FarmPolicy

October 31, 2014

House Ag Hearing; Appropriations; Farm Bill; Ag Economy; CFTC; and, RFS

House Ag Subcommittee Hearing– Impact of EPA Water Rule on Agricultural Producers

DTN Ag Policy Editor Chris Clayton reported yesterday that, “The controversial waters of the United States rule continues to reflect a lack of clarity when it comes to agricultural exemptions and the relationship USDA will play in helping producers avoid needing permits and other regulatory demands.

Robert Bonnie, USDA’s undersecretary for Natural Resources and Environment, testified Thursday before the House Agriculture Subcommittee on Conservation, Energy and Forestry in a contentious hearing in which House members from both parties criticized the perceived federal ‘land grab.’”

Mr. Clayton pointed out that, “The hearing came as legislation was introduced by 30 Republican senators on Thursday specifically to block EPA and the Army Corps from finalizing the water of the U.S. rule.”

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Appropriations; CFTC; Ag Economy; Farm Bill; Biofuels; and Estate Tax

Appropriations Issues

A news release yesterday from Sen. Mark Pryor (D., Ark.) indicated that, “Chairman Mark Pryor today spoke on the Senate floor in support of the Agriculture Appropriations Bill, bipartisan legislation he crafted to help grow our agricultural industry, support our rural communities, and improve the quality of life for families. Pryor is the Chairman of the Agriculture Appropriations Subcommittee.

“The bill passed unanimously out of the Appropriations Committee in May and will now be voted on by the full Senate as part of the bipartisan appropriations package.”

In part, Sen. Pryor stated that, “Mr. President, today I rise in support of the FY15 Agriculture Appropriations Bill. Ranking Member Blunt and I worked tirelessly to craft this common-sense, bipartisan bill. It passed unanimously out of the Appropriations Committee last month, and I’m confident my colleagues will support it this week on the Senate floor.

“Agriculture is something America does better than anyone else. In Arkansas alone, agriculture contributes $17 billion in economic activity annually. It supports 25% of my state’s economy and it is responsible for 1 in 6 jobs.”

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Ag Economy; Appropriations; Policy Issues; Senate Hearing; and, Political Notes

Agricultural Economy

Reuters writer Lucia Mutikani reported yesterday that, “U.S. consumer prices recorded their largest increase in more than a year in May as costs for a range of goods and services rose, likely easing the Federal Reserve’s concerns that inflation was running too low.

“The Labor Department said on Tuesday its Consumer Price Index increased 0.4 percent last month, with food prices posting their biggest rise since August 2011.”

The article noted that, “Food prices increased 0.5 percent in May, the fifth consecutive monthly increase.”

More specifically, the CPI report indicated that, “The index for meats, poultry, fish, and eggs rose 1.4 percent in May after a 1.5 percent increase in April, with virtually all its major components increasing.”

Bloomberg writer Megan Durisin reported yesterday that, “U.S. ground-beef prices are up 76 percent since 2009 to the highest on record, after a seven-year decline in the herd left the fewest cattle in at least six decades, government data show. Meat costs are rising faster than any other food group, eroding profit margins at Hormel Foods Corp. and forcing Costco Wholesale Corp. and Chipotle Mexican Grill Inc. to raise prices.

Supply probably will remain tight. It can take three years to expand the herd, and a prolonged drought in Texas, the top producer, parched pastures needed to raise young animals. The government says the U.S. will become a net beef importer in 2015. Cattle futures already up 22 percent in the past year in Chicago may rally 8.3 percent to $1.578 a pound by the end of December, a Bloomberg survey of five analysts showed.”

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Farm Bill- Policy Issues; Ag Economy; CFTC; and, Political Notes

Farm Bill- Policy Issues

Justin Sink reported yesterday at The Hill Online that, “First lady Michelle Obama on Monday blasted back at critics of her school lunch program, arguing parents should ensure their children eat healthy meals.

“Obama said parents and school leaders can’t let children make the call to eat pizza and burgers for lunch every day.

“‘If I let my kids dictate what we have for dinner every day, it would be French fries, chips and candy, but we don’t run our households like that, and we can’t run our schools like that,’ the first lady said in an interview with MSN.”

Yesterday’s update noted that, “House Republicans are expected to hold a floor vote this week on a bill that would waive tougher nutritional standards on school lunches if the school shows it has operated at a net loss over six months.”

The White House has backed a compromise agreement adopted by the Senate Appropriations Committee. Under that deal, tougher requirements on sodium levels would not be implemented, although requirements for schools to offer fruits and vegetables would be kept,” the Hill article said.

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Policy Issues; Ag Economy; and, Biofuels

Policy Issues: Ag Appropriations, Nutrition, CFTC

Emmarie Huetteman and Ron Nixon reported late last week at The New York Times Online that, “A House vote on an Agriculture Department spending bill containing a provision that would allow schools to opt out of the Obama administration’s nutrition standards for school meals has been delayed until sometime next week, a senior Republican aide said Thursday.”

The article noted that, “Representative Robert B. Aderholt, Republican of Alabama and chairman of a House subcommittee on agriculture appropriations, has said that delaying the rules would give schools 12 months to help them comply.

“Senator Debbie Stabenow, Democrat of Michigan and chairwoman of the Senate Agriculture Committee, said that she recognized that some schools might have problems complying with the nutritional standards and the added cost.

“But Ms. Stabenow said that paying for healthier foods in schools costs less than treating conditions like Type 2 diabetes and hypertension in children, on which $14 billion is spent a year. She said she would work with other lawmakers to help schools but opposed any effort to delay the nutritional standards.”

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House Appropriations; Policy Issues; Ag Economy; and Regulations

House Appropriations- Nutrition Issues

DTN Political Correspondent Jerry Hagstrom reported yesterday (link requires subscription) that, “Further House consideration of the fiscal year 2015 Agriculture appropriations bill has been postponed until at least the week of June 23 because House Republicans are so involved in selecting new leaders, but the Senate will take up its version of the bill next week.”

The DTN article indicated that, “The House voted on some amendments to the Agriculture bill on Wednesday, but then stopped action on it.

“Democrats in the House are expected to propose an amendment to strike a provision that would require the Agriculture Department to grant a waiver from healthier meal rules to any school that says it has been losing money in its lunch program for six months.”

Ag Appropriations Subcommittee ranking member Sam Farr (D., Calif.) tweeted yesterday that, “‪@HouseGOP pushing Ag Approps bill back means ‪#healthy school meals stays in place for now. Still work to do though. ‪#SaveSchoolLunch

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Ag Appropriations; EPA Water Hearing; Trade Hearing; Ag Economy

Agricultural Appropriations- House Action

Yesterday, the House took up the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 2015 (H.R. 4800). Although a final vote on the measure has yet to take place, several amendments to the spending bill were considered on the floor yesterday.

A chronological recap of yesterday’s House activity is available here, while a list of amendments that lawmakers considered can be found here.

More specifically, Cristina Marcos reported yesterday at The Hill Online that, “The House on Wednesday adopted a proposal from Rep. Barbara Lee (D-Calif.) to boost funding for school breakfast equipment grants.

Approved by voice vote, Lee’s amendment to the 2015 Agriculture appropriations bill would increase funding for the school breakfast grant program by $8.1 million by offsetting the same amount from the Agriculture secretary’s administrative accounts. The amendment would bring total funding for school breakfast equipment grants to $35 million, which aligns with the Obama administration budget request.”

The Hill update noted that, “The House is considering the 2015 Agriculture appropriations bill under an open rule, which allows members to offer an unlimited number of amendments. Passage is not expected until Thursday.”

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Rep. Davis Questions EPA on Proposed Changes to the Clean Water Act

Categories: Regulations

U.S. Rep. Rodney Davis (R-Ill.) questions EPA Deputy Administrator and U.S. Army Corp of Engineers on prosed rules to redefine the term “waters of the U.S.” under the Clean Water Act during Water Resources and Environment Subcommittee hearing

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Rep. Smith- Nebraska Exports Benefit World Consumers

In response to questions from Congressman Adrian Smith (R-NE), panelists at a Ways and Means Trade Subcommittee hearing discuss how protectionist trade policies hurt consumers.

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Ag Appropriations; Ag Economy; Regs; Water Bill; and, Political Notes

Agricultural Appropriations- Policy Issues

Today the House will consider the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 2015 (H.R. 4800), which will be debated under a “Modified Open Rule.” (“The rule provides for one hour of general debate and makes in order any amendment offered that complies with the House rules. Additionally, the Rule provides for 10 minutes of debate per amendment equally divided between the proponent and an opponent and up to 10 pro forma amendments for the purpose of debate offered by the Chair and Ranking Member or their designee.”)

Bloomberg writers Alan Bjerga and Derek Wallbank reported yesterday that, “House Republicans today will try to roll back school-lunch nutrition requirements — passed in 2010 with the backing of First Lady Michelle Obama — saying the rules bust local budgets and micromanage what children eat.

The vote, over a provision in the U.S. agriculture spending bill, is a proxy for a larger debate between Republicans, who call the rules a massive government overreach, and Democrats, who say the opposing party is trying to protect the interests of big food producers.”

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Ag Economy; Biofuels; Farm Bill; Regulations; and, Immigration

Agricultural Economy

A news release yesterday from Cargill indicated that, “Cargill, one of the largest pork producers in the U.S., is continuing its commitment of moving to group housing for its sows that produce hogs for pork. Company owned facilities will be 100 percent group housing by the end of calendar 2015. Contract hog farms that contain Cargill-owned sows will transition to 100 percent group housing by the end of calendar 2017. The hogs produced by Cargill-owned sows represent approximately 30 percent of the total hogs harvested annually at the company’s two pork processing facilities in Illinois and Iowa.”

The update noted that, “Based upon the timetable Cargill has set up for completing the transition to group housing for gestating sows, the company will be prepared to support ‘early adopter’ customers seeking pork products from alternative sow housing in the next few years.”

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House Legislative Agenda; Farm Bill; Biotech; and, the Ag Economy

House Legislative Agenda- Ag Appropriations, CFTC

Matt Fuller reported on Friday at Roll Call Online that, “Majority Leader Eric Cantor laid out a busy legislative agenda for the remainder of June in a memo to House Republicans sent Friday, scheduling floor time to address issues at the Department of Veterans Affairs, three appropriations bills, three tax extender bills, and legislation to make gas and other energy prices cheaper. Notably absent from the agenda: any mention of immigration, an unemployment extension or the expiring Export-Import Bank.”

Cantor’s memo indicated that Agriculture was one of the three appropriations bills that would be considered.

More specifically, the Majority Leader’s schedule for this week noted that the Agriculture Appropriations measure was listed under the heading, “Tuesday, June 10th and the Balance of the Week;” and, a notice from the House Rules Committee indicated that the Agriculture Appropriations bill would be addressed at a hearing scheduled for Tuesday afternoon.

Recall that the Appropriations Committee passed the fiscal year 2015 Agriculture Appropriations bill on May 29, and that debate on the measure centered around controversial nutrition provisions regarding the allowance of “school districts a one-year waiver to opt out of improved nutrition standards promoted by Michelle Obama.”

Interestingly, as this appropriations issue potentially moves to the House floor this week, the Senate Agriculture Committee will also be holding a hearing Thursday titled, “A National Priority: The Importance of Child Nutrition Programs to our Nation’s Health, Economy and National Security.”

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Ag Economy; and Farm Bill Issues

Agricultural Economy

DTN Ag Policy Editor Chris Clayton reported yesterday (link requires subscription) that, “Pork producers who have hogs testing positive for porcine epidemic diarrhea virus now will be required to report the outbreak to USDA and develop a strategy for improving biosecurity measures on their farm.

“USDA issued a federal order on Thursday requiring pork producers to notify the department when their hog herds test positive for PEDV. Producers must notify their veterinarians or the state veterinarian’s office about positive cases.

“While mandating producers report the disease, Agriculture Secretary Tom Vilsack told pork producers at the World Pork Expo that the federal order does not require herd quarantines or restrictions on the movement of animals. Those issues had been major concerns by industry leaders when USDA announced in April that it would get more engaged in trying to stem the spread of PEDV.”

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Ag Economy; Policy Issues; CFTC; and, Political Notes

Agricultural Economy

Yesterday, the Federal Reserve Board released its Summary of Commentary on Current Economic Conditions.  Commonly referred to as the “Beige Book,” the report included several observations with respect to the U.S. agricultural economy.

The Minneapolis District indicated that, “Hog producers continued to lose large numbers of animals to a virus, pushing up prices for pork, as well as poultry. Cattle producers enjoyed record beef prices, as overseas demand grew and efforts to rebuild the U.S. herd kept cattle from going to slaughter.”

The Kansas City District noted that, “Profit margins for livestock operators improved further as low cattle and hog supplies pushed prices higher and feed costs remained flat.”

And the San Francisco District added that, “In general, dairy operations benefited from low feed costs. Pork production remained weak as a fatal virus swept through pig farms in some areas.”

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Federal Reserve Beige Book: Observations on the Ag Economy- June 2014

Today the Federal Reserve Board released its Summary of Commentary on Current Economic Conditions.  Commonly referred to as the “Beige Book,” the report included the following observations with respect to the U.S. agricultural economy:

* Fifth District- Richmond- “Agriculture contacts reported that fertilizer prices remained stable, chemical prices rose slightly, and farm equipment prices edged up. A South Carolina farmer said that delayed planting increased field days but did not affect his crop plans. Wholesale agribusiness executives reported that sales were at normal seasonal volumes.”

* Sixth District- Atlanta- “Parts of the District saw excessive rain, with flooding reported in lower Alabama and the Florida panhandle. There were some reports of crop damage and delayed planting attributed to excessive moisture.”

* Seventh District- Chicago- “Corn and soybean planting progressed quickly after precipitation and cool temperatures slowed fieldwork earlier in the spring, though planting in Michigan and Wisconsin was still lagging. Cold soil temperatures are still a concern; some contacts reported that the corn crop was in good shape but that the emergence of soybeans was behind average. Moisture levels were at least adequate for planting throughout the District, although parts of Iowa remained in drought. Corn and wheat prices were lower, while soybean prices drifted higher. Livestock prices remained well above the levels of a year ago, although hog prices moved lower. High milk prices encouraged the expansion of dairies, and high cattle prices appear to be leading to some new entrants into the livestock business. Farm machinery was readily available after several years of waiting lists for purchases.”

* Eighth District – St. Louis- “As of mid-May, on average, corn planting across the District was about 81 percent complete and about 93 percent of the winter wheat crop was rated in fair or better condition.”

* Ninth District- Minneapolis- “District farmers saw their financial condition continue to weaken, while livestock and dairy producers were in better shape. More than half of respondents to the Minneapolis Fed’s first quarter (April) Survey of Agricultural Credit Conditions said farm incomes and capital spending fell in the first three months of 2014, and about the same percentage expect it to decrease in the second quarter. A late spring and heavy early-season rains significantly delayed corn and soybean plantings throughout the district. Hog producers continued to lose large numbers of animals to a virus, pushing up prices for pork, as well as poultry. Cattle producers enjoyed record beef prices, as overseas demand grew and efforts to rebuild the U.S. herd kept cattle from going to slaughter. Grain elevators reported delays in shipping grain due to rail capacity constraints.”

* Tenth District- Kansas City- “Farm income prospects for crop producers dimmed since the last survey period, while profitability in the livestock sector improved. Winter wheat growers were concerned that the poor condition of the crop would limit profits despite an upswing in wheat prices. Corn and soybean prices were steady since the last survey period but remained well below year-ago levels. Spring planting prompted increased demand for operating loans to pay for crop inputs. In contrast, profit margins for livestock operators improved further as low cattle and hog supplies pushed prices higher and feed costs remained flat. Strong demand for grazing pastures supported a modest rise in ranchland values, but cropland values generally held steady. Farm loan repayment rates dipped below year ago-levels, and District bankers reported a slight rise in carry-over debt relative to last year.”

* Eleventh District- Dallas- “District drought conditions worsened further over the reporting period. Most of the Texas panhandle fell into exceptional drought, the most severe drought classification. Winter wheat crop conditions deteriorated and a relatively large share of Texas’ wheat acres were abandoned and will not be harvested this year. Cotton planting season began and farmers were already concerned about poor production due to the very dry soil, particularly for dryland cotton. Agricultural commodity prices stayed strong. Export sales for cotton fell over the last six weeks in response to high cotton prices.”

* Twelfth District- San Francisco- “Demand for assorted fruits and vegetables and livestock products increased, but production in agricultural and resource-related industries was uneven across the District. Concerns about water costs and availability mounted in some areas. Contacts noted that drought conditions in California and Arizona led to reduced herd sizes and decreased plantings of annual crops, including tomatoes and rice. On the other hand, farmers in Idaho anticipated adequate water supplies and planted grains, hay, and potatoes ahead of schedule, expecting the level of plantings in 2014 to be similar to 2013. In general, dairy operations benefited from low feed costs. Pork production remained weak as a fatal virus swept through pig farms in some areas. Contacts noted that demand from China for fertilizer and logs was strong.”

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Climate; Biotech; Ag Economy; Appropriations; and, Regulations

Climate Issues

Coral Davenport reported in today’s New York Times that, “The Obama administration on Monday will announce one of the strongest actions ever taken by the United States government to fight climate change, a proposed Environmental Protection Agency regulation to cut carbon pollution from the nation’s power plants 30 percent from 2005 levels by 2030, according to people briefed on the plan who spoke anonymously because they had been asked not to reveal details.”

The Times article added that, “It is also likely to stand as President Obama’s last chance to substantially shape domestic policy and as a defining element of his legacy. The president, who failed to push a sweeping climate change bill through Congress in his first term [related FarmPolicy update from June 27, 2009- a measure passed the House, but not the Senate], is now acting on his own by using his executive authority under the 1970 Clean Air Act to issue the regulation.”

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