Keith Good: House Making Progress on Compromise Dairy Subsidy Reform

    Farm Bill

    Erik Wasson reported yesterday at The Hill’s on the Money Blog that, “The House could be moving closer to resolving the impasse over dairy that has so far stymied passage of a five-year farm bill.

    “House Agriculture Committee Chairman Frank Lucas (R-Okla.) said Wednesday that work is moving forward on a compromise dairy subsidy reform.”

    Mr. Wasson explained that, “Lucas said the compromise does not have supply management but instead is seeking another disincentive to stop farmers from overproducing milk in response to the subsidy.

    “‘You have to have disincentives to cause the market to make rational decisions. That’s not just dairy policy, that’s everything in life,’ he said. ‘This compromise has to provide a rational market signal without telling you how to turn the valve on your milk tank.’

    “‘We’re moving forward until somebody tells us no,’ Lucas added.”

    The Hill update added that, “[House Ag Committee Ranking Member Collin Peterson (D., Minn.)] said he has not seen ‘language’ on the proposal but appeared to know some details. On Tuesday he said he is open to a compromise as long as it provides enough protection to producers.”

    David Rogers reported yesterday at Politico that, “Minnesota Rep. Collin Peterson, Lucas’s ranking Democrat, said late Wednesday that he had yet to see the draft dairy language and expressed some doubt — from what he did know on the topic — if it would work effectively.

    “But staff talks continued into Wednesday evening and there appears to be a concerted push to try to put to rest the remaining farm bill disputes before Congress leaves Friday for a weeklong recess.

    “Dairy and payment limits on farm subsidies are the two biggest. If Lucas and his Senate counterpart, Chairwoman Debbie Stabenow (D-Mich.), can reach compromises, they would be in far better shape when lawmakers return at the end of January.”

    Mr. Rogers added that, “And the dairy compromises under discussion appear to be aimed at finding more of a price or subsidy formula to send a market signal to farmers — not direct supply management.

    “For example, the premiums charged to the farmer for margin insurance could rise in a period of excess milk production. As a fallback too, the secretary of agriculture could be given more flexibility to buy up excess supplies for food programs or even livestock.”

    Tom Lutey reported yesterday at the Billings Gazette (Mont.) Online that, “Without supply controls, the farmers capable of producing more milk will do so and keep collecting the subsidy, [Steven Rowe, of Northwest Dairy Association] said, while small farmers who cannot ramp up production leave the business. The result will be an abundance of cheap milk for processors and continuing subsidy obligations for taxpayers.”

    Rep. Rodney Davis (R., Il) noted yesterday on WDWS radio (Champaign, Il) that, “We ought to be able to come to a common sense agreement [on the dairy issue],” he added that, “I just wish we could get everybody together on this one provision because I think it is the only hold up right now.”  (Related audio clip here– (MP3- 1:54)).

    Also yesterday, Reuters writer Eric Beech reported that, “Negotiations in Congress on the long overdue U.S. farm bill could be completed this week after progress was stalled by a disagreement over a dairy price support program, a senator said on Wednesday.”

    Mr. Beech noted that, “But Republican Senator John Hoeven of North Dakota, who is a member of the House-Senate ‘conference’ panel considering the bill but not among the four lead negotiators, said he thought a compromise could be reached that does not include the supply management element, which Boehner opposes.”

    The Washington Post editorial board indicated in today’s paper that, “This story of partisan bickering — true enough as far as it goes — does not quite do justice to the wasteful absurdity of the entire dairy-subsidy effort.”

    The Post stated that, “Neither [House, Senate] bill contains a convincing explanation of why the dairy industry deserves government-guaranteed prosperity. The industry’s real problem is that it has become phenomenally efficient at producing huge quantities of a substance Americans no longer want as much as they used to: per-capita consumption of fluid milk is down 30 percent since 1975. The Agriculture Department expects that to continue. Congress can write all the farm bills it wants, but it can’t repeal the law of supply and demand.”

    On a separate issue, Joseph Morton reported yesterday at the Omaha World-Herald Online that, “Advocates for tightening limits on federal farm subsidy payments rejoiced at their victory last year when their proposals were included in both the House and Senate versions of the latest farm bill.

    “But those hard-fought gains appear to be in danger now as members of a conference committee hammer out the final version of the legislation.

    “‘I’m worried about it. I think it’s, sadly, in trouble,’ Rep. Jeff Fortenberry told The World-Herald on Tuesday.”

    Meanwhile, a press release yesterday from Rep. Steve King (R., Iowa) stated that, “[Rep. King] released the following excerpt from a radio interview with WHO News Talk Radio, ‘The Big Show,’ in Des Moines, IA. This interview responds to Secretary of Agriculture Tom Vilsack’s comments on the King Amendment to the Farm Bill at the American Farm Bureau Federation’s annual convention in San Antonio.”

    Rep. King noted in part that, “There is only one piece of [state] legislation that my language affects: that’s California’s unconstitutional egg law… . These are all the same [objections] that Tom Vilsack said to me when we were in the Iowa Senate together… . So we’ve chased this all down, and we are trying to stop trade wars between the states… .”

    To listen to Congressman King’s full interview click here (MP3- 7:00).

    news release yesterday from Sen. Heidi Heitkamp (D., N.D.) stated that, “[Sen. Heitkamp] today spoke with U.S. Secretary of Agriculture Tom Vilsack about the need to pass a comprehensive Farm Bill, the status of the sugar industry, and the importance of agricultural trade to North Dakota.

    “‘We absolutely need to pass a comprehensive Farm Bill – and we are so close.  Secretary Vilsack and I agreed that this is an important week for a potential deal on the Farm Bill, and we’re hopeful the Senate and House negotiators will be able to reach final compromises to push us even closer to a deal.'”

    And an update yesterday at the Red River Farm Network stated that, “South Dakota Congresswoman Kristi Noem, a member of the farm bill conference committee, says dairy provisions and Iowa Senator Chuck Grassley’s position on payment limits and eligibility requirements that are hanging up farm bill negotiations… . Noem says the conference committee may have another public meeting to talk about several remaining issues. ‘There’s a USDA catfish inspection process we may need to vote on, some of the GIPSA regulations we may need to look at, COOL regulations.'”

    The Red River Farm Network update added that, “[Sen.Tim Johnson (D., S.D.)] says he thinks a cut of $8 to $10 billion in food stamps is reasonable, as long as some other changes are made, including payment limitations and a strong conservation measure. Johnson also said the farm bill must include livestock disaster assistance programs, and maintain the country of origin labeling law.”

    Meredith Shiner and Kyle Trygstad noted in an article yesterday at Roll Call Online (“Cochran Baits Primary Hook With Catfish Fight“) that, “On Capitol Hill, [Sen. Thad Cochran (R., Miss.)] is wielding his seniority as a political tool. He has reasserted his authority on certain issues — especially on a stalled farm bill that some believe he is holding up largely on his own. As the top Republican on the Senate Agriculture Committee, Cochran has taken a more aggressive stand to protect the parochial interests of Mississippi since he announced his re-election bid.

    “Agriculture Chairwoman Debbie Stabenow, D-Mich., and her House counterparts, Frank D. Lucas, R-Okla., and Collin C. Peterson, D-Minn., want desperately to finish the farm bill. But Cochran has been the odd man out, dragging out the conference process with his objections to proposed changes to laws regarding catfish and farm manager subsidies.”

    In other news, an update yesterday from the National Cotton Council (NCC) stated that, “The [NCC] is deeply disappointed and disturbed by statements to the press made by representatives of the Brazilian cotton industry. If reports are accurate, a Brazilian cotton delegation visiting Washington has misrepresented the carefully negotiated agreement between U.S. and Brazilian grower organizations and wrongly portrayed the reformed cotton provisions in the farm legislation now being considered by Congress.”  [Note: See this recent Reuters article, “Brazil cotton growers pessimistic on U.S. subsidies dispute.”]

    “The growers’ agreement was negotiated during a series of cordial meetings conducted in Brazil and the United States. During the meetings, the Brazilian growers received a detailed explanation of the insurance program, requested further modifications to cotton provisions (the insurance product had already been modified based on comments by Brazilian government officials), and spent considerable time discussing ways the U.S. and Brazilian grower organizations could cooperate. As a result of the discussions, U.S. growers asked Congress to make additional modifications to the cotton provisions and to broaden the scope of projects that could be conducted using the nearly $500 million in funds transferred to the Brazilian Cotton Institute (BCI) under the U.S.-Brazil Framework Agreement.”

    The NCC item added that, “In summary, the U.S. cotton industry is prepared to accept, and in fact, has promoted major policy reforms to settle the longstanding dispute. Further, the U.S. industry is willing, on final settlement, to make good its commitment to cooperate with the Brazilian industry. In addition, the U.S. industry supports the reinstatement of the Framework Agreement. But, it is time for the Brazilian industry to acknowledge that the new cotton insurance program is substantial reform. It is time to put this matter behind us, but the reported comments by the Brazilian delegation are not a step in the right direction.”

    With respect to nutrition, Tim Devaney reported yesterday at The Hill’s RegWatch Blog that, “The price tag on Michelle Obama’s National School Lunch Program was inaccurately reported in the Federal Register earlier this month, so the Food and Nutrition Service at the U.S. Department of Agriculture is correcting the cost.

    “The National School Lunch Program and School Breakfast Program, which provides free and low-cost healthy meals to more than 31 million students, are now projected to cost taxpayers $16.4 billion… . [T]he costs will continue to grow over the next couple years, according to government estimates, adding up to $17 billion by 2016.

    “In 2013, the costs totaled $15.9 billion.”

    On the issue of crop insurance, Laurie Langstraat, vice president of public affairs for National Crop Insurance Services, noted in a column yesterday that, “For the vast majority of California’s farmers who raise specialty crops — like citrus, almonds, grapes and stone fruit — crop insurance is the only tool available to help them recover from natural disasters. Crop insurance is a public-private partnership whereby farmers purchase policies that are sold by private crop insurance companies and partially discounted by the federal government.”

    Agricultural Economy

    Yesterday the Federal Reserve Board released its Summary of Commentary on Current Economic Conditions. Commonly referred to as the “Beige Book,” the report included observations with respect to the U.S. agricultural economy.  A summary of this part of yesterday’s Fed report has been posted here at FarmPolicy Online.

    Note that the Chicago Fed District indicated that, “Current prices for corn will not cover expected costs for 2014 production…”

    Donnelle Eller reported yesterday at The Des Moines Register Online that, “Iowa farmland values climbed 8.7 percent last year, a new report shows, but demand is beginning to soften.

    “Farm Credit Services of America said Iowa farmland values climbed to $9,863 an acre last year, $786 more than in 2012.”

    The Register update noted that, “‘After years of a steady rise led by lower than average U.S. yields, strong domestic and international demand for commodities, low interest rates and solid profit margins, we’re seeing the rate of price increases leveling off for farmland in some areas we serve,’ said Mark Jensen, a Farm Credit Services senior vice president.”

    More broadly, Bloomberg writers Prabhudatta Mishra and Pratik Parija reported yesterday that, “Food grain production in India may climb to a record this year as farmers in the world’s second-largest grower of wheat and rice expand planting, Agriculture Minister Sharad Pawar said.”

    And in developments regarding trade, Vicki Needham reported yesterday at The Hill’s On the Money Blog that, “Congressional Democrats say the White House is stepping up their discussions on the expanding trade agenda in hopes of gathering support for what are considered major pieces of the economic agenda.

    “Rep. Ron Kind (D-Wis.) told The Hill on Wednesday that talks have picked up significantly in recent weeks, and included a sit-down with 40 lawmakers and White House chief of staff Denis McDonough of trade promotion authority (TPA) and issues surrounding pending trade deals, including the Trans-Pacific Partnership (TPP).”

    press release yesterday from Sen. Tammy Baldwin (D., Wis.) stated that, “[Sen. Baldwin] today joined her colleagues in sending a letter to Senate Majority Leader Harry Reid expressing concern about the prospect of renewing the Trade Promotion Authority (TPA) – better known as Fast Track – that lapsed in 2007. The Senate Finance Committee is holding a hearing on TPA on Thursday.

    “They write, ‘As the TPA that was enacted over a decade ago is inadequate for addressing the complex trade agreements of the 21st century, it is clear that renewal of TPA in a form that resembles that framework would be unacceptable. Instead, TPA must be replacedwith a new trade agreement negotiation and approval process appropriate to 21st-century trade agreements and consistent with the constitutional role of Congress in trade.'”

    And an update posted yesterday at the U.S. Trade Representative’s Office Online stated in part that, “The United States’ position on the environment in the Trans-Pacific Partnership negotiations is this: environmental stewardship is a core American value, and we will insist on a robust, fully enforceable environment chapter in the TPP or we will not come to agreement.”


    Janet Hook reported yesterday at The Wall Street Journal Online that, “The House passed a $1.012 trillion bill Wednesday that would fund the government for the next 8½ months, advancing a broad policy compromise between the warring political parties.

    “The 1,582-page amalgam of discretionary spending for activities from the Army to water projects passed 359-67, with 166 Republican and 193 Democratic votes. The Senate is expected to clear the bill by week’s end.”

    press release yesterday from Sen. Mike Johanns (R., Neb.) stated that, “[Sen. Johanns] today announced that the Environmental Protection Agency (EPA) will finally have to reveal details about its aerial surveillance program. He applauded the inclusion of a provision he pushed in the omnibus appropriations package requiring EPA give a full account, including where the flyovers took place, how much they cost and how many were conducted. Johanns first asked questions about EPA’s use of aerial surveillance to monitor agriculture operations in a letter to the agency’s former administrator in 2012 and has since resubmitted nearly a half dozen requests, most recently during a committee hearing last year.”

    And a news update yesterday from Rep. Tom Rooney (R., Fla.) stated: “Rooney noted that the [omnibus appropriations] bill includes, at his request, $20 million in new funding to combat citrus greening, a disease that continues to devastate the Florida citrus industry, along with its $9 billion in annual economic impact and 76,000 direct and indirect jobs.”


    news release yesterday from Rep. Collin Peterson (D., Minn.) stated that, “House Agriculture Committee Ranking Member Collin Peterson today hosted a meeting with members of Congress and EPA Administrator Gina McCarthy to express their disappointment in EPA’s proposed volume numbers for 2014. The EPA has proposed significant reductions to the Renewable Fuels Standard (RFS).”

    Rep. Peterson indicated that, “I appreciate Administrator McCarthy’s willingness to meet with us and hope the Agency’s final rule will take the concerns of our constituents into account. The rural economy has been one of the few bright spots in recent years, due in large part to the RFS. Reducing the RFS would not only have a negative impact on jobs and the rural economy, it would also halt advances in the next generation of renewable fuels. I will continue to press the importance of a strong RFS as EPA moves ahead with the rulemaking process.”

    Rep. Dave Loebsack (D., Iowa) tweeted a photo of the meeting yesterday.

    Also yesterday, Martin Barbre, the president of the National Corn Growers Association, opined in a column at Roll Call Online that, “Together with eight other lawmakers, Sens. Dianne Feinstein, D-Calif., and Tom Coburn, R-Okla., recently introduced a bill to eliminate the mandate for corn-based ethanol. This proposal comes just weeks after the Environmental Protection Agency announced plans to reduce the ethanol fuel requirement.

    “Both moves are reckless and unjustifiable. The nation must break its fossil-fuel addiction.”

    Rick Barrett reported yesterday at the Milwaukee Journal Sentinel that, “Wisconsin biofuel producers say they’re disappointed Gov. Scott Walker hasn’t joined a group of Midwestern governors urging the federal government to support ethanol use and not cut the fuel additive requirement in gasoline.”

    “Walker says he’s keeping a campaign pledge to not take a position in the debate that has pitted ethanol producers against Wisconsin’s small-engine industry, which opposes increased use of the fuel additive,” the article said.


    Reuters news reported yesterday that, “China’s agriculture ministry says there is still no timetable for the commercialisation of domestically developed genetically-modified strains of corn and rice, although the country is already the world’s top buyer of GMO soy.

    “The ministry granted safety certificates for its first genetically-modified rice and corn in 2009 but has so far refused to authorise commercial production.”

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