FarmPolicy

September 25, 2016

Sec. Vilsack Discusses Farm Economy at Senate Ag Committee Hearing

Yesterday, Secretary of Agriculture Tom Vilsack testified before the Senate Ag Committee at a hearing titled, “The U.S. Department of Agriculture and the Current State of the Farm Economy.”

In his prepared testimony, Sec. Vilsack pointed out that, “Even as commodity prices have weakened and farm incomes have decreased, the rural economy remains strong. Our work to increase trade, grow the bioeconomy, strengthen local and regional food systems, and expand conservation have resulted in a more resilient rural economy. Rural and urban areas continue to recover from the Great Recession. Median income for farm households remains near the historic high of 2014 — 35 percent higher than median US household income in 2015.”

(Click here for a closer look at “Rural” growth and “Farm” income).

In his opening remarks, Chairman Pat Roberts (R., Kans.) pointed out that, “Eleven days ago, I and Chairman Conaway attended the Kansas State Fair, a great opportunity to hear first-hand what folks had on their minds.  Plain and simple, farmers and ranchers are worried. The downturn in the agricultural economy is taking a toll on their pocketbooks and the health of many family operations.”

Chairman Roberts added that, “In Kansas and across the Midwest, we have had a bountiful wheat harvest, and now there are expectations for potentially record-setting corn and soybean crops.

“Most years this would be great news, however these high yields come at a time when we are experiencing large inventories worldwide. At the farm gate, the drop in commodity prices and farm income are felt first hand…and their magnitude is foremost on everyone’s minds around this table.”

Ag Committee Ranking Member, Debbie Stabenow (D., Mich.) indicated in her opening remarks that, “As we know, there has been a dramatic slowdown in the farm economy since the passage of the Farm Bill. Farm income has dropped by over 50 percent—the steepest drop in farm income since the Great Depression. Our farm safety net keeps producers in business when disaster strikes. The 2014 Farm Bill made historic reforms by shifting away from direct payments to a focus on the risk management tools farmers requested to support producers during the bad years like we are seeing today.

“New and beginning farmers are especially vulnerable to financial stress during these times, making access to credit an especially important tool. I applaud USDA for taking action earlier this month to provide additional funding for farm loans. I am hopeful Congress can provide additional flexibility for USDA to extend credit to all farmers in need.”

To listen to an exchange between Chairman Roberts and Sec. Vilsack that highlighted “farm household” income in greater detail, click on the link below.

A news release today from Sen. John Hoeven (R., N.D.) stated that, “Hoeven thanked Vilsack for joining the Office of the United States Trade Representative (USTR) in launching a new trade enforcement challenge against China at the World Trade Organization (WTO). USTR is challenging the country’s excessive subsidies of wheat, rice and corn.”  (A portion of the Sec. Vilsack’s remarks on this issue can be heard on the link below).

Sen. Hoeven’s news release added that, “The senator also requested Vilsack’s support for his Capital for Farmers and Ranchers Act, bipartisan legislation Hoeven introduced with Senator Amy Klobuchar (D-Minn.) to increase the maximum loan amount that an individual farmer or rancher is able to receive under FSA’s loan and loan guarantee programs.”

Sen. David Perdue (R., Ga.) also participated in yesterday’s Senate Ag Committee hearing, a replay of his discussion with the agriculture Secretary is available below.

In part, Sen. Perdue noted that, “I’m concerned about regulation. Everywhere that I go, I talk to our farmers. Regulation is the number one topic [of concern], then comes labor.”

Iowa GOP Senator Joni Ernst (R-Iowa) also highlighted regulatory concerns at yesterday’s hearing, noting that, “And what I’m hearing mostly from our Iowans, especially the farmers, the ranchers, and our land owners, is that it really feels like the federal government is out to get them, and I see that a lot with a number of the rules and regulations that are coming forward.”

The full discussion Sen. Ernst had with Sec. Vilack can be viewed below.

A news release yesterday from Sen. John Thune (R., S.D.) stated in part that, “Thune discussed the lack of common-sense guidance and policy for the Conservation Reserve Program (CRP), which is critical to South Dakota agriculture as an economic alternative to farming marginal and fragile lands. Additionally, CRP provides most of the brood-rearing habitat for South Dakota’s pheasant population, which brings in more than $250 million to the state’s economy.”

A replay of Sen. Thune’s discussion from yesterday’s hearing is available below.

Former Committee Chairman Pat Leahy (D., Vt.) highlighted dairy issues at yesterday’s hearing, a portion of his remarks on this issue can be seen below.

DTN writer Todd Neeley reported yesterday that, “What’s more, as debate on the next farm bill will commence next year, the ability to maintain a strong safety net is expected to be front and center.

“‘This administration has proposed cuts to crop insurance programs each and every year,’ Roberts said. ‘We fought hard to stop a $3 billion cut. The crop insurance program is not a bank. In regard to these proposed cuts — not in this room, not on my watch.'”

The DTN article added that, “Demand for farm loans has been increasing, [Sec. Vilsack] he said, ‘driven in part by the need to cover operating expenses as commodity prices have fallen more quickly than costs.

“‘As a result, the debt-to-asset ratio for U.S. producers has increased over the past two years, but in aggregate is still near historic lows,’ Vilsack said.”

And an update yesterday from WHO radio (Des Moines, Iowa) stated in part that, “In fact, Vilsack told lawmakers that in his opinion, a common factor between essentially every hot spot in the world is the fact that none have a functioning agricultural economy, and all of them have a lot of hungry people.

“‘So if we’re serious about protecting our own people, if we’re serious about making sure the world is a safer and better place for our kids and grandkids, then we have to understand the role that agriculture in this country, and agriculture around the world, will play in providing that level of security,’ he said, ‘and I think, frankly, that there is a lack of appreciation, at times, not certainly in this committee, but in other parts of this town, on the significant role that agriculture plays.'”

And Ken Anderson reported yesterday at Brownfield that, “As the USDA works to implement the GMO labeling law, Senate Agriculture Committee chair Pat Roberts cautions the agency to stay within the limits of what Congress intended.

“During a committee hearing Wednesday, Roberts asked Ag Secretary Tom Vilsack about a proposed USDA study on whether consumers will actually use electronic or digital devices when making food purchasing decisions. Roberts said that question goes beyond the scope of the GMO labeling law.”

The Brownfield update added that, “Vilsack disagreed with Roberts’ assessment. He said the study will provide valuable information as USDA develops the framework for GMO labeling.”

kg

Chairman Conaway on Farm Policy and Food Prices, Related ERS Update

Categories: Farm Bill /Food Prices

Recall that over the weekend, Senate Ag Committee Chairman Pat Roberts (R., Kans.) and House Ag Committee Chairman Mike Conaway (R., Tex.) discussed a variety of current issues impacting the U.S. agricultural economy and farm policy at the Kansas State Fair in Hutchinson.

In particular, before embarking on changes to federal agricultural policies, Chairman Conaway said that he wanted “to know what it does to the cost of food.” He added that “we have 45 million Americans on food stamps [SNAP],” when he analyses farm policies he thinks in terms of what we are getting in return for government investment- and current policies are working, “there is no denying that,” he said.

Noting that on average, Americans spend 9.8% of disposable income on food, Chairman Conaway indicated that,“what I care about is the folks at the bottom 20% of the economic food chain, it’s not 9.8% of their disposable income, they are paying 30-35% of their disposable income for food.”

With this background on the importance of food costs to policy makers in mind, the USDA’s Economic Research Service (ERS) indicated last week (“Percent of Income Spent on Food Falls as Income Rises“) that, “[P]oorer households spend less money on food than higher income households, but this accounts for a greater share of their income.”

The ERS update indicated that, “Over the past two and a half decades, U.S. households in the lowest income quintile (the poorest 20 percent of households) spent between 28.8 and 42.6 percent of their annual before-tax income on food, compared with 6.5 to 9.2 percent spent by households in the highest income quintile. Before-tax income includes earnings and other money income, public assistance, Supplemental Security Income payments, and Supplemental Nutrition Assistance Program (SNAP) benefits.

The share of income spent on food is more volatile for poorer households than for higher income households. The lowest income households saw their share of income spent on food drop from 41.1 to 28.8 percent over the years 2001 to 2007 but then rise to 35.5 percent in 2009. Meanwhile, over the same period, the highest income households saw relatively minor yearly swings of 0.5 to 1.0 percentage points.”

The ERS report explained that, “This volatility in the share of income spent on food by the lowest income quintile is due in part to (1) changes in grocery store (food-at-home) prices and (2) changes in earned income and Federal assistance benefits. The 2001 jump in the share of income spent on food by the lowest income quintile illustrates the impact of rising food prices. Although incomes were steadily increasing for low-income households at this time, at-home food prices increased by 3.3 percent from 2000 to 2001. Higher food prices disproportionately affect the spending behavior of low-income households and often require them to allocate a larger share of their incomes to food.”

kg

Senator Booker, Representatives Ryan and Lee Urge Department of Agriculture to Modernize SNAP Program by Bringing Benefits Online

Categories: Farm Bill /Food Aid

FOR IMMEDIATE RELEASE
September 12, 2016

Contact:
Monique Waters
Press Secretary

Senator Booker, Representatives Ryan and Lee Urge Department of Agriculture to Modernize SNAP Program by Bringing Benefits Online

“Modernizing SNAP benefits will help increase the opportunity for low-income families to access healthy and affordable food that could ultimately lead to healthier lives.”

WASHINGTON, DC – Today, U.S. Sen. Cory Booker (D-NJ), along with U.S. Reps. Tim Ryan (D-OH) and Barbara Lee (D-CA) sent a letter to U.S. Department of Agriculture Secretary Tom Vilsack urging him to expedite United States Department of Agriculture’s (USDA) acceptance of the Supplemental Nutrition Assistance Program (SNAP) for online transactions, which would expand access to healthier foods for low-income individuals and families.

“It is imperative for the economic future and the health of all Americans to ensure that each person has access to nutritious and affordable food, especially the 46 million people who rely on SNAP to ensure that they and their families have enough food to eat. As you know, individuals and their families who rely on SNAP are more likely to reside in food deserts, have lower nutrition education, and live in poverty. That is why it is vital that our nation commits to reducing hunger and bolstering nutrition through improvements in SNAP, such as online transactions,” Sen. Booker and Reps. Ryan and Lee wrote in the letter.

“We know that technological advancements over the last 10 years, like the proliferation of smartphones, have dramatically increased access to the internet throughout our country. Unfortunately, many of our governmental policies and programs have not kept pace with the dramatic improvement in healthy food access that technology offers.

“We deeply appreciate all of your efforts to increase access to healthy foods for all Americans, including your commitment to launch a demonstration project to allow use of SNAP online. However, given the urgent need to catch up with the rapid pace at which the private sector is utilizing technology to expand access to healthy foods, we urge you to consider moving up the timing for beginning the project, allowing all eligible retailers to participate, and facilitating their participation by shortening the projects timeframe,” they concluded.

The full letter can be viewed here.

###

Rep. McGovern Address Hunger Issues

Categories: Farm Bill /Nutrition

Rep. Jim McGovern (D., Mass.) addressed issues associated with hunger in America on the House floor yesterday.  A transcript of his remarks follows.

Mr. Speaker, thousands of people will gather in Washington, D.C., this weekend for Feeding the 5000, an event designed to bring awareness to the issue of food waste. Participants will be served a communal meal made entirely out of food that would otherwise have been discarded—in other words, wasted. Since 2009, Feedback, a global environmental organization working to end food waste, has hosted dozens of Feeding the 5000 events in cities across the globe.

I am pleased to see so many local partners—including government agencies, charitable organizations, NGOs, industry, and chefs—joining together to call attention to food waste, because the truth of the matter is we will need all of these partners working together to solve the issue of food waste.

Last year, the USDA announced their first ever food waste reduction goal, calling for a 50 percent reduction in food waste by 2030. USDA is working with charitable organizations, faith- based groups, and the private sector, and I believe this goal is 100 percent achievable.

American consumers, businesses, and farms spend an estimated $218 billion per year growing, processing, transporting, and disposing of food that is never eaten. Up to 40 percent of all food grown is never eaten; 40 to 50 million tons of food is sent to landfills each year, plus another 10 million tons is left unharvested on farms. This food waste translates into approximately 387 billion calories of food that went unconsumed. With 50 million Americans—including 16 million children— struggling with hunger every year, these are startling figures.

We know food waste occurs throughout the supply chain, from harvesting to manufacturing, to retail operations and consumer habits. But we must do more to reduce food waste at every stage, recover food that would otherwise have been wasted, and recycle unavoidable waste as animal feed, compost, or energy.

Thankfully, there is already a lot of great work being doing to raise awareness about the problem of food waste. Just last week, I attended a screening of the documentary film called ‘‘Just Eat It’’ at Amherst Cinema, organized by The Food Bank of Western Massachusetts. ‘‘Just Eat It’’ follows a cou- ple, Jen and Grant, as they stop going to the grocery store and live solely off of foods that would have been thrown away. Jen and Grant were able to find an abundance of perfectly safe and healthy food available for consumption that would have been thrown away.

It is exciting to see new partnerships forming to study food waste and find ways to use this perfectly good food to reduce hunger in our communities. One such private-public collaboration, ReFED, has brought together over 30 business, government, and NGO leaders committed to wide-scale solutions to U.S. food waste.

In March 2016, ReFED released a Roadmap that charts the course for a 20 percent reduction of food waste within a decade. The Roadmap calls for farmers to reduce unharvested food and create secondary markets for imperfect produce. It calls on manufacturers to reduce inefficiencies, make packaging adjustments, and standardize date labeling. It calls on food service companies to further implement waste tracking and incorporate imperfect produce and smaller plates into restaurants. It urges the Federal Government to strengthen tax incentives for food donations and consider standardized date labeling legislation.

The good news is that many in the industry are already taking steps to dramatically cut down on wasted food by implementing robust donation programs. For example, Starbucks recently announced it will soon scale up its successful food donation pilot program nationwide. In partnership with the Food Donation Connection and Feeding America, Starbucks will donate unsold food from more than 7,000 company-operated stores—salads, sand- wiches, and other refrigerated items— to the Feeding America food bank network. By 2021, that amounts to almost 50 million meals.

Our college campuses are also stepping up. Both the Campus Kitchens Project and the Food Recovery Net- work will work with college dining facilities and students to provide hunger relief in their local communities. In my congressional district, Becker College, Holy Cross College, Smith College, the University of Massachusetts Amherst, and Worcester Polytechnic Institute all have campus food recovery initiatives.

Over the past 35 years, Feeding America has demonstrated an outstanding commitment to ensuring food that would otherwise have been wasted makes its way to food banks across the country and into the homes of families in need. There are dozens of other in- dustry leaders also taking steps to reduce food waste by implementing manufacturing upgrades, maximizing harvests, and utilizing recycling initiatives.

I appreciate the efforts of the Food Waste Reduction Alliance in bringing together industry partners to reduce food waste, shrink the environmental footprint, and alleviate hunger in our communities.

Reducing food waste is one step we can take toward our goal of ending hunger in the United States and throughout the world. I am pleased to see so many partners at every level of the food supply chain taking action to reduce food waste, but there is still more that needs to be done. Let’s solve the problem of food waste, and let’s end hunger now.

Rep. Jim McGovern Addresses SNAP (Food Stamp) Issues

Categories: Farm Bill /Nutrition

Rep. Jim McGovern (D., Mass.), the ranking member of the House Agriculture Subcommittee on Nutrition, delivered a floor speech yesterday where he addressed issues associated with the Supplemental Nutrition Assistance Program (SNAP, or Food Stamps).

A transcript of Rep. McGovern’s remarks follow:

Mr. Speaker, on April 1, thousands of poor Americans started losing their SNAP, or food stamp, benefits.

All told, over the course of this year, as many as 1 million adults will be cut off from SNAP. That is because one of the harshest provisions in the 1996 welfare reform law says that adults working less than 20 hours a week or not enrolled in a job training program can only receive 3 months of SNAP in a 36- month period.

The problem is, however, that many areas of the country haven’t fully recovered from the recession. There are no open jobs, and worker training slots are all full.

The economic recovery has been uneven across the country, and for many individuals—through no fault of their own—getting back to work has been difficult.

At the height of the recession, Governors across this country, both Democratic and Republican, asked the U.S. Department of Agriculture to allow them to temporarily waive work requirements and provide SNAP benefits to unemployed, childless adults for longer periods of time.

But now some Governors are refusing to extend those work waivers even in areas of their States with high unem- ployment. For 1 million of the poorest Americans, to lose food assistance in the midst of this is unconscionable.

Mr. Speaker, we are talking about the poorest of the poor. These are childless adults whose income averages 29 percent of the poverty line, or about $3,400 a year, a year. No one can live on that.

Many face multiple barriers to employment, including disability, limited education, and chronic homelessness. Their employment can be sporadic, often cycling in and out of low-wage jobs with unpredictable hours that do not lift them out of poverty.

What is most appalling is that about 60,000 of those who will be cut off from SNAP this year are veterans. That is right. These are the brave men and women who stood up to protect our country, and now we don’t have the decency to help them put food on the table when they come home. We should be ashamed.

Mr. Speaker, let me be clear about something. The 3-month limit on childless adults receiving SNAP is not a work requirement, despite what some of my Republican colleagues say. It is a time limit. There is no requirement that States offer work or job training to those who are about to lose their benefit. There is nothing here that incentivizes work. Rather, it penalizes those who are struggling the most.

Work requirements and other Federal assistance programs typically require people to look for work or accept any job or job training slot that is offered, but do not cut people off who are willing to work and are looking for a job simply because they cannot find one.

But that is not the case with SNAP. So individuals who have been searching for a job for months, who have applied to every job posting they have seen, and who can’t get into a job training program because the wait list is too long are punished.

Study after study shows that the longer someone is unemployed, the harder it is to get hired. It is baffling to me that the Republicans’ answer to them is: Sorry. You are out of luck.

The Bureau of Labor Statistics estimates that it takes someone who is unemployed about 6 months of looking to find a job.

That is twice as long as the 3-month time limit. For the life of me, I can’t understand how making someone hungrier helps them find a job faster. We should be making people’s lives better, not harder.

This notion that some on the Republican side peddle that somehow SNAP is this overly generous program that people are just jumping to get into, it is ridiculous. It is false. The average SNAP benefit is $1.40 per meal per day. That is meager. It is inadequate.

And this idea that SNAP is the root of our budget problems is outrageous. New data released from the Department of Treasury just last week shows that SNAP spending is falling. In the first half of the current fiscal year, SNAP spending was at its lowest level since 2010. Not only that, but SNAP caseloads are falling, too. That is due to the improving economy.

SNAP operated like it was supposed to during the recession. It was expanded to meet the needs of the millions who lost their jobs, of middle class families who never imagined they would need food assistance in the first place. And now, as our economy improves, fewer people need the assistance. But we are not there yet.

Cutting 1 million of the poorest Americans off from food assistance is wrong. Increasing hunger is wrong. And I would say to the Republican leadership of this House, the narrative that you have put forward about those in poverty does not reflect the reality. Rather than demonize the poor and diminish their struggle, we ought to come together to help, not hurt, people. We ought to end hunger now. This war on the poor has to stop.

 

House Ag Subcommittee: Growing Farm Financial Pressure

Recall that recent news items regarding the agricultural economy have included phrases like, “Mounting Pressure,” and “There Definitely Could be Some Pain;” while the Federal Reserve Board indicated in its most recent Beige Book report that, “Some crop input prices, such as fertilizer and diesel prices, moderated from year-ago levels, but profit margins were expected to remain relatively weak due to suppressed commodity prices.”

The Fed added that, “A contact in eastern Montana reported that less- profitable farms were leaving the business, and more exits were expected.”

Yesterday, the House Agriculture Committee’s Subcommittee on General Farm Commodities and Risk Management held a hearing on the “growing financial pressures faced by U.S. farmers and ranchers. ”

A Subcommittee news release yesterday indicated that, “Conditions in farm country today contrast sharply with those during the formulation of the 2014 Farm Bill. While high prices for many farm commodities led to tremendous growth in net farm income through 2013, many of those prices have spiraled downward over the past three years. Witnesses spoke broadly about the factors that are driving current market conditions, the bleak outlook going forward, and the impact that both are having and could continue to have on our nation’s farmers and ranchers going forward. They also spoke to the vital role that farm policy and crop insurance are playing in helping absorb some of the shock, and they stressed the devastating impact that further reductions to these vital tools could have.”

Subcommittee Chairman Rick Crawford (R., Ark.) stated that, “Next year, we will head into a new Congress, and we will write a new Farm Bill. As we head into that long and difficult process, I hope our colleagues who are less directly involved in agriculture or farm policy will reflect on just how critically important farm policy is in responding to a crisis that can happen overnight.”

USDA Chief Economist Dr. Rob Johansson indicated at yesterday’s hearing that, “A strong dollar coupled with high-levels of global agricultural production leave U.S. producers facing commodity prices that continue to decline from record levels and a more difficult trading environment than last year. As a result there will be growing financial pressures on some producers this year, as expected revenue may not be sufficient to cover expected costs. Overall, USDA forecasts that net cash income will fall again in 2016.”

And Texas A&M agricultural economist Joe Outlaw pointed out yesterday that, “Cash rents have come down a little, but nowhere near the amount that commodity prices and returns have fallen. This is due in-part because some producers have multi-year lease agreements. However several cash lease tenants reported their landlord’s have been unwilling to lower cash lease rates.”

Dr. Outlaw added that, “[T]the current poor situation on farms across this country would be considerably worse if not for the safety net provided by both Title I commodity policies and federal crop insurance. There are some in agriculture who say that commodity policies are more important than crop insurance or vice versa. I believe they are equally important – especially during times of low prices. For example, lenders tend to view crop insurance as being more important because the insurance guarantee is ‘bankable,” meaning it is something on which they can base a loan. On the other hand, producers see the commodity assistance as the only chance they have of coming close to breaking even in a low price environment.

“And finally, in my opinion, the interest groups that continue to call for changes that would negatively impact these two key policy tools clearly either have no idea how difficult the financial situation is across agriculture or they simply do not care. Farmers in this country deserve better than to continually be threatened with changes that I consider a dismantling of the safety net.”

With respect to the price outlook for 2016, University of Illinois agricultural economists Scott Irwin and Darrel Good indicated recently at farmdoc daily (“Forming Corn and Soybean Price Expectations for 2016-17“) that, “Using new ending-stocks-to-use pricing models (farmdoc daily, April 6, 2016), we conclude that the probability of the 2016-17 marketing year average farm price of corn and soybeans to be below $3.40 and $9.00, respectively, appears to be quite low at this time. For perspective, substantially lower prices would require a demand environment even weaker than occurred during the Great Recession of 2008-09. A more interesting question revolves around the conditions required to increase the average price to levels that would be considered profitable for most producers. If overall demand remains weak, prospects of very small year ending stocks would likely be required to move averages above $4.00 and $10.00 for corn and soybeans, respectively, which would be helpful but would not represent a return to general profitability. However, there are factors that could improve the demand environment in the year ahead. These include crop production problems in other parts of the world that would extend the demand for U.S. corn and soybeans, a realignment of currency exchange rates that would favor U.S. corn and soybean exports, and policies that enhance the domestic demand for corn and soybeans. Recent dryness that poses, or may pose, some threat to the Malaysian palm oil crop and the second-season Brazilian corn crop are examples of production problems that would enhance export demand. The current biofuels policy that is supporting biodiesel production also has the potential to support soybean oil consumption at a higher level. It is interesting that the futures markets may already be anticipating some of these developments, as the markets are currently projecting 2016-17 marketing year average prices of about $3.70 for corn and $9.40 for soybeans.”

kg

GOP Proposes SNAP Funding Cut

Categories: Farm Bill /Nutrition

Pete Kasperowicz reported today at The Washington Examiner Online that, “House Republicans are looking to push through a Department of Agriculture spending bill this year that would cut the federal food stamp program by $1.2 billion compared to current year funding.

“The House Appropriations Committee released legislation Tuesday that provides $79.7 billion for the Supplemental Nutrition Assistance Program, or SNAP.”

The article noted that, “In March, USDA noted that compared to two years ago, there are 2 million fewer people using SNAP, informally known as the food stamp program.”

kg

House Ag Committee Holds Hearings to Review USDA Agencies (SNAP, Crop Insurance)

Categories: Farm Bill

On Thursday and Friday, the House Agriculture Committee held hearings “examining USDA organization and program administration.”

A Committee news release on Thursday noted that, “USDA officials from the Food, Nutrition and Consumer Services (FNCS), Food Safety (FS), and Rural Development (RD) mission areas served as witnesses.

“This hearing series follows a similar series the committee held with USDA last fall. By setting aside two days each year to focus on examining each of USDA’s seven mission areas and their respective agencies, members of the committee gain a fuller understanding of how the various parts of USDA work together to achieve the department’s purpose and goals.”

Recall that nutrition programs comprise the largest percentage of Farm Bill spending.

In prepared remarks on Thursday, USDA Under Secretary for Food, Nutrition and Consumer Services Kevin Concannon, indicated that, “As this Committee continues to review SNAP [food stamps], I want to speak candidly about the proposal raised by some to change SNAP into a block grant provided to States; such a change would have significant and negative consequences for the SNAP program. A block grant structure would significantly erode SNAP’s responsiveness to those it serves and ultimately be a step backwards in the national fight against hunger.”

Mr. Concannon added that, “While flexibility is critical to ensuring that States can meet the needs of their residents facing difficult circumstances, members of this Committee have criticized States for how they have used their flexibility, and sought to constrain it in certain areas. The most notable of these is States use of broad-based categorical eligibility, an option by which States extend eligibility to households that receive a non-cash benefit funded by TANF. Conversely, there are examples where States are not taking options favored by the Committee. The Agricultural Act of 2014 codified existing FNS rulemaking that allows States the option to withhold issuing replacement cards to households with excessive requests, defined as five or more in a year. FNS provided States this option as excessive card replacements may be an indicator of potential benefit trafficking. To date, only three States – Iowa, Massachusetts, and Michigan –have adopted this State option.”

Mr. Colcannon also noted that, “As vital as the program is to so many, we can all agree that it would be better if fewer families needed to utilize SNAP because poverty and need were lower. And while the trends are pointing in the right direction – we are currently projecting a 2.3 percent decrease in participation for Fiscal Year 2017 – some ask, why haven’t we made more progress in reducing the need for SNAP, given the reductions in unemployment in recent months?

While overall unemployment has declined, unemployment rates for some workers remain far higher than average. Bureau of Labor Statistics data show that unemployment rates for high school graduates are substantially higher than for college graduates. Workers without high school diplomas are even more likely to be unemployed, and their wages are likely to be far lower than those with more education. Furthermore, some citizens have trouble entering the labor force because of criminal records or other problems from years past. And, many who have jobs do not get the hours and wages they need to meet their food needs but may not be eligible for many other forms of assistance. SNAP is also serving more eligible people because of State and USDA efforts to streamline the program to ensure that those who need benefits are able to access the program with less hassle and paperwork.”

In a news release yesterday, the Ag Committee noted that, “Today, the House Agriculture Committee completed its two-day examination of the USDA’s organization and program administration. Over the past two days, members of the committee heard from 25 undersecretaries, administrators, and other department officials across USDA’s seven mission areas, on a variety of topics, which included an accounting for each area’s purpose and goals, programs administered, and annual budget.”

Witnesses testifying on Friday included, “USDA officials for the Natural Resources and Environment (NRE), Farm and Foreign Agricultural Services (FFAS), Research, Education and Economics (REE), and Marketing and Regulatory Programs (MRP) mission areas.”

As was noted in an earlier FarmPolicy update, the administrations proposed cuts to crop insurance were highlighted on Thursday at the House Agriculture Appropriations Subcommittee.

In prepared remarks on Friday, USDA Deputy Under Secretary for Farm and Foreign Agricultural Services, Alexis Taylor, indicated that, “The Federal crop insurance program is a vital risk-mitigation tool available to our Nation’s agricultural producers. It provides risk management solutions that are market driven and reflect the diversity of the agricultural sector, including specialty crops, organic agriculture, forage and rangeland, as well as staple row crops.

“Over its history, the value of the Federal crop insurance program to American agriculture has grown. In 2015, the crop insurance program provided coverage on more than 298 million acres of farm and ranch land and protected over $102 billion of agricultural production. As of February 25, 2016, indemnity payments to producers on their 2015 crops total just over $5.6 billion on a premium volume of just under $10 billion. Our current projection for the 2016 crop year shows the value of protection will be slightly less than $100 billion.”

Ms. Taylor added that, “Incentives authorized in the 2014 Farm Bill make crop insurance more affordable for beginning farmers and ranchers by providing a 10 percent premium discount, as well as a waiver of the catastrophic and additional coverage administrative fees. Over 13,500 producers have taken advantage of these incentives. Beginning farmers and ranchers have saved over $14.5 million in premiums and administrative fees because of this program.

“The Farm Bill included several reforms to the Federal crop insurance program; however, there remain further opportunities for improvements and efficiencies. The President’s 2017 budget includes two proposals to reform crop insurance, which are expected to save $18 billion over 10 years. This includes reducing subsidies for revenue insurance that insure the price at the time of harvest by 10 percentage points and reforming prevented planting coverage. These reforms will make the program less costly to the taxpayer while still maintaining a quality safety net for farmers.”

With respect to program integrity, Ms. Taylor stated that, “I am proud to report that the improper payment rate for Fiscal Year 2015 is 2.2 percent, down from 5.5 percent in FY 2014.”

kg

Agriculture Budget and Appropriations Issues, Including Crop Insurance

Categories: Budget /Farm Bill

An update yesterday at the National Sustainable Agriculture Coalition Blog (NSAC) provided an excellent recap of budget and appropriations issues that are impacting agriculture.

The NSAC update included a link to the House Agriculture Appropriations Subcommittee hearings for the FY2017 appropriations cycle that the Subcommittee held last month, as well as a recap of the remaining Subcommittee appropriations that concluded last week.

With respect to the Farm and Foreign Agricultural Services Subcommittee appropriations hearing, which was held on Thursday,  yesterday’s NSAC update pointed out that, “Congressman Robert Aderholt (R-AL), Chairman of the House Agriculture Appropriations Subcommittee [opening statement here], began the Farm and Foreign Agricultural Services hearing by arguing against the Administration’s proposal to reform crop insurance subsidies.

“‘The budget proposal is misguided by seeking to change a mandatory spending program through the appropriations process,’ Chairman Aderholt said.”

Yesterday’s NSAC update also explained that, “Ranking Member [Sam Farr (D., Calf.)] asked RMA Administrator Brandon Willis [prepared testimony] what is being done to make crop insurance work better for producers practicing sustainable, organic, and diversified agriculture. Administrator Willis mentioned Whole-Farm Revenue Insurance, and noted that the number of organic price elections has expanded significantly over the last several years. He committed to continuing to expand those opportunities.

“Similarly, Congresswoman [Chellie Pingree (D., Maine)] urged RMA to make it easier for producers to use conservation practices, such as cover crops, without having to fear losing their crop insurance. Producers who use cover crops must follow a complicated and sometimes confusing set of guidelines for terminating those crops in order to qualify for crop insurance. Pingree urged Administrator Willis to instead classify cover crop as a ‘good farming practice‘ so that producers can more easily pursue conservation efforts without fear of losing their insurance.”

The NSAC update added that: “Following weeks of lobbying for program support by fellow members, and public and private stakeholders, Members of Congress finally submit their appropriations requests to the Subcommittee this week. We expect the Subcommittee to begin reviewing those requests and writing its bill between now and early April. At this point, the Senate Agriculture Appropriations Subcommittee has held far fewer appropriations hearings than the House, so it may require considerably more time before it begins to write its own bill.”

kg

FAPRI Baseline Update

The Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri released its U.S. Baseline Briefing Book today.

The FAPRI report noted that, “Lower agricultural commodity prices have contributed to a sharp reduction in net farm income. The outlook for the next several years suggests continued pressure on farm finances is likely.”

The report added that, “Projected corn prices average $3.75 per bushel for the 2016/17 marketing year, up only slightly from 2015/16. Corn prices average less than $4.00 per bushel for the 2017-2025 period.

“Other crop prices also remain well below recent peak levels. Soybean prices average $8.73 per bushel in 2016/17, while wheat averages $4.97 per bushel and upland cotton averages 56.9 cents per pound.”

“With farm income well below recent peak levels and if interest rates increase as forecasted, there will be continued pressure on farm finances and farm real estate values,” the report said, while adding that, “Crop insurance net outlays are projected to average about $8 billion per year for fiscal years 2017-2025.”

kg

SNAP and Farmers Markets

Categories: Farm Bill /Nutrition

The editorial board at the Los Angeles Times indicated today that, “On any given day in and around Los Angeles, more than half a dozen farmers markets pop up to cater to crowds of Angelenos in search of heirloom Cherokee Purple tomatoes, cilantro hummus, chili-lime cashews or a dozen eggs from a small family run poultry farm. Not to mention more prosaic fruits, vegetables, breads and other fresh-food staples.

“Los Angeles does love its farmers markets — but not all Angelenos can use them. Of the approximately 60 certified markets in Los Angeles, only about half accept the modern version of food stamps, Electronic Benefit Transfer cards. There’s something terribly wrong when Jack in the Box and corner liquor stores eagerly accept EBT, but a farmers market does not.”

Today’s editorial explained that, “The Los Angeles City Council is trying to rectify that and has asked the public works staff and city attorney to figure out how to make that happen by the end of this month. Farmers markets serving the public, especially those operating on public land or in the public right of way, really should serve all of the public. And although it would be preferable for city leaders to persuade markets to accept EBT rather than coercing them to do so, a mandate along those lines would nevertheless seem to benefit everyone.

While accepting EBT does require extra effort, the operating costs are negligible. The state provides the electronic card readers, and even pays for wireless access if needed. And accepting EBT wouldn’t reduce the vendors’ profits, given that an EBT dollar has the same value as a dollar bill.”

It’s hard enough for low-income Angelenos to obtain nutritious groceries, with wide swaths of the city virtual healthy-food deserts. They shouldn’t be cut off from the few oases of reasonably priced, healthy and local produce,” the LA Times said.

Keith Good

Cotton Oilseed Issue- Continues

Forrest Laws reported yesterday at the Delta Farm Press Online that, “Secretary Tom Vilsack’s answer to the question was short and to the point.

After he was asked during a news briefing why he couldn’t designate cotton as an ‘other oilseed,’ a request made by the cotton industry and a number of farm-state congressmen, he replied: ‘Because I can’t.'”

For more detail on this issue, see this backgrounder.

Mr. Laws added that, “But [Sec. Vilsack] went on to explain USDA does want to help cotton producers and two possible avenues for that. One would be to provide a Cotton-Transition-Assistance-Payment-type program, using Commodity Credit Corp. funding. The other would be a cost-share for cotton ginning through marketing assistance funding.

“The latter is being explored through negotiations with the cotton industry aimed at determining the costs and the mechanics of how such a program would work. Vilsack has mentioned a figure of $300 million for the total cost of ginning while the cotton industry estimated the total could be closer to $800 million.”

Recall also that The Wall Street Journal recently looked closer at the issue of Chinese cotton stocks and the market price of cotton.

Keith Good

SNAP Enrollment Declines- Remains High

Categories: Farm Bill /Nutrition

Pete Kasperowicz reported today at The Washington Examiner Online that, “The U.S. Department of Agriculture said Monday that nearly 2 million people have stopped using the federal food stamp program over the last two years, and said reduced rolls are a sign that economic growth is finally beginning to reduce the need for federal nutrition aid more than six years after the Great Recession ended.

But that 2 million drop is not even 10 percent of the more than 21 million people who signed up for the Supplemental Nutrition Assistance Program, or SNAP, from 2008 to 2013.

“‘Seven years later, a stronger economy is helping slow and reverse the trend of rising participation in SNAP,’ Undersecretary of Agriculture Kevin Concannon wrote in a blog post. ‘From its peak rates during the Great Recession, as families and communities begin to rebuild, participation in SNAP has dropped by over 2 million participants — and that’s the way the program is designed,’ he added.”

Today’s Washington Examiner update added that, “The Great Recession started at the very end of 2007, and lasted through June 2009. Before it began, there were an average of 26.3 million people using SNAP, and the rolls quickly grew each year through 2013, ending at an average of 47.6 million people.”

In his blog post today, Undersecretary Concannon also noted that, “In the last year of this Administration, I am committed to keeping up our work to ensure states and local partners have the tools they need to reach their constituents so that we can continue to see more of the positive changes that we’ve seen in the last seven years. We are also working to take stock of what’s working and how those programs can reach more people who really need them. I’m very proud of what we’ve accomplished in seven years, but our work here is far from done.

“Today, we launched Part II of our two-part series on how these historic changes to our nation’s nutrition programs came to be. You can catch up on Part I and read a blog from Secretary Vilsack reflecting on seven years of progress.”

Recall also that the House Ag Committee held a hearing last week on SNAP related issues.

Keith Good

Cotton Issues Persist

Recall that back in December, at a House Agriculture Subcommittee hearing on the current state of the U.S. cotton industry, Shane Stephens, the Vice Chairman of the National Cotton Council, explained that: “Current stocks-to-use ratios stand in stark contrast to historical stocks that generally ranged between 50 and 60 percent of total use. The recent increase in stocks was the direct result of policies in place in China for the 2011 through 2013 crops. During those years, China supported its cotton farmers by purchasing vast amounts of its production into government reserves at prices well above the world market.”

Rep. Rick Crawford (R., Ark.), the House Ag Subcommittee Chairman on General Farm Commodities and Risk Management, noted at the December hearing that, “In the not too distant past, we lost to China most of what was once the largest manufacturing sector in America, our textile industry. Now, I believe we are in grave danger of losing the vast majority of our production to China, India, and other countries that are employing anticompetitive trade practices that no American farmer can match.”

Lucy Craymer reported in Friday’s Wall Street Journal that, “Global cotton prices have plunged in recent weeks as speculation mounts that China is getting ready to sell some of its 11 million-metric-ton stockpile—enough to make 10 billion pairs of jeans.

“Commodity analysts expect China to conduct a cotton auction in the next few months, its first since the end of August.

“While the government sells nearly all of its cotton at home, it is such a big player in the market that unloading a chunk would depress global prices by reducing how much foreign cotton Chinese businesses buy. China holds about 60% of the world’s cotton stockpiles and is responsible for slightly less than a third of global consumption.”

The Journal article added that, “The expectation of a new round of selling by China has pushed down prices on the Zhengzhou Commodity Exchange to their lowest levels since 2004. Meanwhile, the benchmark ICE Futures U.S. exchange has cotton trading near its lowest since 2009, dropping about 12% since the beginning of the year; the May contract settled at 56.41 cents a pound on Thursday.”

Ms. Craymer explained that, “One factor putting pressure on China to sell is that cotton deteriorates, so it can’t simply hold supplies for years in hopes the price will rise.

The stockpile dates back to a government program introduced in March 2011 to improve the livelihoods of domestic cotton farmers by setting a floor for prices. But with global cotton prices dropping, China chose to store the cotton rather than sell it on the global market.

The result, according to the USDA, was a doubling of the world’s stockpiles, which further depressed prices. USDA estimates of cotton stockpiles are slightly above China’s.”

The Journal article added that: “China has since ended the price-support program for cotton. But that won’t help it with its huge stockpile—which is enough to make three times more jeans than the total sold globally in 2015, according to Euromonitor.”

Lower cotton prices for U.S. producers, and international policies, such as those implemented by China, have been an impetus for cotton farmers to ask the USDA to “use legal authority provided under the 2014 Farm Bill” to provide additional federal assistance to struggling cotton farmers.

So far, Agriculture Secretary Tom Vilsack has indicated that the USDA does not have the authority to make this change.

A backgrounder on the cotton Farm Bill issue is available here.

Keith Good

House Ag Committee Discusses SNAP (Food Stamp) Issues

Categories: Farm Bill /Nutrition

A news release yesterday from the House Ag Committee indicated that, “Today, the House Agriculture Committee held a hearing to review the various options available to states when implementing the Supplemental Nutrition Assistance Program (SNAP). Members heard from a panel of witnesses who shared the current options available to states when implementing the program and how those options allow states to respond to the needs of their respective populations. Some of these state options streamline program administration, coordinate SNAP with other assistance programs for low-income families, and enable states to design the program to meet their objectives through determining their own financial eligibility, work-related eligibility, and reporting requirements.”

Committee Chairman Mike Conaway (R., Tex.) noted at yesterday’s hearing that, “When carrying out the program, states determine eligibility requirements, such as income thresholds, asset limits, and work-related requirements. Through categorical eligibility, states can utilize the participation from one means-tested program, such as the Temporary Assistance for Needy Families program, or TANF, to defer eligibility for SNAP. When calculating and issuing monthly benefits for those eligible, states have the flexibility to determine the value of medical deductions or standard utility allowances. It is important to note SNAP does not operate in a vacuum.

“When administering SNAP, states have a multitude of programs they are overseeing. As we will hear today, other programs, such as TANF and the Supplemental Security Income program have an effect on how SNAP is administered in states. It is important to look at how, as a collective whole, these programs are used by the people they serve.”

Ranking Member Collin Peterson (D., Minn.) pointed out yesterday that, “I’ve been urging, for some time now, that the Committee take a good look at the flexibility states have when administering SNAP. I understand that this is done to simplify the process but I worry that it’s gone too far and they now have too much leeway.

“During the last farm bill debate I offered a plan to reform categorical eligibility. Of course that didn’t happen but I still have a hard time understanding how states, with both Democratic and Republican governors, are allowed to exceed federal eligibility guidelines and then charge the federal government for the additional expense. This creates a system where we treat people differently in different parts of the country and I don’t think that’s right.

My district, for example, borders North Dakota. North Dakota and Minnesota have different income and asset tests to qualify for SNAP. So people in the same community are being treated differently.”

Karen Cunnyngham of Mathematica Policy Research stated in prepared remarks yesterday that, “In FY 2014, the average monthly percentage of a state’s population subject to work requirements ranged from fewer than 3 percent in Delaware, Massachusetts, and Oregon to over 20 percent in Florida and Michigan. The percentage subject to time limits varied from less than half a percent in Maryland, Massachusetts, and Nevada to 9 percent or more in Florida, Georgia, and Mississippi. The average monthly benefit per person was higher for participants subject to work requirements ($162) and subject to time limits ($178) than the average benefit per person for all participants ($124).”

In addition, Stacy Dean, Vice President for Food Assistance Policy at the Center for Budget and Policy Priorities indicated in her prepared remarks that, “The number of SNAP households that have earnings while participating in SNAP has more than tripled — from about 2 million in 2000 to about 7 million in 2014. The share of SNAP families that are working while receiving SNAP assistance has also been rising — while only about 28 percent of SNAP families with an able-bodied adult had earnings in 1990, 57 percent of those families were working in 2014…[M]ost SNAP recipients who can work do so.”

Ms. Dean also noted that, “The percentage of SNAP benefit dollars issued to ineligible households or to eligible households in excessive amounts fell for seven consecutive years and stayed low in 2014 at 2.96 percent, USDA data show. The underpayment error rate also stayed low at 0.69 percent. The combined payment error rate — that is, the sum of the overpayment and underpayment error rates — was 3.66 percent, low by historical standards.3 Less than 1 percent of SNAP benefits go to households that are ineligible.”

And, Ms. Dean pointed out that, “SNAP has low administrative overhead. About 90 percent of federal SNAP spending goes to providing benefits to households for purchasing food.”

Meanwhile, Claire Williams reported this week at Arkansas Online that, “The 30,000 Arkansans who could lose food stamps this year will have more options to receive training and find jobs through a program sponsored by the U.S. Department of Agriculture, Agriculture Secretary Tom Vilsack announced Tuesday.

“The SNAP to Skills program will help states organize programs to ultimately move adults off the Supplemental Nutrition Assistance Program. People who would otherwise lose access to government food stamps could continue to use them under the training programs as they search for employment and receive training, Vilsack said.”

And Lynn Bonner reported earlier this week at The News & Observer (NC) Online that, “The goal of such employment and training projects, said U.S. Agriculture Secretary Tom Vilsack, is to get adults to a point where they no longer need help from the food stamp program, officially called the Supplemental Nutrition Assistance Program, or SNAP.

“States ‘will learn best practices, get technical assistance and learn how they can make more robust their efforts to find jobs’ for food stamp recipients, Vilsack said in an interview. ‘This is the right way to reduce SNAP rolls, not some artificial process.'”

Keith Good

Hearing: House Ag Subcommittee on Conservation

Categories: Conservation /Farm Bill

Yesterday afternoon, the House Agriculture Subcommittee on Conservation and Forestry held a hearing titled on land conservation issues.

Subcommittee Chairman Glenn ‘GT’ Thompson (R., Pa.) indicated at yesterday’s hearing that, “The Earth’s population is projected to grow to roughly 9 billion people by the year 2050. Given the growing demands on farm land everywhere, we must invest in the necessary resources and best practices to be certain that producers can continue to meet this growing need. To that end, I am particularly proud of this committee’s work on conservation programs during the deliberation of the most recent farm bill. The 2014 Farm Bill contained creative, outside-the-box approaches to funding and delivering conservation programs.

“One of the biggest successes of this creative approach has been the Regional Conservation Partnership Program, known as RCPP. RCPP is an innovative approach to target conservation initiatives. It uses NRCS programs that produce known conservation improvements, and leverages that federal funding with matching funding from partners in the private sector. It has brought together broad coalitions consisting of commodity organizations, conservation groups, sportsmen, and others to unite around a common goal.

“In the first two years, RCPP has awarded funding to 199 projects across all 50 states and Puerto Rico and matched over $500 million in program funding with $900 million from partner contributions. These efforts that bring all perspectives to the table are the ones that are actually working. It takes everyone coming together.”

USDA’s Natural Resources Conservation Service Chief, Jason Weller, noted yesterday that, “Science-based solutions and innovative tools are also supporting the locally led approach. NRCS is advancing innovative partner-driven conservation through the [RCPP]. Created by the 2014 Farm Bill, RCPP is a locally led conservation approach that is already showing results. Now in its second year, RCPP has demonstrated high demand, with over 2,000 partners leading nearly 200 projects nationwide. All told, in the first two years of the program, NRCS will have invested about $500 million while another $900 million is being brought in by partners to address locally defined, nationally significant natural resource issues. For the next round of RCPP funding, NRCS will challenge partners to consider environmental markets and conservation finance systems with agricultural opportunities.”

Frank Price, a rancher from Texas, explained at yesterday’s hearing that, “U.S. cattlemen own and manage considerably more land than any other segment of agriculture— or any other industry for that matter. Cattlemen graze cattle on approximately 666.4 million acres of the approximately 2 billion acres of the U.S. land mass. In addition, the acreage used to grow hay, feed grains, and food grains add millions more acres of land under cattlemen’s stewardship and private ownership. Some of the biggest challenges and threats to our industry come from the loss of our natural resources. The livestock industry is threatened daily by urban encroachment, natural disasters, and government overreach. Since our livelihood is made on the land, through the utilization of our natural resources, being good stewards of the land not only makes good environmental sense; it is fundamental for our industry to remain strong.”

Mr. Price noted that, “The Environmental Quality Incentive Program, or EQIP, is a cost-share program that rewards and provides incentives to producers for implementing conservation practices. When wildfire came through our ranch in 2011, we had to rebuild miles of fencing. EQIP helped us do it. One of the reasons EQIP has become popular among ranchers is because it is a working-lands program. Conservation programs that keep land in production and do not limit its use are best for both the ranchers and conserving our resources.

“Another working lands program is the Conservation Stewardship Program. CSP rewards those of us that have been conservationists and have spent the time and money in the improving of our land, water, and wildlife habitats. CSP offers cattlemen the opportunity to earn payments for actively managing, maintaining, and expanding conservation activities like cover crops, rotational grazing, ecologically-based pest management, and buffer strips.”

Subcommittee Ranking Member Michelle Lujan Grisham (D., N.M.) added at yesterday’s hearing that: “I’ve often mentioned the inadequate rainfall and drought conditions in New Mexico and the Southwest. Fortunately, there are conservation tools available to help Southwestern producers cope with these situations. I’ve heard from several New Mexican producers that the Conservation Stewardship Program, which pays producers to adopt conservation activities to improve working lands, helped in keeping many farmers and ranchers on their lands and in business during the past drought, which lasted about 5 years.”

Keith Good