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    Monday, May 21, 2012

    Keith Good Farm Policy: Concerns Grow Over Senate Farm Bill Draft


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    Farm Bill

    The “Washington Insider” section of DTN Friday (link requires subscription) reported that, “The growing unhappiness with the Senate Ag Committee’s farm bill draft was highlighted this week in a House Ag Subcommittee hearing. Both lawmakers and stakeholders pushed for a new and different bill than the one approved by the Senate Committee in April.

    “The hearing was before the House Ag Subcommittee on General Farm Commodities and Risk Management, and the testimony was from ag economists and leaders of top farm groups. The focus was commodity programs and crop insurance, one of the contentious parts of the debate, likely second only to proposals to cut nutrition programs.”

    The DTN item noted that, “Rep. Collin Peterson, D-Minn., the ranking member of the House Agriculture Committee, weighed in with his preference on offering choices between revenue-based or price-based protection. He is especially worried about a future price decline and asserts that ‘Congress will not be able to offer ad hoc assistance, as was done in the past. The thing that people need to understand is this time, if this happens, there is no money coming from Washington,’ he said. If prices collapse, there are going to be ‘people camped out here and we’re not going to be able to do anything about it,’ he added.




    “Joe Outlaw, co-director of the Agriculture and Food Policy Center at Texas A&M, testified that offering the price loss coverage option was the best way to serve all producers. ‘I don’t think you can provide every commodity a fair shake with the ARC program,’ Outlaw said. ‘Each commodity ought to have the opportunity to stay in business if there is a loss and the way the Senate plan is crafted right now, I can’t say that they can.’”

    An update posted late last week at the National Sustainable Agriculture Coalition blog pointed out that, “As the House Agriculture Committee works to put together a farm bill, Chairman Lucas has been clear about a number of starting points.  First, contrary to what was previously expected, the committee will not be starting from the Senate committee-passed bill, but rather than draft bill prepared last year for the ill-fated congressional Super Committee process.  The main sticking points have to do with the structure of the commodity and crop insurance titles in the Senate bill and the size of the cuts to the Supplemental Nutrition Assistance Program (SNAP or food stamps) program.  Both Chairman Lucas and Ranking Member Peterson (D-MN) have publicly criticized the Senate bill’s farm safety net for not being appropriate for all commodity crops, and for not being structured to protect farmers against several years of bad crop prices.  Chairman Lucas has also indicated that his bill will cut food stamp benefits more sharply than the Senate bill.”

    Friday’s Agriculture Today radio program from the Red River Farm Network included a report by Don Wick and Randy Koenen on the Farm Bill that featured remarks from both House Agriculture Committee Ranking Member Collin Peterson (D., Minn.) and Committee Chairman Frank Lucas (R., Okla.).  A portion of the Agriculture Today program, which can be heard here (MP3- 2:41) included analysis on both the timing and substance of the 2012 Farm Bill.

    And Jonathan Knutson reported on Friday at Agweek Online that, “Congress may be reaching the final stage of work on the 2012 farm bill, and Rep. Collin Peterson, D-Minn., wants input from his constituents.

    “He’ll be hosting a series of farm meetings this week in western Minnesota.

    “Peterson, who spoke with the news media in a May 18 conference call, said he’s optimistic that the new farm bill — the federal government’s main food and agricultural policy tool — will be finalized by Aug. 5. If work isn’t completed by then, the chances of approving a new farm bill this year fall sharply, he said.”

    Mr. Knutson added that, “The U.S. House and Senate agree on some aspects of the next farm bill. The areas of agreement include conservation and rural development, he says.

    “But the two bodies disagree on a number of things, most notably the commodity title and counter-cyclical payments. The disagreements are based on geographical and philosophical, not partisan, differences, he says.”

    Matt Wilde reported yesterday at the Waterloo Daily Courier (Iowa) Online that, “[Rep. Bruce Braley (D., Iowa)] likes the Senate version [of the Farm Bill] but admits compromise will be difficult given the economic and political climate in Washington, D.C. Passing effective farm legislation is crucial for the country.”

    “During the first five listening sessions, Braley said farmers voiced support for the Senate bill and no producers expressed opposition to the elimination of direct payments, which totaled $400 million statewide in 2010,” the article said.

    David Rogers reported yesterday at Politico that, “With her farm bill now slated for the Senate floor in June, Agriculture Committee Chairwoman Debbie Stabenow is reaching out to Southern lawmakers, trying to heal the breach that split her panel last month and put her at odds with allies in the House.

    “Southern rice and peanut growers are the two primary outliers, and the backroom talks are focused on tailoring some modest countercyclical program as a safety net for these commodities.

    “One option discussed last week would trigger assistance if prices fell below $10.50 per hundredweight for rice and $495 per ton of peanuts. These are the same indexes set in current law and far below what the growers have been asking for, especially in the case of rice. But eager to see Senate movement, House lawmakers sympathetic with the South say the potential deal must be considered as a bridge to a future House-Senate conference on the five-year bill.”

    Mr. Rogers noted that, “In fact, Stabenow reached a bipartisan compromise with House Agriculture Committee Chairman Frank Lucas (R-Okla.) last fall that would have satisfied rice and peanuts growers. But the bill approved in April reflects more of Roberts’s influence as the ranking Republican on the Senate committee.

    “Senate Majority Leader Harry Reid’s office confirmed that he has promised floor time to Stabenow in June to try to move her bill. And Reid acted after getting assurance from Republican senators that they are committed to passage in a bipartisan fashion.

    “Senate action is pivotal for Lucas in the House. The Oklahoma Republican is poised to begin marking up his own farm bill in June and would be helped greatly by progress in the Senate, since House leaders would feel pressure then to give him floor time this summer.”

    Meanwhile, a recent news release from the National Confectioners Association stated that, “The House Agriculture Committee Subcommittee on General Farm Commodities & Risk Management finished two days of Farm Bill hearings today with no mention of the outdated and costly U.S. sugar program.  The National Confectioners Association and its members are concerned that the House will follow the Senate Agriculture Committee and pass the bill out of committee leaving the current U.S. sugar program in place.  The program greatly favors U.S. sugar growers while costing consumers $3.5 billion a year.

    “NCA President Larry Graham, who chairs the Coalition for Sugar Reform, issued written testimony to the U.S. House Committee on Agriculture on behalf of the sugar-using industry. ‘We are disappointed that the Agriculture Committee denied our request to testify at either of the commodity hearings,’ Graham said. ‘If Congress is truly concerned about jobs, why would it deny an open debate on a sugar program that is negatively impacting the interests of the 600,000 Americans employed by the sugar-using sector?’”

    With respect to opinion on farm policy, the editorial board at The Kansas City Star opined yesterday that, “The [current Senate version of the Farm] bill does include a few welcome changes. It would do away with the fixed-payments program, which has doled out $5 billion a year to farmers whether or not they grew anything in that year. And it would eliminate a handful of other programs for more savings.

    “In exchange, however, the bill would create a ‘shallow loss’ insurance program that could prove more expensive than the programs being scrapped.”

    In other developments, a news release Friday from the House Agriculture Committee stated that, “Today, Rep. Glenn ‘GT’ Thompson, Chairman of the House Agriculture Committee’s Subcommittee on Conservation, Energy, and Forestry, wrapped up the third and final hearing series on agricultural programs in advance of writing the next Farm Bill. This series was held on the Subcommittee level and gathered agricultural leaders in Washington to share their policy priorities. Today’s hearing focused on energy and forestry programs.”

    And in news regarding Rural Development programs, USDA’s Economic Research Service indicated in a report from last week (“Farm Activities Associated With Rural Development Initiatives”) that, “Since 2002, USDA’s Rural Business and Industry (B&I) Loan Guarantee program has increased its emphasis on farm-related business activities associated with renewable energy, local/regional food, and value-added agriculture. Other new programs and program modifications also have focused on these and other farm activities and related industries, including the use of farm and ranch natural resources. This trend represents a relatively new direction for USDA’s Rural Development programs, which have historically focused on nonfarm-related business.”

    In other policy news, Darryl Fears reported in today’s Washington Post that, “For more than 60 years, poultry growers, drug companies and the Food and Drug Administration said Roxarsone, sold under the brand 3-Nitro, contained a harmless form of organic arsenic that is present in almost everything in nature, including a glass of drinking water.

    “That thinking was firmly contradicted last year by an FDA study that found trace amounts of inorganic arsenic in the livers of chickens that were fed Roxarsone and then slaughtered for tests. Hundreds of growers in the United States continue to use Roxarsone.

    “The FDA said eating chicken with traces of inorganic arsenic is safe, but its findings had a strong influence on Maryland lawmakers. Last month they passed a bill banning the use of Roxarsone and other arsenic-based drugs in chicken feed after two years of strong opposition to such a measure from the vast poultry enterprise on the Eastern Shore.”

    The Post article added that, “Gov. Martin O’Malley (D) is expected to sign the bill this week, making Maryland the first state to end a practice in existence since 1944.”

    Today’s article pointed out that, “The General Assembly’s action could embolden lawmakers in states such as Georgia, North Carolina and Arkansas, where poultry production dwarfs Maryland’s output of 300 million broilers in 2010, [Del. Tom Hucker (D-Montgomery), who sponsored the House version of the legislation] said.

    “But at least one state official questioned whether Maryland can enforce the ban. O’Malley would have to find money for more inspectors and scientists to monitor and test the feed. ‘We’re effectively under a hiring freeze,’ said Guy Hohenhaus, the state veterinarian at the Maryland Department of Agriculture, which expressed concern in hearings about the ban.”

    And on Thursday, a news release from Sen. Chuck Schumer (D., N.Y.) stated that, “Today, [Sen. Schumer] called on the U.S. Department of Agriculture to prepare to grant an anticipated request for emergency assistance for fruit farmers across New York who suffered damage in recent freezes, which followed suddenly after an unseasonably warm winter. As damage assessments continue throughout the state, Schumer, in a personal letter, urged Agriculture Secretary Tom Vilsack to put resources in place to assist farmers who lost crops during the freezes. An emergency declaration for counties with severe crop damage would make farmers in those counties eligible for emergency disaster loans to mitigate the cash flow problems that occur after crops are lost due to inclement weather. Due to the damage to farms across the state, Schumer is urging the USDA to prepare to immediately grant the state’s anticipated request for an emergency declaration to make aid available to impacted farmers as soon as possible.”

    Agricultural Economy

    Owen Fletcher reported yesterday at The Wall Street Journal Online that, “U.S. corn futures jumped 9.4% last week, lifted by concerns about tight current supplies and a rally in wheat prices.

    “The sharp rise came after corn futures had fallen 11% in the month through May 11, dragged down by forecasts for a large U.S. harvest this fall. Analysts still expect the influx of new supplies later this year to weigh on prices, but the continued strong spot-market demand for on-hand corn helped boost prices, highlighting concerns about the immediate availability of the grain.”

    Budget Issues

    Jackie Calmes reported in Saturday’s New York Times that, “President Obama and Republican leaders in Congress made history of sorts last year when they agreed to a 10-year plan to reduce annual deficits with spending cuts and no tax increases. Mr. Obama vows not to let it happen again.

    “Both he and Speaker John A. Boehner put down their respective markers this week, suggesting a potential replay of their damaging showdown over the debt ceiling last summer. On Tuesday, the speaker reiterated what has become known as the Boehner Rule: House Republicans will not increase the debt ceiling again without spending cuts of a greater amount. Mr. Obama, on Wednesday, told him Congress must pass a ‘clean’ debt-limit increase to cover the nation’s obligations; there will be no more deficit deals, he said, without higher tax revenues from the wealthiest Americans.”

    Meghan McCarthy reported yesterday at the National Journal Online that, “It’s only May, but it already feels like August in Washington—August of 2011, that is, when Congress and the White House were locked in a seemingly endless battle over raising the federal government’s debt ceiling.

    “Republican leaders spent Sunday criticizing President Obama for failing to lead on debt and deficit issues, provoking Democrats months before an increase will actually be needed. The attacks suggest that Republicans clearly see the debt ceiling as a fruitful critique of President Obama, shifting the conversation to the economy and jobs as the general election swings into gear.

    “‘The real issue here is, will the president lead?’ said House Speaker John Boehner on ABC’s This Week.”

    The update noted that, “While Senate Minority Leader Mitch McConnell said he wouldn’t try to force a debate over the debt ceiling before the president requested it—McConnell admitted it would likely come at the end of this year or early next year—he did say that it was the ‘perfect’ time to discuss the government’s fiscal health.

    “‘We do need to have another serious discussion about trying to do something significant about the deficit and the debt,’ McConnell told CBS’s Face the Nation. ‘At some point here, this president needs to become the adult…the speaker and I have been the adults talking about this serious problem.’”

    Ed O’Keefe, writing yesterday at the 2chambers blog (The Washington Post), noted that, “Republican leaders doubled down Sunday on a renewed push to secure spending cuts as part of any deal to increase the national debt limit, drawing a sharper line in an emerging fight over the issue.”

    And Andrew Feinberg reported yesterday at The Hill Online that, “House Budget Committee Chairman Paul Ryan (R-Wis.) said his budget proposal would help ‘prevent’ the tough austerity measures being implemented in Europe, by keeping entitlements from bankrupting the nation.

    “On NBC’s ‘Meet the Press,’ Ryan contrasted his approach to President Obama, and said his budget would bring down the amount of government borrowing, creating ‘certainty for investors’ that the U.S. won’t experience a Europe-like debt crisis.”

    “But Senate Majority Whip Dick Durbin (D-Ill.), appearing on the same program, defended President Obama’s budget as a balanced approach between austerity measures and stimulus to create job growth.  Durbin said he agrees with Ryan that the nation is ‘facing serious deficit challenges.’”

    Regulations

    news release Friday from the Senate Agriculture Committee stated that, “Senator Debbie Stabenow, Chairwoman of the U.S. Senate Committee on Agriculture, Nutrition and Forestry, today strongly urged the officials charged with overseeing the implementation of the Wall Street Reform and Consumer Protection Act to finalize new rules to protect the U.S. economy and the investors, consumers and businesses that rely on the stability of markets.  Chairwoman Stabenow said the Agriculture Committee will hold hearings on the implementation of Wall Street Reform in the coming weeks.

    “‘Recent events like the MF Global bankruptcy and the losses at JP Morgan are prime examples of why we needed to pass this bill,’ Chairwoman Stabenow wrote in a letter to the nation’s top financial officials.  ‘These are certainly complex issues, and I applaud you for keeping an open process that has allowed businesses and consumers to comment on these rules. But after two years of deliberation, it is time to get the rules written and to fully implement this strong reform bill.’”

    Meanwhile, Azam Ahmed and Ben Protess reported in Saturday’s New York Times that, “The trustee overseeing the return of customer money after the collapse of MF Global has received more than $168 million from JPMorgan Chase, the first bank payment since the commodities brokerage firm filed for bankruptcy in October.

    “The money, which was sent Thursday night, is part of the extra collateral that MF Global posted to reassure JPMorgan during the brokerage firm’s final days. In the aftermath of the firm’s dissolution, the cash was left at JPMorgan, which facilitated and cleared numerous trades on behalf of MF Global.”

    The article noted that, “The money is not technically part of the $1.6 billion in customer cash that vanished from the firm in its final days, but the trustee, James W. Giddens, plans to use it to repay the farmers, traders and hedge funds who have waited more than six months to get all of their money back.

    “JPMorgan has been in the center of the controversy surrounding the missing funds, as customers, politicians and federal investigators struggle to figure out how MF Global managed to misuse the cash before collapsing.

    “Investigators have scrutinized a $175 million transfer the brokerage firm made from customer accounts to JPMorgan the day before it collapsed.”


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