Keith Good Farm Policy: Ag Committee Passes Draft Despite Southern Protests
Farm Bill: Senate Agriculture Committee Advances Legislation
David Rogers reported yesterday at Politico that, “Landmark farm legislation cleared the Senate Agriculture Committee Thursday, promising wholesale changes in commodity programs but also opening up a major breach with Southern growers angered by what they see as an unfair tilt toward the Midwest Corn Belt.
“The 16-5 vote—counting proxies — underscored the regional split, with two former Agriculture chairmen from the South and Senate Minority Leader Mitch McConnell from the border state of Kentucky joining in the opposition.
“The action followed a long night of final adjustments in what proved a vain attempt to buy unity. Cotton won concessions on its own revenue protection program, including a decision to lift the acreage cap on land enrolled. But the leadership resisted any return to a countercyclical program with target prices, and Sen. Saxby Chambliss (R-Ga.) bluntly warned that peanuts and rice will take a ‘huge hit’ and are left ‘without any safety net whatsoever.’” (Note: To listen to detailed remarks from Sen. Chambliss at yesterday’s markup in which he methodically explains some of the unique characteristics of peanut and rice production, and how these differences translate into desired policy options that are separate from Midwestern corn and soybean operations, just click here (MP3- 6:12)).
Mr. Rogers stated that: “Indeed, corn and soybeans appear the big winners in what would be an historic shift away from direct cash payments and price supports in favor of new forms of subsidized crop insurance.”
The Politico article noted that, “Breaking down the numbers, estimates show that corn’s share would fall 25 percent, while rice drops 70 percent, and peanuts and cotton lose in the range of 41 percent.”
“Sen. John Boozman (R-Ark.) argued that rice farmers in his state would have a hard time getting operating loans without a higher price and predicted ‘the commodity title as it is currently written will have a devastating impact on Southern ag.’ [full statement] Even the typically gentle Sen. Thad Cochran (R-Miss.) didn’t hide his irritation” [full statement], the Politico article said.
Mr. Rogers pointed out that, “And not to be forgotten in these calculations too is [House Ag Committee Chairman Frank Lucas], with his own Southern ties in Oklahoma.
“‘I am disappointed by the Senate bill’s commodity title because it does not work for all of agriculture,’ he said in a statement later. ‘It fails to provide producers a viable safety net and instead locks in profit for a couple of commodities.
“‘I have made it clear that my chief priority is making certain that the commodity title is equitable and provides a safety net for all covered commodities and all regions of the country. A shallow loss program is not a safety net. It does not provide protection against price declines over multiple years and it does not work for all commodities.’”
Recall that earlier this week, Chairman Lucas pointed out that, “If you craft a program where one or two commodity groups benefit greatly and a couple of commodity groups limp along and most of the rest are left out, that’s unacceptable policy.”
Chairman Lucas also noted this week that, “A farm bill should not just be guaranteeing that the good times are the best, but a farm bill is about one or two or three or four bad years.”
House Ag Committee Ranking Member Collin Peterson (D., Minn.) noted in part yesterday that, “The strong, bipartisan tone set by the Senate mark-up makes me more confident that we can get past some of the recent partisanship and get a farm bill done this year. We know there will be differences between the House and Senate bills but I am confident that, if permitted, we can work through these differences in conference committee.”
At a House Subcommittee hearing yesterday morning, Rep. Peterson pointed out that, “And I frankly think that what we’re doing, what’s going on over in the Senate, is a mistake, because when these prices go down – and they will – there is not going to be any floor under this deal. And this happened in ’96 when we did Freedom to Farm, and it collapsed, and two years later we spent more money than we ever spent in history bailing people out.
“Well, I just want to tell people that this time, when these prices go down – and they will – there isn’t going to be any money to bail anybody out, so people better be careful about what they’re doing here. It’s all good to look at this when the prices are good and everybody’s been making a lot of money, but I’ve been around long enough to know that’s going to go the other way.”
Also at yesterday’s markup, Sen. Chambliss stated that, “But I think I know what the House is going to do, if they take a bill at all, its going to be more in the direction of what we have proposed to the Chair and the Ranking Member with respect to both peanuts and to rice.”
DTN Ag Policy Editor Chris Clayton reported yesterday (link requires subscription) that, “The bill makes dramatic changes to the farm-program safety net. Direct payments, counter-cyclical payments and the Average Crop Revenue Election program all go away to be replaced with one program that has a $50,000 payment cap for an individual or a $100,000 cap for a married couple. The bill would have ‘the tightest payment limits ever,’ said Agriculture Committee Chairwoman Debbie Stabenow, D-Mich.”
Mr. Clayton explained that, “Stabenow said the bill, which had changed in the past few days, would save $24.7 billion over 10 years under the Congressional Budget Office cost estimate. Commodity programs showed $17.6 billion in cuts. That was before some changes made Thursday that added costs back into the bill, including re-inserting $800 million in mandatory spending for various renewable energy programs.
“Stabenow and committee ranking member Pat Roberts, R-Kan., said they are determined, however, to ensure at least $23 billion in savings.
“Speaking to reporters after the bill was approved, Stabenow and Roberts touted the reform nature of the bill. Not only were commodity programs overhauled, but the bill cuts more than $6 billion in conservation programs as well. Areas such as conservation and rural development would see significant program consolidation.”
The DTN article added that, “The bill also lowered the adjusted gross income eligibility to $750,000. Moreover, the bill makes major changes to language involving ‘actively engaged’ to further restrict who is eligible for payments.”
Reuters writer Charles Abbott indicated yesterday that, “An insurance-like program would compensate grain and soybean growers when revenue from a crop was 11-21 percent below the five-year average with a maximum payment of $50,000. The federally subsidized crop insurance system would cover deeper losses. Cotton growers would use a separate, but similar, program.”
Daniel Looker reported yesterday at Agriculture.com that, “The committee voted to make several changes to the bill Thursday, with the biggest being the addition of $800 million in mandatory spending for the energy title, which promotes the development of new crops for biofuels and has an energy efficiency assistance program that Agriculture Secretary Tom Vilsack has also used to support installation of blender pumps that dispense different mixes of ethanol and gasoline.
“The amendment, offered by Senator Kent Conrad (D-ND) would have taken about half of the funds for the energy title from a program for cotton gins, but Conrad agreed to an amendment from Senator Saxby Chambliss (R-GA) take all of the $800 million from the extra savings in the farm bill in the CBO score.”
A news release yesterday from the Senate Agriculture Committee provided additional details contained in the Senate passed measure.
Additional Lawmaker Reaction to the Senate Legislation
* A news release yesterday from Sen. Conrad noted that, “During debate today, the Ag Committee accepted several amendments offered by Senator Conrad to improve the Farm Bill, including elements of a proposal he developed with Senators John Hoeven (R-ND) [related statement] and Max Baucus (D-MT) to strengthen the farm safety net program while reducing complexity and duplication in farm programs.
“Their proposal for a shallow loss revenue program addresses two main shortcomings of the federal crop insurance: program deductibles that greatly exceed the operating margins for a crop and the lack of adequate coverage during multi-year price declines. Additionally, the shallow loss program will reduce complexity and duplication in farm programs while saving taxpayer dollars.
“Under the proposal, producers will have the opportunity to choose between county level coverage or farm level coverage.”
* Sen. Mike Johanns (R., Neb.)- “Moving away from direct payments while bolstering the crop insurance program is good for our farmers and ranchers and good for American agriculture.”
* Sen. Chuck Grassley (R., Iowa)- “The bill also includes a provision to begin closing the loopholes that allow people who aren’t involved in farming to collect farm payments. The provision prevents non-farmers from being able to use the management loophole in current law.”
* Sen. Richard Lugar (R., Ind.)- “Vowed to continue to seek the elimination of the outdated, job-killing sugar program.”
* Sen. Kirsten Gillibrand (D., N.Y.)- “And I do appreciate the investments you’ve made in terms of trying to help long-term dairy reform.”
Commodity Group and Organizational Reaction
* National Milk Producers Federation (NMPF)- “The Senate legislation includes a new, voluntary margin protection program, endorsed by NMPF, to better safeguard farmers against disastrously low margins, such as those generated by the low milk prices and high feed costs that cost dairy farmers $20 billion in net worth between 2007 and 2009. ‘The Senate has taken a huge step in the right direction by including the dairy reforms modeled after NMPF’s Foundation for the Future program,’ said Jerry Kozak, President and CEO of NMPF.”
* Tom Zacharias, president, National Crop Insurance Services- “The bill passed out of the Committee today responded to calls from growers of most major crops by keeping crop insurance strong and ensuring that it will remain at the forefront of modern-day farm policy. We appreciate the Committee’s efforts to improve the crop insurance title and limit the adverse impacts of other programs on crop insurance. The fact that farmers are in the fields planting following a difficult 2011 growing season shows how well the current crop insurance system is working.”
* American Soybean Association (ASA)- “ASA is very pleased with the Senate Agriculture Committee’s work today, and throughout the Farm Bill process. As passed by the Committee, this legislation will serve the needs not only of soybean farmers, but of the entire farming community.”
* National Cotton Council (NCC) Chairman Chuck Coley – “The U.S. cotton industry is grateful to Chairwoman Stabenow (D-MI) and Senator Roberts (R-KS) – along with the solid support of Senators Chambliss (R-GA), Cochran (R-MS) and Boozman (R-AR) — for including the NCC’s Stacked Income Protection Plan (STAX) and modified marketing assistance loan program, both designed to meet budget challenges and the resolving of the Brazil WTO case.”
* Bob Stallman, President, American Farm Bureau Federation- “We will continue to seek improvements in several areas as this bill moves forward, particularly in how to provide more equity among commodities, and ways to better address deep, catastrophic losses. Now that this first phase has been completed, we will continue to assist Senators in any way we can to assemble a final Senate bill that addresses the challenges and risks faced by today’s farm families.”
* National Farmers Union (NFU) President Roger Johnson– “NFU welcomes the adjustments made to the new Agriculture Risk Coverage (ARC) program, which will allow farmers to choose a coverage plan that allows them to best manage their risk. Additionally, the temporary extension of the Supplemental Revenue Assistance (SURE) program to cover disaster-level losses suffered during the 2012 crop year and of the Milk Income Loss Contract Program (MILC) will provide needed protection during the transition period as the next farm bill is implemented.”
* American Sugar Alliance– ““The Committee overwhelmingly agreed that America’s popular no-cost sugar policy should be continued. This is great news for the 142,000 Americans employed by sugar; great news for the country’s food security; and great news for taxpayers who will continue to receive an ample and affordable sugar supply without government cost.”
* National Sustainable Agriculture Coalition (NSAC)- “The Committee also enacted a nationwide ‘Sodsaver’ provision to protect native grass and prairie lands. The provision reduces crop insurance premium subsidies and tightens program rules in a manner that will reduce the taxpayer-funded incentive to destroy important grassland resources.
“‘By agreeing to a nationwide ‘Sodsaver’ provision championed by Senators Thune (R-SD), Brown (D-OH), and Johanns (R-NE), the Senate Agriculture Committee made sure that taxpayer dollars are not subsidizing the destruction of native grass and prairie lands,’ said [Ferd Hoefner, Policy Director for the NSAC]. ‘These lands are diminishing at a rapid rate and protecting them provides ranching opportunities and economic, environmental, and recreational benefits to rural communities.’”
* Craig Cox, Senior Vice President for Agriculture and Natural Resources of the Environmental Working Group- “We hope the full Senate will take additional steps to ensure that farmers who receive these insurance subsidies commit to protect soil health and wetlands.”
* National Council of Farmer Cooperatives President Chuck Conner– “A key element of this for NCFC and our dairy co-op members is the package of dairy reforms contained in the draft legislation that is supported by dairy producers of all sizes and in all regions of the country. NCFC strenuously opposes any amendment, including the one offered by Senator Michael Bennett (D-Colo.) that would weaken the dairy provisions and which, if accepted, would cost dairy farmers more than $400 million in additional expenses.”
Farm Bill: House Ag Committee Subcommittee Hearings- Dairy, and Conservation
A news release yesterday from the House Ag Committee stated that, “Today, Rep. Thomas J. Rooney, Chairman of the House Agriculture Committee’s Subcommittee on Livestock, Dairy, and Poultry held a hearing on reforming dairy programs in the 2012 Farm Bill. This is the third of eight hearings which are gathering agricultural leaders in Washington to share their perspective on farm policy.”
To listen to remarks on dairy reform issues at yesterday’s hearing, focusing particularly on ideas associated with the Dairy Security Act, from Committee Ranking Member Collin Peterson, just click here (MP3- 4:12).
A separate release yesterday from Representative Glenn ‘GT’ Thompson (R., Pa.) stated that, “[Rep. Thompson], Chairman of the House Agriculture Committee’s Subcommittee on Conservation, Energy, and Forestry, today held a hearing to learn from members of the agriculture community on how conservation programs should be structured and revised in the 2012 Farm Bill. This is the second of eight hearings at the Subcommittee level to gather input from national agricultural leaders and stakeholders before the House Agriculture Committee begins drafting the 2012 Farm Bill reauthorization.”
Some remarks from Ranking Member Peterson at this hearing are available in this unofficial FarmPolicy.com
In part, Rep. Peterson noted that, “And so I drive around my district and I have never seen anything like what’s going on right now. The land that’s being broke up, land that should not be farmed is being broke up. All of the tree lines are being taken out. All of the old homesteads are being bulldozed down. If you don’t think things are changing, you know, it’s… And I think this is going on all over the country.
“So I would argue that…somebody in the testimony said we should freeze rental rates. I think we should raise the rental rates. I think they’re out of whack from what reality is today, and the rental rates in CRP [Conservation Reserve Program] are about 25% of what the rent is for farmland. Now, the Secretary moved to raise the rental rates on continuous, which is fine, but the pressure is on the big tract CRP.”
Rep. Peterson added that, “We have land being broken up that’s never been broken. They’re dragging up rocks bigger than a house out of these things. This is land that should not be farmed. And we’re allowing the crop insurance system to provide a backstop for these people to do this. They know they can break up this land and the crop insurance is going to cover them even if they don’t get a crop, and most of them know they aren’t going to get a crop.
“So I hope that we can focus on some of these real issues and not get off on this ideology about, well, we’ve got to take every CRP acre in the country out so we can have cheap corn. That is a shortsighted policy. And I understand that people liked it when we had two dollar corn. It made it easy for the livestock industry.”
And on the issue of linking crop insurance and conservation compliance, Rep. Peterson stated that, “Which leads me to the next issue that I probably shouldn’t even wade into, but this whole issue of the tying conservation compliance to crop insurance. I’ve had discussions about this, and I don’t see how this can work without doing serious damage to the crop insurance system. We made a conscious decision in ’96 to separate these, and I, for the life of me, cannot see how you’re going to be able to comply with this or make it work without damaging the system. Nobody’s been able to explain that to me.”
Also yesterday in the House, a news release from Rep. Kristi Noem (R., S.D.) stated that, “[Rep. Noem] today introduced legislation to provide a dependable safety net for livestock owners in South Dakota and across the United States. The Livestock Disaster Protection Act would extend the Livestock Indemnity Program (LIP), the Livestock Forage Program (LFP) and the Emergency Livestock Assistance Program (ELAP) authorized in the 2008 Farm Bill for five years as well as provide coverage for the current fiscal year, as the programs expired in the Fall of last year… Rep. Noem will work with House Agriculture Committee Chairman Lucas to include the Livestock Disaster Protection Act in the new Farm Bill, which is currently being drafted.”
A news release yesterday from the Senate Appropriations Committee stated that, “The Senate Committee on Appropriations today approved the FY 2013 Agriculture, Rural Development, Food and Drug Administration, and Related Agencies; and Energy and Water Development Appropriations bills by a vote of 28-1. Both measures will now be reported to the full Senate for its consideration.”
A summary of the Agriculture bill is available here.
Senator Roy Blunt’s (R., Mo.) opening statement from yesterday’s markup is available here.
Rachel Leven reported yesterday at The Hill Online that, “The Labor Department withdrew a proposed rule Thursday that would have limited the work that children can perform on farms.”
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,