Farm Bill; Budget; Ag Economy; Regulations; RINs; and, Immigration- Thursday Posted By Keith Good On October 3, 2013 (Note that yesterday’s FarmPolicy report has been updated with a correction in the Farm Bill Analysis section). Farm Bill Issues DTN Political Correspondent Jerry Hagstrom reported yesterday at the DTN Ag Policy Blog that, “As congressional leaders met with President Barack Obama on Tuesday to resolve the federal government shutdown, Senate Majority Leader Harry Reid was pushing for alager budget agreement. “The proposal includes plans to talk about a final savings figure for farm programs.” Yesterday’s DTN update noted that, “Reid, a Democrat from Nevada, wrote a letter to House Speaker John Boehner, R-Ohio, proposing that the House pass the Senate resolution to reopen the government to be followed by the large-scale negotiations on budget policies. “The letter also says, ‘You and your colleagues have repeatedly cited these fiscal issues as the things on which we need to work. This conference would be an appropriate place to have these discussions, where participants could raise whatever proposals — such as tax reform, health care, agriculture and certainly discretionary spending like veterans, national parks and NIH — they feel appropriate.’” Mr. Hagstrom explained that, “In response to Reid’s letter, Michael Steel, a spokesman for Boehner, said, “‘The entire government is shut down right now because Washington Democrats refuse to even talk about fairness for all Americans under Obamacare. Offering to negotiate only after Democrats get everything they want is not much of an offer. Today, the House will continue to pass bills that reflect the American people’s priorities…’” Note that Jake Sherman, John Bresnahan, Burgess Everett and Jonathan Allen reported yesterday at Politico that, “President Barack Obama and congressional leaders appeared no closer to ending a two-day-old government shutdown after meeting for more than an hour Wednesday night. “Instead, lawmakers resumed the same posture they held before the conference: No one is backing down.” Bloomberg writer Derek Wallbank reported yesterday that, “Also in limbo: the appointment of House members to a conference committee that will work out differences between the House and Senate versions of a measure dealing with farm subsidies, H.R. 2642. House Speaker John Boehner, an Ohio Republican, has the final say on the Republicans who’ll handle that task. He plays a key role in the impasse and the effort to resolve it and end the resulting shutdown. “‘The question is when will the speaker have time to focus on that, given all the other issues going on,’ House Agriculture Chairman Frank Lucas, an Oklahoma Republican, said in an interview.” Sen. Mark Pryor (D., Ark.) tweeted yesterday that, “$17b of economic activity & 1 in 6 jobs in AR are tied to agriculture. #FarmBill expired on 9/30 & House still hasn’t appointed conferees” Meanwhile, a news release yesterday from the National Farmers Union (NFU) indicated that, “[NFU] President Roger Johnson sent a letter to the Speaker of the U.S. House of Representatives, urging the immediate naming of conferees to the farm bill conference committee. “‘The 2008 Farm Bill has now been allowed to expire twice, most recently on Sept. 30, 2013,’ said Johnson. ‘The fate of the farm bill is now in your hands.’” American Soybean Association President Danny Murphy indicated in a news release this week that, “Congressional gridlock has cost farmers yet again, and we demand a stop to the political gamesmanship. It’s time for our elected officials to remember who they represent and get to work passing a farm bill that works for American farmers.” And a news update yesterday from the International Dairy Foods Association indicated that, “Twenty-eight dairy manufacturers, including some of the largest food companies in the United States, have sent letters to the Senate conferees for the 2013 Farm Bill, calling on them to accept the House-passed dairy title that does not include a controversial new program that would periodically limit milk supplies.” Budget: Impacts of Budget Impasse, Looking Ahead Tony Dreibus reported yesterday at The Wall Street Journal Online that, “The partial U.S. government shutdown has thrown into question whether the U.S. Department of Agriculture will release a monthly crop report next week that is closely watched by commodities traders and often leads to sharp moves in the price of corn and other crops. “Commodities analysts said Wednesday that it appears increasingly unlikely the USDA will release its monthly supply-and-demand report on its scheduled date of Oct. 11.” Mr. Dreibus added that, “The partial closure, combined with the expiration this week of a one-year extension to the 2008 Farm Bill, has left many farmers wondering how much of each crop to seed next year and to increased concerns about insurance rates, subsidy programs and the lack of government information. That means many won’t use hedges, which cuts down on the amount of business done by grain brokers and commodity trading advisers.” A CME Group Notice from yesterday stated in part that, “Following our letter to customers yesterday, please note that the calculation and distribution of the CME Lean Hog and Feeder Cattle Indexes has been temporarily suspended due to the unavailability of relevant data reported by the USDA-AMS.” Also, Jennifer Jacobs reported in yesterday’s Des Moines Register that, “Iowa officials say the government has money to honor the existing healthy-food vouchers that are circulating here for children and pregnant women, but Iowans won’t be able to get newvouchers until the shutdown ends. “And the state has money to keep program offices open for just 10 days.” The Register article noted that, “Congress’ failure to pass a stopgap spending bill Monday night means there is no money to pay for many federal programs, including the $7 billion Special Supplemental Nutrition Program for Women, Infants, and Children, which is commonly called WIC. “Effective Tuesday, the 20 WIC offices in Iowa couldn’t issue new vouchers, which pay exclusively for healthy items such as fruits, vegetables, milk, eggs, wheat bread, certain cereals, peanut butter, beans and infant formula.” With respect to broader budgetary variables, Zachary A. Goldfarb reported in today’s Washington Post that, “The fight over the government shutdown quickly moved on Wednesday to a bigger showdown over raising the nation’s debt ceiling, as the first White House talks to solve the fiscal standoff failed to make any progress toward a deal.” The Post article pointed out that, “The next crucial deadline comes on Oct. 17, the last day that the Treasury Department estimates that the federal government is certain to have enough money to pay all its bills. Investors have been demanding higher interest rates for U.S. Treasury bills in recent days, a sign of concern that the federal government could have trouble servicing its debt. “On Wednesday, there was growing realization on both sides of the aisle that lawmakers will likely have to deal with resolving the debt ceiling issue at the same time as the government shutdown. Some senior Republicans said they are ready to enter a more far-reaching discussion over entitlement programs, tax reform and the federal debt limit.” And John D. McKinnon reported in today’s Wall Street Journal that, “While much of Washington is focused on the government shutdown, another round of spending cuts set to take effect in January may do more to fuel momentum for broad bipartisan budget talks. “Some Republicans and Democrats think the dread of more automatic spending cuts—known as the sequester—could prod the two sides to negotiate a broad budget deal that could reopen the government, raise the federal borrowing limit and mitigate some of the cuts’ worst effects.” Agricultural Economy Jamie Chisholm reported yesterday at The Financial Times Online that, “Cattle and feeder cattle futures sit just shy of, and at record highs, respectively, as tight supplies continue to dominate the market. “Recent droughts in the US left the cattle herd at the start of the year at its smallest since 1952.” The FT article added that, “The latest rally in prices comes after the US Department of Agriculture last month revealed the nation’s feedlots added the least amount of cattle to herds in August since the method of collating such data began in 1996, according to Bloomberg. “This comes as exports of beef continue to expand and domestic consumption holds up as the economy improves.” Tina Parker reported earlier this week at the Arkansas Democrat-Gazette that, “The drought that plagued the nation’s crops and livestock for two years is still causing residual effects for ranchers and farmers. The cattle inventory has decreased to a 50-year national low, while the cost of cattle has reached an all-time high. In 2012, cattle producers saw a loss of more than $120 million, mostly because of rising hay prices, reduction in hay sales, short corn crops and higher-than-average fuel prices. Those factors made it difficult for farmers to continue to produce cattle, and many were faced with a choice: sell part of their herd to be able to feed what they had left or borrow money from banks.” The article pointed out that, “Because of the reduction in population, the price for beef has reached record highs, which consumers have already seen at the supermarket.” Earlier this week, Bloomberg writer Jeff Wilson discussed feed grain supply issues on Bloomberg television; a video replay a brief overview of this discussion is available here. With respect to trade issues, James Politi reported yesterday at The Financial Times Online that, “Chief executives from the US, Canada and Mexico are asking their governments to ratchet up the integration of North America’s economies in border clearance, regulation and energy security, in order to create a more competitive trading bloc. “In a joint letter to US President Barack Obama, Canadian Prime Minister Stephen Harper, and Mexican President Enrique Peña Nieto, the main lobbying groups for large companies in the three countries said their members ‘continue to face obstacles to doing business across and within our borders.’” The FT article noted that, “But even staunch supporters of Nafta say the pact has become outdated since 1994 amid big shifts in the global economy. The US, Canada and Mexico are all participating in negotiations on a Trans-Pacific Partnership trade deal with nine other nations that could offer a vehicle for upgrading Nafta, but the business groups argue that even more can be done trilaterally.” Meanwhile, DTN Ag Policy Editor Chris Clayton reported yesterday (link requires subscription) that, “Canada’s agricultural minister and trade minister said Tuesday they were pleased the World Trade Organization announced last week it would put together a compliance panel on U.S. Country-of-Origin Labeling for meat. “‘Following through on our commitment to stand up for Canadian livestock producers by pursuing all options available to resolve this dispute, our Government requested and obtained the establishment of a World Trade Organization compliance panel on U.S. Country-of-Origin Labeling,’ said Agriculture Minister Gerry Ritz. ‘Our Government continues to aggressively lobby the U.S. Government to make a legislative change to finally put an end to mandatory Country-of-Origin Labeling that hurts producers on both sides of the border.’ “Canada maintains that the U.S. has failed to bring its COOL measure into conformity with its WTO obligations. It believes that the recent amendments to the COOL regulations will further hinder the ability of Canadian cattle and hog producers to freely compete in the U.S.” Mr. Clayton explained that, “USDA remains closed because of the federal shutdown. USDA has been under fire from Canada and Mexico since USDA announced the rule change last May. Livestock groups remain divided over the labeling requirements. A federal judge earlier denied a preliminary injunction request in the lawsuit attempting to block the labeling rule.” In other news, David Kesmodel reported yesterday at The Wall Street Journal Online that, “Monsanto Co., the world’s largest seed company by sales, agreed to buy farm-analytics firm Climate Corp. for about $930 million, deepening its push into technology designed to help farmers boost productivity and manage risk.” Regulations: CFTC, EPA A news release yesterday from the House Agriculture Committee stated that, “Today, Rep. K. Michael Conaway, Chairman of the House Agriculture Subcommittee on General Farm Commodities and Risk Management, held a fourth hearing on the future of theCommodity Futures Trading Commission (CFTC) in advance of writing legislation to reauthorize the agency. The purpose of this hearing was to explore ways to improve customer protections and understand how best to avoid or prevent the collapse of another futures commission merchant (FCM) that disproportionately impacts farmers and ranchers in light of the failures at MF Global and PFG Best.” The release noted that, “This is expected to be the final hearing in the series on the future of the CFTC. The first one was a full committee hearing to gain perspectives from the market. The last two were subcommittee proceedings to hear from the CFTC Commissionersand end-users directly.” A news release yesterday from the National Grain and Feed Association (NGFA) noted in part that, “The [NGFA] today testified that two specific elements of a rulemaking proposal issued by the [CFTC] would ‘dramatically increase customer risk’ – having the opposite of its intended effect. “In testimony presented at a hearing conducted by the House Agriculture Committee’s Subcommittee on General Farm Commodities and Risk Management, the NGFA said that for years, grain hedgers and futures commission merchants (FCMs) have relied on a consistent interpretation of the Commodity Exchange Act by the CFTC. ‘Unfortunately, in the name of customer protection, that interpretation recently has been thrown into question by a new proposal from the CFTC that we believe would dramatically increase customer risk,’ saidMJ Anderson, regional sales manager for The Andersons Inc, Union City, Tenn., who testified on behalf of NGFA.” Also with respect to the CFTC, Katy Burne and Geoffrey T. Smith reported in today’s Wall Street Journal that, “After wrangling for months with U.S. regulators over new swaps-trading rules, banks, brokers and investors had a new grievance Wednesday as the regulations took effect: The Commodity Futures Trading Commission’s out-of-office message was on. “Market participants groused that the agency wasn’t available for guidance following a raft of clarifications on the new rules in recent weeks. Just 4% of staffers at the CFTC, the main U.S. regulator for derivatives, were working Wednesday because of the partial government shutdown. A CFTC spokesman wasn’t available for comment.” Also yesterday, Julian Hattem reported at The Hill’s RegWatch Blog that, “Senate Republicans are charging the Obama administration with being opaque about guidance on regulating streams, brooks and smaller waters. “Six senators on the Environment and Public Works Committee sent a letter to the Environmental Protection Agency (EPA) on Wednesday accusing it on being ‘less than forthright’ about old guidance on precisely which bodies of water the agency can oversee.” Biofuels: RINs University of Illinois Agricultural Economist Scott Irwin indicated yesterday at the farmdoc daily blog (“The Remarkable Foresight of Biodiesel RINs Traders”) that, “The efficiency of price discovery in the RINs market is quite controversial at the present moment.” Dr. Irwin noted that, “The purpose of today’s post is to provide further evidence on price discovery in the RINs market using data on biodiesel RINs prices.” And after detailed analysis, Dr. Irwin noted in yesterday’s farmdoc update that, “Pricing in the RINs market is viewed with skepticism in some quarters. Analysis of data from the D4 biodiesel RINs market indicates that traders not only anchor prices to current blending margins as theory predicts, but also calibrate prices with an eye toward retroactive reinstatement of the blenders’ tax credit during periods when the credit has been suspended. This reinforces the conclusion in previous farmdoc daily posts (here and here) that the data do not reveal any glaring problems with the efficiency of price discovery in the RINs market. Furthermore, there is evidence that the RINs market anticipates even political outcomes with surprising accuracy.” Immigration Mike Lillis reported yesterday at The Hill Online that, “House Democratic leaders unveiled legislation Wednesday to overhaul the nation’s broken immigration system and create a pathway to citizenship for millions of illegal residents. “The sweeping proposal, which largely mirrors the bipartisan package approved by the Senate in June, is designed to keep the immigration issue in the headlines and intensify the pressure on GOP leaders to bring a reform bill to the floor.” The Hill update pointed out that, “[House Speaker John] Boehner has already rejected the Senate’s approach to immigration reform and is not expected to act on the similar plan from House Democrats. “In lieu of a sweeping reform package, House Republicans have so far pushed a piecemeal approach that largely excludes citizenship benefits and focuses on enforcement measures. GOP leaders are eyeing broader reforms that could include a path to citizenship for certain immigrant kids, but those reforms have yet to be unveiled.” -- Keith Good President FarmPolicy, Inc. Champaign, IL (t) 217.356.2269 FarmPolicy is a FREE newsletter and is made possible by the generous support of McLeod, Watkinson & Miller- Attorneys at Law. To subscribe to the FarmPolicy Email, send a note to, [email protected]. To unsubscribe, send a note to, [email protected]. For instant updates, follow me on twitter.
Posted on: Thu, 03 Oct 2013 09:50:38 +0000
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