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    Wednesday, May 2, 2012

    Keith Good Farm Policy: Concerns Rising That Crop Insurance Changes Won’t Support Heavy Price Drops


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    Farm Bill Issues

    Senate Agriculture Committee Member John Boozman (R., Ark.) was a guest yesterday on KASU radio (Jonesboro, Ark.) with host Mark Smith where in part, the two discussed 2012 Farm Bill issues and the bill that passed the Senate Agriculture Committee last week.

    During a portion of yesterday’s discussion, Sen. Boozman elaborated on concerns from Southern producers, the potential difference in the House “vision” of the measure, why the Senate Ag Committee voted on a Farm Bill proposal prior to the House Ag Committee, and the SNAP (food stamps) program.  The discussion of these issues can be heard in this clip from the KASU program (MP3- 3:50).

    On yesterday’s AgriTalk radio program with Mike Adams, Craig Brown, Vice-President of Producer Affairs for the National Cotton Council also discussed several Farm Bill related issues.

    An audio replay of this portion of yesterday’s AgriTalk program is available here, (MP3- 10:15), while an unofficial FarmPolicy.com transcript of the conversation can be downloaded here.

    A portion of yesterday’s discussion focused on potential WTO concerns– Mr. Adams: Let’s start with what you like about the farm bill that came out of the Senate Ag Committee.

    Mr. Brown: Well, we appreciate Chairwoman Stabenow and Ranking Member Roberts’ willingness to include the Stacked Income Protection Program in the Senate bill. It’s the basic delivery system that the cotton industry recommended, albeit with some changes that were made. But basically it’s the provision that we recommended ever since this process has started for the ’12 farm bill debate.

    Mr. Adams: How does this deal with the Brazilian WTO case as well?

    Mr. Brown: Well, we believe that it gives the basis for our government to go back to the Brazilian government and argue that we have complied with the WTO decision, because it does away with countercyclical payments, it makes modificationsto the marketing loan, and it creates a new delivery system that is crop insurance based. And it’s substantially less spending authority than was the case in the original WTO decision, so we believe it’s the basis for which the United States can go make an argument to Brazil that we’ve complied with the case.

    On the issue of payment limits, Mr. Brown noted that, “Well, we’re very concerned on behalf of our producers, who are very diversified and grow a lot of different crops, about the trend that Congress has been taking, and specifically Senator Grassley in his endeavor to try to further tighten down eligibility for commercial size farms. We’re particularly concerned with the provisions that are in the bill that relate to a tighter payment limit, a reduced AGI means test, and also some changes in the eligibility requirements.”

    Mr. Brown also noted that, “If the cotton provisions remain as they are, then it’s a bill that we can support.”

    Meanwhile, Bloomberg writer Alan Bjerga reported yesterday that, “U.S. food-stamp use, which Republicans have cited as evidence of a failing economy, dropped 0.3 percent in February from the previous month, the government said.

    “About 46.326 million Americans received aid, down from 46.45 million in January, the U.S. Department of Agriculture said today in an e-mail. Participation was 4.8 percent higher than a year earlier. February was the second consecutive monthly drop.”

    Sean Lengell reported earlier this week at The Washington Times Online that, “A Senate proposal to end direct federal payments to farmers and replace it with a new subsidy program gambles that crop prices will remain at historically high levels, a tactic that could backfire and double its cost, some experts say.

    “The proposed ‘shallow loss’ program would pay farmers when decreasing yields or declining crop prices result in a farmer’s revenue falling below historic averages. The program would save about $2 billion annually compared with the current $5 billion direct payment system — but only if crop prices remain near their current levels. If prices dip, the saving could disappear and the cost could exceed the direct payment price tag, experts say.”

    Recall that on Thursday at a House Agriculture Subcommittee hearing on conservation issues, House Ag Committee Ranking Member Collin Peterson (D., Minn.) 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.”

    An update posted yesterday at the House Ag Committee webpage indicated that the Subcommittee on Nutrition and Horticulture has scheduled a hearing regarding Specialty Crop and Nutrition Programs on Tuesday, May 8, 2012 at 11:00 a.m.  And, the Subcommittee on Department Operations, Oversight, and Credit has scheduled a hearing on Thursday, May 10, 2012 at 10:00 a.m. to address Credit Programs.

     

    Policy Issues

    In other policy related developments, a news release yesterday from USDA stated that, “Agriculture Secretary Tom Vilsack today announced the publication in the Federal Register of new proposed guidelines for the USDA BioPreferred program that could expand the ability of USDA to designate biobased products for Federal purchase. USDA is proposing to allow for the designation of intermediate ingredients such as fibers, resins, and chemicals so that the products made from them could more easily be designated for preferred Federal procurement.”

    Pete Kasperowicz reported yesterday at The Hill’s Floor Action Blog that, “Del. Eleanor Holmes Norton (D-D.C.) has put forward legislation creating a federal program aimed at reducing the number of overweight Americans.

    “The Lifelong Improvements in Food and Exercise (LIFE) Act, H.R. 4604, proposes spending $25 million on the program in fiscal 2013, and ‘such sums as may be necessary’ for the next three years after that. The money would be used to train health professionals to help overweight people, including by educating them about proper nutrition and exercise, and making them more aware of the risks of obesity.”

    On the issue of organic agriculture, an update yesterday at the Voice of America (VAO) Online pointed to a recent study published in the journal Nature (“Comparing the yields of organic and conventional agriculture”).  The VAO update noted that, “In a new study, researchers wanted to measure the difference between conventional and organic yields. So they combined the results of sixty-six earlier studies. They found that some organic farms can yield almost as much as conventional farms. But most cannot.”

    In more specific news relating to animal agriculture, Bloomberg writer Whitney McFerron reported earlier this week that, “European Union rules requiring pig farmers to keep animals in larger pens may mean production in the world’s second-biggest pork exporter is set to tumble as farmers choose between barn remodeling or going out of business.

    “Beginning Jan. 1, farmers in the 27-nation bloc will be required to keep breeding animals together in open pens for most of their lives, instead of confining them individually in stalls that are often too small for a pig to turn around. Pork output in Europe, the biggest shipper after the United States, may drop as much as 10 percent after the ruling goes into effect, because some farmers aren’t prepared to make the change, Britain’s Agriculture and Horticulture Development Board said.”

    In related news regarding protein consumption, an update posted earlier this week at The Economist Online stated that, “The world has a burgeoning appetite for meat. Fifty years ago global consumption was 70m tonnes. By 2007—the latest year for which comparable data are available—it had risen to 268m tonnes. In a similar vein, the amount of meat eaten by each person has leapt from around 22kg in 1961 to 40kg in 2007.”

     

    Budget

    Pete Kasperowicz reported yesterday at The Hill’s Floor Action Blog that, “House Budget Committee Chairman Paul Ryan (R-Wis.) has introduced legislation to replace a mandatory across-the-board discretionary spending cut in fiscal year 2013 that is required by last summer’s deal to raise the debt ceiling.

    “The bill is the start of an effort to prevent $600 billion in defense cuts over 10 years that both parties argue would reduce U.S. national security. The defense cuts were supposed to pressure a ‘supercommittee’ of lawmakers to find alternative cuts in the budget, but that panel failed to come up with a plan.”

    Yesterday’s update noted that, “Another piece of legislation, the Sequester Replacement Reconciliation Act, is a 187-page bill that outlines the various cuts and savings to mandatory programs that will make up for ending the sequester. Cuts in this bill come from recommendations made by six House committees: Agriculture, Energy and Commerce, Financial Services, Judiciary, Oversight and Government Reform and Ways and Means.”

    “According to reports filed this week, the Agriculture Committee cuts would save $7.7 billion in the first year, and $33.2 billion over ten years, almost all of which come from reforms to federal food stamp assistance,” The Hill update said.

    In related news on the political climate in Washington, Politico writers Charles Mahtesian and Jim VandeHei reported yesterday that, “Think Congress is a big, dysfunctional, polarized mess?

    “Just wait: It’s going to get worse.

    “The House is certainly the most extreme illustration of what’s to come. Moderate Republicans are basically extinct. Conservative Democrats, who not long ago accounted for more than a quarter of the party in the House, are getting wiped away, too — and will likely number a little more than a dozen after November.”

    The article added that, “The Senate, once the chamber of deliberation and reason, is getting its own extreme makeover. Moderates such as Maine Republican Olympia Snowe and Democrat Ben Nelson are bolting an institution that barely resembles the one they entered as idealistic deal makers.

    “As it stands, Congress is more polarized than at any time since Reconstruction, according to data compiled by Keith Poole and Howard Rosenthal, political scientists who study congressional voting.”

     

    Rural Economy

    news update yesterday from Creighton University stated that, “The monthly Business Conditions Index for the nine-state, Mid-America region [Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota] indicates growing strength in the regional economy. The index, a leading economic indicator from a monthly survey of supply managers, has increased for five straight months.

    “The index, which ranges between 0 and 100, climbed to 60.0 from 58.6 in March and 58.4 in February. ‘Despite higher energy prices, manufacturers, especially those tied to international markets and agriculture expanded briskly for the month. Heavy manufacturing continues to be source of growth for the region with export oriented manufacturers leading the way,’ said Ernie Goss, director of Creighton’s Economic Forecasting Group and the Jack A. MacAllister Chair in Regional Economics.”

    Laurie Winslow reported yesterday at the Tulsa World Online that, “The state’s [Oklahoma] Business Conditions Index rose to a healthy 62.6 in April, up from 58.6 in March, according to information released Tuesday by Creighton University in Omaha, Neb… ‘Second only to North Dakota, Oklahoma’s growth continues uninterrupted and very positive. Our survey indicates no change to that growth in the months ahead,’ said Ernie Goss, director of Creighton’s Economic Forecasting Group, in a written statement. ‘Despite healthy economic activity, firms in the state are not adding to the hourly work-week of current employees. Instead, firms are adding new workers.’”

     

    Trade

    Reuters writer Charles Abbott reported yesterday that, “A South Korean delegation will conduct a week-long review this week of U.S. mad-cow safeguards and will meet with the top U.S. animal health official on Tuesday in the wake of a new U.S. case of the brain-wasting disease.

    “A USDA spokesman said it is routine for trading partners to seek details about animal disease outbreaks. Agriculture Secretary Tom Vilsack wrote to 28 countries, including major importers, last week to assure them U.S. beef is safe to eat.

    “‘The Republic of Korea is an important partner and we welcome the opportunity to share information about the effective system we have in place for safeguarding against the risks posed by BSE,’ said USDA spokesman Matt Herrick, using the abbreviation for mad cow’s formal name, bovine spongiform encephalopathy.”

    Mr. Abbott explained that, “Canada, Mexico, Japan and South Korea, in that order, were the largest markets for U.S. beef in 2011, accounting for 90 percent of beef exports. Ten percent of U.S. beef is exported. Some 380 million lbs, worth $661 million, were shipped to South Korea in 2011, says USDA.”

    An update posted yesterday at the Economic Research Service (USDA- ERS) Charts of Note webpage stated that, “Agricultural trade within the NAFTA region has recovered from the recent global economic downturn, reaching record levels in 2011. The total value (exports and imports) of U.S. agricultural trade with Canada and Mexico reached about $72.1 billion in 2011, compared with $60.7 billion in 2008 and $54.7 billion in 2009. Prior to the downturn, regional agricultural trade had enjoyed a long period of sustained growth with few interruptions. Even when accounting for the effects of the recent downturn, U.S. agricultural trade with Canada and Mexico has nearly quadrupled since NAFTA’s implementation in 1994. This chart is an update of one found in the ERS report, NAFTA at 17, WRS-11-01, March 2011.”

    A WTO (World Trade Organization) news release from yesterday stated that, “Director-General Pascal Lamy reported to the General Council on 1 May 2012 that on the Doha Round, ‘my conversations over the past few weeks with Ministers and delegations have provided me with a sense that Members wish to continue to explore any opportunities to gain the necessary traction and make tangible progress soon.’ He added that the recent G-20 Trade Ministerial in Puerto Vallarta, Mexico supported giving ‘fresh impetus to the Doha negotiations towards results in areas with potential for prompt resolution — such as trade facilitation — while intensifying efforts to find ways and approaches to overcome the most critical and fundamental stalemates in specially challenging areas.’”

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