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    Wednesday, February 29, 2012

    Keith Good Farm Policy: House Ag Committee Faces ‘Enormous Obstacles’ in Farm Bill


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    Farm Bill and Policy Issues

    An update posted yesterday at the Oklahoma Farm Report Online stated that, “One of the biggest challenges facing Oklahoma Representative Frank Lucas as he works to forge a farm bill is how to get all the disparate groups to pull in the same direction. In an interview with Ron Hays, the House Committee on Agriculture Chairman said the obstacles facing his committee as they work on farm legislation are enormous.

    “Lucas said he and Senate Agriculture Food and Forestry Committee Chairman Debbie Stabenow had agreed in December to write legislation anticipating $23 billion in cuts. Since then, the President’s budget shows a $32 billion reduction in spending for farm programs. That budget, declared dead on arrival by both the House and Senate is off the table. Lucas said one proposal for a new budget being floated in the House by Paul Ryan entails $40 billion dollars in cuts.”

    (FarmPolicy Note:  Recall that the House GOP budget framework from last year contained a total of $178 billion in cuts to agricultural programs over 10 years, a target that was significantly greater than any other of the other comprehensive budget proposals that contained reductions in Farm Bill spending ($10 billion- President’s Fiscal Commission, $11 billion- Gang of Six, $23 billion- House and Senate Ag Committees, $30 billion- Domenici-Rivlin Proposal, and $32 billion- President’s Deficit Reduction Plan).  If the House proposal for this year contains a similar level of cuts ($178 billion), which is possible, it could add to the difficulty of reconciling a Senate Farm Bill with a House passed measure).

    Yesterday’s Oklahoma Farm Report update noted that, “Lucas said he thinks the action taken by the Senate Ag Committee to accelerate its hearings on the conservation title of the farm bill is a positive step, but given the way Washington works, it may mean little. Questions about the possibility of having a farm bill before Easter, may be optimistic, Lucas said, but Senate Committee Chairwoman Debbie Stabenow ‘wants to move quicker rather than later and she told me early on if she had everything together in her chamber, she would move heaven and earth to get it done. I think there is an indication by moving up those hearing dates that perhaps the pieces are coming together. But that is only speculation on my part.’

    “Some of the dissension on how to proceed with a comprehensive farm bill, Lucas said, is differences in approach on how the bill should work. There are those who advocate for a ‘shallow loss’ approach and those who prefer crop insurance as the major policy initiative. With money difficulties on the horizon, Lucas said a bill that provides for both may be difficult to achieve.

    “‘That’s the real question, will we have enough money to do both. If you’re going to have cuts that are 30 billion or 40 billion dollars or more, it makes it really, really difficult to do both and you can’t just halfway do one or the other. You’ve got to have both elements if you’re going to have a real safety net as some seem to think by stepping off direct payments.’

    “‘I have regions that are more focused on the revenue side of the equation. I have regions that are more focused on the crop side of the equation.’”

    To listen to the complete interview yesterday with Ron Hays and Chairman Lucas, just click here.

    Historically robust commodity and land prices, which have provided producers with strong incentives to maximize the use of agricultural farmland, and could cause strains on conservation practices, were cited as concerns by Senators at Tuesday’s Senate Agriculture Committee hearing. (Note that a replay of the hearing and related files and testimony can be found here).

    At the Committee’s second hearing this month on the reauthorization of the Farm Bill, Committee Chairwoman Debbie Stabenow (D., Mich.) captured some of these concerns in questions directed at the chief administrators of the U.S. Department of Agriculture’s conservation programs.

    “With record high land prices, paired with high commodity prices, of course we are seeing significant pressure to keep land out of the [Conservation Reserve Program]…as our farmers face growing pressure to plant more, what adjustments to the current program should this Committee consider?”

    Farm Service Agency Administrator Bruce Nelson indicated that, “That is the heart of the issue here.”  The Montana native added that, “The important thing in this isn’t the number of toolboxes, it’s how many tools we have so that we can tailor the conservation programs for our individual farming and ranching operations.”

    “In a word,” the FSA Administrator said, “we need to increase our targeting to those most environmentally sensitive lands.”  (To listen to Administrator Nelson’s full response, just click here (MP3- 3:24)).

    Former Committee Chairman Tom Harkin (D., Iowa) pointed out that the U.S. agricultural economy may be in for a “rather long” period of strong commodity prices, and noted, “how that’s going to impact our conservation services is really a real question.”

    Sen. Harkin asked about enrollment in the Conservation Stewardship Program for the first three enrollments beginning in 2009.  National Resources Conservation Services Chief David White responded that he was “stunned with the demand” that producers demonstrated in response to the program.  To listen to this exchange just click here (MP3- 0:54).

    South Dakota GOP Senator John Thune stressed that in order to maintain the positive returns the agricultural sector has provided to our national economy, the Committee should draft policy that “not only provides an adequate safety net, but that also keeps agriculture production sustainable.”

    Sen. Thune added that higher prices cause producers to utilize acreage to maximum production capability and pointed out the crop insurance indemnities have exceeded previous records this past year.

    When specifically asked by Chairwoman Stabenow about how the Committee could build on previous conservation success as the next Farm Bill is drafted, NRCS Chief White responded by strongly endorsing the super committee recommendations drafted by the House and Senate Agriculture Committees in preparation for a final super committee work product, which was never implemented.

    Although that draft document was never officially released, the conservation portion of the proposal focused on program consolidation.

    To listen to this exchange between Chairwoman Stabenow and Chief White, just click here (MP3- 0:33).

    Technological innovations that could enable producers to access USDA conservation program information remotely via the Internet were also noted at Tuesday’s Senate Agriculture Committee hearing.

    In response to a question about program access from Sen. Amy Klobuchar (D., Minn.), NRCS Chief White talked about a computer program under development that could save producers 750,000 hours a year- related audio here (MP3- 1:00).

    Likewise, FSA Administrator Nelson spoke about USDA modernization efforts and getting the Department away “from 1985 computers” that are used to administer some programs.  The new technology would enable producers to have more remote access to important program information through the Internet- one minute audio clip.

    The House Appropriations Subcommittee on Agriculture held a budget hearing yesterday that focused on the President’s FY2013 budget framework.

    Subcommittee Chairman Jack Kingston (R., Ga.) explained that, “In particular, the Subcommittee will examine the FY 2013 budget request for USDA’s Food, Nutrition, and Consumer Services Mission Area. By far, this Mission Area accounts for the greatest percentage – 85 percent of total resources in this Bill. On the discretionary side, WIC [Woman, Infants, and Children] accounts for the single largest spending program – over $7 billion in the request.”

    Rep. Kingston added that, “The FY 2013 President’s Budget for the Food, Nutrition and Consumer Services Mission Area seeks a funding level of $109 billion. I want to remind everyone from USDA that when you were sitting here last year at this time, you were asking for a total of $100 billion for these same accounts. This FY 2013 request equates to a 9.3 billion increase over the FY 2012 increase or a 9.3 percent increase and $19.5 billion increase over the amount we appropriated in the FY 2011 Continuing Resolution last April. While we had to revise our appropriation last summer to account for the Administration’s revised estimate of need in the SNAP program, this percentage increase is indicative of the Nation’s uncontrolled spending on the mandatory side.”

    In his opening statement, Kevin Concannon, the Under Secretary for Food, Nutrition, and Consumer Services at USDA, pointed out that, “It is also important to note that our budget reflects tremendously low overhead costs for the administration of the major nutrition assistance programs. Indeed, Federal funding for administrative costs accounts for about nine percent of Federal spending for WIC, about four percent for SNAP and less than three percent for school meals. This positive aspect of our programs was recently confirmed in a report by the independent, nonpartisan Center on Budget and Policy Priorities.”

    Under Sec. Concannon pointed out that, “It is no secret that SNAP has experienced significant growth over the last ten years. Some have suggested in recent months that eligibility requirements have been relaxed or eliminated in favor of an ‘anything goes’ policy that allows wealthy people to take advantage of the program. This is not correct. While eligibility has expanded to some degree over the past decade, most notably through bipartisan congressional action,the program maintains and enforces national standards for eligibility and benefits. The growth that we have seen in recent years reflects both the expansion of the population in need and our increasing success in reaching higher proportions of those in need, Americans that are eligible for the program by virtue of their low incomes. Increased costs also reflect the fact that the poor not only grew in number, but got poorer, with the proportion of households receiving the maximum benefit level – because their income was particularly low – nearly doubling between 2001 and 2010, to 40 percent.”

    Mr. Concannon also penned a column yesterday regarding the SNAP program that was posted at Roll Call Online.  The item noted that, “Today, 46 million Americans in need get help putting nutritious food on the table through the Supplemental Nutrition Assistance Program. About half of those receiving benefits are children, an additional 8 percent are age 60 or older and 20 percent of SNAP households contain a person with disabilities.”

    In other news on nutrition issues, Bloomberg writer Stephanie Armour was a guest on yesterday’s Washington Journal program (C-SPAN) where she “talked about Obama administration plans to release new rules regarding the types of snack foods sold in school vending machines.”

    To listen to a portion of her remarks on this issue from yesterday’s C-SPAN program, just click here (MP3- 1:44).

    Dale Murden, a farmer from Texas, wrote a column on sugar policy that was posted earlier this week at the Southwest Farm Press Online.  The column noted that, “Every five years when Congress debates a new farm bill, confectioners plow boatloads of profits into slick lobbying campaigns aimed at driving down the price of one of their biggest ingredients—sugar.  They tell lawmakers that U.S. sugar prices have led to economic woes. … Such claims feel a little hollow since most of us can walk into a restaurant and pick up free sugar packets, and it all seems disingenuous since the country’s best known confectioner just posted a 23 percent income increase in 2011.”

    Regulations

    The Wall Street Journal editorial board discussed regulatory issues involving water in California and noted the implications of some recent actions: “More than 10,000 farm jobs have been lost as a result, and regional unemployment stands at about 15%.”

    The Journal editorial added that, “GOP Congressman Devin Nunes of Fresno is trying to restore some certainty to farmers and sanity in the water wars. He’s introduced legislation that would cap the amount of water that annually flows into the Bay at 800,000 acre-feet per year, which is what Congress agreed to in 1992 before environmentalists started suing.

    “The House is expected to pass his bill Wednesday, but its prospects in the Senate are less sanguine. California’s Democratic Senators Dianne Feinstein and Barbara Boxer have dismissed it as ‘overkill’ and called for ‘consensus-based solutions that respect the interests of all stakeholders.’”

    Related news items on this issue from Rep. Nunes and Rep. John Garamendi (D., Calif.) can be found here and here.

    Pete Kasperowicz reported yesterday at the Hill’s Floor Action Blog that, “The House on Tuesday afternoon approved legislation that overturns a 2005 Supreme Court decision that affirmed the ability of states to take control of private property under the doctrine of eminent domain and hand it to another private developer.”

    Meanwhile, an EPA update from Friday noted that, “EPA is proposing to keep greenhouse gas permitting thresholds at current levels. These thresholds established under the GHG Tailoring Rule, define when permits under the New Source Review Prevention of Significant Deterioration and title V Operating Permit programs are required for new and existing industrial facilities. EPA also is proposing two approaches to streamline the GHG permitting process.”  The update contained links to the Proposed Rule (PDF) and a Fact Sheet (PDF) (3pp, 33k).

    news item posted yesterday at the House Agriculture Committee Online noted that, “This week during The Ag Minute [MP3], Chairman Frank Lucas discusses how the threat of overregulation is hurting economic growth.  The uncertainty created by the volume of new regulations makes it difficult for businesses to invest in new workers and job-creating expansions. This week, the House Agriculture Committee will hold a hearing to learn more about the 2012 agenda for the Commodity Futures Trading Commission (CFTC).  The Committee will continue its oversight of the CFTC as it investigates the MF Global collapse and promulgates Dodd-Frank regulations. Committee Members will address the costs created by CFTC rules which would regulate Main Street businesses with a heavy hand designed for Wall Street firms.”

    More specifically on the MF Global issue, Reuters reported yesterday that, “CME Group Inc received two subpoenas, including one for a criminal probe, in the immediate aftermath of the collapse of futures broker MF Global Holdings Ltd, the giant exchange operator said on Tuesday.

    “MF Global, run by former Goldman Sachs Group Inc Chief Executive Jon Corzine, filed for bankruptcy on October 31 of last year, and regulators are still seeking roughly $1.6 billion of customer funds that went missing in the chaotic days before the firm’s implosion.

    “One day after the bankruptcy, a grand jury in Chicago made a demand for information and witnesses in connection with the MF Global probe, a CME Group spokeswoman said. The U.S. Commodity Futures Trading Commission’s enforcement division made a separate demand on November 3.”

    Azam Ahmed and Ben Protess reported in today’s New York Times that, “Federal authorities are struggling to find evidence to support a criminal case stemming from the collapse of MF Global, even after a federal grand jury in Chicago has issued subpoenas.

    “Investigators, unable to find a smoking gun amid thousands of e-mails and documents, increasingly suspect that chaos and poor risk control systems prompted the disappearance of more than $1 billion in customer money, according to several people involved in the case.”

    Trade

    Bloomberg writer Eric Martin reported yesterday that, “President Barack Obama signed an executive order creating a U.S. panel to investigate unfair trade practices by nations including China.

    “The Interagency Trade Enforcement Center will bring together lawyers, researchers, analysts and government agents to monitor and enforce trade agreements and laws. The panel, established within U.S. Trade Representative Ron Kirk’s office, will have its director chosen by Kirk, with a deputy selected by Commerce Secretary John Bryson.”

    Senate Agriculture Committee Chairwoman Debbie Stabenow released a statement on this issue yesterday, which indicated in part that, “The global economy presents many economic opportunities, but when other countries break the rules, we lose jobs. For years I have been leading a growing bipartisan effort to create a Trade Enforcement Unit to fight back against other countries illegal trade violations. Today’s action is a big win for Michigan businesses and American jobs.”


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