Keith Good Farm Policy: AFB Not All In on Catastrophic Loss Proposal
Farm Bill: Background for Today’s Senate Ag Committee Hearing
DTN Political Correspondent Jerry Hagstrom reported yesterday that, “American Farm Bureau Federation President Bob Stallman will tell the Senate Agriculture Committee Thursday that Farm Bureau will consider supporting farm bill proposals that are alternatives to its catastrophic loss proposal.
“In a telephone call to reporters, Stallman said the Farm Bureau board, which voted last week to consider supporting other proposals, has concerns that its approved policy ‘is revolutionary’ and that the Congressional Budget Office has not scored the measure at a time that the Senate Agriculture Committee is headed toward markup of the bill.
“Stallman also acknowledged that the Arkansas, Louisiana and Mi
The DTN item added that, “But he added that none of those state chapters have proposed an alternative to the catastrophic loss program that Farm Bureau has proposed. He added that 47 states and Puerto Rico support the proposal approved at the annual convention in Hawaii in January.
“Stallman said Farm Bureau has not abandoned its proposal, but he will indicate flexibility when he testifies on Thursday.”
David Bennett also reported yesterday at the Delta Farm Press Online on Mr. Stallman’s news briefing from earlier this week, and noted that, “As for dissents of the Mid-South states, Stallman said the trio has made use of ‘a specific, formal, so-called dissent process that states can engage in if they disagree with a policy passed by our delegates. It’s a sort of safety valve that’s served our organization well over the years.’
“None of the three states, claimed Stallman ‘has an indication of what they’re willing to support. At this point, they just don’t like the policy passed by our delegates. The other 47 states and Puerto Rico have not dissented from our policy. Therefore, I think we have pretty good organizational support for where we are.’”
Mr. Bennett added that, “The main reason for the dissent?
“‘The problem that the three states have in common is we’re heavy in rice and cotton,’ says [Jeffrey Hall, who deals with national affairs for the Arkansas Farm Bureau]. ‘Also, we all have a lot of irrigated acreage. We have different issues with irrigated corn than the Midwest, which doesn’t irrigate (like the Mid-South does).
“‘The common thread for the three states was the ‘catastrophic deep loss’ proposal that AFBF has been talking about, the two policies passed at the convention (concerning that proposed) safety net program. We’ve run the numbers with University of Arkansas economists and it won’t provide the kind of safety net that our farmers feel they need to stay in business.’”
Yesterday’s article explained that, “While he doesn’t speak with sister organizations in Louisiana and Mississippi, Hall believes all are ‘together about the current marketing loan program. Arkansas would like to see that with increased loan rates to market values. That’s one thing I think (all three states) agree with. Also, that’s in the AFBF policy that we agree with – we didn’t dissent from that. That’s something we can all work towards.’
“While the Mid-South states dissented from the catastrophic deep loss program, ‘we also question a one-size-fits-all commodity safety net program,’ says Hall. ‘We don’t think a one-size-fits-all approach works.
“‘There are regional differences in the way (the Mid-South) grows crops compared to other regions in the country. And there are commodity differences, as well. Take rice, for instance, where Arkansas is Number One in production. We feel these safety net programs must take into consideration regional and commodity differences.’”
Also, Chris Clayton reported yesterday at the DTN Ag Policy Blog that, “A shallow-loss farm payment under consideration in Congress could cause farmers in high-producing corn and soybean states to lose market value on their bushels while spurring more production on the fringes of corn and soybean-producing regions, according to a new report by an Iowa State University economist.”
“Iowa Soybean Association got a report earlier this week from Iowa State University ag economist Dermot Hayes indicating a shallow-loss program would encourage more commodity production on marginal land at the fringes of the Corn Belt. A free revenue-protection program could spur more production in regions that generally would have to pay more for comparable crop insurance coverage. That translates into higher costs for the shallow-loss program as well as production that could push down commodity prices in traditional growing regions.”
Mr. Clayton pointed out that, “If those programs effectively drive more acres into production, then commodity prices likely decline. A 1% increase in production would cause a 26.6 cents per bushel decline in soybean prices, or the equivalent of $14.61 per acre for the typical Iowa farmer, Hayes stated. That per-acre decline is more than the expected benefits pitched by the shallow-loss programs.”
The DTN update pointed out that, “Environmental groups have already pointed out that loss of direct payments and more reliance on crop insurance will cause farmers to ignore conservation-compliance provisions. [Ron Heck, a farmer and Iowa Soybean Association board member] said if farmers drop out of commodity programs they also potentially would not report their acreage to the Farm Service Agency as well.”
On this issue, USDA’s Economic Research Service released a report yesterday titled, “The Future of Environmental Compliance Incentives in U.S. Agriculture,” which noted that, “If direct payments are sharply reduced or eliminated to help reduce the Federal budget deficit, compliance incentives would be reduced on many farms, potentially increasing environmental quality problems. Some farmers will still be subject to compliance through existing Federal agricultural programs (e.g., conservation or disaster programs) or programs that may succeed direct payments. Making federally subsidized crop insurance subject to compliance could also make up some of the lost incentive to farmers.”
The ERS report included a summary of conclusions at page 11 of the publication.
Farm Bill: Lawmaker Perspectives
Kevin Hall reported earlier this week at The Moultrie Observer Online (Ga.) that, “In a speech that focused primarily on budgetary issues, U.S. Rep. Austin Scott raised concerns for the future of the Farm Bill.
“Speaking to the Moultrie Rotary Club on Tuesday, Scott, R-Tifton, said limitations placed by Senate Democrats have made passage of a farm bill almost impossible.”
The article stated that, “Some $23 billion in cuts have been proposed for the Farm Bill as compared to the 2008 version, Scott said. However, he said, [Sen. Ag. Comm. Chairwoman Debbie Stabenow (D., Mich.)] is requiring no more than $4 billion of the decrease to come from nutrition programs. The remaining $19 billion would have to come from the much smaller share of the funding — that going to support agricultural producers.
“Answering questions after his speech, Scott said he did not believe the House is able to pass a farm bill that meets Stabenow’s mandate.”
Josh Egbert reported yesterday at KHAS-TV Online (Hastings, Neb.) (video included) that, “‘Some would say as they have that there’s not much farm left in the farm bill and certainly as a percentage that’s very true,’ [Rep. Adrian Smith (R., Neb.)] said.
“Most of the farm bill centers around the nutrition title, food stamps [SNAP benefits, related chart] and crop insurance.
“‘I do get a lot of questions if it is possible to uncouple the nutrition title from the farm bill, I’m not sure there would be the votes for that,’ said Smith.”
Yesterday’s update added that, “With work still being done to get the bill ready, Representative Smith says it’s important to understand how those directly affected feel.
“‘How different will crop insurance be moving forward, the shallow loss vs. deep loss debate and so I’m anxious to hear from producers on what their preferences are,’ said Smith.”
Ryan Johnson reported yesterday at the Grand Forks Herald Online that, “Rep. Collin Peterson, D-Minn., said Wednesday that he is optimistic the U.S. sugar program will be continued in the next farm bill, but he said he is unsure when — or if — a proposed $1.78 billion Red River diversion to protect Fargo and Moorhead during flooding can be built given the current ‘fiscal environment.’”
The article noted that, “Under the terms of the 2008 farm bill, the program operates at no cost to taxpayers and aims to stabilize prices by giving the U.S. Department of Agriculture the authority to limit foreign imports of sugar and control how much sugar American farmers are allowed to sell.
“But its future is up to the House and Senate, which will pass the next farm bill this year.”
Sen. Al Franken (D., Minn.) noted in a recent column that, “As Congressional budget cutters look to cut direct farm payments, crop insurance will become even more important in helping farmers recover from devastating losses. In 2010, crop insurance policies covered 256 million acres, or about 75 percent of all acres planted. I will work with my colleagues on the Agriculture Committee to expand and strengthen this important program.”
Farm Bill: Budget and Appropriations
Naftali Bendavid reported in today’s Wall Street Journal that, “Republicans are likely to unveil a budget plan next week that will cut 2013 federal spending below the level the two parties negotiated last August, prompting Democrats to complain that they are reneging on the agreement.
“GOP leaders respond that the figure, reached after tough talks and sacrifices by both sides, always was intended as an upper limit, not an ironclad amount.”
More specifically to agriculture, and the Congressional Budget Office (CBO) updated baseline numbers released this week, an update posted yesterday at the National Sustainable Agriculture Coalition (NSAC) Blog indicated that, “According to CBO, the big pots of money in the omnibus farm bill (assuming current policy with no changes) are as follows:
– Supplemental Nutrition Assistance Program (SNAP) — $774.8 billion or an average of $77.5 billion a year,
– Crop Insurance Subsidies — $89.8 billion or an average of $9 billion a year
– Commodity Subsidies — $66.6 billion or an average of $6.6 billion a year,
– Farm Conservation Programs — $65.3 billion or an average of $6.5 billion a year
“The child nutrition programs (including school meals but excluding SNAP) are projected to cost $237.9 billion over the next decade. The programs do not fall within the farm bill, but are the other major category of USDA mandatory spending.”
A recent update at the NSAC blog also provided a summary of recent House Appropriations Hearings on agricultural spending, noting that, “Earlier this month, the House Agriculture Appropriations Subcommittee held a series of four hearings on the Obama Administration’s fiscal year (FY) 2013 budget request for the U.S. Department of Agriculture (USDA). The hearings precede and are meant to inform the markup of a FY 2013 agriculture appropriations bill.”
In other policy developments, an update yesterday at Bridges Weekly (International Centre for Trade and Sustainable Development) reported that, “Farm subsidies in agricultural powerhouse Brazil remained mostly de-linked from production in 2008-09, new figures from the government indicate (The full subsidy notification, dated 1 March 2012, (G/AG/N/BRA/27) is available online at: http://docsonline.wto.org)
“Although the country provided almost US$6 billion in total farm support, the government’s latest report to the WTO indicates that over US$3.5 billion caused no more than minimal trade distortion – a category which is exempt from any ceiling at the WTO, where it is known as ‘green box’ spending.”
And Julie Buntjer reported yesterday at the Worthington Daily Globe Online (Minn.) that, “Chad Gregory is not a very popular person these days, and he knows it.
“Gregory, senior vice president of the United Egg Producers (UEP), appeared before dozens of farmers Tuesday night during an agricultural forum in Luverne to explain why the UEP made what most people in agriculture say is a ‘deal with the devil.’
“It was last July 7 when the UEP — in its attempt to save the egg industry in the United States — made a deal with the Humane Society of the United States (HSUS) to phase out battery cages for larger laying-hen pens, known in the industry as enriched colony cages.”
The article noted that, “As Gregory took the stage Tuesday night, he explained that for years he was just like the farmers in the room — he spoke out against the HSUS.
“‘How could anyone in agriculture come to make a deal with the devil?’ he asked.
“It began after HSUS targeted states where it could get ballot initiatives asking consumers to decide whether egg-laying hens should be raised in cages, sows in gestation crates and baby calves in veal crates.
“By 2010, 22 states had HSUS-sponsored legislation on ballots.”
Yesterday’s article added that, “After Prop 2 passed in California, HSUS targeted Washington, Oregon, Connecticut, Nebraska, Florida and Massachusetts, states that have a combined egg-laying hen population of 75.5 million and represent roughly 26 percent of the U.S. egg-laying industry.
“Gregory said if legislation passed in each state, there were bound to be differences that would create ‘logistically a major problem for the egg producers association,’ much like those existing in Europe today, where some countries are cage-free, range, organic or enriched-colony cages.
“Legislation there has forced many poultry and egg producing farmers out of business and has caused egg shortages in Germany.”
The article pointed out that, “When HSUS and UEP came together July 7 in a joint press conference in Washington, D.C., they announced a petition to the federal government to enact legislation on or before June 30 requiring egg producers make the switch in cages, as well as initiate new labeling standards for eggs. The labeling would inform consumers of how the chickens that produced the eggs were raised, whether caged, enriched-colony caged, cage-free or free-range.
“The legislation is part of U.S. House bill HR3798 and has the potential to be included in the 2012 federal Farm Bill. Gregory said federal law is needed to ensure both HSUS and the UEP stand by their mutual agreement.”
A CBS News update yesterday reported that, “Farmers in Illinois say the mild winter has given them time to prepare early for the growing season.”
In fact, a Twitter update yesterday from Maria Cox (@CropInsQueen) stated that, “The Cox farm in Greene county Illinois planted corn yesterday. Earliest ever!”
For more on the mild weather and corn yields, see this recent farmdocdaily blog update, “Do Warm Winters Tell Us Anything about Summer Temperatures and Corn Yields?” by University of Illinois Agricultural Economists Scott Irwin and Darrel Good.
The Senate Finance Committee holds a hearing this morning titled, “Russia’s WTO Accession-Implications for the United States;” while a related news release yesterday from the American Soybean Association (ASA) stated that, “[T]he [ASA] joined more than 150 organizations from across the business community in submitting a letter urging the committee to establish permanent normal trade relations (PNTR) with Russia.
“‘The pork and poultry industries, which use soybean meal in animal feed, are poised to see great success in Russia as income levels rise and the demand for meat increases. What benefits these industries benefits soybean farmers,’ said ASA First Vice President Danny Murphy, a soybean farmer from Canton, Miss. ‘Those potential positives, however, hinge on further expansion of trade to Russia. The establishment of PNTR with Russia is critical to our ability to increase soybean exports into Europe’s largest consumer market and the world’s 11th largest economy.’”
DTN writer Todd Neeley reported yesterday (link requires subscription) that, “Two federal agencies are seeking suggestions on how to improve landowners’ involvement in the enforcement of the controversial Endangered Species Act.
“The U.S. Department of the Interior and the U.S. Fish and Wildlife Service announced Wednesday that they are opening a 60-day public comment period Thursday looking for ideas from the public on how to enhance landowner involvement in making the act more effective in using existing conservation tools such as habitat conservation plans, safe harbor agreements and candidate conservation agreements with assurances.”
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,