Keith Good Farm Policy: More Ag Cuts Could Stall Farm Bill
Farm Bill Issues
Chris Clayton reported yesterday at the DTN Ag Policy Blog that, “House Agriculture Committee Ranking Member Collin Peterson told members of the National Farmers Union on Sunday he was optimistic about chances for passing a farm bill this year, but there are hurdles such as a push for steeper cuts in the agriculture budget.
“Peterson, a Democrat from Minnesota, spoke Sunday night as the National Farmers Union opened its 110th annual convention in Omaha.
“The Senate and House Agriculture Committees are operating under the assumption that they will cut $23 billion out of the baseline spending on agricultural programs over the next 10 years. But House Speaker John Boehner, R-Ohio, has not committed to a number and President Obama’s budget proposal last month aimed for closer to $32 billion in agricultural cuts. The president’s budget proposal may push other lawmakers to demand even more cuts from the Agriculture Committees.”
The DTN update noted that, “The House gets its Congressional Budget Office numbers on March 13. House Agriculture Committee leaders want to move their bill before the House passes a possible fiscal-year 2014 budget that could call for a higher figure.”
“‘The way this is going to work, hopefully, is the Senate will move their bill out of committee, and when they do that we will move a bill out of the House Committee,’ Peterson said. ‘Then the Senate goes to floor and when they get it through the floor we are going to take it to the floor.’
“Peterson said he had talked last week with House Minority Leader Nancy Pelosi, D-Calif., and Minority Whip Steny Hoyer, D-Md., and got a commitment to support a bill. Peterson said House Agriculture Committee Chairman Frank Lucas, R-Okla., also has talked with House Republican leaders who seem to be positive as well. Senate Majority Leader Harry Reid, D-Nev., also wants to see a farm bill move.”
Mr. Clayton explained that, “One of the difficult tasks in trying to get a bill done is managing the drive to cut certain programs, particularly in nutrition. Peterson said there are House lawmakers, particularly Republicans, who believe $100 billion can be cut from the food-stamp program.”
“Talking to reporters, Peterson said commodity program changes would likely stick with the kind of changes proposed last fall.”
The DTN update added that, “There will be a revenue program and a program offering higher target prices of which producers will pick. Peterson said he expects Midwest producers would lean toward the revenue program and southern producers would go with target prices. A new insurance program is being created for cotton producers.
“Peterson dismissed concerns raised by some commodity groups that crop production could shift based on some higher target prices. He said they won’t be high enough to cause those kinds of crop changes.”
Justine Wettschreck reported on Friday at the Worthington Daily Globe Online (Minn.) that, “As the ranking member of the House Committee on Agriculture, it is hard enough, [Rep. Peterson] admitted, to get anything done in the political climate these days because of power struggles between Republicans and Democrats, adding that many people want to weigh in on the farm bill.
“‘A lot of city folks who have no idea what happens in these small, rural communities,’ he explained.”
Julie Harker reported on Friday at Brownfield that, “[Secretary of Agriculture Tom Vilsack] credits Senate Ag Chair Debbie Stabenow for accelerating the [Farm Bill] process and says the House Ag Chairman is in a tough spot right now.
“‘Representative Lucas, I have a lot of respect for him,’ says Vilsack, ‘He’s got a tough job because he doesn’t know what the number is. Until he knows what the number is it’s going to be really hard to move. So, he’s going to have a series of hearings, he’s going to wait for the Senate to take action. Then, he’s going to use the Senate as a way of explaining to his colleagues that number that you would like to have is probably not what the Senate will accept.’
“Vilsack says he’s more hopeful now than he was at the first of the year about passage of a Farm Bill in 2012. He says it’s clear that the ag committees are committed to getting it done this year.”
DTN Ag Policy Editor Chris Clayton reported on Friday from Nashville (link requires subscription) that, “The next farm bill needs to do more than provide ‘a token nod’ to beginning farmers, Agriculture Secretary Tom Vilsack said Friday.
“Speaking at the Commodity Classic show, Vilsack gave a rousing speech that hit on many of the messages the Obama administration wants to stress in rural America. The farm bill should focus on the future of agriculture, but it also needs to get done.”
Daniel Looker reported on Friday at Agriculture.com that, “Agriculture Secretary Tom Vilsack said Friday that the American people are tired of hearing excuses from Congress about its lack of action on the nation’s problems and called for speedy passage of a farm bill this year.
“Speaking at the Commodity Classic in Nashville, Vilsack got an enthusiastic response when he repeated support for biofuels and offered new ideas for helping beginning farmers.”
An audio replay of Sec. Vilsack’s speech from Friday can be heard here.
Meanwhile, a news release Thursday from Rep. Larry Kissell (D., N.C.) stated that, “[Rep. Kissell] met with area cotton growers in his Washington office this week.”
The release added that, “Kissell and the Cotton Growers discussed the need to pass a Farm Bill in 2012…‘My colleagues and I on the Agriculture Committee have been working hard to create a Farm Bill that best represents the interests of our farming community. It is time for the House and the Senate to work together to ensure that we continue to support our farmers, here in North Carolina and across the country. I will do everything I can to make sure that we pass a Farm Bill that fairly meets the needs of our farmers here at home.’”
Forrest Laws reported on Friday at the Delta Farm Press Online that, “National Cotton Council leaders are also having to learn to deal with more uncertainty given the federal budget crisis and the need to revisit the nation’s four- or five-year farm legislation in the midst of a presidential election year.
“That’s basically what NCC Chairman Chuck Coley said when he spoke to the opening session of the 60th annual Mid-South Farm and Gin Show in Memphis, Tenn., this morning. The incoming chairman of the Council traditionally gives the first speech at the ‘Gin Show’s’ Friday-morning educational seminar.
“Coley, a cotton producer and ginner from Vienna, Ga., said one of the biggest uncertainties is the ongoing effort to rein in the federal budget deficit through cuts to farm programs and to the U.S. Department of Agriculture’s budget.”
Mr. Laws added that, “Similarly troubling will be the probable push from other agricultural organizations for a ‘one size fits all’ approach instead of a package of options tailored to fit each commodity covered in the next farm bill.
“The Council unveiled its own farm policy position last summer and then re-affirmed the language at its annual meeting in Ft. Worth, Texas last month. The proposal is called the Stacked Income Protection Program or STAX — an area-wide crop insurance-based, shallow loss risk management program, along with adjustments to the marketing loan.
“The Council was successful in including STAX in the House and Senate agriculture committees’ proposal to the Joint Committee on Deficit Reductions last November. The Select Committee was unable to put together a deficit-reduction plan, creating even more uncertainty for the next budget cycle.”
Daniel Looker reported on Saturday at Agriculture.com that, “Groups representing corn and soybean farmers closed out the Commodity Classic in Nashville, Saturday with no major changes in their wish list for commodity programs in the next farm bill. Both have their own versions of ‘shallow loss’ payments that would cover some of the shortfall from crop insurance.
“And, they’re circling the wagons against major cuts to crop insurance.
“‘Crop insurance is our highest priority,’ National Corn Growers president Gary Niemeyer, an Auburn, Illinois farmer, told Agriculture.com.”
In other developments, Ohio State University Professor Carl Zulauf noted on Friday in an update (“Market Oriented vs. Fixed Supports and the 2012 Farm Bill”) posted at the farmdocdaily blog (University of Illinois) that, “A key issue framing debate on the 2012 Farm Bill is whether farm supports should be market oriented or fixed by Congress. The issue is most clearly seen in the debate over target prices fixed by Congress vs. a shallow loss program, such as ACRE, with assistance levels tied to market revenue. Similar debates have occurred throughout the history of U.S. farm policy. This article first reviews these historical debates, often referred to at the time as a debate over flexible vs. fixed farm supports. An explanation is then proposed for why the U.S. has consistently chosen flexibility and market orientation. The article then discusses the 2012 Farm Bill debate.”
On conservation issues, Reuters writer Tom Polansek reported on Friday that, “U.S. officials said on Friday they would offer higher payments to certain owners of environmentally sensitive farm land if they idle it in a conservation program instead of using it to grow crops.
“The offer from the U.S. Department of Agriculture is an attempt to slow an exodus of millions of acres from conservation programs at a time when high crop and land prices are enticing farmers to put the land into production. Increased payments will be available to owners of up to 1 million acres of the highly sensitive grasslands and wetlands under a new initiative that is part of the federal Conservation Reserve Program, or CRP.
“The move solidifies a shift in the government’s strategy to protect the environment by focusing its resources on the most sensitive land, instead of simply pursuing a large quantity of acres for conservation.”
Dan Piller reported on Friday at The Des Moines Register Online that, “U.S. Secretary of Agriculture Tom Vilsack said Friday that his department would increase by $50 per acre the current $100-per-acre incentive for farmers to set aside their most environmentally sensitive land for use as bird and animal habitats.”
With respect to spending on Farm Bill nutrition programs, Phil Izzo reported on Friday at the Real Time Economics Blog (Wall Street Journal) that, “Food-stamp use jumped in the U.S. in December with more than 1 in 7 people receiving benefits, even as a program for disaster assistance related to Hurricane Irene came to an end.
“Food stamp rolls increased 5.5% in 2011, the Department of Agriculture reported, though the pace of growth has slowed from the depths of the recession.
“The number of recipients in the food stamp program, formally known as the Supplemental Nutrition Assistance Program (SNAP), rose to 46.5 million, or 15% of the population in December. The numbers receiving benefits were boosted by disaster assistance in the late summer and autumn due to Hurricane Irene, but the those programs were largely ended by December in Connecticut, Massachusetts, New Jersey and Pennsylvania the last states still in need.”
An update posted on Friday at the Economic Research Service (ERS- USDA) Charts of Note webpage indicated that, “Expenditures for USDA’s 15 food and nutrition assistance programs account for over two-thirds of USDA’s annual budget. Tough economic times found more Americans applying for and receiving food assistance. Federal expenditures for these programs totaled $103.3 billion in fiscal year 2011—an 8-percent increase from 2010. Among the major food assistance programs, the Supplemental Nutrition Assistance Program (SNAP), which grew by 10 percent, and the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), which posted an 8-percent increase, expanded the most during fiscal year 2011. This chart appears in the Food Assistance and Nutrition Programs briefing room on the ERS website, updated February 2012.”
On the food safety issue, Dina ElBoghdady reported today on the front page of The Washington Post that, “Every day, inspectors in white hats and coats take up positions at every one of the nation’s slaughterhouses, eyeballing the hanging carcasses of cows and chickens as they shuttle past on elevated rails, looking for bruises, tumors and signs of contamination.
“It’s essentially the way U.S. Department of Agriculture food safety inspectors have done their jobs for a century, ever since Upton Sinclair’s blockbuster novel, ‘The Jungle,’ exposed horrid conditions in a Chicago meatpacking facility and shook Americans awake to the hazards of tainted food.
“But these days, the bulk of what Americans eat — seafood, vegetables, fruit, dairy products, shelled eggs and almost everything except meat and poultry — is regulated by the Food and Drug Administration. And the FDA inspects the plants it oversees on average about once a decade.”
The Post article noted that, “The USDA and the FDA are under pressure to overhaul their dramatically different procedures, in essence bringing them closer together. There’s a growing recognition among food-safety experts that the government can be smarter about tackling food-borne hazards that sicken one in six Americans each year and kill about 3,000.”
Todd Neeley reported on Friday at DTN (link requires subscription) that, “The EPA sent a final Clean Water Act guidance document to the Office of Management and Budget last week, and an official with the American Farm Bureau Federation said there is concern it will allow EPA and the U.S. Army Corps of Engineers to expand the definition of waters of the U.S. under the jurisdiction of Environmental Protection Agency.
“In May 2011 EPA issued draft guidance for identifying waters protected by the Clean Water Act to include ditches and other ephemeral features that may flow after rain events — something the agency said it wouldn’t do following a U.S. Supreme Court ruling in 2008.
“Don Parrish, senior director of regulatory relations with the AFBF said it would be the first time EPA has included ditches and other upland drainage features, subjecting farmers to an increasing threat of CWA violations.”
And Reuters writer Christopher Doering reported on Friday that, “The U.S. futures regulator may agree to raise the threshold used to identify the biggest swaps market traders to $3 billion, an agency official told Reuters on Friday, providing more relief to commodity merchants and corporations that have fiercely fought the rule.
“The $3 billion cut-off, based on the notional value of a company’s annual swaps trade, will determine which market participants are deemed swap dealers, saddling them with more onerous capital requirements and higher hedging costs.”
The ICE Dec and Mar contracts gave back 160 and 87 points on the week, respectively, as last week’s inversion between the two contracts gave way to partial carry. Well,