Budget; Farm Bill; CFTC (MF Global); Climate; and the Ag
Economy
Categories:
Agricultural
Economy /Audio /Budget /Farm Bill
Budget Issues, Payroll Tax
Felicia Sonmez reported
yesterday at the 2chambers Blog (Washington Post) that, “The Senate on
Thursday voted against proceeding on a symbolic resolution
that would have disapproved of President Obama’s request earlier this month to
raise the federal borrowing limit, clearing the way for the $1.2 trillion
increase to proceed as expected.”
The update noted that, “Last
week, the House approved the disapproval resolution on
a largely party-line vote, with most Republicans voting ‘yes’ and most
Democrats voting ‘no.’
“Even if the resolution had
passed, Obama most likely would have vetoed it, and lawmakers would have faced
the hurdle of a two-thirds supermajority in both chambers to override the White
House’s decision.”
Meanwhile, Elisabeth Bumiller and Thom Shanker reported in today’s New York Times that,
“The Pentagon took the first major step toward shrinking its
budget after a decade of war as it announced Thursday that it wanted to
limit pay raises for troops, increase health insurance fees for military retirees
and close bases in the United States.”
The Times article explained
that, “Next year’s Pentagon budget is to be $525 billion, down from $531
billion this fiscal year. Even though the Defense Department has been
called on to find $259 billion in cuts in the next five years — and $487
billion over the decade — its base budget (not counting the costs of
Afghanistan or other wars) will rise to $567 billion by 2017. But when
adjusted for inflation, the increases are small enough that they will amount to
a slight cut of 1.6 percent of the Pentagon’s base budget over the next five
years.”
With respect to the payroll
tax issue, Mike Lillis reported yesterday at The Hill Online
that, “A senior Democrat on the payroll tax conference panel had some
strong words Thursday for Republicans hoping to attach Keystone pipeline
language to the package.
“‘That is so stupid, already,
for them to be pushing the Keystone pipeline issue in this bill, in this
conference,’ Rep. Henry Waxman told reporters gathered near the
Chesapeake Bay for the Democrats’ annual caucus retreat. ‘The pipeline issue is
one that the Republicans are obsessing over.’”
More specifically on USDA
budget issues, concern from a variety of quarters has been expressed regarding
the Department’s recent “Blueprint for Stronger Service” announcement,
which included the prospect of closing “259 domestic offices, facilities and
labs across the country, as well as seven foreign offices.”
Lawmakers such as Sen. Kirsten Gillibrand (D.,
N.Y.), Sen. Mark Pryor (D., Ark.), Rep. Rick Crawford (R., Ark.), and Sen. Sherrod Brown (D., Ohio) have highlighted the
office closure issue, as have USDA Farm Service Agency employees and producers.
In a tele-conference
with reporters earlier this week, Sec. of Agriculture Tom Vilsack spoke
about the “Blueprint” in more detail- related audio of this portion of his
press conference can be heard here (MP3- 3:18).
Farm Bill Issues
Reuters writer Charles
Abbott reported on Wednesday that, “The next U.S. farm law could move
away from a traditional uniform plan and offer different subsidy schemes to
grain, soybean and cotton farmers as a way of accommodating a demand for deep
cuts in spending, according to an influential farm state lawmaker.
“Frank Lucas, the
Agriculture Committee chairman in the U.S. House, said that the next law, due
this year, will likely end the $5 billion a year direct-payment subsidy, which is a target because
it is paid regardless of need.
“‘I don’t know that you
can craft a ‘one size fits all’ program,’ said Lucas, an Oklahoma
Republican, in discussing regional infighting over the farm bill. In the end,
lawmakers could leave the choice to growers on what works best, he said.”
Mr. Abbott explained that, “Corn
and soybean groups want a farm safety net built on insurance-like tools
that protect growers against catastrophic loss of revenue. Farmers in the U.S. South
and Plains say fickle weather makes insurance less attractive.
“There is growing doubt,
however, that U.S. lawmakers will be able to craft a farm bill in this election
year that covers some $480 billion in funding. The bill has a big impact on
the country’s booming agri-business. Analysts put the odds of success at
50/50.”
The Reuters article stated
that, “Farm groups, representing some of the biggest farming operations, back a
welter of conflicting proposals. Some would replace traditional subsidies with
insurance-like programs to assure farmer revenue. Others want higher support
prices. Cotton growers want a hybrid of loan rates and insurance.”
Don Walton reported yesterday at the Lincoln
Journal Star Online (Neb.) that, “Sen. Mike Johanns
said Thursday he is beginning to view crop insurance as ‘the new safety net’
for farmers and likely to be ‘a mainstay of our agriculture policy’
as Congress begins to consider a new farm bill.
“In the approaching new world
of farm policy, he said, ‘you don’t get a payment just because you farm.’
“Under the crop insurance
program, he said, ‘payment is tied to a loss.’”
The article noted that, “Johanns addressed farm policy during his weekly telephone
conference call from Washington.”
During that conference Sen. Johanns stated that, “It’s become very, very clear to me
that crop insurance really is the new safety net. And it’s a system that is
working.
“Farmers pay premiums. They
have an annual premium that they pay to participate in the Crop Insurance
Program. So they have skin in the game. The federal government provides
support. So, there’s a piece of this that is provided through federal support.
And probably most importantly, crop insurance is actually tied to a loss. You
don’t get a payment just because you farm. It’s a system that has wide support
across Nebraska. We have a very high participation rate and I see it as a
mainstay of our Ag policy going forward.”
Sen. Johanns
added that, “Well, one of the things about crop insurance is that it has — it
has gone through a process whereby it was cut back pretty dramatically.
Part of that did go to dealing with the national deficit. So, about $6 billion
was involved in that…[I] think in — in crop insurance,
if I might use an old cliche, we’ve given at — at the
office on that one. And I really would push back against somebody who says,
look we can — we can continue to take more and more out of this program.”
Amy
Bickel reported earlier this week at The Hutchinson News Online
(Kans.) that, “Experiencing one of the worst droughts since the 1930s, Kansas
farmers have claimed nearly $1 billion in crop insurance indemnities to offset
the loss of their withered wheat and fall crops.
“That surpasses a record set
during the 2002 drought as claims continue to stream in to the U.S. Department
of Agriculture’s Risk Management Agency Topeka office, said Director Rebecca
Davis.”
And Joseph Morton reported yesterday at the Omaha
World-Herald Online that, “Sen. Mike Johanns, R-Neb.,
said Thursday that some of his old proposals from his days as U.S. secretary of
agriculture could be dusted off and used in putting together the next farm
bill.
“Specifically, he cited
efforts to consolidate many of the complex and overlapping conservation
programs covered by the farm bill.
“‘We’d sit down at the USDA
and start talking about conservation programs, and it didn’t take long and we
were confused,’ Johanns said during his weekly
conference call with reporters. ‘There’s just a whole host of them. So doing
some things to try to deal with that would be very helpful.’”
An update posted this weekat KATC TV Online (Lafayette, La.) reported that,
“Congressman Jeff Landry [R., La.] attended the Louisiana Rice Council
and Louisiana Rice Growers Association Annual meeting today to hear concerns
from farmers and discuss legislative efforts.”
The update indicated that,
“Landry went on to discuss that since only 61 members of Congress represent
rural districts, it is up to the farmers to fight for their protection. ‘If
we get into a farmer verses farmer fight, we’re only going to lose access to a
responsible, long-term Farm Bill that ensures our farmers can keep feeding
and clothing our nation.’”
Peter Harriman reported this week at the Argus
Leader Online (S.D.) that, “The realities of election year politics suggest
Congress won’t tackle an ambitious agenda this year, Sen. Tim Johnson
says. That was reflected in President Obama’s state of the union address
Tuesday.”
The article stated that, “Johnson
doubted Congress will find the will to write a new farm bill this year.
Since the existing one that expires in September has found wide favor in the
agriculture world, Johnson said it probably will be extended. ‘For how long,
I don’t know,’ he said.”
With respect to nutrition
issues, Bloomberg writer Stephanie Armour
reported earlier this week that, “An Obama administration effort to add more fruits,
vegetables and whole grains to U.S. school meals may limit educators’ ability
to deliver a balanced diet to 32 million children, meat- and potato-industry
groups said.
“The first major overhaul of
the school meal standards in 15 years, unveiled yesterday, came at the expense
of some agriculture interests, by limiting potatoes at breakfast and dropping
a requirement that meat be served at the morning meal.”
The Environmental Working
Group also included an update on the new school meal standards at the
organization’s webpage yesterday, “Putting Real Food in School Lunches.”
In other policy developments,
a news release Wednesday from the American Farm
Bureau (AFBF) stated that, “The [AFBF] is urging congressional members to
oppose legislation that would restrict the use of antibiotics in livestock and
poultry. In letters to Senate and House members, AFBF said the legislation
would handicap veterinarians and farmers in their efforts to maintain animal
health and protect the nation’s food supply.”
Also on the issue of animal
agriculture, yesterday’s All Things Considered program from National
Public Radio (NPR) contained a more in depth look at the recent bill introduced in Congress that would
improve housing for egg-laying hens; the foundation for that legislation stems from an agreement reached this summer between the
United Egg Producers and The Humane Society of the United States.
An audio replay of the NPR
program with transcript and related links has been posted at NPR’s Food Blog
and is available here.
CFTC (MF Global)
Ben Protess and Azam Ahmed reported in yesterday’s New York
Times that, “Earlier this month, in a ninth-floor conference room of the
Northern Trust bank in Chicago, an unlikely assembly of futures industry
executives, regulators and customers discussed the fallout from MF Global’s collapse.
“The closed-door meeting
illustrated a fundamental shift under way in the futures industry: financial
firms, ordinarily loath to accept regulation, are now spearheading efforts for
new oversight as they try to heal the black eye left by MF Global and the
disappearance of $1.2 billion in its customers’ money.”
The Times article added that,
“Concerns about a lack of controls and regulation are underpinning the movement
for change after MF Global’s downfall.
“‘To a certain extent, I
think the industry was hoping there was some smoking gun, so it could be seen
as unique or as an aberration,’ said Gary DeWaal, the global general counsel of the futures firm NewEdge. ‘But the longer this goes on, the more you
wonder whether there was something in the system that went wrong.’”
The article noted that, “The
Senate Agriculture Committee has sent letters to big industry players, seeking
their input on a crackdown. ‘As we move forward, the committee will further
examine customer protections in the commodities markets to see where reforms
are needed so participants are assured their money is safe,’ said Senator Debbie
Stabenow, Democrat of Michigan and chairwoman of the committee.”
Yesterday, an update titled,
“Customer Accounts and the MF Global Bankruptcy, ”
by Paul E. Peterson was posted at the FarmDocDaily
Blog (University of Illinois), this update also contained additional
information on the MF Global issue.
Climate Change
Pilita Clark reported yesterday at The Financial Times
Online that, “It is not often that reports on climate change highlight the
benefits of global warming, as well as the risks.
“Yet that is what the
464-page Climate Change Risk Assessment published on Thursday by the Department
for Environment, Food and Rural Affairs seeks to do.”
The FT article noted that,
“The agriculture section cites many climate risks, such as increases in drought,
pests and disease. But it also discusses possible benefits from higher
yields for crops, such as wheat and sugar beet.”
Agricultural Economy
(Biofuels)
Bloomberg writers Laura Price and Lucia Kassai
reported yesterday that, “Corn farmers in Argentina, the world’s
second-biggest exporter of the grain, will face a renewed heat wave next week
after two months of dry weather harmed South American crops.”
Meanwhile, Gregory Meyer reported yesterday at The Financial
Times Online that, “From the state of Kansas, where he grows 2,000 acres of
wheat, Jerry McReynolds watched with disappointment last year as the
price of the grain kept falling. ‘It has dropped like a rock, unfortunately,’
says the American farmer.
“The cause had little to do
with the drought that has wiped out much of the 2011 winter wheat
harvest in Kansas, Oklahoma and Texas. Instead, Mr
McReynolds’ bottom line was hit by a force thousands of miles to the east, where
Russian wheat exports have poured through the Bosporus strait, depressing
global prices.
“The world’s wheat supply has
gone from grave to plentiful, illustrating how quickly agricultural markets
can turn with the seasons. Stocks are forecast to top 200m tonnes by mid-2012, the highest in more than a decade.”
The FT article noted that,
“The US agricultural attaché in Moscow last week forecast a ‘dramatic slowdown
in exports’ during the rest of the Russian marketing year, noting that exports
from the three major southern growing regions ‘has largely finished’.
“More pressure on wheat
prices could be on the way. In the southern hemisphere, Australia and
Argentina both had good crops. Global wheat supplies are anticipated to reach a
record 690m tonnes this year.
“In the US, the largest
exporter, farmers added 3 per cent to land they planted with winter wheat, a
crop to be harvested at midyear. In a strange twist, the drought in plains
states such as Kansas may well lead to more winter wheat, after farmers
ploughed under stunted corn fields and replaced them with wheat.”
An editorial this week at The Financial Time
Online stated that, “The good news is that the world’s farmers are set for bumper crops this year. Global wheat stocks
are at their highest in 12 years and the United Nations Food and Agriculture Organisation
index shows commodity prices are 11 per cent lower than the peak
last February.
“The bad news is that,
despite the cornucopia of good harvests, the world is a long way from
resolving the urgent question of food security. Roughly one in six people
suffers from chronic hunger. The number of hungry risks rising dramatically as
the world’s population heads towards 9bn by 2050. No one wants a repeat of the food
shortages and soaring prices that set off riots in 30 countries in
2007-08, bringing down governments.
“The first step to address
the problem is to revive investment in agricultural productivity, which has
been falling for 20 years or more.”
Reuters writer Hugh Bronstein reported yesterday that, “The
United States is headed for a corn output boom over the years ahead that will
increase supplies available for ethanol production, the head of an industry
chamber said on Thursday… He [National Corn Growers Association Chief Executive
Rick Tolman] expects U.S. corn yields to climb to an
average 300 bushels per acre by 2030, almost double current yields. ‘That’s
going to allow us significantly more opportunity to grow,’ Tolman
said.
“Thomas Dorr, head of
the U.S. Grains Council, said the ethanol boom is not cutting into the amount
of corn available for food.”
And a news release
yesterday from USDA stated that, “Agriculture Secretary Tom Vilsack
today announced that USDA has approved a conditional commitment in the amount
of $232.5 million to ZeaChem Boardman Biorefinery, LLC (ZBB) through the Biorefinery
Assistance Program. ZBB will operate a 25 million gallon per year biorefinery, which will be constructed on an industrial
site in Boardman, Oregon, along the Columbia River… [L]ocated
in the northeast part of the state, the biorefinery
will use high-yield cellulosic fermentation technology to produce advanced
biofuels (cellulosic ethanol and other biofuels).”
Keith Good
