Monday, February 6, 2012
Keith Good Farm Policy: Ag Department Data on Corn Market Creating Stir
By Keith Good
Liam Pleven and Tom McGinty reported in today’s Wall Street Journal that, “Farmers and analysts are expressing fresh skepticism about Agriculture Department data on the corn market in the wake of the latest figures, which stunned traders and sent prices on another wild ride.
“A high-ranking USDA official last week faced sharp questions at an agriculture forum in Chicago over government estimates of how much corn is stockpiled around the U.S. and how much is being grown in the fields.”
“‘The level of frustration with the government reports is very high,’ said Dan Cekander, director of grain research at futures broker NewEdge USA LLC, who sat on a panel at the forum with the official, Joseph Prusacki.”
Meanwhile, Roman Olearchyk and Emiko Terazono reported on Friday at The Financial Times Online that, “Ukraine has warned that freezing temperatures sweeping across eastern Europe have damaged about a third of its winter wheat crop, threatening to send wheat prices higher.”
While Dow Jones News reported on Friday that, “Russian government said Friday it sees no justification for imposing restrictions on grain exports in April, rebuffing concerns that the country could introduce duties to combat supply shortages caused by record export levels.”
Bloomberg writer Isis Almeida reported yesterday that, “The era of falling food prices has come to an end with the world population set to add another 2 billion people, according to Cargill Inc., the U.S. farm commodities trader.
“The United Nations’ Food and Agriculture Organization has said global food output must rise 70 percent by 2050 to feed a world population expected to grow to 9 billion from 7 billion now and as increasingly wealthy consumers in developing economies eat more meat. Food prices tracked by the FAO climbed to the highest ever a year ago on surging grain prices.”
Meanwhile, recent articles in The New York Times (“Texas Drought Forces a Town to Sip From a Truck”) and The Wall Street Journal (“Even After Rain, Texas Drought Persists”) highlighted drought conditions in Texas, while an article in Saturday’s Wall Street Journal focused on drought conditions in Mexico (“Mexico Drought Chokes Cattle, Crops”).
Payroll Tax- Budget
Pete Kasperowicz reported on Friday at The Hill’s Floor Action Blog that, “All the partisan rhetoric leading up to the November elections is masking a surprising new trend — bilateral cooperation.”
After noting that two bills passed last week (the STOCK Act in the Senate, and long-term FAA funding in the House), the article indicated that, “The House and Senate have a chance to keep up this small bipartisan streak in the next few weeks, when some agreement will be needed to extend the payroll tax cut holiday. Yes, Republicans still want to pay for that extension with spending cuts, and yes, Democrats still want to pay for it through a tax hike on the wealthy.
“But House Republicans in particular will be looking to avoid the optics of last December, when they pushed unsuccessfully for a tougher extension but lost the public relations battle against Senate Democrats. House Majority Leader Eric Cantor (R-Va.) said Friday that he’s hoping for a deal in an ‘expeditious manner,’ a sign that compromise may still be in the air.”
Mr. Kasperowicz explained that, “True, neither party is ready to bring the other home to meet mom and dad. Cantor spent time Friday blaming Senate Democrats for refusing to consider serious spending cuts, such as freezing federal salaries. And House Minority Whip Steny Hoyer (D-Md.) said that despite the GOP’s promise of cooperation, Republicans need to do more convincing when it comes to their federal highway bill, which Democrats roundly oppose.
“Further, the House next week will call attention to a major difference between the parties by pushing two additional budget reform bills, after having passed two related bills this week” [the Pro-Growth Budgeting Act, and the Baseline Reform Act].
With respect to the extension of the payroll tax cut, Fridays Need-to-Know Daily Email from National Journal stated that, “The conference committee tasked with negotiating a long-term payroll-tax-holiday extension met publicly for the third time on Thursday, and while lawmakers agreed they had to focus solely on the issue at hand, they didn’t agree on what exactly that meant. With so many fringe issues fighting for attention — including the delay of some Environmental Protection Agency guidelines and tighter regulations on where unemployment recipients can spend their benefits — the committee remains split on the most important elements to include in the final legislation.”
Meredith Shiner noted yesterday at Roll Call Online that the controversial Keystone XL pipeline measure could also potentially end up in the conference report; however, the article added that, “other vehicles, such as a highway and infrastructure bill, also are being discussed” for the pipeline measure.
And Reuters writers Donna Smith and Richard Cowan reported on Friday that, “Senate Democrats have begun preparing a backup plan to extend a tax cut for workers if a special congressional negotiating committee fails to reach quick agreement, Senate Majority Leader Harry Reid said on Friday.”
The article noted that, “[House Speaker John Boehner (R., Ohio)] quickly issued a statement urging Reid to use his energies to help congressional negotiators come to agreement on a bipartisan plan and said Democrats had so far failed to produce a comprehensive plan to extend the popular payroll tax break through the end of the year.”
Humberto Sanchez and Steven T. Dennis reported today at Roll Call Online that, “Senate Republicans see a political opportunity in their Democratic counterparts’ decision to forgo a budget blueprint this year.
“As the GOP makes its case to voters to take back the majority, Republicans plan to argue that budgeting is a basic aspect of governing and shows where a party’s priorities lie.”
The article added that, “[Senate Majority Leader Harry Reid (D-Nev.)] said the Senate already has a budget in the spending levels that were set this past summer in the deal to raise the debt ceiling, also known as the Budget Control Act.
“He said the law is stronger than a nonbinding budget resolution and that the Appropriations committees are already at work building off the spending levels set by that law.”
And with respect to USDA budget decisions, Iowa GOP Senator Charles Grassley recently sent a letter to Agriculture Secretary Tom Vilsack that raised “questions about the Farm Service Agency office closures recently announced by the U.S. Department of Agriculture.”
Farm Bill and Policy Issues
Agri-Pulse Senior Editor Stewart Doan interviewed Senate Agriculture Committee Chairwoman Debbie Stabenow (D., Mich.) in the latest edition of the Agri-Pulse Open Mic program.
An Agri-Pulse summary of the interview, which can be heard here, stated that, “[Sen.] Stabenow previews the panel’s drafting of multi-year farm legislation and discusses regulatory issues of concern to farmers and ranchers. Stabenow believes the farm bill will come together fairly quickly and says it must provide a safety net for producers in all regions of the country. The Michigan Democrat suggests the Labor Department needs to make more changes in its proposed rules for child labor in agriculture. Stabenow opines on the UEP-HSUS compromise on animal welfare standards for egg production and she says it’s not her fault that new EPA pesticide permitting requirements took effect.”
An update posted Friday at the National Sustainable Agriculture Coalition (NSAC) Blog highlighted the 2012 Farm Bill and outlined “major factors influencing the debate.”
On the issue of budget sequestration, the NSAC update stated that, “Because Congress failed to come up with a bill through the Super Committee process to cut the deficit by $1.2 trillion over ten years, automatic budget cuts (‘sequestration’ in congressional parlance) will go into effect in January 2013 under the Budget Control Act passed in August 2011. Rough estimates from the Congressional Budget Office peg the cut to farm bill spending under sequestration at $15.6 billion. By law, the Supplemental Nutrition Assistance Program (SNAP) and the Conservation Reserve Program are exempt from sequestration cuts, so savings would come from other parts of the bill — most notably from the crop insurance subsidies, followed in terms of size of cut by the commodity program payments and then the conservation incentives.
“If Congress does not amend the Budget Control Act — which mandates sequestration — and sequestration takes effect, and Congress has reauthorized a new farm bill by next January, then budget cuts could be made in the new farm bill that would supersede the automatic cuts. That is not to say that it must happen that way, only that it could. If it did, it would put Congress back in the driver’s seat in allocating the cuts, rather than the automatic pro rata cuts. It would also put Congress back in the driver’s seat with respect to the policies that would yield the budget savings, rather than punting those decisions to USDA and the White House as would be the case under sequestration.”
Friday’s NSAC update added that, “If January 2013 arrives without a new farm bill (but presumably with some sort of temporary farm bill extension), and sequestration happens, then the Agriculture Committees may have the opportunity to re-shape the cuts through a 2013 Farm Bill, though only after the first-year cuts have already been made.
“Between now and when the automatic cuts go into effect next January, Congress may pass a new deficit-reduction plan that avoids sequestration and enables another spending reduction mechanism — such as budget reconciliation, which would give Congressional committees power to determine how to cut spending within their jurisdictions. The primary motivation to pass a new plan would be avoid the automatic cuts to defense spending that are currently included in sequestration.”
On the issue of nutrition, a news release Thursday from Rep. Rosa DeLauro (D., Conn.) stated that, “In 2008, the need for the Food Stamp program [SNAP] grew as millions of families were hit hard by the historic recession caused by the financial crisis on Wall Street. Child poverty, child hunger, and food insecurity all rose rapidly, even among formerly middle-class families. DeLauro, working with then Chairman of the Appropriations Committee David Obey, fought in response toincrease the funding for the Food Stamps program from $4 billion to $20 billion, expanding access to 14 million more American households.
“According to the Census Bureau’s Supplemental Poverty Measure, food stamp aid lifted 5.2 million Americans over the poverty line in 2010, including 2.2 million children. Without food stamps, the poverty rate would have been 17.7%– and over 21% for children. And these funds did not just assist struggling Americans, they were instrumental in keeping our economy afloat as they were reinvested in our economy at a rate of $1.73 for every dollar spent. Food stamps added nearly $5 billion to the national economy in 2009 alone.”
And Lisa Levenstein and Jennifer Mittelstadt indicated in an Op-Ed published in today’s Los Angeles Times that, “The nation’s food stamp program is an essential part of the American safety net. Why? Because people can’t be productive — in school, at work or looking for work — if they are hungry and fearful about not having enough food to feed their families.
“The program serves 46 million people, almost as many people as Medicare. And that’s despite the fact that more than one-third of those eligible for the benefit are not receiving it. If all those who qualified for food stamps enrolled in the program, it would include 20% to 25% of Americans.”
The opinion item noted that, “Food stamps were first conceived during the Depression as part of a Keynesian approach to priming the economic pump. And it was the grocery industry, not social welfare advocates, that pushed for them. The architects of the program emphasized that it bolstered household consumption and shored up the retail economy.”
Meanwhile, on the issue of research and land grant universities, John Carlin and Mark E. Keenum penned an opinion item late last week at Roll Call Online (“Reinvigorating Land-Grant Institutions Is Vital”) which stated that, “This year marks the 150th anniversary of the U.S. system of land-grant colleges and universities. It’s an opportune time, especially in light of government budget woes, to take stock of the benefits land-grant institutions have produced over the years — and to step up our investments in their potential to help lead America into a new era of scientific discovery and economic progress.”
And in policy news impacting animal agriculture, Bloomberg writer Alan Bjerga reported in a recent article (“Humane Society’s Pact With Egg Producers Signals Strategic Shift”- Feb. 3) that, “A peace deal between the United Egg Producers and the Humane Society of the United States puts the largest U.S. animal-welfare group in a strange spot: working with farmers they’ve fought for years.
“The Humane Society has joined the egg group, which includes Jackson, Mississippi-based Cal-Maine Foods Inc., the biggest U.S. producer, to urge Congress to pass a bill requiring larger cages for egg-laying hens, which the industry estimates will cost $4 billion over 15 years. In exchange, the society has agreed to stop sponsoring state referendums and legislation on the topic, if the measure is approved by June 30.”
“The accord has raised concerns from both animal-rights and farm and rancher advocates. The animal groups fear accepting caged birds is a sellout to agribusiness. The industry organizations worry that putting farm practices into federal law sets a precedent and will embolden the Humane Society,” Mr. Bjerga noted.
The article stated that, “The California campaign that include the push for larger hen cages, known as Proposition 2, cost each side about $10 million, according to [Wayne Pacelle, the chief executive officer of the Washington-based Humane Society] and Gene Gregory, the president of the Atlanta-based United Egg Producers. After Arizona, Michigan and Oh
The Bloomberg article indicated that, “‘We can’t win ballot initiatives because of consumer emotion,’ said Gregory. ‘If we have a federal law, we can make changes and have certainty. It’s our best option.’
“If the legislation passes, egg producers will switch over the next 15 to 18 years to the new, larger cages, already required in the European Union, Gregory said. Chickens in such settings, which Gregory said the egg group was considering before talks with the Humane Society began, have room to nest, perch and scratch.
“The bigger cages may reduce chicken numbers while raising their productivity.”
Reuters writer Doug Palmer reported on Friday that, “Detroit automakers are urging President Barack Obama to reject Japan’s bid to join talks on a regional free trade agreement, the head of an automotive group representing GM, Ford and Chrysler said on Thursday.
“‘Adding Japan to the Trans-Pacific Partnership negotiations will lengthen those negotiations … by years and perhaps keep them from ever coming to fruition,’ Matt Blunt, president of the American Automotive Policy Council, told Reuters.”
Alessandro Torello reported in Friday’s Wall Street Journal that, “[L]ess than three years after adopting a key law—which mandates that by 2020, 10% of the total energy used in transport will have to come from renewable sources such as biofuels—a tough debate has begun in the EU on whether biofuels really are better for the climate than conventional fuels.
“On Thursday, the environmental organization Friends of the Earth Europe urged the EU to scrap its 2020 target, saying it would cost consumers as much as €126 billion without helping the climate.”
The Journal article added that, “‘Europe’s squeezed consumers and taxpayers are paying the price for a flawed green policy that delivers no environmental benefits,’ said Robbie Blake, a campaigner with the group.
“If policy makers judge biofuels’ touted benefits to the climate to be illusory, officials say changes in regulation could result. That would likely cause the demand for biofuels to drop, consequently calling into question many investments.”
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