Wednesday, March 7, 2012
Keith Good Farm Policy: India’s Cotton Export Ban Shakes Up Market
By Keith Good
James Fontanella-Khan reported yesterday at The Financial Times Online that, “Cotton prices have spiked after India banned exports of the fibre for the second time in two years, continuing a volatile run that has roiled the savviest commodity traders.
“The world’s second-largest producer of cotton instituted the ban with immediate effect on Monday. Analysts said the move was aimed at ensuring sufficient supply of cotton for domestic textile companies, which have been under pressure as prices have risen.”
Biman Mukherji and Prasanta Sahu reported yesterday at The Wall Street Journal Online that, “An Indian ministerial panel on Friday will review the recently imposed cotton-export ban after the farm minister objected to the move, saying it would harm farmers.
“The trade ministry banned cotton exports for the second time in nearly two years, citing concerns that higher-than-expected shipments could prompt competition among domestic textile mills for the remaining fiber, driving local prices higher.”
Farm Bill Issues
Rep. Vicky Hartzler (R-Mo.) noted yesterday at The Hill’s Congress Blog that, “Americans enjoy the most abundant, safe and affordable food supply in the world. In fact, Americans spend less than 10 percent of their incomes on food — the lowest in the world. Citizens in many other countries spend over 50 percent of their incomes on food.
“Why is this? Certainly it’s the hard work of American farmers and ranchers, new technology and wise stewardship of our natural resources. But a national farm policy that supports agriculture and provides a safety net for our farmers also plays a role. Agriculture policy has evolved over the years but its primary focus has endured: food security for our nation.”
The update added that, “Among farmers, crop insurance is the most popular program because it mitigates risk caused by droughts and disasters. But rather than a government handout, farmers must put their own money on the line to obtain loss protection. The taxpayer subsidizes the premiums but ends up spending less money than if coverage were to provide emergency disaster assistance as in years past.
“Other popular programs include agriculture research. Crop yields have increased tremendously over the past few years due to improved genetics and enhanced crop protection products. With the world’s food needs doubling by 2050, continued improvements are necessary to feed the world.
“Cost savings can be found in the Conservation Reserve Program (CRP) which pays property owners to keep lands out of production while preserving marginal lands and providing a place for wildlife habitat. At a time when people around the world are starving, crop prices are at an all-time high and our country is running a deficit, it’s time for more of this land to come back into production.”
Rep. Hartzler pointed out that, “In addition, real savings could be found in the portion of the Farm Bill covering SNAP. This program is known for waste, fraud and abuse. With one in seven Americans now on food stamps due to the president’s failed fiscal policies, SNAP’s costs are skyrocketing. We must find ways to be more responsible. This could be done by giving more implementation authority to state and local government. House Budget Chairman Paul Ryan has proposed converting SNAP into a block grant program that would help get Farm Bill spending under control and allow states to implement innovative reforms to eliminate waste and encourage work.”
On the SNAP issue, Kevin Concannon, Under Secretary for Food, Nutrition and Consumer Service, penned an update yesterday at the USDA Blog, which stated that, “Some have suggested that SNAP increases are the result of lax certification policies or that the benefits are an attractive alternative to a paying job. Those claims couldn’t be further from the truth. Although the SNAP program is managed by the states, SNAP maintains and enforces national standards for eligibility and benefits. And the accuracy of eligibility and benefit determination has steadily improved over the past decade.
“SNAP is not an alternative to work. SNAP provides nutrition assistance to individuals and families who are most in need. The majority are children and elderly people.”
Meanwhile, Rep. Kurt Schrader (D-Ore.) indicated yesterday at The Hill’s Congress Blog that, “In the current Farm Bill we must build on the strengths of American agriculture and promote investments in research, marketing and conservation. The government must use those investments to leverage the industry and family farm dollars paid to crop commissions to bolster further excellent innovation and research. These public-private partnerships are critical in solving the most significant challenges our farmers are currently facing.
“The House Agriculture Committee and farmers across the nation are also realizing that crop insurance, much like other insurance policies Americans obtain, makes sense in these difficult times. American farmers are trying to compete with farming interests from around the world, while dealing with climate change, pests and disease. Whether facing drought in the South or the spotted wing drosophila in the Pacific Northwest, the research and development of new hybrids, cropping techniques and conservation programs are necessary to help American farmers and ensure the safety of our food. Investments in school lunch programs, farm to market programs and appropriate labeling of products help consumers meet dietary needs and understand the benefits of American agriculture. America can outcompete the rest of the world in specialty crop production, while decreasing national health concerns and providing much needed economic support for our nation’s rural communities.”
Also at The Hill’s Congress Blog this week, Rep. Henry Cuellar (D-Texas) stated that, “The remainder of the 112th Congress is likely to be consumed by the debate of a variety of long term pieces of legislation, including corporate tax-reform, surface transportation funding, and debt reduction provisions. Unfortunately, the likelihood of Congress taking up long term agricultural reform legislation, commonly known as the Farm Bill, is looking increasingly less promising. This will leave the engine of the world’s most efficient agriculture industry wavering in the uncertainty of what the future holds.”
Rep. Cuellar pointed out that, “Without a new farm bill, USDA is unable to assist with new difficulties that have arisen since 2008 – such as the expanding citrus diseases – and cut areas that have out lived their usefulness.
“The Farm Bill has a history of being one of Congress’s most bipartisan products that draws support from Democrats and Republicans alike. American producers are not asking for a hand-out or bail-out; they are asking us to simply put them in a position to compete and succeed in new markets.”
And Robert Pore reported yesterday at the Omaha World Herald Online that, “Rep. Adrian Smith, R-Neb., will conduct meetings across the 3rd Congressional District next week to hear from constituents and answer questions about the future of agriculture policy.
“In addition, Smith has launched a webpage as a resource for constituents interested in learning more about the next farm bill and his listening tour.”
Note also that Rep. Smith was a guest on this week’s Agri-Pulse Open Mic program with Stewart Doan. An Agri-Pulse summary of the interview, which can be heard here, stated that, “Rep. Adrian Smith, R-Neb., joins us this week on Open Mic. A member of the influential House Ways and Committee, Smith says the Trans-Pacific Partnership (TPP) negotiations present the U.S. with an opportunity to resolve some outstanding ag trade issues with Japan and its NAFTA partners. On the estate tax, he favors a permanent repeal but suggests permanent relief is the best hope for reformers in 2012. While not a member of the Agriculture Committee, Smith will kick off a Farm Bill listening tour next week to hear what his constituents want included in new farm legislation. One thing Nebraskans want the Obama Administration to do, he says, is to approve construction of the full 1,661 mile Keystone XL pipeline.”
A news release yesterday from Sen. Michael Bennet (D., Colo.) noted that, “Six members of the Colorado Congressional delegation called on leaders of the Senate and House Agriculture Committees to advance and pass a Farm Bill in 2012. The bipartisan group said a bill is needed to provide more certainty to farmers, ranchers and rural communities across Colorado.
“Colorado U.S. Senators Michael Bennet and Mark Udall and Representatives Scott Tipton, Mike Coffman, Cory Gardner and Ed Perlmutter wrote a letter to Senate Committee on Agriculture, Nutrition and Forestry Chairwoman Debbie Stabenow and Ranking Member Pat Roberts and House Committee on Agriculture Chairman Frank Lucas and Ranking Member Collin Peterson. The members expressed support for the progress the committees have made toward bipartisan consensus on a Farm Bill but pushed them to quickly move forward with a Farm Bill that strengthens rural Colorado and rural communities nationwide.”
Along these lines, the Senate Agriculture Committee will be holding another Farm Bill hearing this morning where Sec. of Agriculture Tom Vilsack will be testifying. “This hearing will explore innovative opportunities in agriculture through policies that assist the development of local markets for farmers – connecting them to the growing consumer demand for locally-produced, healthy food options,” an update at the Sen. Ag. Comm. webpage said.
An update posted recently at the Red River Farm Network Online reported that, “The Congressional Budget Office will come out with the agriculture budget score March 13th. House Agriculture Committee Ranking Member Collin Peterson says the CBO score is needed before there will be any action on the farm bill.”
The update quoted Rep. Peterson: “I’ve personally told [House Ag Comm. Chairman Frank Lucas (R., Okla.)] I think we’ve had enough hearings; I’m not sure these field hearings are going to generate anything we haven’t already heard, but they can’t hurt.’ If the ag committee can stay out the bipartisan bickering, Peterson believes there is better than a 50-50 chance of getting the bill done this year. So far, the stumbling block is with the commodity title. ‘I think everybody is waiting; until the Senate actually moves to markup, you’re not going to see any consensus, but I think they will and if they don’t, we’ll develop a consensus for them,’ Peterson said with a smile.”
More specifically on budget issues, Erik Wasson reported yesterday at The Hill’s On the Money Blog that, “Republicans on the House Budget Committee have intensified their push to overcome differences and produce their 2013 budget resolution, meeting almost daily.
“The GOP wants to be able to pass a budget without reaching out to any conservative Democrats, so it must find a way to resolve differences on discretionary spending and entitlements within the party conference.”
And Daniel Newhauser reported today at Roll Call Online that, “Under increasing pressure from conservatives, House GOP leaders are poised to lower budget levels below what appropriators have said they need to pass spending bills this year.”
Note that the House Agriculture Committee will be holding a business meeting this morning “To consider the Budget Views and Estimates Letter of the Committee on Agriculture for the agencies and programs under jurisdiction of the Committee for FY2013.”
In other developments, a news release yesterday from the National Farmers Union stated in part that, “Relating to investment in the 2012 Farm Bill, a second order called for adequate funding for the U.S. Department of Agriculture (USDA) microloan programs, reestablishing the link between federal crop insurance eligibility and compliance with conservation requirements, and including a means of protecting farmers against catastrophic losses in the next farm bill. NFU also called for robust, mandatory funding of the Rural Energy for America Program, the Biomass Crop Assistance Program, and the Biorefinery Assistance Program.”
And a news item yesterday from American Farmland Trust (AFT) stated that, “Currently, compliance requirements do not attach to the federal insurance premium support that farmers receive when they purchase crop insurance. Compliance was attached to crop insurance subsidies in 1985, but was later removed in 1996 to help encourage producers to purchase crop insurance. Today, program participation is not an issue, with over 80 percent of commodity farmers signed up. As crop insurance becomes the centerpiece of the farm safety net going forward, and direct payments go away, farmers will have much less of an incentive to follow conservation compliance.
“‘This is a critical juncture for U.S. agriculture,’ added [Jon Scholl, President of AFT]. ‘We have a choice in this farm bill between moving forward and falling backward, and for the good of agriculture and our key natural resources, we must move forward. The conservation compliance system works, and it should be attached to the core of the farm support system, regardless of whether that’s a traditional commodity program, a revenue program, or crop insurance. This is just a basic accountability measure.’”
AFT also provided this one-page summary titled, “Re-Linking Conservation Compliance and Crop Insurance.”
And a news update yesterday from the House Agriculture Committee stated that, “This week during The Ag Minute [MP3], Chairman Frank Lucas calls on President Obama to join House Republicans in moving forward with an all-of-the-above energy plan that reduces costs for America’s farmers and ranchers, creates jobs, and improves our energy security. Just today at a press conference, President Obama stated that ‘the only way we are going to solve this problem…is with an all-of-the-above strategy,’ yet he failed to offer any new solutions to increase American energy supplies and help make prices more affordable. Meanwhile, America’s farmers and ranchers are especially sensitive to high energy costs.”
James Politi reported yesterday at The Financial Times Online that, “The US has launched a case against India at the World Trade Organisation, charging that the Asian nation’s ban on poultry imports – imposed to prevent avian flu – violated global trade rules.
“The move comes as the Obama administration has become more aggressive on trade enforcement, recently establishing a new taskforce across government agencies to co-ordinate litigation efforts.”
Recall that, “The Senate on Monday afternoon quickly approved legislation that would give the Commerce Department the authority to continue imposing countervailing duties on imports from non-market economies such as China and Vietnam.”
A news item yesterday from Sen. Agriculture Committee Chairwoman Debbie Stabenow (D., Mich.) indicated that, “The U.S. Senate late yesterday passed legislation cosponsored by Senator Debbie Stabenow to restore America’s ability to implement policies that offset the effects of other countries’ illegal trade practices. In an all-too-rare display of unity on an important jobs bill, the Senate passed the legislation by unanimous consent.
“‘When foreign countries break international trade rules and cost us jobs, America cannot sit back and do nothing,’ said Senator Stabenow. ‘Our country simply must have tools at our disposal to stand up for American businesses and workers. This bill restores our country’s ability to do something about illegal trade practices and helps ensure a more level playing field.’”
And Pete Kasperowicz reported yesterday at The Hill’s Floor Action Blog that, “The House on Tuesday easily approved legislation that would allow the Commerce Department to continue applying anti-subsidy duties to the products of non-market economies such as China.
“The bill, H.R. 4105, is a response to a December court ruling stating that Commerce does not have the authority to conduct this practice, something it had been doing since 2007. Members of the House from both parties said the bill is needed to correct this decision and help U.S. manufacturers better compete against subsidized goods from China and elsewhere.”
On a separate issue, a news update yesterday from Iowa GOP Sen. Charles Grassley noted that, “Sen. Chuck Grassley today made the following comment on the Taiwanese government announcement that Taiwan plans to set an allowance level for U.S. beef that contains the feed additive ractopamine but not set a similar level for U.S. pork. Ractopamine has been approved by the Food and Drug Administration and is used by many U.S. beef and pork producers as a feed additive.
“‘I’m encouraged that the Taiwanese government may allow some U.S. beef that contains traces of ractopamine into Taiwan, but the announcement falls far short of resolving this issue. The Taiwanese government has not set any allowable level of this additive for U.S. pork imports. As I’ve said before, Taiwan must treat U.S. agricultural products fairly, in accordance with scientific evidence, and in keeping with its trade obligations, if it expects to maintain its status as a strong economic partner with the United States. There is no scientific reason for Taiwan to set residual levels of a certain additive for beef but not pork. I hope Taiwan’s announcement was just a first step in the right direction toward more removal of the trade barriers hurting U.S. farmers.’”
Reuters writer Christopher Doering reported yesterday that, “The Commodity Futures Trading Commission’s internal watchdog found agency employees working on its controversial position limits rule did not engage in wrongdoing, downplaying allegations by whistleblowers of misconduct.
“The CFTC’s Office of the Inspector General conducted a preliminary investigation into allegations last year that the leader of the team writing the position limits rule was undermining the effort by removing senior employees and trying to push an unworkable rule.”
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