Farm Bill; and, the Ag Economy- Tuesday Posted By Keith Good On September 30, 2014 Farm Bill House Ag Committee Ranking Member Collin Peterson (D., Minn.) was a guest yesterday on the AgriTalk radio program with Mike Adams, where the conversation focused on the Farm Bill (audio replay here, MP3- 10:17). An unofficial FarmPolicy transcript of yesterday’s discussion is available here. With respect to USDA Farm Bill implementation, Rep. Peterson noted that, “The Department has put a pretty heavy focus on getting this thing done. There’s been some controversy over the APH decision, which affects Texas and down in that part of the world, that I’ve heard about. The dairy stuff I think could have got going a little bit sooner, but that’s now being actively rolled out. We have our first meeting today in my district with the FSA folks and the University of Minnesota, and I’m going to attend one of those tomorrow to kind of see how that’s all going. “We had the Secretary here last Thursday in Minnesota, and he’s announcing at that time the PLC/ARC signup. And that’s going to take some real study on the part of farmers to make sure that they understand the implications and have as much information as they can getbefore they have to make the decision probably sometime after the first of the year.” More broadly, Rep. Peterson indicated that, “But I’m pleased with what we did in terms of we got a good safety net, a good farm bill passed, and we maintained the permanent law. So if we get to the end of this farm bill and Congress is not able to do another farm bill, to do a new farm bill, then what happens in 2019 is that we go back to permanent law, which nobody can live with. So at that point, if there’s not a new farm bill, and it’s permanent law staring us in the face, then I think what happens is we get an extension of the current law. “And frankly, an extension of the current law is not that bad of an outcome. This time we needed a new bill because dairy needed a new program and cotton needed a new program, so we needed to have a new farm bill in order to accommodate that, and also some other issues in conservation and so forth. Now I think we’ve got a pretty good bill in place, and if it had to be extended, it would be something that most people could live with.” With respect to crop insurance, Rep. Peterson explained that, “I think there will be amendments offered to appropriation bills to put payment limits on and to do this and that to the program, but we were able to maintain the crop insurance system in the farm bill, and I think we’ll be able to maintain support for it even though we may have some attacks from different folks and different areas. “And we need to be able to fend off those attacks because the crop insurance program is probably the most important safety net that we have. Without it, a lot of producers would not be able to get financing from their bankers. And so if Congress screwed this up with some amendments that make it unworkable, you could have a lot of very significant unintended consequences. “So I think we’ll be okay. I think we have a program that’s very defensible and we’ll just have to fight off the opponents as they come forward.” And on the issue of EPA and the Waters of the U.S. rule, Mike Adams asked: “Do you think you, as a Congress, will step up and head this off?” Rep. Peterson pointed out that, “Well, first of all, we got them to extend the comment period, and they’re going through the process now of looking at all those comments. So first of all we have to see what the final rule is. And I think there’s a good possibility the final rule will be different than what was put out initially. So that’s the first thing. “But if they move ahead with something that’s not workable—and I have to say this about it—I really believe that Gina McCarthy and the EPA, in what they were trying to do in responding to these court decisions, they were actually trying to help farmers. The problem is they really don’t understand what they’re doing, in my opinion, and I’ve told her that. So if we get down to the point where they’re moving ahead with the rule and they’re going to try to finalize it, I do believe that Congress will overturn it, if they move ahead with something that’s not workable for agriculture. And I will certainly be there at the forefront to overturn it if they’re moving in that direction.” Also on this issue, Timothy Cama reported yesterday at The Hill Online that, “Critics of the Environmental Protection Agency’s water jurisdiction rule are spreading misinformation, the agency’s chief said Monday. “McCarthy said the rule was proposed in March to clarify Clean Water Act protections for 60 percent of the nation’s streams and wetlands, since two court decisions made it unclear. “‘As with everything EPA does these days, there is some misinformation out there, confusing what our plan is all about,’ McCarthy said at a conference of water quality officials in New Orleans.” The Hill update noted that, “The House voted this month to prohibit the EPA from working on the rule, which would redefine the agency’s authority over small waterways and wetlands under the Clean Water Act. “Conservatives and their allies in agriculture, construction and other industries have charged that the rule would amount to a massive land grab by the federal government, forcing property owners to apply for permits for projects like digging ditches or building fences. “McCarthy said the rule, known as ‘waters of the United States,’ is ‘foundational’ to water quality management and urged attendees to file comments on the proposal before Oct. 20.” Meanwhile, a replay of a free webinar from Friday by the University of Illinois regarding Farm Bill Decision Aids and Programs is available here, at the farmdoc Farm Bill Toolbox webpage. Sign-up for additional upcoming Farm Bill webinars from the University of Illinois can also be found on the farmdoc Toolbox page. Rebecca Shabad reported yesterday at The Hill Online that, “A division of the Agriculture Department is making $31.5 million in funding available to help people on food stamps obtain healthier foods. “The department’s National Institute of Food and Agriculture (NIFA) is making the funding available to help those enrolled in Supplemental Nutrition Assistance Program (SNAP), which offers nutrition assistance to millions of low-income Americans.” Also with respect to nutrition issues, Maura Corrigan, the Director of the Michigan Department of Human Services, indicated yesterday at the Detroit Free Press Online that, “Nancy Kaffer’s recent column ‘Lawmakers take food from mouths of Michigan’s hungry’ misconstrues the facts about recent federal policy changes, the impact on Michigan families and the state’s commitment to those in need. “The bipartisan congressional 2014 Farm Bill abolished the so-called Heat and Eat program because it was viewed as a ‘loophole’ that diminished overall support for food stamps, and reduced the number of people who could be helped by energy assistance. This change was made at the federal level, not the state level. Heat and Eat provided an automatic $1 payment for energy assistance to all households receiving food assistance, regardless of heating needs. Congress eliminated this loophole to ensure funds intended for those needing energy assistance to stay warm and safe in the winter months received it. “Other states have chosen to exploit a new loophole in the Farm Bill by paying $21 automatic energy payments to food assistance recipients to draw down federal benefits for families who otherwise were not eligible. That money comes directly from funds intended to help vulnerable families keep lights and heat on. This is not a responsible or lasting solution to the problem.” In other policy related developments, The New York Times editorial board indicated today (“A New Attack on Antibiotic Resistance”) that, “Antibiotic-resistant germs are an increasing threat, causing at least 23,000 deaths and two million illnesses in the United States each year, and requiring treatment costing $20 billion in direct medical expenses. The Obama administration announced some good measures this month that should help reduce the overuse of antibiotics in humans and much, though perhaps not all, of the overuse in animal husbandry that together are fueling the emergence of drug-resistant germs.” The Times noted that, “On the farming front, the Food and Drug Administration had already started a voluntary plan among drug producers that could end almost all use of antibiotics by farmers and ranchers to enhance the growth of food animals. All 26 major manufacturers of antibiotics for livestock have agreed to change their labels to eliminate the promotion of animal growth as a valid use. Once they do so, it will be illegal to use antibiotics for that purpose. “Antibiotics can still be used to treat sick animals, or prevent disease in animals, if administered under orders from a veterinarian. The F.D.A. will need to make sure that veterinarians do not dole out prescriptions for healthy animals to curry favor with the ranchers and farmers who pay them.” And the Los Angeles Times editorial board indicated yesterday evening that, “Just as the nation must stop overusing antibiotics if it hopes to slow the emergence of resistant infections, it must do the same with herbicides and genetically modified crops. The way to deal with so-called superweeds isn’t by escalating the arms race against them.” The LA Times indicated that, “The USDA considers only whether the genetically engineered seeds represent a hazard to other crops; the EPA is responsible for overseeing the safety of herbicides used in agriculture. No agency looks at the bigger policy question of whether the nation is embarking on a potentially dangerous path toward creating ever-more-resistant weeds and spraying them and crops with larger and larger doses of stronger herbicides. That question should be answered before the country escalates the war out in the fields.” Agricultural Economy Reuters writer Naveen Thukral reported today that, “Chicago Board of Trade soybeans are down more than 34 percent this quarter, the biggest drop since 2008, and front-month corn has lost more than 23 percent in the third quarter, its biggest in a year. “Wheat has dropped nearly 15 percent in the July-Sept. period, its second straight three-month slide.” Today’s article pointed out that, “U.S. corn and soybean harvests are progressing slightly below average as cool weather during the growing season slowed maturity but there is no cause of concern. “The USDA pegged the corn harvest at 12 percent complete, up from 7 percent last week. Analysts had expected 15 percent of the crop to be harvested as of Sunday. “Soybean harvest was at 10 percent complete against analysts’ expectations of 11 percent.” The USDA’s National Agricultural Statistics Service released its monthly Agricultural Prices report yesterday, which noted in part that, “The corn price, at $3.38 per bushel, is down 25 cents from last month and $2.02 below September 2013 [related graph]… The soybeanprice, at $11.20 per bushel, decreased $1.20 from August and is $2.10 below September 2013 [related graph]… The September beef cattle price of $156 per cwt is down $2.00 from last month but $34.00 higher than September 2013 [related graph]…and… The September all milk price of $25.00 per cwt is up 90 cents from last month and up $4.90 from September 2013 [related graph].” Purdue University agricultural economist Chris Hurt indicated yesterday at the farmdoc daily blog (“More Pork Please! More Quickly”) that, “The rising volume of pork production over the next year will stand on three legs: lower death losses from PED, higher farrowings from producer expansion, and higher market weights this fall and winter.” The farmdoc update added that, “In 2014, the pork industry is having a record profit year, partially due to reduced pork supplies as a result of the PED virus. Profits for 2014 are estimated at $60 per head for average cost farrow-to-finish producers. The third quarter, which came to a close at the end of September, had an estimated $81 of record quarterly profits. Profits are estimated to be near $60 in the last quarter and in the lower $40 per head for the first-half of 2015. By mid-2015, expanded pork production will cut into prices and profits drop to an estimated $30 per head in the third quarter of 2015 and to $5 per head in the final quarter. Profits for calendar 2015 are currently estimated at $30 per head.” Also yesterday, Eric Morath reported at the Real Time Economics blog (Wall Street Journal) that, “Food costs increased 2.2% from a year earlier in August, the Commerce Department said Monday. That was the strongest annual gain in food prices since June 2012. On a monthly, seasonally adjusted basis, food prices have increased in six of the past seven months. One category driving the gains: meat. “Overall meat and poultry prices rose 7.8% in August from a year earlier. Specifically, beef and veal prices are up 15% during the 12-month span, and pork prices increased almost 12%.” In transportation news, an update yesterday from Rep. Kevin Cramer (R., N.D.) indicated that, “Today [Rep. Cramer] announced BNSF Railway and Canadian Pacific Railway (CP) have publicly filed updated weekly status reports on the backlog in grain shipments. “The figures from BNSF show a total of 2,072 past due rail cars in North Dakota averaging 9.2 days late as of September 25, compared to the report the previous week which indicated 1,646 past due cars were averaging 8.8 days late. The CP report shows a total of 2,907 open requests in North Dakota with an average age of 8.76 weeks. The previous report showed 3,023 open requests with an average age of 10.45 weeks. “The BNSF report can be viewed here, and the CP report can be viewed here.” And in trade developments, Richard Katz, the editor of The Oriental Economist Alert, a newsletter on Japan, penned a column yesterday at The Wall Street Journal Online which stated in part that, “The U.S.-Japan cabinet-level talks on the Trans-Pacific Partnership trade pact broke down on Wednesday largely because of Tokyo’s refusal to sufficiently lower farm tariffs and other associated import barriers. The irony is that Japan, not America, has the most to gain from liberalizing food trade, as Japan’s own reformers recognize. “Consider the costs of protecting farmers, most of whom are part-timers over the age of 60. Japanese consumers spend 13.7% of their total household budget on food, far more than the 6.3% spent by Americans, or even the 9.3% spent by Britons. If this share were reduced even to 11% by opening the food market to more competition, Japanese households would save 7.5 trillion yen ($72 billion) per year. “To put that in perspective, the output of Japan’s entire farm sector is only worth 5.4 trillion yen. The five ‘sacred’ farm sectors that Prime Minister Shinzo Abe resists liberalizing—rice, beef and pork, dairy, wheat and sugar—produce just 3.6 trillion yen, or 0.8% of Japan’s gross domestic product.” Mr. Katz added that, “Then there is the hidden cost to taxpayers, who provide almost half of farmers’ income through subsidies. This compares to 23% in the European Union, 10% in the U.S. and 2.7% in Australia. In 2009, these subsidies amounted to 4.3 trillion yen.” Bloomberg writer Indira A.R. Lakshmanan reported yesterday that, “‘Next year will be crucial’ for the U.S. and the European Union to make significant progress toward a Trans-Atlantic Trade and Investment Partnership, Germany’s Ambassador to the U.S. Peter Wittigsaid today. “A deal is a ‘once-in-a-lifetime chance’ to set a new standard for international trade and commerce, he said at a Bloomberg Government lunch in Washington.” The article noted that, “For the trans-Atlantic deal to get done, Wittig said, Congress should restore the trade fast-track authority that expired in 2007. “Trade Promotion Authority ‘needs to be taken from the freezer,’ Wittig urged. ‘In 2015, we have to make headway on our negotiations; that’s our corridor time-wise.’” Reuters writer Robin Emmott noted in an article from yesterday that, “U.S. and EU negotiators hold a seventh round of talks in Washington this week, seeking to keep up the momentum for a deal that could encompass half the world’s economic output and generate $100 billion a year for both sides in economic gains.” -- Keith Good President FarmPolicy, Inc. Champaign, IL FarmPolicy is a FREE newsletter and is underwritten and made possible by the generous support of McLeod, Watkinson & Miller- Attorneys at Law. Office accommodations for FarmPolicy are provided by Bartell Powell LLP- Attorneys at Law, located in downtown Champaign, Il. To subscribe to the FarmPolicy Email, send a note to, [email protected]. To unsubscribe, send a note to, [email protected]. FarmPolicy is also on: Twitter, Instagram, YouTube and Google+
Posted on: Tue, 30 Sep 2014 10:22:43 +0000
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