DTN Ag Policy Editor Chris Clayton reported yesterday (link requires subscription) that, “While possible sequestration cuts could begin as soon as March 1, USDA is still examining the possible effects on farm programs, a senior USDA official said Tuesday.
“Michael Scuse, the department’s undersecretary for Farm and Foreign Agricultural Services, spoke at the crop insurance industry’s annual meeting near Palm Springs, Calif. During the question-and-answer session, DTN asked Scuse about how farmers would be affected by possible cuts to commodity and conservation programs.
“‘We still have all of the attorneys at USDA looking at all of the programs and how they will in fact be affected if the sequester does kick in on March 1,’ Scuse said.”
The DTN update noted that, “Responding in a statement, AMI President J. Patrick Boyle wrote Agriculture Secretary Tom Vilsack ‘reminding him of USDA’s legal obligations to provide meat inspection even under sequestration.’
“As AMI stated, USDA also said that production will shut down for that time period, impacting approximately 6,290 establishments nationwide and costing roughly over $10 billion in production losses. USDA further told reporters that industry workers would experience over $400 million in lost wages and that consumers would experience limited meat and poultry supplies and potentially higher prices.
“‘We agree with the assessment that furloughing inspectors would have a profound, indeed devastating, effect on meat and poultry companies, their employees, and consumers, not to mention the producers who raise the cattle, hogs, lamb, and poultry processed in those facilities,’ Boyle said. ‘AMI respectfully disagrees with the Department’s assertion is that, in the event of sequestration, the furloughs referenced are necessary and legal. The Federal Meat Inspection Act and the Poultry Products Inspection Act (the Acts) impose many obligations on the inspected industry, which we strive to meet. Those Acts, also however, impose an obligation on the Department – to provide inspection services.’”
Purdue University Agricultural Economist Chris Hurt noted yesterday at the farmdoc daily blog (“Where Have All the Beef Cows Gone?”) that, “Cattle numbers are down again, to their lowest level since 1952, according to USDA’s recent inventory count. Beef cow numbers are at their lowest level since 1962 as the devastating impacts of the 2012 drought continues the longer-term decline. Beef cow numbers were down three percent in 2012 and 11 percent since 2007. The drivers have been high feed and forage prices, persistent drought in the Southern Plains, and of course the widespread Midwestern drought of 2012.”
Dr. Hurt added that, “What will it take to turn the herd decline around? The answeris more rain, more crop production, and more pasture and forage production. Larger crop and forage production would increase availability and lower prices of these critical feedstuffs. Given the small size of the calf crop, this would bolster calf prices. A second condition beef producers would like to see before expanding is some assurance that feed prices will have an overall moderation in coming years, not just a one year decrease.”
After additional analysis, yesterday’s farmdoc update pointed out that, “If crop and forage production returns to near normal, the cattle industry is poised for multiple years of favorable returns and expansion. However, everyone watching the ‘Drought Monitor’ knows that much of the country has not yet returned to normal weather conditions. Beef cattle producers will be poised to expand when weather conditions improve. Unfortunately for the beef industry, both poultry and pork producers are waiting at the start line as well. Those industries can expand production much more quickly and will extract market share from beef during the period from late 2013 to 2016.”
A news release yesterday from USDA’s Farm Service Agency (FSA) indicated that, “[USDA- FSA] Administrator Juan Garcia today announced that beginning Feb. 5, USDA will issue payments to dairy farmers enrolled in the Milk Income Loss Contract (MILC) program for the September 2012 marketings. The American Taxpayer Relief Act of 2012 extended the authorization of the Food, Conservation, and Energy Act of 2008 (the 2008 Farm Bill) through 2013 for many programs administered by FSA, including MILC. The 2008 Farm Bill extension provides for a continuation of the MILC program through Sept. 30, 2013.”
The release added that, “The payment rate for September 2012 is approximately $0.59 per hundredweight. The payment rate for October 2012 marketings is approximately $0.02 per hundredweight. The payment rate for November 2012 marketings is zero.”
A recent editorial at Hoard’s Dairyman Online noted that, “As far as dairy is concerned, 2013 will be much of the same with renewal of the MILC program (Milk Income Loss Contract), Dairy Export Incentive Program (DEIP) and dairy product price supports. Unfortunately, DEIP and the dairy price support program represent outdated safety net initiatives that offer no peace of mind for dairy producers nor does it account for the escalating price of feed. That being the case, neither will generate stability under current market conditions. While MILC was renewed with a $7.35 ration adjuster at 45 percent of production, it too offers no projected support based on current futures contracts. Plus, not all milk production is eligible due to its production caps.
“In light of the legislative stalemate, the Dairy Security Act (DSA) was kicked to the wayside. While it didn’t receive praise from many processors and a few producer groups due to production controls during periods of high milk supply, it did offer margin protection or insurance based on a balanced approach of milk prices and feed costs. The DSA also represented the broadest and most public dairy producer led policy discussion our industry has seen in some time.”
Meanwhile, Jim Dickrell noted on Tuesday at AgWeb Online that, “If the farm bill is ever to pass, it will have to go through a more normal legislative process, say lobbyists who have worked on Capitol Hill for years.
“It cannot be wedged into larger budget bills that get rammed through Congress without debate.”
A news release Friday from University of Missouri Extension indicated that, “Although Congress extended the farm bill until Sept. 30, 2013, the director of the Food and Agricultural Policy Research Institute at the University of Missouri says several factors may cause Congress to revisit the legislation sooner rather than later.
“‘There’s a very good chance there could be changes in this legislation long before we get to September,’ Pat Westhoff said. ‘Not because we’ll necessarily pass a new five-year farm bill right away, but because upcoming negotiations on fiscal issues may cause us to make further cuts in programs to try to meet budgetary targets. That can mean changes in farm bill provisions even for the crop we harvest this fall.’
“Westhoff says that agricultural programs may be cut as part of three related budget debates that will occur over the next several weeks.”
Yesterday’s update also pointed out that, “Westhoff says many things could happen in the next several months that might affect farm program spending.
“‘In addition to the across-the-board sequestration, there are also annual appropriation bills that have to be passed in the next couple of months, and there is also the debt limit,’ he said. Both of those debates could also lead to proposals to cut farm program spending as part of broader efforts to limit government spending.
“‘I think a lot of people have assumed that we’ve got our farm bill in place for 2013, and it’s true as long as Congress doesn’t pass any new legislation,’ Westhoff said. ‘I think it would be a mistake to assume these things are written in stone. Some in Congress may want to come back and at least reexamine if not actually make changes in the bill they approved a month ago.’”
Gannett writer Christopher Doering reported earlier this week that, “The House Agriculture Committee has not decided when it will begin the arduous task of crafting a new farm bill, the head of the panel said Wednesday.
“Rep. Frank Lucas, R- Okla., said there are a lot of moving parts that are delaying action by the committee.”
“Collin Peterson of Minnesota, the top Democrat on the House Agriculture Committee, said lawmakers representing rural areas need to first see how they fare in the budget discussions,” the article said.
Mr. Doering noted that, “Peterson said the divide over the scope of cuts to nutrition programs, widely blamed last year for derailing hopes of passing a new farm law, was overblown. Republicans, he said, merely used it as a reason to give the public to explain why the bill was being delayed… [F]or now, Peterson said the committee is looking for guidance from House and Senate leaders as to how big the cuts to nutrition programs should be. ‘We have a list of changes that can be made to reduce the food stamp budget, so all we need is a number,’ said Peterson.”
Robert Pore reported late last week at the Grand Island Independent (Neb.) Online that, “While U.S. Rep. Adrian Smith, R-Neb., expresses frustration that a new Farm Bill wasn’t passed during the last session of Congress, he expects the new Congress to approve one.
“But a new Farm Bill will face new funding realities as Congress tackles the debt ceiling and spending cuts needed to address the growing federal debt, which has exceeded $16 trillion.”
Bloomberg writer Brian K. Sullivan reported recently that, “The drought that covers almost 62 percent of the contiguous U.S. states is second in size only to the Dust Bowl of the 1930s and may continue into 2013 in the southern Great Plains, government climatologists said.
“Forecast models suggest an area from parts of western Kansas south into Texas and west to New Mexico will probably see the drought continue until at least March, said David Unger, a meteorologist at the U.S. Climate Prediction Center in College Park, Maryland.”
The Bloomberg article pointed out that, “Drought conditions now cover 61.79 percent of the 48 contiguous U.S. states and 51.7 percent of the entire country, including Puerto Rico, according to the U.S. Drought Monitor in Lincoln, Nebraska.
“There is a chance the Ohio River valley will have above- average levels of rain and snow this winter, alleviating dryness in the soil before spring arrives, Unger said.
“The drought is one of 11 natural disasters that cost more than $1 billion in 2012, said Adam Smith, an applied climatologist at the National Climatic Data Center in Asheville, North Carolina.”
David Rogers reported yesterday at Politico that, “House and Senate farm bill leaders are to meet again Wednesday in what’s become a political rollercoaster that risks tossing Congress into a flood of overpriced milk come Jan. 1.
“Just last week, the Agriculture Committees were predicting agreement soon on how to rewrite the commodity title and replace the current system of direct cash payments to producers. But Tuesday’s tone was much more skeptical, and House Ag Chairman Frank Lucas (R-Okla.) warned his party it had to be prepared ‘for how consumers will react at the grocery store when a gallon of milk doubles.’
“‘I was a very hopeful fellow a few days ago. I’m becoming pessimistic,’ Lucas told POLITICO after a meeting of House committee chairs in the Capitol. ‘I’m trying to explain to everybody what the consequences are. I’m going to push to the last moment, but I would acknowledge to you that if we can’t make progress, something has to happen.’”
Ramsey Cox reported yesterday at The Hill’s Floor Action Blog that, “Sen. Orrin Hatch (R-Utah) called on President Obama to ‘end the death tax’ on Monday.
“At the end of the year, the current rate of the estate tax — also called the ‘death tax’ — will go from 35 percent on assets valued at more than $5 million to 55 percent on assets of more than $1 million. Hatch called that a ‘burden’ that ‘can be a death sentence for the American workers and family farms.’
“‘We ought to repeal the death tax,’ Hatch said on the floor Monday. ‘It might make sense in a college social justice seminar but it doesn’t make sense in a thriving economy.’”
The AP reported on Saturday that, “Agriculture Secretary Tom Vilsack has some harsh words for rural America: It’s ‘becoming less and less relevant,’ he says.
“A month after an election that Democrats won even as rural parts of the country voted overwhelmingly Republican, the former Democratic governor of Iowa told farm belt leaders this past week that he’s frustrated with their internecine squabbles and says they need to be more strategic in picking their political fights.
“‘It’s time for us to have an adult conversation with folks in rural America,’ Vilsack said in a speech at a forum sponsored by the Farm Journal. ‘It’s time for a different thought process here, in my view.’”
David Rogers reported yesterday at Politico that, “House Agriculture Committee Chairman Frank Lucas signaled new optimism that a deal could be reached on a five-year farm bill, saying ‘great progress’ has been made on the commodity title and he is looking for a year-end budget agreement to get over the finish line.
“With just weeks left before this Congress adjourns, Lucas spelled out a process in which enactment could be delayed until early 2013 as part of a larger deficit-reduction package. But a five-year bill ‘can be done and if the powers that be determine that it will be done, it will happen,’ Lucas said.
“The Oklahoma Republican made his comments first before a Washington breakfast sponsored by the Farm Journal, and Senate Agriculture Committee Chairwoman Debbie Stabenow (D-Mich.) echoed his optimism in a speech at the same forum just hours later.”
Ron Nixon reported in today’s New York Times that, “As President Obama and Republican leaders try to avoid automatic spending cuts and tax increases beginning in the new year, several lawmakers say a stalled farm bill that reshapes nutrition and agriculture programs could contribute billions of dollars in savings.
“Senator Debbie Stabenow, Democrat of Michigan and chairwoman of the Senate Agriculture Committee, and Representative Frank D. Lucas, Republican of Oklahoma and chairman of the House Agriculture Committee, are trying to persuade administration and Congressional leaders to include the measure in negotiations that are seeking to avoid more than $500 billion in tax increases and more than $100 billion in automatic spending cuts that would go into effect next year.”
The article noted that, “‘The Farm Bill is the only bipartisan deficit reduction bill that passed the Senate this year. It’s only natural it should be part of a larger deficit reduction agreement,’ said Ms. Stabenow, who along with other leaders of the House and Senate agriculture committees, met last week with Agriculture Secretary Tom Vilsack to discuss including a new five-year bill in any deal between the White House and Congress.”
Jonathan Weisman explained in yesterday’s New York Times that, “For all the growing angst over the state of negotiations to head off a fiscal crisis in January, the parties are farthest apart on a relatively small part of the overall deficit reduction program — the down payment.
“President Obama and the House speaker, John A. Boehner, are in general agreement that the relevant Congressional committees must sit down next year and work out changes to the tax code and entitlement programs to save well more than $1 trillion over the next decade.
“But before that work begins, both men want Congress to approve a first installment on deficit reduction in the coming weeks. The installment would replace the automatic spending cuts and tax increases that make up the ‘fiscal cliff,’ while signaling Washington’s seriousness about getting its fiscal house in order. That is where the chasm lies in size and scope.” (This two-step compromise was explained in greater detail in this New York Times article from Nov. 17.)
David Rogers reported yesterday at Politico that, “House and Senate farm bill leaders edged closer Thursday, joined in a last ditch effort —together with Agriculture Secy. Tom Vilsack—to put in place a new five-year plan before the end of this Congress.
“Vilsack played host to the gathering of the top four Republicans and Democrats on the House and Senate Agriculture Committees [related photo]. And he told reporters later that ‘absolutely’ he remained optimistic that a bill can be completed before Dec. 31 and the focus must be on that goal, not a simple extension.
“‘What I was interested in doing today was basically get all four folks who are critical to this process in the room at the same time talking to each other and we’ve accomplished that,’ Vilsack said. ‘There is a commitment to work and try to get this resolved. The countryside needs a five year farm bill, rural America needs a five year farm bill.’”