Monday, April 30, 2012
Keith Good Farm Policy: Soybean Prices Heading to Record High
By Keith Good
Javier Blas and Emiko Terazono reported yesterday at the Financial Times Online that, “The price of soyabeans is heading towards the record high set during the 2007-08 food crisis, which is set to reignite fears of runaway global food inflation.
“The surge in prices is because of falling global production levels following dry weather in Latin America and increased China imports.”
And Owen Fletcher reported in Saturday’s Wall Street Journal that, “Corn prices jumped 4.6% after the federal government reported the sixth-largest export sale ever for the grain, which analysts believe is headed for China.
“The sale, the latest indication of the Chinese appetite for U.S. corn, coincided with analysts’ expectations in recent weeks that China would make a large purchase from the U.S. to help replenish its reserves. China’s state-owned grain-stockpiling enterprise, China Grain Reserves Corp., said in March that it would continue to import corn this year if it found a need or if doing so would be profitable.
Farm Bill: Lawmaker, and Executive Branch Perspectives
Senate Ag Committee Ranking Member Pat Roberts (R., Kan.) was a guest on Friday’s AgriTalk radio program with Mike Adams where part of their conversation turned to last week’s Senate action on the Farm Bill. In part, Sen. Roberts noted that, “I think that we can talk [Senate Leader] Harry Reid [D., Nev.] into putting this on the floor,” and added that, “I really don’t expect that many amendments.”
The Kansas Republican pointed out that, “We saved over $23 billion for the taxpayer. We are the first authorizing committee- agriculture led the way- in providing significant deficit reduction to reduce the debt and spending, over $23 billion.”
To listen to the full remarks on the Farm Bill from Sen. Roberts, just click here (MP3- 3:31).
Senator Jerry Moran (R., Kan.) also spoke briefly about the Farm Bill on Friday’s AgriTalk program and pointed out that, considering the broad support from the Committee, he thought Leader Reid would bring the bill to the Senate floor for a vote and noted that he would likely offer amendments to the legislation. Sen. Moran stated that, “We need to make certain that all commodities in all regions are treated fairly.”
Sen. Moran’s complete remarks on the Farm Bill from Friday can be heard here (MP3- 1:12).
An item posted on Saturday at the Great Falls Tribune (Mont.) Online explained that, “The only thing that is certain now is that cuts will be made to the U.S. Department of Agriculture’s budget, which not only includes agricultural and conservation programs, crop insurance and lending, but also food stamp and school lunch programs. The Senate version of the Farm Bill includes $25 billion in cuts over the next decade. The House’s is something like $180 billion in cuts over the next 10 years.”
In a brief audio report on Friday (“House Ag leadership united in opposition to Senate Ag Farm Bill”), Agri-Pulse Senior Editor Stewart Doan included remarks from House Agriculture Committee Ranking Member Collin Peterson (D., Minn.) who noted that, “[House Ag Committee] Chairman [Frank] Lucas [R., Okla.] and I at this point, are both still supporting the target price concept that was in the Super Committee Bill.” Ranking Member Peterson pointed out that, “You cannot pass a bill if you have Southern agriculture opposed to it.”
Click here to listen to the complete Agri-Pulse report (1:26).
With respect to the executive branch, Gannett writer Christopher Doering reported late last week that, “U.S. lawmakers risk slowing or even stopping the torrid economic growth in rural America if Congress fails to pass a farm bill this year, the head of the Agriculture Department said Friday.”
“Agriculture Secretary Tom Vilsack said in an interview he understands lawmakers are saddled with a bevy of challenges that could make passing a farm bill difficult, including the need to balance the interests of different geographic regions and commodities. But he added that should not be enough to deter Congress from acting in order to keep the momentum going in agriculture.”
Mr. Doering noted that, “Vilsack expressed concern over the ‘serious, serious depth of cuts’ that are being floated in the House that could ‘irreparably harm’ a host of farm programs ranging from conservation to nutrition. He pointed out that excessive cuts to programs such as food stamps, for example, could make their way down to the bottom line of farmers who collect about 16 cents of every dollar spent at the grocery store.”
Farm Bill: Southern Concerns, and Trade Issues (WTO- Cotton)
A news release last week from the Corn Producers Association of Texas (CPAT) stated that, “The [CPAT] has expressed appreciative for the efforts of the Senate Committee on Agriculture, Nutrition and Forestry on the 2012 Farm Bill by passing legislation from the committee today; however, the organization says the current bill poses some serious concerns for Texas producers.
“A CPAT statement reports that Senator Saxby Chambliss (R-Ga.) spoke on the disproportionate impact the presented Commodity Title of the bill has to varying regions across the nation. ‘CPAT concurs with Sen. Chambliss’ sentiments in this regard, as do Chairman of the House Ag Committee Frank Lucas (R-Okla.) and Rep. Michael Conaway (R-Texas) in statements released in response to the Senate committee’s passing yesterday,’ the statement said.”
The release added that, “CPAT Executive Director David Gibson said the organization had the Agricultural and Food Policy Center at Texas A&M University analyze the bill presented by the Senate committee prior to the markup, which shows Texas corn producers would not have an adequate safety net if prices for corn, during the life of the 2012 Farm Bill, were to fall below CBO projected prices.”
And Paul Hollis reported on Friday at the Southeast Farm Press Online that, “Texas farmer and president of the Western Peanut Growers Association Jimbo Grissom recently told a Senate panel that U.S. peanut producers support two provisions for a new farm bill — an equitable risk management tool and a ‘producer choice’ crop program.
“Grissom told the U.S. Senate Committee on Agriculture, Nutrition & Forestry that in addition to a viable crop insurance program, peanut producers need ‘a real choice between a new revenue program for peanuts and a target price program for peanuts.’”
Mr. Hollis noted that, “The ‘producer choice,’ he said, should be between a counter cyclical-type program (with no direct payments) with a $534 per-ton target price and a $355 per-ton marketing loan, or a new revenue program based on the Rotterdam price with a price floor of $534 and a differentiation in peanuts yields between irrigation production and non-irrigated production with a $355 per-ton marketing loan.”
“The absence of a crop revenue insurance policy for peanuts, [Grissom] said, only serves to make the lack of risk management tools much worse. ‘Most of the commodity program options being discussed this year are predicated on the existence of crop revenue insurance as a foundation of the policy. That option is simply foreclosed for peanuts because RMA has not yet been able to clear a revenue policy for our crop.’”
Meanwhile, a news release Friday from Rep. Ron Kind (D., Wis.) stated that, “[Rep. Kind] today with his colleagues Rep. Jeff Flake (R-AZ) and Rep. Earl Blumenauer (D-OR) introduced legislation to put an end to the $147 million in taxpayer dollars going to the Brazilian cotton agribusiness each year.”
Recall that back in June, during a debate on the 2012 Agriculture spending bill, Rep. Flake sought to take the $147 million out of direct payments to cotton farmers to pay the Brazilians- audio (2:03). However, last week’s markup of the Senate Agriculture Bill eliminated direct payments.
Friday’s news release indicated that, “The Senate Agriculture Committee had an opportunity to put an end to the subsidies going to the Brazilian Cotton Institute in their markup of the farm bill this week. Unfortunately, they instead created an entirely new, heavily subsidized ‘insurance’ program for American cotton producers, which covers shallow revenue losses, and costs $3.2 billion over 10 years.
“‘Adding a new shallow revenue loss program with unlimited payments will only burden taxpayers more and will surely be challenged again by Brazil at the WTO, risking another loss and even more costly, unnecessary payouts to foreign producers,’ said Rep. Kind.”
The “Washington Insider” section of DTN on Friday (link requires subscription) stated that, “The cotton program being developed by the Senate Agriculture Committee is drawing intense scrutiny from trade officials in Brazil who believe that as currently configured, the program will be even more trade-distorting than previously was the case.
“Roberto Azevedo, Brazil’s ambassador to the World Trade Organization, told the Bloomberg BNA news service that the Brazilian government was still examining in detail the proposed farm bill, which contains a new safety net for cotton growers called the Stacked Income Protection Plan (STAX).”
The DTN update noted that, “Azevedo said that under the proposed STAX program, ‘you can have extremely high prices, you may be making wonderful profits, and you will still get payments. That is the problem: you’re getting money where you otherwise wouldn’t.’ And, he added, ‘depending on prices, on the market conditions, those expenditures will be a lot higher than they would have been with the previous programs.’ If that proves to the case, Brazil and the United States could find themselves once again before another WTO dispute settlement panel.”
Recall that an Inside U.S. Trade article from February 10 of this year (“Brazil Blasts Farm Bill Proposals, Suggests They Could Violate WTO Rules”) stated that, “The Brazilian government is criticizing several proposals put forward by U.S. senators and agriculture industry groups for inclusion in the next farm bill, arguing that they would increase trade-distorting subsidies provided by the U.S. government and, if implemented, could even violate World Trade Organization rules.
“In a letter dated from last month and sent to the chairmen and ranking members of the two congressional agriculture committees, Brazil reserved its harshest criticism for a proposal by the National Cotton Council (NCC).”
The Inside U.S. Trade article from February noted that, “‘In our view, no farm program can be WTO-compliant and cover ‘shallow losses‘ — thereby insulating farmers from market forces — to the extent foreseen in the aforementioned NCC proposal,’ Azevedo wrote. STAX would ‘result in billions of dollars in subsidies, providing cotton producers with a large incentive to maintain very high current acreage and production, or even increase it.’”
The article from earlier this year added that, “In an interview, NCC chief economist Gary Adams said that the STAX proposal was designed to address the WTO findings in the cotton case. He argued that if STAX were implemented, it would result in about a 60 percent reduction in subsidy outlays moving forward compared with the 1999-2005 period examined by the WTO.”
Urban C. Lehner, DTN Vice President of Editorial Operations reported on Friday at his blog- An Urban’s Rural View, that, “When the chairs and ranking members of the House and Senate Agriculture Committees met recently with agricultural journalists, they were asked whether the next farm bill will move the U.S. away from its obligations as a member of the World Trade Organization.
“The legislators’ answer, boiled down to simplest terms: ‘Who cares?’
“OK, that’s an oversimplification, a fib even. Three of the four did express vague sympathy for the WTO issue and some have consulted trade experts. But none of the four made a convincing case that Congress will pass a WTO-friendly farm bill.”
Mr. Lehner added that, “The one who came closest to ‘who cares’ was the ranking member of the House committee, Minnesota Democrat Collin Peterson. ‘In my view the WTO is irrelevant at this point,’ Peterson said. No one’s going to sue the U.S., he said, ‘so why should we tie ourselves into knots?’”
Farm Bill: Additional Issues- SNAP, Conservation, Dairy, Information Sharing, Catfish, and Opinion
Kate Maehr, the executive director and CEO of the Greater Chicago Food Depository, noted in a column published in yesterday’s Chicago Sun-Times that, “Congress is considering major cuts to the Supplemental Nutrition Assistance Program (formerly known as food stamps), which supports 46 million low- and middle-income people — half of whom are children. Proposed Senate cuts in the Farm Bill, which funds SNAP, would slash $4 billion from benefits in coming years.
“The House’s proposed fiscal year 2013 budget would cut a staggering $33 billion from SNAP in the next 10 years.
“Reining in the budget is in order. But balancing the budget on the backs of the most vulnerable is not acceptable.”
Meanwhile, a report yesterday at the Grand Forks Herald (N.D.) Online stated that, “Conservation groups across the country are applauding the Senate Agriculture Committee for its decision Thursday to maintain a strong conservation component in the 2012 farm bill.”
And Jim Spencer reported over the weekend at the Minneapolis Star-Tribune Online that, “Dairy farmer Dave Buck feeds his calves at 6:30 in the morning and 6:30 in the evening. He wants them to grow healthy on his land in Goodhue, Minn., so they produce as much milk as possible.
“Now, Buck and thousands of other Minnesota dairy farmers and dairy food processors may have to choose between getting the most milk from cows or participating in a voluntary government system that ties insurance protection to accepting occasional production limits.”
The Star-Tribune article stated that, “The goal of the proposed program is to protect farmers against losses and to eliminate big price swings, like the ones that drove a significant number of dairy farmers out of business in 2009. Whether that’s a good idea has fractured agriculture communities across the country, including Minnesota, the nation’s seventh-largest dairy state.
“The Minnesota Milk Producers Association, of which Buck serves as vice president, came out against production limits. But many national and regional dairy farm trade groups support the measure, which was introduced in Congress by a longtime farmer ally, Seventh District Democratic Rep. Collin Peterson.
“Some of the state’s biggest dairy processors are also divided.”
Mr. Spencer noted that, “The Dairy Security Act, as the new system is called, was incorporated into the five-year farm bill that the Senate Agriculture Committee passed last week. The House Agriculture Committee must still weigh in on the bill and the House and Senate must vote on it.”
Lori Potter reported on Friday at the Kearney Hub (Neb.) Online that, “In a conference call at Thursday’s CPNRD [Central Platte Natural Resources District] board meeting Grand Island, Nebraska Sen. Ben Nelson said the [Senate Committee Farm Bill] legislationincludes wording that allows entities such as natural resources districts to access basic landowner-producer information from U.S. Department of Agriculture’s Farm Service Agency records.
“Central Platte officials have tried unsuccessfully for four years to get some general data that’s already part of ag producers’ FSA records. Central Platte’s interest is information needed to certify irrigated acres, CPNRD General Manager Ron Bishop told the Hub.”
Erik Wasson reported yesterday at The Hill’s On the Money Blog that, “As the 2012 farm bill moves to the Senate floor, a scuffle has intensified over the inspection of catfish.
“The battle pits the southern catfish industry and its supporters against a wider coalition of agriculture groups and fiscal conservatives.”
The Hill article noted that, “In this fight, catfish farmers actually want tougher inspection of their products while their opponents say they are trying to create an unfair system just to block imports of fish from Vietnam.”
On Saturday, The Washington Post editorial board criticized the Farm Bill draft passed by the Senate Agriculture Committee, while The New York Times published an editorial that focused on food safety issues: “While the first lady, Michelle Obama, champions the issue of healthy food, the rest of the administration does not seem to have gotten the message. There are now three important food issues on hold. And health and nutrition advocates worry that they are stalled for the election season, or longer, because of pushback from the food industry.”
Todd Neeley reported on Friday (link requires subscription) that, “The EPA and the U.S. Army Corps of Engineers would be prevented from using a controversial Clean Water Act guidance document to make wetlands determinations if legislation working its way through Congress becomes law.
“On Friday lawmakers in the House introduced H.R. 4965 that would prohibit EPA and the Corps of Engineers from using a proposed CWA guidance document to enforce the act. The bill, introduced by Reps. John Mica, R-Fla.; Nick Rahall, R-W.V.; Frank Lucas, R-Okla.; Collin Peterson, D-Minn.; and Bob Gibbs, R-Ohio, is nearly identical to S.2245, the ‘Preserve the Waters of the U.S. Act’ introduced in March.
“The yet-to-be-released final CWA guidance has drawn the ire of many agriculture interest groups who say the guidance allows EPA to expand its control of waters in the U.S.”
Ian Berry, Marshall Eckblad, and Curt Thacker reported on Friday at The Wall Street Journal Online that, “The Commodity Futures Trading Commission has asked the U.S. Department of Agriculture to provide a timeline of the decisions and events leading to the department’s announcement Tuesday of a new case of mad-cow disease, which jolted markets before the information was officially released.
“U.S. live-cattle futures prices began tumbling on rumors at least two hours before the USDA announced the first reported U.S. case of mad-cow disease—formally known as bovine spongiform encephalopathy—since 2006.”
And Sam Hananel reported in today’s Washington Post that, “The Obama administration’s move to scrap a plan that would prevent some children from working in dangerous farm jobs drew sharp rebukes Friday from child-welfare advocates who claim the president caved in to election-year pressure from farmers and Republicans.”
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