Monday, February 20, 2012
Keith Good Farm Policy: Thune (S.D.) Says Higher Prices Don’t Isolate Farmers From Risk
By Keith Good
Farm Bill: Legislative Timing, Budget Variables, Safety Net and Crop Insurance Issues
Late last week, Mike Hergert of the Red River Farm Network spoke with Senate Agriculture Committee Chairwoman Debbie Stabenow (D., Mich.) about the 2012 Farm Bill. In part, their discussion focused on regional issues and the safety net, budget concerns, and legislative timing of the Farm Bill- the full interview can be heard here (MP3- 5:33).
Meanwhile, Agri-Pulse Senior Editor Stewart Doan spoke with Senate Agriculture Committee Ranking Member Pat Roberts (R., Kans.) on this week’s Agri-Pulse Open Mic program.
An Agri-Pulse summary of the discussion indicated that, “The top Republican on the Senate Ag Committee bristles at the suggestion that he’s blocking a legislative fix to a court order requiring EPA to regulate aquatic pesticide applications, and he says the Labor Department’s child labor in agriculture proposal should be withdrawn. Speaking the day after the Senate Ag panel’s first farm bill hearing of 2012, Sen. Pat Roberts says he and Chairman Debbie Stabenow are working in a bipartisan fashion to markup a bill ASAP containing a ‘crop insurance-plus’ commodity title that serves the needs of all of U.S. agriculture.”
To listen to the Open Mic interview with Sen. Roberts, just click here.
Daniel Looker reported on Friday at Agriculture.com that, “[House Agriculture Committee Chairman Frank Lucas (R., Okla.)] told Agriculture.com earlier this week that he checks frequently with House Budget Committee Chairman Paul Ryan (R-WI) on when his committee will have its budget prepared for agricultural spending in 2013.
“Lucas said he needs that information before his committee can mark up a farm bill to send to the House floor for a vote.”
Mr. Looker added that, “He doesn’t yet know when that will be.
“‘I have a suspicion by the end of March, but I’m not certain,’ he said.”
“The five-year farm bill expires in September, making it one of the few bills with a shot of passing Congress before the election.
“Farm state lawmakers want to nail down a farm bill on time partly to avoid deeper cuts to farm programs in a lame-duck session where a grand deficit bargain may be negotiated.”
The Hill update pointed out that, “The expiration of Bush-ear tax rates at the end of the year and the triggering of automatic cuts to defense spending, which many lawmakers want to avoid, could make farm subsidies a popular target in December if a farm bill hasn’t already been approved by then.”
On the issue of crop insurance, Saturday’s update noted that, “Agriculture Secretary Tom Vilsack on Friday said the administration will be in dialogue throughout the year on how to replace direct payments.
“He defended the crop insurance changes under questioning from Rep. Jo Ann Emerson (R-Mo.) at an appropriations hearing Friday when Emerson said cuts could endanger the program’s viability.”
Mr. Wasson added that, “Vilsack explained that crop insurance savings come from reducing premium support payments by 2 percent for those farmers that receive subsidies that are greater than 50 percent of the cost of insurance.
“Emerson said afterwards that the Obama budget complicates the effort to do a farm bill on time this year.”
(Note: To listen to the exchange between Rep. Emerson and Sec. Vilsack regarding crop insurance from Friday’s House Appropriations Agriculture Subcommittee hearing, just click here, (MP3- 3:00). A video replay of the entire hearing can be found here).
The Hill update went on to explain that, “[Rep. Steve King (R-Iowa), a member of the Agriculture Committee] argued that Vilsack is way off base and that Obama’s cuts threaten the whole crop insurance program. He said rather than rush to complete a farm bill, he will hold out for a solution that protects insurance providers.
“He said food stamp use needs to be slashed, something fiercely opposed by House liberals such as Rep. Marcy Kaptur (D-Ohio), who vowed Friday to vigorously fight any cuts to nutrition programs that are used to preserve farm programs.”
Also at Friday’s House Appropriations Committee panel, Iowa GOP Representative Tom Latham had an exchange with Sec. Vilsack that covered Farm Bill issues, FSA office closures, crop insurance variables and potential FSA administration of the crop insurance program- audio replay here (MP3- 3:27). On the question of FSA and crop insurance administration, Sec. Vilsack indicated to Rep. Latham that, “To my knowledge there is no conversation that I have been engaged in about taking over the crop insurance program in terms of management.”
In addition, Rep. Sanford Bishop (D., Ga.) used his time in the first round of questioning Sec. Vilsack Friday morning to highlight the crop insurance program and also sought additional explanation on the issue of FSA and crop insurance management- audio replay here (MP3- 3:28). Sec. Vilsack stated that, “As I indicated Representative, I have not had any specific conversations with anybody within my office on FSA taking over the responsibility for insurance agents. I have not had that conversation; I don’t expect to have that conversation. Bill Murphy runs the Risk Management Agency has indicated that is not likely to be something that he would recommend to me.”
In other Farm Bill developments, Sen. John Thune (R., S.D.) noted in a column posted on Friday at AgWeek Online that, “Several obstacles have emerged that will make writing the 2012 farm bill much more difficult. The agriculture economy is one of the healthiest sectors of the U.S. economy right now, thanks to higher than normal crop and livestock prices over the past year.
“Unfortunately, too many members of Congress representing urban populations do not understand the cyclical nature of the prices farmers receive, nor do they realize that higher prices do not isolate farmers from risk.”
Sen. Thune added that, “At every farm bill roundtable and in meetings with farmers and ranchers across South Dakota, they have made very clear to me that risk management is clearly their top priority. Crop insurance administered through the U.S. Department of Agriculture’s (USDA) Risk Management Agency and delivered by private insurance agents has been providing the risk protection agriculture producers need most.”
Robert Pore reported yesterday at The Grand Island Independent Online (Neb.) that, “Turning to another function of the Farm Bill, [Sen. Ben Nelson (D., Neb.)] said he hopes there will be broad agreement in Congress to develop a farm bill that relies on crop insurance as its base.
“‘Prices are up,’ Nelson said. ‘But at the same time, I can’t imagine a riskier business. It only takes a few days of bad weather to cause hardship and loss. What I’ve heard loud and clear from Nebraskans is that there needs to be a safety net for times of losses. Crop insurance plays a key role when there’s a loss because of bad weather. The crop insurance program has proven to be successful and can serve as a key safety net for our producers who are at the whims of the ever-changing weather.’”
More specifically on speculation of Farm Bill legislative timing, Jane Fyksen reported on Friday at Agri-View Online that, “Though the leadership of the U.S. House and Senate ag committees will work together in the spirit of cooperation to craft a new Farm Bill, don’t expect one to finally pass a far-more-uncooperative Congress until after this fall’s presidential election and probably not until as late April 2013, i.e. in the 11th hour prior to planting in the Midwest next year. That’s just one of many well-educated predictions made recently by emeritus Kansas State University ag economist Barry Flinchbaugh during his keynote Corn/Soy EXPO address in Wisconsin Dells.”
Lori Potter reported on Friday at Kearney Hub Online (Neb.) that, “[Bruce Knight, Strategic Conservation Solutions founder and former U.S. Department of Agriculture official], a South Dakota native and third-generation farmer-rancher, is skeptical that a new farm bill can be written before the November general election. He advised Ag Conference participants to gauge whether progress is being made by watching what happens before Congress goes into a recess.
“Knight said the odds are high that action will be taken before the end of year, perhaps in a lame-duck session after the election, and it’s more likely that a new farm bill, rather than an extension of the current one, will be passed.”
Farm Bill: Nutrition Issues
The recently released Economic Report of the President (full report) indicated at page 206 that, “Roughly half of all SNAP [food stamp] participants were children, and more than three-quarters of all participant households included a child, an elderly person, or a disabled nonelderly person. Roughly a quarter of all children participated. In FY 2010, the average household participating in the SNAP program received monthly benefits worth $287; 40 percent of participating households received the maximum benefit for their family size—for example, $668 a month for a family of four.
“Both participation and expenditures are strongly countercyclical in the SNAP program, increasing during economic contractions and decreasing during expansions. Current projections are that SNAP enrollment will begin falling next year, as the economy continues to recover. Thus, like UI [unemployment insurance], SNAP not only provides direct benefits to participant households, but also has a stabilizing effect on the economy by limiting declines in consumption during economic downturns.”
The AP reported on Saturday that, “Too often it is after the fact that teachers discover their students are worrying less about math and reading and more about where the next meal comes from.
“So Doug White, principal of Garfield Elementary School in inner-city Kansas City, was relieved when his school, like many across the country, began offering dinner to students enrolled in after-school child-care or tutoring programs.
“With breakfast and lunch already provided for poor students, many children now are getting all their meals at school.”
The article pointed out that, “The Healthy, Hunger-Free Kids Act, signed into law by President Barack Obama in December 2010, provides federal funds for the after-school dinner program in areas where at least half the students qualify for free or reduced price lunches. Before the change, the program was limited to 13 states and the District of Columbia. Most states had provided money for only after-school snacks.”
In other news, David Karp reported in Friday’s Los Angeles Times that, “As certified farmers markets have proliferated in recent years, it may appear as if everyone and his uncle is getting into the game. Some vendors indeed are flourishing, but others have been stretched thin by the expansion and resulting dilution of farmers markets. Selling at farmers markets has always involved manifold risks, inefficiencies and frustrations, but in the last year, likely because of the weak economy, quite a few longtime or prominent vendors have withdrawn from the markets or are considering doing so. Each has his own reasons, but together they tell a story: Surviving at farmers markets is increasingly tough for many growers.”
The article noted that, “Even for large farms, selling at farmers markets is rarely a gold mine. Gless Ranch, which is based in Riverside and grows more than a thousand acres of citrus in the Inland Empire, desert and San Joaquin Valley districts, had been in Southern California farmers markets for several decades. They sold at about 10 venues, including Burbank, Santa Monica and Costa Mesa, and were popular for bargain bags of citrus. So why did they abruptly withdraw last month from all farmers markets?
“‘It was just economics,’ says John Gless Sr., the family patriarch. ‘It was kind of like a push; we were not losing money but not making much, either. When there were fewer farmers markets, we used to sell more at each one, but now every town has several.’”
Friday’s Talk of the Nation National Public Radio program highlighted the issue of sugar in a segment titled, “Should Sugar Be Regulated Like Alcohol?” A transcript and replay of that program can be found here.
Farm Bill: Dairy
A news release Friday from Sen. Patrick Leahy (D., Vt.) stated that, “[Sen. Leahy] and Sen. Bernie Sanders and Rep. Peter Welch – has introduced legislation to extend a vital safety net that helps dairy farmers ride out downturns in milk prices. Without action, dairy farmers could face a severe drop in support from the MILC safety net come September 1st.
“The MILC Continuation Act of 2012 would extend for one year the Milk Income Loss Contract (MILC) program at current support levels, which helps dairy farmers when the price of milk falls below $16.94 per hundredweight. Once triggered, farmers receive 45 percent of the difference between that price and the current price of milk, which also takes into account feed costs as a factor in triggering program payments.
“The Farm Bill, which authorizes many programs under the purview of the U.S. Department of Agriculture – including the dairy safety net – is set to expire October 1, 2012. For the last month of the Farm Bill, after August 31st, the MILC program support levels for dairy farmers drop significantly. That would leave dairy farmers exposed without a sufficient safety net. Although the delegation is committed to passing a Farm Bill with dairy reforms this year, with prospects for that bill uncertain, this legislation would ensure there is no lapse in the safety net for dairy farmers.”
Lastly today, Missouri Farm Bureau Blake Hurst penned an Op-Ed that was published in today’s New York Times titled, “Don’t Presume to Know a Pig’s Mind.”
Mr. Hurst addressed issues associated with a recent ad by Chipotle Mexican Grill that featured a cartoon farmer and his cows and pigs.
“At the start of the ad, the farmer and his animals are happy and content. But then progress rears its ugly head, and the animals move indoors, into large, crowded buildings. They are pumped with antibiotics and processed into cubes, all to the mournful sound of Willie Nelson singing a Coldplay tune: ‘Science and progress/Don’t speak as loud as my heart.’ In the end, the farmer sees the light, gets rid of the technological evils and frees his cows and pigs. Redemption is found in a simpler life. And you can have it all at Chipotle, for the price of a burrito,” Mr. Hurst explained.
The opinion item noted that, “Since we can’t ask the pigs what they think, we know only one thing for sure about the effects of scrapping our most efficient farming systems: the cost of bacon will rise. Wealthy consumers will reward farmers who are able to pull off the Chipotle ad’s brand of combination farm/tourist attraction and are willing to trade efficient animal husbandry for political correctness. Many big multistate operations will also be able to afford to make the changes, or will at least have the political sway to resist them. But the small farmers now raising hogs will be pushed out of the industry.
“Farmers are businesspeople and respond to market signals as best we can. But the messages we receive are decidedly mixed. The market tells us to produce more, as prices and worldwide hunger are high. But from disputes over animal care to arguments over the adoption of genetically altered seeds, the media and popular culture send a completely different message: abandon the methods of production that best provide a plentiful and affordable food supply.
“Commercial farmers will have to decide whether we can withstand public opprobrium while continuing to efficiently produce the world’s most essential good or join the entertainment industry, selling expensive pork chops with heaping sides of nostalgia.”
Copyright ©2011 FarmPolicy.com, Inc. All rights reserved.
P.O. Box 3201 - Champaign, IL 61826