Keith Good Farm Policy: Food-Price Inflation May Accelerate
Bloomberg writer Jeff Wilson reported yesterday that, “U.S. corn stockpiles are poised to be the smallest in 16 years by August and soybean reserves will be lower than the government expected, potentially accelerating food-price inflation in an election year.
“The U.S. Department of Agriculture may say tomorrow that corn inventories on Aug. 31 will be 37 percent lower than a year earlier at 715 million bushels (18.2 million metric tons), the average of 32 analyst forecasts compiled by Bloomberg show. That compares with a projection of 801 million bushels last month. Soybean stockpiles will be 242 million bushels, down from a March prediction of 275 million, the survey showed.
“The government is already predicting food inflation of 2.5 percent to 3.5 percent in 2012. While that’s down from 3.7 percent in 2011, it would be higher than gains in as many as five of the past eight years. Drivers are contending with gasoline prices that have jumped 20 percent this year, American Automobile Association data show. Global food costs rose for the third straight month in March, the United Nations said April 5.”
Cheri Zagurski and Anthony Greder reported yesterday at DTN (link requires subscription) that, “Early corn planting continues, according to USDA’s Weekly Crop Progress report, with 7% of the crop in the ground as of April 8. That’s more than double last week’s pace of 3% and well ahead of the average pace of 2%.
“With dry soils in many areas of the Midwest and forecasts for much cooler conditions in the next few days, however, there could be a letup in the corn planting pace this week, according to DTN Senior Ag Meteorologist Bryce Anderson. ‘It still is very early in the season, however, so such a lull in activity is not critical to overall progress,’ he said.”
Gregory Meyer reported yesterday at The Financial Times Online that, “Soyabean prices climbed to their highest in seven months as traders braced for a government report that could show further deterioration of the South American crop.
“CBOT May soyabeans touched $14.46¾ a bushel, up 0.9 per cent, early on Monday, bringing the market back to values last traded in August 2011.
“Soyabeans have gained 18 per cent this year as analysts lowered their expectations for the crop in South America, the world’s biggest producer. The US Department of Agriculture will update its view of the situation in widely followed monthly crop estimates due early on Tuesday.”
Meanwhile, Purdue University Agricultural Economist Chris Hurt noted yesterday (“Pork Profit Outlook Gets Trimmed”) that, “The nation’s pork producers are largely holding back on expansion even though the industry returned to profitability in the spring of 2011. However, higher feed prices in the past few months as a result of crop damage in South America has increased costs and reduced the profit outlook for 2012.”
Farm Bill Issues
Brett Neely reported yesterday at Minnesota Public Radio (MPR) Online that, “Farmers may face some uncertainty by harvest time as Congress grapples with rewriting the farm bill before it expires in September. On the table are big cuts in federal farm spending.”
“At a recent field hearing in Arkansas, House Agriculture Committee Chairman Frank Lucas, an Oklahoma Republican, sounded optimistic.
“‘We don’t have an easy road ahead of us but I’m confident that by working together we can craft a farm bill that continues to support the success story that is American agriculture,’ Lucas said.”
Mr. Neely indicated that, “That road might be rougher than he’s letting on, thanks to the House budget road map authored by U.S. Rep. Paul Ryan, R-Wisconsin, that was passed last month without any Democratic votes.
“The House budget — which won’t become law because the Democratic-controlled Senate doesn’t plan to take it up — calls for deep cuts to agriculture and food stamp programs covered by the farm bill. It will have to be reconciled with any legislation the Senate passes this year, which likely would contain fewer cuts.
“Under Ryan’s budget, various farm programs including subsidies, crop insurance and conservation would face $33 billion dollars worth of budget cuts over the next decade. Food stamps and nutrition programs would face even larger reductions — $133 billionover a decade.”
Yesterday’s update added that, “U.S. Rep. Collin Peterson, the top Democrat on the committee and the author of the last farm bill, said simply laying out a proposed set of cuts that fast will inflame every interest group involved in the delicate process of negotiating a bill.
“‘It’s going to so poison the water by the time that’s over with, because they’re going to go after food stamps and whatever else they do, that I don’t know if we’re going to be able to get back to working,’ Peterson said.”
The MPR item also pointed out that, “Even if all of the stake-holders can agree on what a bill should look like, Peterson thinks 2012 won’t be the year a farm bill gets written.
“‘My guess right now is we’ll be doing the farm bill next year in the next Congress,’ Peterson said.
“If the farm bill expires on September 30th, lawmakers will likely try to find some way to craft a short-term extension of its provisions – itself no easy task in this divided Congress.”
Meanwhile, Rep. Rosa DeLauro (D., Conn.) stated yesterday at The Hill’s Congress Blog that, “Two weeks ago, the House Republican Majority passed a budget – embraced by their likely presidential nominee, Mitt Romney – that, among other things, slashes deeply into the social safety net and ends the Food Stamp program as we know it. Their budget cuts food stamp funding by at least $133.5 billion, or 17 percent, over ten years, meaning over 8 million men, women, and children could be cut from the program. It also attempts to convert our most important and successful federal anti-hunger program into a woefully inadequate block grant that would be incapable of responding to downturns in the economy or the needs of American families.
“This is not the direction we should be moving in. In the words of President Harry Truman, ‘nothing is more important in our national life than the welfare of our children, and proper nourishment comes first in attaining this welfare.’ And in this economy, child poverty, child hunger, and food insecurity have all been on the rise, and middle-class and working families are working harder than ever to make ends meet. In 2010, nearly 15 percent of American households were food insecure. This means nearly 50 million Americans, including over 16 million children, face the real risk everyday of going hungry.
“Last year, with 13 million unemployed and one in six living below the official poverty level, over 46 million Americans – almost half of them children – used food stamps to get their basic foods. Nearly 75 percent of participants are families with children. According to the Census Bureau, the program lifted 5.2 million Americans over the poverty line in 2010. And without food stamps, the poverty rate would have been over 21 percent for children.”
Rep. DeLauro added that, “In short, Food Stamps is a critical anti-hunger program that works. It feeds millions of Americans every day, with one of the lowest error rates of any federal program.”
An update posted yesterday at the Public Health Institute Online stated that, “Over ninety national and regional hunger relief, public health, faith-based and other advocacy organizations sent a letter to Congress today urging the Senate and House Agriculture Committees to strengthen and protect nutrition programs in the 2012 Farm Bill. The letter is being sent as the Senate Agriculture Committee is expected to begin marking up a Farm Bill after the congressional Easter recess.”
“Last year, the Senate and House Agriculture Committees recommended $4.2 billion in nutrition cuts to the Super Committee as part of the deficit reduction process. The House budget resolution passed last month would go far deeper, making$133.5 billion in cuts to the Supplemental Nutrition Assistance Program (SNAP), the largest federal nutrition program, formerly called food stamps,” yesterday’s update said.
Agri-Pulse Senior Editor Stewart Doan filed an audio report yesterday that featured perspective on the $4 billion in nutrition cuts contained in the Supercommittee proposal. House Agriculture Committee Members Randy Neugebauer (R., Tex.) and James McGovern (D., Mass.) offered different viewpoints on the proposed cuts in yesterday’s Agri-Pulse report, which can be heard here (1:41).
Sabrina Tavernise reported in today’s New York Times that, “A new study by the Agriculture Department has found that food stamps, one of the country’s largest social safety net programs, reduced the poverty rate substantially during the recent recession. The food stamp program, formally known as the Supplemental Nutrition Assistance Program, or SNAP, reduced the poverty rate by nearly 8 percent in 2009, the most recent year included in the study, a significant impact for a social program whose effects often go unnoticed by policy makers.
“The food stamp program is one of the largest antipoverty efforts in the country, serving more than 46 million people. But the extra income it provides is not counted in the government’s formal poverty measure, an omission that makes it difficult for officials to see the effects of the policy and get an accurate figure for the number of people beneath the poverty threshold, which was about $22,000 for a family of four in 2009.”
The Times article added that, “Kevin W. Concannon, the under secretary of agriculture for food, nutrition and consumer services, argued that since the changes to the welfare system in the 1990s, the food stamp program was one of the few remaining antipoverty programs that provided benefits with few conditions beyond income level and legal residence.
“‘The numbers of people on SNAP reflect the economic challenges people are facing across the country,’ Mr. Concannon said. ‘Folks who have lost their jobs or are getting fewer hours. These people haven’t been invented.’”
In other Farm Bill related news, Chris Clayton, writing yesterday at the DTN Ag Policy Blog (“The New Farm Bill Alphabet Soup: ARRM, ARC, RLAP and RAPA”), provided an overview of some aspects of different proposals being considered as work on Title I of the Farm Bill progresses.
And, an update last week at The Hutchinson News (Kans.) Online stated that, “Kansas Big First District Republican Tim Huelskamp wants to add regulatory measures to the farm bill.
“Last fall, Huelskamp, a fifth-generation farmer from Fowler, introduced ‘Freeing Agriculture to Reap More’ – or what he calls the FARM Act. It addresses approximately a dozen proposed regulations he says hurts agriculture and family farms.
“Among the proposals in the FARM Act: prevent regulation of farm dust; prohibit the redefinition of navigable waters; prevent the EPA from imposing livestock emissions taxes; allow farmers to operate tractors without a CDL; prohibit regulation of emissions of greenhouse gases under the Clean Air Act; and deny funding for the White House Rural Council.”
The update noted that, “Huelskamp plans to have a town hall meeting after the April 20 farm bill hearing in Dodge City to hear from farmers on burdensome regulations.”
Victoria G. Myers reported yesterday at DTN (link requires subscription) that, “Sometimes one word can make a lot of difference. Take the bold step by the EPA and the Corp of Engineers to remove the word ‘navigable’ from the Clean Waters Act (CWA). This seemingly simple change is being likened to the largest federal land grab in history. It could impact virtually every landowner whose property includes a body of water.
“J.J. Goicoechea, is a fourth generation rancher in Nevada, as well as a practicing large animal veterinarian. He testified last month before a House of Representatives subcommittee on National Parks, Forest and Public Lands Committee on Natural Resources. Part of Goicoechea’s testimony addressed upcoming changes to the Clean Water Act, which are being issued in the form of a ‘guidance.’ The draft of this new guidance was proposed last year, but is expected to be finalized at any time.
“Goicoechea, who hopes there’s time to put a stop to the change, testified that: ‘This guidance as drafted by the agencies, would effectively remove the word ‘navigable’ from the Clean Water Act resulting in legislation by regulation — or in this case not even regulation — only guidance that has the force of law, but does not have to be vetted through standard rulemaking procedures.’”
Yesterday’s DTN article explained that, “In the CWA, the term ‘navigable’ is used to define a body of water large enough for commerce to take place. ‘Navigable’ is an important limiting factor within the CWA, seemingly limiting the federal government’s authority to only those waters large enough for barges and other commercial vehicles to navigate through. Effectively removing this term by interpreting it to be so broad as to have little to no meaning leads many to believe the new guidance effectively makes it possible for the government to regulate all waters, both manmade and natural, of any size or type. And that, says Goicoechea, represents land control and a serious loss of property rights.”
Andrew Pollack reported in today’s New York Times that, “The Environmental Protection Agency on Monday said that the widely used herbicide 2,4-D would remain on the market, denying a petition from an environmental group that sought to revoke the chemical’s approval.
“The E.P.A. said that the environmental group, the Natural Resources Defense Council, had not adequately shown that 2,4-D would be harmful under the conditions in which it is used.”
Meredith Shiner reported yesterday at Roll Call Online that, “The Senate Budget Committee is prepared to mark up a budget next week, potentially as early as April 17, according to sources close to the panel.
“The move to proceed with a budget resolution in committee is counter to the initial desires of Democratic leaders, who are reluctant to bring a resolution to the floor. Though leaders rarely state this publicly, they have feared political repercussions, such as the threat of a limitless number of show votes or forcing vulnerable Members up for re-election to take politically undesirable votes.
“But aides in both parties suggested today that they have been instructed to expect a markup to begin as early as April 17 and to stretch as long as April 19.”
Ms. Shiner indicated that, “‘The fact is, what we don’t have is a longer-term plan. That’s what I’m going to mark up the first week I’m back in session,’ Senate Budget Chairman Kent Conrad said on ‘Fox News Sunday,’ though at the time it was unclear whether the North Dakota Democrat meant a formal budget resolution or something that would be more informal and in the shape of the Bowles-Simpson deficit reduction plan released in 2010.
“Sources close to the committee but not its leaders suggested they have been advised the panel will take up a budget in regular order, however, and that Members have been influencing the budget framework with recommendations for weeks.
“Conrad, however, reinforced Sunday what Majority Leader Harry Reid (D-Nev.) has repeatedly said, that there is little desire to bring a budget resolution to the floor because government spending levels have been set for the imminent future by last summer’s Budget Control Act.”