Disaster Aid- Farm
Bill
John
Lyon reported earlier this week at the Arkansas News Online that, “A recent spate of editorials in the national press
knocking U.S. Sen. Blanche Lincoln’s efforts to secure $1.5 billion in disaster
aid for farmers [Washington
Post, New
York Times, Wall
Street Journal] shows how the East Coast media misunderstands the
importance of agriculture, Lincoln said today.
“‘It’s certainly nothing
new for the East Coast newspapers to be extremely critical of agricultural
support, that’s for sure,’ Lincoln
said in an interview with the Arkansas News Bureau. ‘I think it’s just another example of how those
folks truly, I don’t think, understand production agriculture and how important
it is to our economy and how important is to feeding the world.’
“Lincoln, who chairs the
Senate Agriculture Committee, won a fight in July to include $1.5 billion in
agricultural disaster aid in a bill to aid small businesses, but Republican
senators voted to block the bill. The Obama administration, which supported the
small-business bill, promised to provide the disaster aid
administratively in exchange for Lincoln
agreeing to drop the provision from the bill.”
Mr. Lyon explained that, “Critics say the aid package is an end run
around the
Supplemental Revenue Assistance Payments, or SURE, program, which was
included in the 2008 Farm Bill. The program sought to reform
farm subsidies by offering formula-based payments to farmers who signed up for
federally subsidized crop insurance.
“‘We’ve not had a single
farmer sign up for this program in Arkansas
because it’s not effective for the crops that we grow and how we grow them,’ Lincoln said. ‘It’s very
similar in other Southern states.’”
“Another complaint is that
most of the money will go to the wealthiest farmers. Lincoln said the payments follow production,”
the article noted.
Meanwhile, the
AP reported yesterday that, “A $1.5 billion farm aid package sought by
Arkansas Sen. Blanche Lincoln as she faces a tough re-election fight may not be funded by the end of the month as the
White House promised, a spokeswoman for the Senate Agriculture Committee said
Monday.
“Lincoln, the chairwoman
of the Senate Agriculture Committee, had received a commitment from the Office
of Management and Budget that the
aid package would be funded administratively by Tuesday. Senate Agriculture
Committee spokeswoman Courtney Rowe said Monday it’s possible that won’t
happen.
“‘She’s continuing to work with the White House and
with USDA to find a way forward in delivering the assistance,’ Rowe said
Monday. ‘We should have details to announce soon.’”
The article added that,
“Rowe said Lincoln still has a commitment from
the White House that it will fund the package. A White House spokesman did not
respond to a request for comment.”
The disaster aid issue
also came up yesterday in tele-news conference with
Agriculture Secretary Tom
Vilsack: “Q: [T]his is the final day of the month, and Senator
Lincoln– Blanch Lincoln indicated that she had expected to hear something from
the administration, USDA, regarding how ad hoc disaster assistance, this would
be…Has USDA reached a decision on
that?”
Sec. Vilsack indicated
that, “As far as the ad hoc disaster assistance program is concerned, we’re —
you know, I think it’s fair to say that we’re working hard to try to make sure that this
is a program that makes sense, that provides help and assistance to those who
suffered very serious losses, and that it’s structured in a way that complies
with rules and regulations, laws and statutes.
“It is a complicated process. We’re
going to try to do it as well as we can, and as soon as we’re certain, we will
— we’ll be working with the senator’s office and the White House to — to
provide the out — the outline of that program. But we’re not there yet.”
With respect to the SURE
program, DTN Executive Editor Marcia
Zarley Taylor reported yesterday at the
Minding Ag’s Business Blog that, “Recently I reported that the permanent farm
disaster aid program made princes and paupers out of farmers in states struck
by farm revenue losses when it first launched for the 2008 crop last
January. SURE, the Supplemental
Revenue Assistance program, rewarded some growers with maximum $100,000
payments while others with equally legitimate losses collected zero because of
technical glitches. Equally troubling, why did SURE shower Iowans with aid in a year when
statewide farm incomes reached an all-time record high? How
good is the SURE formula in compensating revenue ‘losses’?
“Wall Street’s 2008
subprime mortgage panic and farm disaster aid didn’t have much in common, but
in politics, timing is everything. Farm
aid piggybacked on the emergency economic stimulus bill that year, so Congress
increased the coverage level from which the SURE guarantee was calculated.
Through Aug. 24, this meant an extra $465 million for 2008 payees, out of a
total $1.282 billion in 2008 SURE payments. This economic stimulus ‘super
charger’ and related rules actually
benefited Texans more than any other state, accounting for $79
million in extra assistance–more than half of the state’s total SURE payouts of
$144 million in 2008. For Iowans, the subprime misfortune allowed them to
collect an extra $65 million out of $215 million in 2008 aid paid so far.”
Yesterday’s update added
that, “Even without the extra 2008
bonus, economists are finding flaws in SURE’s
‘wiring.’ A recent journal article by land grant university
economists Gary Schnitkey, Carl Zulauf
and Michael Langemeir, ‘ACRE, Crop Insurance, and
SURE: Interactions and Overlap for U.S. Midwest Crops,’ in the Journal of
Agricultural and Applied Economics (Number 3, 2010), points out a bias in the
SURE formula that they think overstates the revenue losses. In laymen’s terms,
the spring guarantee price for determining your base revenue uses a future’s
price. Revenue losses are scored against a season-average cash price at the end
of the crop year.
“The apples-to-oranges
price formula ignores basis–the wide spread between futures prices in Chicago and lower local
cash prices–and triggers sizable over payments, the economists contend.”
In other news, Senate Ag
Committee Ranking Member Saxby
Chambliss (R-Georgia) was a guest on Monday’s
AgriTalk Radio program with Mike Adams. The two
engaged in wide-ranging discussion that included issues associated with the
Farm Bill; to listen to remarks from Sen. Chambliss on this issue, including
budget concerns, just
click here (MP3- about two minutes.)
A news
release yesterday from Rep. Jerry Moran (R-Kansas) stated that, “Congressman Jerry Moran today requested that House Agriculture Committee Chairman
Collin Peterson (D-MN), hold a field hearing in Kansas in advance of the 2012
Farm Bill. Earlier this year, Chairman Peterson began holding
field hearings across America
to hear directly from farmers and ranchers about U.S. farm policy. Information
gathered in field hearings will play an important role in writing the next farm
bill. Hearings have been held in the following states: Iowa,
Idaho, California,
Wyoming, Georgia,
Alabama, Texas,
South Dakota and North Carolina.”
See this link for a
FarmPolicy.com overview of the House Ag Committee Farm Bill hearings, and this link for a
recap of Senate Ag Committee Farm Bill hearings to date.
A news release yesterday
from USDA’s Risk Management Agency stated that, “USDA’s Federal Crop Insurance
Corporation Board of Directors recently approved Optimum® AcreMax™
1products as qualifying for the Pilot Biotechnology Endorsement (BE) program, beginning
with the 2011 crop year. Optimum® AcreMax™ 1 products
are comprised of a combination of a Pioneer® hybrid with Herculex®
XTRA insect protection and a Pioneer® hybrid with the Herculex
I trait in the same bag.”
USDA Reports
A
statement by Sec.
Vilsack from yesterday indicated that, “Agriculture
Secretary Tom Vilsack today released the following statement in response to two USDA reports that show the
strength of the overall rural economy and growth in agricultural exports:
“‘Today’s reports are encouraging news.
They show that while American agriculture has struggled through difficult
economic times, the 2008 Farm Bill, the efforts of the Obama Administration –
such as the Recovery Act – and the hard work and resilience of America’s
farmers and ranchers have helped
put American agriculture on the road to recovery.’”
The first report, the
2010 Farm Income Forecast, from the USDA’s Economic Research Service (ERS),
stated that, “Net farm
income is forecast to be $77.1
billion in 2010, up $14.9 billion (24 percent) from 2009 [related
graph]. The 2010 forecast is $12.3 billion above the average of $64.8
billion in net farm income earned in the previous 10 years. The $77.1 billion forecast for 2010 remains the
fourth largest amount of income earned in U.S. farming.”
ERS stated yesterday that,
“The average family farm household
income is expected to be up by 5.8 percent in 2010, to $81,670.
Both farm and off-farm income are forecast to be up in 2010, compared to 2009
[see related
graph].”
ERS indicated that, “Total
production expenses in 2010 are forecast to rise to $284.0 billion, $3.0
billion (1.1 percent) higher than 2009’s estimated $281.0 billion [related
graph]. This change is modest relative to increases of $36.5 billion (15.7
percent) in 2007 and $23.7 billion (8.8 percent) in 2008, and follows a
$12.0-billion (4.1-percent) drop in 2009. The 2010 forecast puts nominal expenses at the second highest level
ever.”
And with respect to
government payments, yesterday’s update explained that, “Government payments paid directly to producers are expected to
total $11.9 billion in 2010, a 3- percent decrease from the $12.3 billion paid
out in 2009. This level would be 22 percent below the 5-year
average for 2005-09. Direct
payments under the Direct and Countercyclical Program (DCP) and the
Average Crop Revenue Election Program (ACRE) are forecast at $4.81 billion for 2010. Direct
payment rates are fixed in legislation and are not affected by the level of
program crop prices. However,
the 4-percent decline in direct payments forecast in 2010 relative to the
5-year average is due to producers receiving revenue insurance payments fromthe ACRE program
expected to be $432 million in 2010. Authorized under the Food, Conservation, and
Energy Act of 2008, ACRE provides revenue
insurance to producers in exchange for a 20 percent reduction in their annual
direct payment allotments beginning with the 2009 crop year.
“Countercyclical payments are forecast
to decrease by 79 percent from
$1.17 billion in 2009 to $243 million in 2010. Strong cotton prices are
responsible for this projected decrease. Only upland cotton and peanuts are projected to receive
countercyclical payments in 2010.
“Marketing loan benefits—including loan
deficiency payments, marketing loan gains, and certificate exchange gains—are
projected at $163 million in 2010, down
97 percent from 2009 levels.”
ERS noted
that, “Conservation programs include all conservation programs operated by
the Farm Service Agency (FSA) and
the Natural Resources Conservation Service (NRCS)
that provide direct payments to producers. Estimated conservation payments of $3.1 billion in 2010 reflect
programs being brought up toward funding levels authorized by current
legislation.
“Ad hoc and emergency disaster program payments are
forecast to be $2.3 billion in 2010, an increase of 256 percent over the $648
million paid out in 2009. The 2008 Farm Act created a permanent
fund for disaster assistance, the Agricultural Disaster Relief Trust
Fund. Supplemental Revenue
Assistance Payments (SURE) from this fund and from the 2009 Recovery Act are
expected to amount to $1.5 billion in 2010. All other disaster
programs—including primarily the Emergency Conservation Program, Livestock
Forage Program, Livestock Indemnity Program, and Noninsured Assistance
Program—are functioning at existing statutory authority and appropriation
levels.”
A related
graph from yesterday’s update depicting government payments from
2000-2010f, can be viewed here.
The second USDA report cited
yesterday by Sec. Vilsack was the, “Outlook for U.S. Agricultural Trade.” This
report stated that, “Fiscal 2011
agricultural exports are forecast at $113 billion, up $5.5 billion from the
revised 2010 forecast.”
William Neuman reported
in today’s New York Times that, “Even
as the broader economy falters amid signs of a weakening recovery, the nation’s
agriculture sector is going strong, bolstered in part by a surge in exports,
according to federal estimates of farm trade and income released on Tuesday [see related graph].
“The
estimates confirm what economists have been saying for months: agriculture,
which was generally not hit as hard by the recession as many other segments of
the economy, remains a small bright spot going forward.”
The Times
article added that, “Joseph Glauber, the agriculture department’s chief
economist, said that a strong
rebound in livestock and dairy prices had been a major factor in the farm
recovery.
“Dairy
producers were hurt badly in the recession by high costs and low prices, which
have recently begun to recover. Cattle and hog producers also struggled with
low prices, caused by overproduction. But cattle and hog producers have managed
to cut the size of their herds, pushing prices back up at the same time that
international demand recovers, Mr. Glauber said.”
Also
yesterday, USDA’s National Agricultural Statistics Service released its
monthly Agricultural Prices report, which stated in
part that, “The corn price,
at $3.65 per bushel, is up 16
cents from last month and 32 cents above August 2009 [related graph], The soybean price, at $10.10 per
bushel, increased 31 cents from
July but is 70 cents below August 2009 [related graph], the August all wheat price, at $5.56 per
bushel, is up $1.06 from July
and 71 cents above August 2009[related graph]; and, “The August all milk price of $16.60 per
cwt is up 60 cents from last
month and up $4.50 from August 2009 [related graph].”
In other
news, the Food and Agriculture Organization of the UN indicated in a news release today that, “Surging wheat prices drove international food
prices up five percent last month in the biggest month-on-month increase since
November 2009, FAO announced.
“The
FAO Food Price Index (FFPI) averaged 176
points in August, up nearly nine points from July, FAO said in its latest update on the global cereals supply
and demand situation. The
increase – five percent – brought the Index up to its highest level since
September 2008, but still 38 percent down from its peak in June 2008.”
And National
Public Radio aired a news item on yesterday’s Morning Edition program titled, “Russian Wheat Crisis Boosts U.S. Growers,”
which noted that, “Russia’s
drought and massive wildfires have sent wheat prices through the roof.
Fortunately, most U.S.
wheat farmers have had a stellar harvest and are likely to help meet global
demand. That’s especially the case in Colorado,
which exports 80 percent of the wheat it produces.”
Climate
Issues
Reuters writer Timothy Gardner reported yesterday
that, “Senate Majority Leader Harry
Reid said he hoped to pick up Republican votes for a pared-down energy bill
after the midterm congressional elections.
“‘Maybe after
the elections we can get some more Republicans to help us on these issues,’
Reid, a Democrat, told reporters in a teleconference on Tuesday.
“But passing
any major legislation this year will be an uphill struggle. With Republicans
eyeing gains in November 2 elections, Democrats may face fierce campaign opposition on all major initiatives.”
The article
stated that, “There was little chance
cap-and-trade would make it back into the bill, however. ‘It doesn’t appear so
at this stage,’ Reid said.”
Biofuels
Chris Clayton reported yesterday at
the DTN Ag Policy Blog that, “Sen. Charles
Grassley, R-Iowa, told reporters in a conference call Tuesday
he doesn’t think Congress would appease environmental groups by holding more
hearings on an expected rule from the Environmental Protection Agency
that would allow E-15 blends of
ethanol to be sold. Grassley agreed such hearings would only be
a delaying tactic, but added
that once a rule is released that there will likely be court challenges trying
to delay implementation as well.
“Grassley
said he has recently met with EPA Administrator Lisa Jackson and staff from the
U.S. Department of Energy and was
told E-15 would be available by January.”
Food Safety
Philip Brasher reported yesterday at
the Green Fields Blog (Des Moines Register) that, “Sen. Charles Grassley says consumers could do what
the government hasn’t – put egg producer Jack DeCoster
out of business.
“The Food and
Drug Administration probably can’t shut down DeCoster
short of finding criminal activity, but ‘the marketplace is making the
determination if the law doesn’t,’ Grassley said.”
Meanwhile, P.J. Huffstutter reported
today at the Los Angeles Times Online that, “Since they were old enough to
drive the family skip loader and shovel chicken droppings, the Armstrong brothers followed a state-sanctioned
quality-assurance program designed to curtail salmonella in eggs.
So have dozens more California egg farmers, who helped develop the guidelines
alongside federal and state officials following a salmonella outbreak 15 years
ago that sickened thousands of people.
“The program, which includes vaccinating hens and
testing barns regularly for bacteria, has essentially wiped out salmonella on California farms,
industry officials say. Yet only nine other states have enacted similar
government-sponsored efforts.
“One reason,
the Armstrongs and other California farmers contend, is cost. Injecting chickens and swabbing cages takes money — not a fortune, but enough to send egg distributors
searching for lower-cost sources.”
And the editorial board at the Los Angles
Times opined today that, “A bill to
give regulators more authority probably would have died quietly in the Senate
if not for the crisis, which has focused public attention on food security
lapses. The Food Safety Modernization Act, already approved by
the House, would give regulators the power to order mandatory recalls of
tainted foods and suspend the registration of food facilities. Crossing the 60-vote threshold needed to overcome a
Senate filibuster on this bill still won’t be easy considering the
extraordinary power of Big Agriculture, but the failure of the current system
shows how badly reform is needed.”
The opinion
item added that, “Meanwhile, a simple
and inexpensive way of preventing salmonella exposure is being neglected:
vaccines for chickens. U.S. regulators examined such
vaccines before the current outbreak but decided not to mandate them,
apparently based on outdated studies, according to a recent report in the New
York Times. Yet vaccination in Britain
has all but wiped out salmonella in eggs there, and California
vaccination guidelines have done the same in the Golden State.
The FDA should reconsider the evidence.
“Industrialized agriculture has profoundly changed
the American diet and landscape, greatly reducing the cost of food but exacting
a steep price in other areas. One of them is public health,
which is under threat not only from farm-based bacteria such as E. coli and
salmonella but also from industrial pesticides, synthetic hormones and the
overuse of antibiotics on grain-fed livestock. With all that to cope with,
fighting salmonella should be comparatively easy. All it takes is a little
courage on the part of public officials to resist the farm lobby.”