Friday, January 4, 2013

Farm Bill Perspectives Emerge; and the Ag Economy

Farm Bill Issues
Bloomberg writer Alan Bjerga reported yesterday that, “The fiscal-cliff settlement, which extends the most-recent agriculture law until September, is frustrating farmer groups that spent 2012 pushing new programs and now must start again under a tougher spending outlook.

“Congress’s approval of a one-year extension of the farm bill that expired Sept. 30 heads off government-mandated higher milk prices. It also preserves subsidies that even farmers call wasteful and makes plans approved by the U.S. House Agriculture Committee and full Senate last year moot. Now back to square one, lobbyists and lawmakers may have an even tougher climb as cost-cutting rules the day, said analyst Mark McMinimy.”
Mr. Bjerga explained that, “The top Republicans and Democrats on both congressional agriculture committees had pushed for an extension that contained elements of legislation they had backed last year, including a new dairy program intended to stabilize prices for the boom-or-bust industry. That plan, which House Speaker John Boehner blasted as worse than ‘Soviet-style’ economic management [related audio clip from July 12], was stripped from the fiscal-cliff deal.”

The article added that, “The House Agriculture Committee plans to start drafting a new farm bill on Feb. 27, while the Senate panel will begin its work  soon,’ [Senate Ag Committee Chairwoman Debbie Stabenow (D., Mich.)] said Dec. 30.”

The “Washington Insider” section of DTN pointed out yesterday (link requires subscription) that, Stabenow and her House counterpart, Rep. Frank Lucas, R-Okla., now have until next September to draft legislation to replace the extended 2008 farm bill. They already have their earlier effort to use as a starting point, and there are indications that a new farm bill might be ready for floor consideration in both chambers before summer.”

Mary Kay Thatcher, Senior Director of Congressional Relations for the American Farm Bureau Federation, reminded listeners yesterday on the AgriTalk radio program with Mike Adams, that in early March, the Congressional Budget Office will release its new projections of what programs will cost.

Ms. Thatcher noted that, “It’s going to be very challenging, and there almost certainly will be less money to do it. So we may start somewhere close to where the bills are now, but the question on the budgeting comes up and will give us a big answer about whether we can finish about in the same place.”

With respect to the Farm Bill extension, Ms. Thatcher stated that, “Obviously I think everyone would have liked to have had a five year bill done, but that became somet
hing that just wasn’t doable.”

In the AgriTalk interview yesterday, Ms. Thatcher added that, “Most everything got extended, but the problem is that there were 37 expiring provisions, which included things like disaster assistance for livestock, new and beginning farmer money, energy money, etc. Those things are all authorized, but the fact is in order to get money, you’d have to go to the Appropriations Committee, and then those folks will have to fight for that money against money that’s probably already at least planned for some other item.

“So I would say the big losers in the game are, indeed, the 37 programs that didn’t get funded. I think the disaster assistance for livestock is the most striking.”

In an update yesterday at the DTN Ag Policy Blog, Chris Clayton provided more details about the Farm Bill extension, and pointed out that, “The bill extends most farm programs through Sept. 30, 2013, giving lawmakers nine months to get a new bill moved…Much of the challenge from the extension comes from a problem highlighted in the 2008 farm bill. There were 37 programs in that legislation that didn’t have a ‘budget baseline’ to carry forward after Sept. 30, 2012.”

In his detailed update, Mr. Clayton added that,Disaster programs were authorized in the bill, but not with any mandatory funding. The one exception is the Supplemental Revenue Assistance Program, or SURE, which was not reauthorized. Instead, discretionary levels were set with funding for certain programs that could come through the appropriations process.”

A news release yesterday from the United Fresh Produce Association noted that, “Unfortunately, the extension of the Farm Bill excludes funding for several specialty crop programs and disregards reforms made by the Senate and the House Agriculture Committee in the 2012 Farm Bill. For example, lawmakers set discretionary funding for the Specialty Crop Research Initiative (SCRI) at $100 million, while mandatory funding stood at $50 million in the 2012 Farm Bill. With a discretionary designation, lawmakers must still approve appropriations for the research programs.”

Also, a news release yesterday from the Specialty Crop Farm Bill Alliance stated that, “The passage of a fiscal package late Tuesday evening excluded key specialty crop priorities. While the bill does avert the dreaded ‘fiscal cliff,’ efforts to roll a new five- year Farm Bill into the bill were rejected in favor of a nine month extension of the 2008 law. The extension does not include funding for certain expiring programs such as the Specialty Crop Research Initiative and Clean Plant Network.”

Meanwhile, Christopher Doering reported in yesterday’s Des Moines Register that, “The Democrat who is chairwoman of the Senate Agriculture Committee was critical of the role that Republican Sen. Mitch McConnell, his party’s leader, played in the outcome. ‘Rather than embrace the Senate’s bipartisan farm bill, which cuts $24 billion in spending and creates certainty for our agriculture economy, McConnell insisted on a partial extension that reforms nothing, provides no deficit reduction and hurts many areas of our agriculture economy,’ said Debbie Stabenow of Michigan.”

Speaking briefly about the Farm Bill on the Senate floor yesterday (video replay at Online), Majority Leader Harry Reid (D., Nev.) noted that the five-year Farm Bill that the Senate passed in June saved $24 billion, and was a bipartisan bill that passed overwhelmingly.

Sen. Reid cast blame at the House for not taking action on the legislation and stated: “So now we are on a short-term extension.”

Norman Ornstein of the American Enterprise Institute stated on The Diane Rehm Show (NPR Radio) yesterday that, The Senate early last year, by a wide bipartisan margin, passed a farm bill. It, you know, may not have been a great farm bill, but it did a lot of things at the time when we had the worst drought since the Great Depression. Seventy-four votes for it, and the House did nothing all the way through the election. Livestock farmers among others were just hit enormously hard.

“And now, simply because without a fix, milk prices would have gone up immediately to $6 to $8 a gallon, they basically just patched it for nine months, but did it in a fashion that really hit small milk producers and benefits the large ones because that’s what Mitch McConnell insisted on. You know, this is the worst possible way to make really bad policy. And while this — nobody’s paying much attention to this except in dairy states. It really is a classic example of how far away from decent policy-making we have come in the last few years. It’s just embarrassing.”

Earlier this week, Senate Ag Committee Ranking Member Pat Roberts (R., Kan.) noted that, “I am pleased that the final agreement [legislation to address the so-called fiscal cliff] also includes an extension of the 2008 Farm Bill through the end of September 2013. While this extension is not the best possible bill, I believe it is the best bill possible at this time.”

In a news release yesterday, House Ag Committee Chairman Frank Lucas (R., Okla.) noted in part that, “Further, this bill provides a one year extension of the 2008 farm bill, which gives agricultural producers certainty and allows the Agriculture Committees in Congress to continue working on a five-year comprehensive farm bill.”

And perhaps most interesting, the AP reported today that, “Minnesota U.S. Rep. Collin Peterson said Wednesday he’s so upset that Congress passed only a short extension of the 2008 Farm Bill that he won’t work on a new version without assurances from congressional leaders it will get a vote.”

The article stated that, “Peterson told The Associated Press he and his staff were writing to Boehner and other House leaders expressing frustration over what he called lack of respect for the committee’s hard work. He said he would demand a guarantee that if the committee passes a farm bill in 2013, it will be allowed to come to the floor where representatives can fight out any disagreements over the details.

“‘If they will not give me that assurance, I am not interested in writing a farm bill,’ Peterson said.

Peterson said he discussed his frustrations with Lucas and that Lucas told him he couldn’t write a farm bill without Peterson’s support.”

The AP article explained that, “The bill passed Tuesday night to avert the tax increases and spending cuts known as the ‘fiscal cliff’ extends current farm bill programs for just nine months and averts a potential spike in milk prices that could have happened if the current dairy program had been allowed to expire. It does not contain a broader overhaul of dairy policy that Peterson authored, which was in both the House committee’s farm bill and the version that passed the full Senate with bipartisan support in June.”

Meanwhile, Daniel Looker reported yesterday at Agriculture Online that Iowa GOP Senate Charles Grassley called the nine-month Farm Bill extension “bittersweet.”

Mr. Looker added that, “Grassley said that as Congress moves to the next stage of fighting over spending cuts, that the ag committees may face pressure to cut more from farm programs.”

Rep. Jim Costa (D., Calif.) noted in a news release this week that, “Despite all the hard work and compromise to craft a bipartisan Farm Bill, Republican Leadership chose an all too familiar, kick-the-can approach that does nothing to modernize our agriculture programs or address the crisis facing our nation’s dairy industry. We had the bill and the agreement but what American agriculture got was more of the same.”

Also, in a statement yesterday, Agriculture Secretary Tom Vilsack noted that, “While I am relieved that the agreement reached prevents a spike in the price of dairy and other commodities, I am disappointed Congress has been unable to pass a multi-year reauthorization of the Food, Farm and Jobs bill to give rural America the long-term certainty they need and deserve.”

In a statement yesterday, American Soybean Association (ASA) President Danny Murphy noted that, “Once the extension expires at the end of the fiscal year in September, we will be left at the same impasse we’ve had since the House Agriculture Committee passed its farm bill in July unless our elected leaders can find a way to come back to the bargaining table with a renewed focus on what’s important, not just for soybean farmers, but for all of agriculture and for the nation as a whole. It’s imperative that our members of Congress in both chambers and in both parties move past party politics and get the job done this time.”
American Farm Bureau Federation (AFBF) President Bob Stallman discussed the nine-month extension of the Farm Bill in a video update yesterday, which is available at

And an update yesterday from the National Cotton Council stated that, “Cotton industry leaders commend the leaders of the respective agriculture committees and Cotton Belt Senators and Representatives for their unwavering efforts to enact predictable farm policy in a timely manner for the 2013 crop year and beyond.

“The industry looks forward to continuing to work for prompt enactment of balanced long-term policy that is fiscally responsible, consistent with U.S. trade obligations and provides certainty for farmers, consumers, agribusinesses and rural communities.”
Meanwhile, National Association of Conservation Districts (NACD) President Gene Schmidt noted yesterday that, In total, the fiscal cliff bill does not address deficit reduction, whereas the 2012 Farm Bill as passed by the full Senate and the House Agriculture Committee would have saved taxpayers $23 billion and $33 billion respectively, while maintaining needed funding for important conservation programs.”
Similarly, Mary Kay Thatcher of the American Farm Bureau, pointed out yesterday on AgriTalk that, “You know, you would have thought they would have jumped at that ability to get $24 to $35 billion, but instead they said no, we just want to do something easy and go ahead and extend where we are.”

Christopher Galen, Senior Vice President of Communications for the National Milk Producers Federation, was also a guest on yesterday’s AgriTalk program where he noted that, So the real irony here is that all this talk about the fiscal cliff, and oh, we’ve got to reduce the deficit, what they did with the farm bill actually doesn’t help… And so the farm bill is that low- hanging fruit on the tree. We’re talking about $20 to $30 billions of dollars of savings, if they will just take it. And if you don’t take the reforms in the new farm bill, then you’re going to continue to spend more money than you might otherwise. So I think that’s going to be one of our strongest arguments going forward.”

Mr. Galen also pointed to the importance of the Dairy Security Act in today’s economic environment on yesterday’s AgriTalk program- related audio (MP3- 1:11), while an unofficial transcript of his complete interview on AgriTalk yesterday can be found here -full audio replay of his discussion with Mike Adams here (MP3- 12:12).

And a news release yesterday from the National Milk Producers Federation noted that, “Now that the House of Representatives has passed the Senate’s fiscal cliff package extending existing farm programs into 2013, the National Milk Producers Federation (NMPF) said today it will continue its push in the 113th Congress for a five-year farm bill that includes the Dairy Security Act.”

In other developments associated with the recently passed fiscal cliff deal, Reuters news reported yesterday that, “The $1 a gallon tax credit for biodiesel will run through 2013 at a cost of more than $2 billion under a provision of the mammoth legislation passed by Congress to avoid the so-called ‘fiscal cliff.’”

The American Soybean Association, in a news release yesterday, welcomed this development.

And the AP reported yesterday that, “The measure approved Tuesday night as part of the bill extending tax cuts for most taxpayers also helps wind energy and ethanol producers by extending tax credits, most of which expired Monday.”

Sen. Tim Johnson (D., S.D.) indicated yesterday that, “Especially important for South Dakota is the wind energy production tax credit has been extended for 5 years providing much needed certainty for wind turbine manufacturers and wind farm investors.”

However, Zack Colman reported yesterday at The Hill’s Energy Blog that, “A recently renewed wind power credit could face more scrutiny next Congress, as House Committee on Oversight and Government Reform Chairman Darrell Issa (R-Calif.) said Wednesday that the credit is of ‘serious interest’ to his committee.

“Issa criticized a ‘dramatic’ alteration to the credit that he said amounted to an expansion of the program.”
Agricultural Economy
The AP reported yesterday that, “Despite getting some big storms last month, much of the U.S. is still desperate for relief from the nation’s longest dry spell in decades. And experts say it will take an absurd amount of snow to ease the woes of farmers and ranchers.”

And Bloomberg writer Tony C. Dreibus reported yesterday that, The worst U.S. drought since the 1930s Dust Bowl is damaging wheat crops across the world’s biggest supplier, at a time when hedge funds are the most bearish on prices in seven months.

“About 62 percent of the country is mired in a dry spell that the government says will last at least until March in states growing the most winter wheat. With dormant crops already in the worst condition since records began in 1985 and global inventories headed for a third annual drop, Chicago futures may rise as much as 25 percent to $9.50 a bushel this year, the median of 32 analyst estimates compiled by Bloomberg shows.”
Keith Good

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