Keith Good: Farm Bill Moves to Senate; Roll Call Vote Expected Monday
David Rogers reported yesterday at Politico that, “Given up for dead just months ago, a new five-year farm bill easily cleared the House Wednesday morning, raising hopes that Congress can send it to President Barack Obama next week.
“The strength of the House’s 251-166 vote makes this easier, and it’s now expected that when the bill papers arrive in the Senate Thursday, cloture will be filed promptly, setting up a pivotal roll call vote Monday. Senate Agriculture Committee Chairwoman Debbie Stabenow (D-Mich.) has said she wants to finish no later than next Wednesday, and aides in both parties said this was certainly doable.
“Filling hundreds of pages, the giant measure combines a landmark rewrite of commodity programs with bipartisan reforms and savings from food stamps. It caps years of struggle spanning two Congresses, a political saga largely ignored by the national media and White House but one that fractured the old farm and food coalition as never before.
Mr. Rogers noted that, “Given this history, the breadth of support in the House Wednesday was all the more striking. Republicans, includi
The Politico article explained that, “Reformers came away frustrated by the bill’s failure to rein in crop insurance subsidies and impose a more meaningful cap on what any single farm can receive in government aid. ‘This bill is woefully short of what’s needed,’ said Rep. Ron Kind (D-Wis.).
“But the measure has won high praise from wildlife and land conservation groups. At one level, it’s almost a coming of age for growers of organic foods and goes much further than past farm bills in opening the door to specialty crops and cattle ranchers -two priorities for Stabenow and Lucas.”
Yesterday’s article pointed out that, “From a policy standpoint, the single biggest decision in the bill is to end the nearly 18-year-old system of direct cash payments to farmers, which cost more than $4.5 billion annually and go out at a fixed rate– whatever a farmer’s profits or even if he hasn’t planted crops.
“Instead producers will have to make a choice in the next few months between two options linked to real market losses.”
Mr. Rogers noted that, “The first, known as Agriculture Risk Coverage and favored by the Senate, promises early but temporary assistance to growers faced with a downward cycle of prices.
“Payments would be triggered once prices fall 14 percentage points below the prior five-year average. But the subsidy covers only a narrow 10-point band — from 86 percent to 76 percent of revenues — and will fade after several years if prices don’t improve.
“The second choice, Price Loss Coverage, fits the more classic countercyclical model of fixed, government-set target prices — not a rolling five-year average.”
Gina Chon and Neil Munshi reported yesterday at The Financial Times Online that, “The new five-year farm bill cuts about $23bn in federal spending over 10 years, partly by ending direct subsidy payments to farmers regardless of whether they had a good or bad year with their crops. Government-backed crop insurance programmes, which will only pay out during bad years, will be expanded under the new legislation.”
Kristina Peterson reported yesterday at The Wall Street Journal Online that, “More Democrats opposed the bill than supported it, but the coalition of 162 Republicans and 89 Democrats was large enough to send it to the Senate, where it is expected to pass.”
Reuters writer Eric Beech reported yesterday that, “White House spokesman Jay Carney said President Barack Obama would sign the legislation.”
The Reuters article noted that, “‘All Americans stand to benefit in some way from this farm bill,’ House Speaker John Boehner said after the vote. ‘This is an improvement over current law, and there are no earmarks.'”
DTN Ag Policy Editor Chris Clayton reported yesterday that, “Sixty-three Republicans voted against the bill, as well as 103 Democrats.
“The bill reflects a huge victory for House Agriculture Committee Chairman Frank Lucas, R-Okla., who was whipsawed by his own party throughout much of 2013 over the costs of the bill and demands for more spending cuts. Nonetheless, he was able to successfully navigate a compromise bill through the chamber.”
Mr. Clayton explained that, “Overall, the bill is expected to spend $44.5 billion on commodity programs over 10 years and $89 billion on crop insurance. The bill also is scored to spend $57.6 billion on conservation programs.
“The bill boosts spending in crop insurance by $5.7 billion over 10 years mainly because cotton producers will get a new crop insurance program in lieu of most commodity programs. However, cotton producers also will get ‘transitional’ Direct Payments for this year and 2015.
“Under the bill, farmers must make a one-time choice for their commodity program. They will enroll either in a program for revenue protection that is based on yields and season-average prices or in a target-price program.”
Pete Kasperowicz and Erik Wasson provided a broader historical perspective on the House vote yesterday at The Hill’s Floor Action Blog: “In 2012, the House was unable to act on a farm bill at all, creating an awkward situation for some Republicans running in agricultural states. Congress was forced to extend farm programs for another year on the last day of 2012. A version of the farm bill failed spectacularly on the House floor in June after Democrats balked at a food stamp work requirement amendment. That led the GOP to split the bill and double the cuts in the food stamp portion to pass a GOP-only bill.”
AP writer Mary Clare Jalonick reported yesterday that, “After wavering for several years, the GOP leaders were seeking to put the long-stalled bill behind them and build on the success of a bipartisan budget passed earlier this month. Leaders in both parties also were hoping to bolster rural candidates in this year’s midterm elections.”
Ms. Jalonick added that, “To pass the bill, Lucas and his Senate counterpart, Democratic Sen. Debbie Stabenow of Michigan, found ways to bring many potential naysayers on board. They spent more than two years crafting the bill to appeal to members from all regions of the country. They included a boost in money for crop insurance popular in the Midwest; higher rice and peanut subsidies for Southern farmers; and renewal of federal land payments for Western states.
“They also backed away from repealing a catfish program — a move that would have angered Mississippi lawmakers — and dropped House language that would have thwarted a California law requiring all eggs sold in the state to come from hens living in larger cages. Striking out that provision was a priority for California lawmakers who did not want to see the state law changed.”
Emma Dumain reported yesterday at Roll Call Online that, “Republican and Democratic leaders supported the conference report, conceding that any imperfections outweighed the imperative that a farm bill finally get signed into law.”
Bloomberg writer Alan Bjerga reported yesterday that, “The black caucus, representing mostly urban constituencies, split 19-19 with three not voting. The caucus was unanimously opposed last year.
“The bill would cut food-stamp spending by $8.6 billion over 10 years, though additions to other programs bring nutrition-aid cuts down to $8 billion — one-fifth of the $40 billion sought by Republicans and fought by Democrats and food retailers. The reduction would equal about 1 percent of the program’s record $79.6 billion in spending for the budget year that ended Sept. 30.
“‘It was the right decision to vote for legislation that prevents devastating cuts,’ Democratic Representative Marcia Fudge, an Ohio Democrat and chairwoman of the black caucus, said in a statement after the vote, calling the reductions ‘a difficult compromise to accept.'”
Ron Nixon reported in today’s New York Times that, “The seafood industry expressed disappointment that a contentious seafood inspection program at the Agriculture Department remained in the bill, despite bipartisan efforts to repeal it. Meat and poultry industry groups also expressed their concern with the bill because it did not include language to delay a labeling program that requires retailers to list the country of origin of meat. The industry said the labeling was too costly.
“The bill does not address the changes to the international food aid program sought by the Obama administration, but it does give an increase of about $80 million to the United States Agency for International Development to buy food closer to disaster areas, rather than shipping food from the United States.”
Michael Doyle reported yesterday at the Sacramento Bee Online that, “California’s prune producers, winemakers and almond ranchers can take the new farm bill to the bank.
“Following several fallow years, the House on Wednesday gave final approval to a 900-plus page farm and food stamp package that sustains California’s famed specialty crops, commodities and university researchers. The nation’s largest and most unique farm state, California gets multi-faceted attention in the long-stalled bill.”
In addition, The New York Times editorial board indicated today that, “On balance, the bill is clearly worthy of support, particularly because it will prevent austerity fanatics in future Congresses from gutting food stamps for the next five years.”
And The Washington Post editorial board stated today that, “Exhausted by two years of trench warfare by farm lobbies, lawmakers are desperate to pass this turkey and move on. President Obama can put them out of their misery by signing it — or stand up for his declared principles by vetoing it.”
Kansas farm broadcaster Greg Akagi tweeted yesterday that, “All 4 Kansas House members, @RepLynnJenkins @CongHuelskamp @RepMikePompeo & @RepKevinYoder voted against the #farmbill”
And Rep. Jeff Fortenberry (R., Neb.) indicated in an update yesterday that, “[T]his Farm Bill missed a key opportunity for significant reform. Responsible payment limits save taxpayer money, prevent fraud and abuse of the system, and level the playing field for smaller farmers. Payment limits reform passed both the House and Senate with significant bipartisan majorities – but the conference committee plowed it under. I could not support today’s measure in good conscience.”
Rep. K. Michael Conaway (R-Texas) indicated yesterday that, “Especially important to Texas is livestock disaster aid for ranchers affected by severe drought. This aid will be in place going forward, but also covers losses from 2012 and 2013. As the Chairman of the General Farm Commodities and Risk Management Subcommittee, I am pleased with the product that we have produced for farmers and taxpayers.”
And Rep. Steve King (R., Iowa) noted yesterday that, “I am pleased that we have produced a 5-year Farm Bill for the people of Iowa and all Americans so they can have the agriculture policy predictability they deserve. The Fourth District is one of the leading agricultural production districts in America and I look forward to this bill helping continue that growth.
“However, I’ve had my reservations. The livestock industry was not treated right by Senate Democrats and I resolve to bring those issues to a proper conclusion.”
More specifically on the dairy provisions, AP writer M.L. Johnson reported yesterday that, “Farmers expressed relief this week that a long fight over federal dairy subsidies had ended with an overhaul that most thought would be fair and effective in keeping farms from going under during hard times.”
The article stated that, “Instead of limiting milk production, the compromise legislation restricts farmers’ ability to buy subsidized insurance to cover their losses if they produce too much milk and cause prices to plummet.
“Farmers, who had been divided over the production limits known as supply management, said the new legislation wasn’t perfect, but it was reasonable. They also said its passage would help bring stability to an industry rocked by volatile prices, drought and uncertainty after the previous farm bill expired in 2012. Lawmakers unable to agree on a bill passed a short extension last year.”
Yesterday’s article explained that, “The current dairy subsidy program pays farmers when milk prices sink beyond a certain point. But it does not consider farmers’ costs, and corn feed prices have risen in recent years because of drought and demand from ethanol manufacturers. Farmers getting a good price for milk still found themselves losing money.
“The new farm bill would scrap that program in favor of subsidized insurance that would pay farmers when the difference between milk and feed prices grew too small. Farmers would pay premiums based on the difference, or margin, they wanted to insure. Options range from $4 to $8 per hundred pounds of milk.”
House Ag Committee Ranking Member Collin Peterson (D., Minn.) was a guest on yesterday’s AgriTalk radio program with Mike Adams where he offered a detailed explained of the dairy provisions in the conference report. A FarmPolicy.com transcript of yesterday’sAgriTalk discussion with Rep. Peterson is available here.
In addition to dairy issues, Rep. Peterson pointed out that, “And the actively engaged situation is going to be dealt with at the department level. And frankly, I don’t think you can ever accurately define what farmer is actively engaged. I mean, that’s a very difficult thing to do, and I’m not sure the department will ever figure it out, but that’s been shifted over to them.”
On the issue of conservation compliance and crop insurance, Rep. Peterson noted that, “There was a lot of push from conservation groups, hunting groups, environmental groups, and our urban colleagues to do that. And I think we’ve done it in a way that works. Most everybody that is in the crop insurance system is already complying with these rules. In Minnesota, for example, our state wetland law is way more strict than the federal swamp buster law, so no matter what we do, for example, in Minnesota, the state law is going to prevail anyway, so it frankly doesn’t make that much difference.”
Also in the AgriTalk interview, Mike Adams queried: “What are you most unhappy with in this bill?”
Rep. Peterson indicated that, “Well, I guess at the end of the day I think it’s a big mistake for us to continue to base the safety net on historical base acres. I think we should have updated that to planted acres. I think it’s much more understandable to our friends that don’t understand what we do in agriculture.
“And frankly, it shifts the balance of power more to the producer away from the landowner, which I think is the right way to go. So I was disappointed when we moved off of planted acres. That was probably my biggest disappointment. And there are others, but, you know, at this point there’s so many I can’t remember them all.”
Also in the AgriTalk discussion, Rep. Peterson explained that, “This market oriented ideology is what got us into direct payments in the first place, and it came back to bite us. Apparently they’re complaining about the target prices that we put in the bill that are still substantially below the cost of production.
“And I guarantee you, and I have talked to I don’t know how many farmers all over the country, that there isn’t anything in this bill that is going to change the way people make planting decisions. And frankly, even if we’d have kept planted acres, in my opinion, and most farmers that I’ve talked to, what was in this bill was not going to change what they do.
“So I believe farmers are going to make decisions based on the marketplace.”
Also yesterday, Rep. Peterson held a telenews conference with reporters to discuss Farm Bill related developments; a FarmPolicy.com transcript of this conversation is available here.
Rep. Peterson spent a lot of time explaining dairy related provisions in yesterday’s discussion with reporters and indicated that, “Lucas supported me on dairy… . [B]ut then when Boehner started making a lot of noise, he got not so much with us. And that got Stabenow nervous.
“We had other things that were hanging up the bill at that point–payment limitations, a few other things. It became obvious to me that with Boehner out there making all this noise that Lucas was never going to finalize this bill. And I just happened to run into John about that time in the back of the chamber, and I said to him, well, we’ve got to figure out some way to work this out. And he goes no…I can’t say it on the air. But anyway… .
“So I said, well, you know, let’s look at some ideas here. I said I cannot support the Goodlatte-Scott language because it’s an open-ended government bailout of the processors. And he says, okay, I can get that. So I said, well, we got some other ideas that we want to look at. And so he and I kind of came to that agreement that day that we were going to look at another way to deal with this.”
A questioner noted during yesterday’s call that, “[W]e’d rather have the supply management so we wouldn’t have an oversupply.”
Rep. Peterson responded by saying, “Well, so would I, but we didn’t win, because what ended up happening, I had Lucas, I had Stabenow, I had Cochran, all four of us were in agreement. The dairy stuff was never a question. And then Boehner started putting pressure on and Lucas came to me and said I can’t support the dairy stuff anymore. And he’s the chairman. He’s in charge.”
On the SNAP issue, Rep. Peterson noted that, “Well, I think it was driven by the Senate, more than anything. And it changed when Senator Roberts was replaced by Senator Cochran as the ranking member, because Senator Roberts was advocating $36 billion in cuts, and Senator Cochran took over the first of last year as the ranking member, and he advocated zero cuts. And so I think Senator Stabenow was…before Cochran came on she was maybe willing to look at a little more, but with Cochran’s position and her Democrats telling her they didn’t want to do much, the thing that was the least…
“Well, the thing that needed to be done, frankly, was this LIHEAP thing, which was being manipulated by the states. And only 16 states are doing this. And it’s a loophole.”
On the Brazil cotton case, Rep. Peterson pointed out that, “I had the Brazilians in my office a week ago, maybe two weeks ago. The issue is you can’t find out from them what they would accept. That’s part of the problem. You cannot pin them down. They complain about anything you try to do, which I think is kind of disingenuous, because the Brazilians are subsidizing their farmers more than we’re subsidizing ours. The problem is ours runs afoul of the WTO rules, which are ridiculous in the first place, and their subsidies are in a different category or they’ve got an exception because they’re a developing country, which they’re not.
“So I told the Brazilians, well, you guys do whatever you want, but this is our answer. You wanted us to get rid of Step 2, we got rid of it. We’re reforming the program. And so they kind of said, well, okay… First they were worried we were going to even never get a bill done, and then what was going to happen. I said, well, wait and see what…we get the bill done, take a look at what’s in there, come back and talk to us after that. So that’s kind of where it was left at.
“But my judgment is you’re never going to satisfy those people no matter what you do.”
And Erik Wasson reported yesterday at The Hill’s Ballet Box Blog that, “Rep. Collin Peterson (D-Minn.), fresh from a farm bill victory, told reporters Wednesday that he would decide on his political future next month.”
In other news, Siobhan Hughes and William Mauldin reported yesterday at The Wall Street Journal Online that, “Senate Majority Leader Harry Reid (D., Nev.) broke with the White House Wednesday and said he opposed legislation aimed at smoothing the passage of free-trade agreements, instantly imperiling two major trade deals being negotiated with Asian and European partners.”
Also yesterday, Scott Irwin (University of Illinois), Dwight Sanders (Southern Illinois University) and Darrel Good (University of Illinois) indicated at the farmdocDaily blog (“Is There a Problem with USDA Grain Stocks Estimates in Corn?“) that, “In a farmdoc daily post last week, we summarized the results of a research report that evaluates USDA forecasts and estimates for corn and soybeans. Many of the concerns about the forecasts and estimates since 2006 have centered on the accuracy of the quarterly USDA estimates of corn stocks. Today’s post reviews the evidence from our report about potential problems with USDA corn stocks estimates. This is the second in a series of farmdoc daily posts discussing the findings in the recent report, which can be found here. The research was funded by the Office of the Chief Economist of the USDA. We begin with a brief overview of the USDA grain stocks estimates.”
Also, Donnelle Eller reported this week at The Des Moines Register Online that, “Iowa Attorney General Tom Miller says the federal government doesn’t have the authority to reduce how much ethanol and biodiesel should be blended into the U.S. fuel supply.”
The bulls were again winners in an exciting week for longs and producers. In last week’s report, I said the markets bias would be near unchanged to a bit lower.