearing.
Full Committee Chairman Hal Rogers (R., Ky.) brought attention to the SNAP program (food stamps) and sought more detail about USDA resource use for promoting the program, while Sec. Vilsack described USDA outreach efforts as educational in nature.
Damian Paletta reported in today’s Wall Street Journal that, “The White House offered a tax and spending plan Tuesday that was largely absent of lofty new policy goals, acknowledging the limited ambition of both political parties to renew a fight over the budget with midterm elections looming.
“President Barack Obama’s $3.9 trillion budget for the year beginning Oct. 1 focused on targeted measures, many of which have been previously proposed, including tax increases on upper-income Americans and companies such as oil and gas concerns. It also called for spending increases for education, infrastructure projects, and research and development, and included proposals to aid low-income workers and the unemployed, such as expanding the Earned Income Tax Credit for more childless workers.” (Note that a brief overview of the budget proposal is available here, while remarks by Pres. Obama yesterday announcing the budget outline can be read here).
The Journal article explained that, “The president’s framework is constrained by a two-year deal on discretionary spending struck in December between House Budget Chairman Paul Ryan (R., Wis.) and Senate Budget Chairman Patty Murray (D., Wash.). The agreement came after last year’s government shutdown and a decision by many lawmakers to avoid another fight over the debt ceiling. Lawmakers are instead waiting to see how the congressional elections in November might change the capital’s political dynamic. And with fiscal fatigue setting in, it is possible both sides will forgo writing budgets in Congress this year since the spending levels already have been agreed to.”
Tony C. Dreibus and Neena Rai reported yesterday at The Wall Street Journal Online that, “U.S. wheat futures surged 4.6%, the biggest one-day percentage gain in more than 17 months, as traders fretted that Ukraine’s escalating crisis will slow grain exports from the eastern European country.
“Wheat prices jumped after Russia’s military appeared to tighten its control of Ukraine’s Black Sea region of Crimea. The tensions led traders to speculate that buyers of wheat and corn will shift purchases from Ukraine—one of the world’s biggest grain exporters—to shippers such as the U.S.”
Jesse Newman and Jacob Bunge reported in today’s Wall Street Journal that, “Broker Pat Karst thought the farm being auctioned late last month would be scooped up. The 98-acre plot was of decent quality, and the volunteer fire station in Arlington, Ind., where his firm was holding the sale, was packed with farmers.
“Instead, the evening ended with the latest in a spate of failed auctions, after the top bidder dropped out far below the asking price. ‘The moral of the story is: unrealistic expectations from sellers and more caution on the side of the buyer,’ said Mr. Karst, who acknowledged he, too, thought the property would fetch a higher price than offered.
“The flop reflects a broader turning point in one of the U.S.’s biggest recent asset booms. From 2009 to mid-2013, average prices for agricultural land in the U.S. rose by half, while in Iowa, Nebraska and some other Midwest farm states, prices more than doubled, according to U.S. Department of Agriculture data from last August. That helped fuel economic prosperity across the Farm Belt while stoking fears about a possible bubble.”
The Journal writers explained that, “Now there is mounting evidence the boom is fizzling out. Farmland prices in Iowa fell 3% over the second half of last year, and those in Nebraska fell 1%, according to estimates from the Farm Credit Services of America, an Omaha, Neb., lender that calculates weighted averages based on land quality. Reports from U.S. Federal Reserve Banks across the Midwest late last year showed prices flattening or slipping from the previous quarter. A monthly survey of Midwestern lenders by Omaha-based Creighton University in January found the outlook for farmland and ranchland prices was the weakest in more than four years.
“Despite the falling property values, agricultural analysts say a repeat of past farm-belt collapses is unlikely. Farmer income is expected to remain strong and debt levels are low, according to USDA figures” [see related graph].
Today’s Wall Street Journal article stated that, “But prices have plunged for corn, a key U.S. crop. After rising to all-time highs in 2012—driven by growing demand and tight supply because of a historic drought—prices for the biggest U.S. crop dropped 40% last year, thanks to a record harvest of 14 billion bushels. The Federal Reserve warned in January that corn prices, then around $4.28 a bushel, won’t cover farmers’ anticipated cost of raising the crop this year. Prices have since climbed to about $4.40 a bushel, compared with about $8.31 in August 2012.
“Soybeans, the nation’s No. 2 crop, have also lost value. Meanwhile, with the Fed scaling back its stimulus efforts, buyers of U.S. farmland face the prospect of higher interest rates after years of cheap borrowing.”