February 2

Budget; Farm Bill; Regulations; Ag Economy; MF Global; and Trade Categories: Agricultural Economy /Budget /China /Farm Bill Budget: Payroll Tax Cut Extension Yesterday’s Need-to-Know Daily Email from the National Journal reported that, “The conference committee tasked with bridging the partisan divide over how to extend unemployment insurance and a payroll-tax break convenes today for their second public meeting. Lawmakers have until the end of the month to strike a deal. Also on their agenda is the Medicare ‘doc fix,’ which entails preventing a pay cut for doctors who treat Medicare patients. That task got harder on Tuesday, however, when the Congressional Budget Office said that freezing physicians’ pay at current levels for the coming decade would cost $26 billion more than had been assumed in November.” Bernie Becker reported yesterday at The Hill Online that, “With their approval ratings in the tank, Congress perhaps doesn’t need another anxiety-ridden, eleventh-hour deal. But with the payroll tax cut set to expire at month’s end, that may well be where lawmakers are heading. “Lawmakers tasked with hammering out a yearlong payroll tax cut extension appeared to jump-start their negotiations on Wednesday, after a month in which little public progress was made. “But even as they dived deeper in to the details, the members of a House-Senate conference committee remained far apart in discussions over how to pay for their proposals.” Daniel Newhauser and Meredith Shiner reported today at Roll Call Online that, “Members aiming to hash out a deal on the payroll tax cut conference committee still find themselves on shaky ground after their second meeting, with broad agreement on where to go but little agreement on how to get there. “Still, an opening offer from Senate Finance Chairman Max Baucus (D-Mont.) looks to secure at least some progress on low-hanging fruit at today’s follow-up meeting.” The Roll Call article explained that, “The 20 conferees agreed Wednesday on general goals: extend the payroll tax holiday and unemployment benefits for the balance of the year and temporarily prevent cuts to doctors’ Medicare reimbursement while working on a long-term solution. “When it comes to paying for or changing the programs, however, there was almost no accord, and the panel’s co-chairman, House Ways and Means Chairman Dave Camp, encouraged Members to ignore talk of how to pay for things for now.” And from a political perspective regarding GOP House leadership issues, Jake Sherman and John Bresnahan reported last night at Politico that, “The top aides to House Majority Leader Eric Cantor and Speaker John Boehner are now seeking a truce after a bitter year of behind-the-scenes fighting that pitted the top House Republicans against one another. “Tensions had gotten so bad between the two offices that senior aides decided, for the good of the party and their own bosses, that the rivalry has to be toned down.” The article noted that, “So like two warring nations, Boehner and Cantor aides, with the approval of their bosses, have decided to hit the ‘reset button.’ GOP insiders used different terms to describe the new reality — a truce, a cease-fire, a détente.”   Farm Bill Issues A news update yesterday from the Senate Agriculture Committee stated that,  “Senator Debbie Stabenow, Chairwoman of the U.S. Senate Committee on Agriculture, Nutrition and Forestry, today announced the Committee’s Farm Bill hearing schedule for February and March, noting that the Committee will continue examining Farm Bill principles and evaluating policy solutions to develop a 2012 Farm Bill.” Details of the next series of hearings include: - Wednesday, February 15- Energy and Economic Growth for Rural America. - Wednesday, February 29- Strengthening Conservation through the 2012 Farm Bill. - Wednesday, March 14- Healthy Food Initiatives, Local Production and Nutrition. - Wednesday, March 21- Risk Management and Commodities in the 2012 Farm Bill. Also yesterday, USDA indicated in a news release that, “Acting Under Secretary for Farm and Foreign Agricultural Services (FFAS) Michael Scuse announced today that the [USDA] will conduct a four-week Conservation Reserve Program (CRP) general signup, beginning on March 12 and ending on April 6.” An update yesterday from the Theodore Roosevelt Conservation Partnership stated that, “Prominent voices in the sportsmen’s community are commending a decision by the U.S. Department of Agriculture to open a general signup for the federal Conservation Reserve Program, a cornerstone of the Farm Bill critical to sustaining privately owned lands and the fish and wildlife resources that rely on them, the Theodore Roosevelt Conservation Partnership announced today.  Members of the TRCP Agriculture and Wildlife Working Group joined in praising news of the signup, the first opportunity in a year for landowners to participate in the successful conservation program.” Meanwhile, an update posted yesterday at Inside U.S. Trade’s World Trade Online noted that, “Brazilian officials intend to discuss the development of the next farm bill with officials from the Office of the U.S. Trade Representative today (Feb. 1) in a meeting in Brazil, and will convey their views to USTR on various farm bill proposals that have been floated by U.S. commodity groups, sources close to the Brazilian government said.” And an editorial posted earlier this week at the Wisconsin State Journal Online stated that, “Finally, it appears, Washington is ready to scale back billions of dollars in wasteful farm subsidies.” The opinion piece noted that, “But $5 billion in direct payments to landowners each year are handed out regardless of need, occupation or high commodity prices. Just as bad, these payments inflate land prices, making it harder for young farmers to get started. “President Barack Obama last year added his voice to the push to end the $5 billion in direct payments…Wisconsin’s congressional delegation should help keep the momentum going to finally rein in these excessive payments as America struggles to ease its soaring debt.” An update posted yesterday at the Mineral Wells Index Online (Tex.) reported that, “Last year, farmers in Palo Pinto County saw drought and record heat take their toll on their crops. The only thing standing between many in the area and total devastation was crop insurance and other safety net programs. “‘When you have a year like we did last year, all you can do is prepare for the next one,’ said Greg Gilbert, Palo Pinto County Farm Bureau president. ‘We know budget cuts are coming to the next farm bill, but crop insurance is one safety net that allows us to keep growing food and fiber.’”   Regulations: Department of Labor, EPA, and Sugar Rachel Leven reported yesterday at The Hill Online that, “The Obama administration plans to rework a regulation that lawmakers and industry groups fear would prohibit young people from working on family farms. “The Department of Labor on Wednesday said it would re-propose a portion of the child-labor rule to allow for more input from members of Congress and the public. “Specifically, the department intends to reconsider its interpretation of the ‘parental exemption,’ which allows children under 16 years of age to continue working on the farm of a parent or guardian. While the exemption is not new, the language in the rule caused controversy.” The Hill update added that, “Several senators and representatives sent letters to Solis discouraging changes to the child labor regulations. Comments also flowed from farm associations, other members of Congress, unions and public health professionals on both sides of the issue. “Sen. Debbie Stabenow (D-Mich.), the chairwoman of the Senate Committee on Agriculture, Nutrition and Forestry, praised Solis’s move to re-propose the regulation. “‘I am glad the Department of Labor heard my concerns and the concerns of so many families in Michigan and decided to re-evaluate this rule. I was concerned when I learned about the proposed rules,’ Stabenow said in a statement.” Senate Agriculture Committee ranking member Pat Roberts (R., Kans.) noted yesterday that, “While I am pleased the Department of Labor has listened to commonsense straight from America’s farmers and ranchers, this proposed regulation would threaten the most fundamental tradition in agriculture—working on the family farm,” Roberts said, “I encourage them to scrap the whole thing and start over.” Senator Jerry Moran (R., Kans.) indicated that, “DOL’s decision to withdraw with the ‘parental exemption’ portion of its rule is promising news and speaks to the power of citizens sharing their concerns with Washington. Unfortunately, the entire proposal – not just this one portion – is a threat to the future of agriculture.” American Farm Bureau President Bob Stallman noted yesterday that, “The decision today by the Labor Department to re-propose the ‘parental exemption’ in the child labor rule is a positive step, but much more work is needed.” And National Farmers Union (NFU) President Roger Johnson stated yesterday that, “NFU is pleased that the administration listened to the concerns of the agriculture community and determined that these rules would hinder the ability of young workers to learn about agriculture while doing little to make them safer.” In other news, Bill Tomson reported yesterday at The Wall Street Journal Online that, “The Environmental Protection Agency missed a deadline to release federal guidelines on the dangers of excess dioxin chemicals in the food supply and environment, giving ammunition to critics that hope the agency will change course. “The EPA was scheduled to release standards in January that would for the first time set a maximum human-exposure level for dioxins. The delay comes after criticism by food and chemical industries that have argued the EPA is using flawed science and will scare Americans about the food they eat.” Karen Kaplan reported yesterday at the Los Angeles Times Online that, “Move over salt. Step aside, saturated fat. There’s a new public enemy in the pantry, and it’s … sugar. “In a provocative commentary coming out in Thursday’s edition of the journal Nature, Dr. Robert Lustig and two colleagues from UC San Francisco argue that the added sugars in processed foods and drinks are responsible for so many cases of chronic disease and premature deaths that their use ought to be regulated, just like alcohol and tobacco.”   Agricultural Economy: China Keith Bradsher reported earlier this week in The New York Times that, “As the White House prepares for a Washington visit by the man who is expected to run China for the coming decade, trade tensions between the United States and Beijing are on the rise. “On Tuesday, a coalition of big American labor unions, Democratic politicians and trade advocacy groups plans to start campaigning for the Obama administration to file a series of trade cases against China in the auto industry. They accuse Beijing of unfairly subsidizing Chinese auto parts makers and illegally restricting the exports of crucial raw materials that foreign parts makers need to stay competitive.” Mr. Bradsher explained that, “Separately, the Commerce Department is considering whether to levy punitive tariffs against China over green energy technology. And on Monday, Washington was on the winning side of a World Trade Organization ruling against China for its export restrictions on industrial minerals. “All of which promises to test diplomacy on both sides during a Feb. 14 White House visit by China’s vice president, Xi Jinping, who is expected to succeed President Hu Jintao next winter as China’s leader.” The Times article added that, “Hoping to reduce the trade tensions just before Mr. Xi’s visit, Chinese officials are preparing to send at least six business delegations on buying trips to the United States, people familiar with the plans but not authorized to discuss them said. Similar delegations have preceded past visits by top Chinese leaders to Washington and have focused on bundling planned purchases of Boeing jets, American grain and other exports into multibillion-dollar contracts that can be signed at elaborate ceremonies. “The Obama administration has also made a few small conciliatory moves. The Commerce Department planned to issue a preliminary ruling on Feb. 13 on whether to impose tariffs on Chinese solar panels to offset reported Chinese export subsidies. But when the United States and China agreed last week that Feb. 14 would be the date for Vice President Xi’s visit to Washington, the department pushed back its ruling until March 2.” Also this week, Wall Street Journal writers Jeremy Page and Mark Peters penned an interesting article highlighting a trip Xi Jinping [who is expected to succeed President Hu Jintao next winter as China’s leader] made to Muscatine, Iowa 27 years ago when Mr. Xi was “then an up-and-coming official in a pig-farming region in China.”  He “led an animal-feed delegation to Iowa,” the Journal noted. The Journal writers stated that, “On Feb. 15, one day after he visits the White House for the first time, Mr. Xi, now China’s vice president, plans to return to Muscatine and share tea with the people he met in 1985. His trip back to the American heartland appears intended to showcase what makes him so different from China’s current leader, Hu Jintao—a confident, personable style and easygoing familiarity with the U.S.” The article pointed out that, “Mr. Xi shed his uniform in 1982 and took a job as deputy Communist Party chief of Zhengding county, a pig-farming region in the northern province of Hebei. That is when he first met Terry E. Branstad, the current governor of Iowa, who visited Hebei in 1984 as part of a ‘sister-states’ exchange. The following year, Mr. Xi led the animal-feed delegation to Iowa.” The Journal writers indicated that, “Late last year, Mr. Branstad wrote to Mr. Xi to invite him back to Iowa, suggesting a reunion with his 1985 hosts. “About two weeks ago, the Chinese consulate in Chicago informed the governor they were considering the invitation. A few days later, the Chinese ambassador in Washington flew to Iowa to help with arrangements. The Chinese Embassy in Washington and the Foreign Ministry in Beijing didn’t respond to requests for comment.” Meanwhile, Reuters news reported yesterday that, “China said on Wednesday it would boost agriculture innovation in an effort to increase food output, signaling that the world’s most populous country is trying to tackle outdated farm and food infrastructure to feed its people. “China accounts for a fifth of the world’s population with less than 9 percent of its arable land, and the cabinet suggested in a document that China’s leaders were aiming to get serious about technology to ensure long-term food supplies.” Domestically, MJ Lee reported yesterday at Politico that, “Alabama’s controversial immigration law, considered one of the toughest in the nation, is costing the state’s economy up to a whopping $10.8 billion annually, according to a new study.”   MF Global Ben Protess and Azam Ahmed reported in yesterday’s New York Times that, “Investigators have determined what happened to nearly all of the customer money that disappeared from MF Global around the time of its bankruptcy last Oct. 31, but have not publicly disclosed their progress, fearing that doing so might cripple efforts to recover the cash and pursue potential wrongdoing, people briefed on the investigation said. “While authorities have traced hundreds of millions of dollars to banks, MF Global’s trading partners and even the firm’s securities customers, investigators remain uncertain about whether they can retrieve the money. “Some recipients were entitled to payouts from MF Global, which could make clawing back the money difficult. For instance, securities customers withdrawing their money as MF Global began to collapse were paid from accounts that belonged to futures clients, according to other people briefed on the matter.” The Times article added that, “The findings shift the pressing question surrounding the collapse of MF Global from what happened to the money to how to recover it and who is at fault. “Answers will not come easy. A significant impediment has been clashes among the parties trying to resolve the MF Global mess: three federal agencies and two bankruptcy trustees.”   Trade An update posted yesterday at Bridges Online (International Centre for Trade and Sustainable Development) reported that, “Trade talks between Brussels and New Delhi, which were launched in 2007, are reportedly moving forward in advance of the upcoming India-EU Summit, scheduled for 10 February in New Delhi. While the pact is unlikely to be ready for signature by the February meet, both sides have confirmed that steady progress is being made toward concluding negotiations, possibly by year’s end.” Keith Good   February 1 Budget (CBO Update); Farm Bill; Ag Economy; CFTC (MF Global); and Trade Categories: Budget /Farm Bill Budget: CBO Update Robert Pear reported in today’s New York Times that, “The Congressional Budget Office said Tuesday that the economy would remain sluggish, with high unemployment, and that the federal budget deficit would exceed $1 trillion in 2012 for the fourth consecutive year. “The deficit will be $1.1 trillion in the current fiscal year, about $200 billion less than in 2011, and will fall sharply in the next three years as a result of tax increases and spending cuts required by existing law, the agency said in its annual report on the budget and economic outlook.” Damian Paletta reported in today’s Wall Street Journal that, “White House spokesman Jay Carney said [President] Obama has tried to put in place broad deficit-reduction deals but has been blocked by Republicans at multiple turns, particularly over the issue of tax increases. ‘What has been lacking thus far is any willingness to deal with revenue in any meaningful way by the Republicans,’ Mr. Carney said. ‘And that is just not the approach that the broad base of the American public feels is the right way to go.’ “The two parties are starkly at odds over how best to address the dual challenge of spurring economic growth while trying to reduce looming deficits. Democrats have advocated more short-term spending to jump-start growth, combined with tax increases on the wealthy, while Republicans have called for deep spending reductions and the preservation of temporary tax cuts. The CBO report suggested there was no easy way out of the country’s fiscal problems, and offered fresh details of the trade-offs.” Senate Budget Committee Chairman Kent Conrad (D., N.D.) indicated yesterday that, “While CBO’s report shows a lower deficit in 2012, it also demonstrates that we must do much more to put the nation’s long-term budget outlook on a sustainable path. The deficit reduction included in last summer’s Budget Control Act cannot be the end of the story. We need to achieve about $4 trillion in deficit reduction over ten years, including what has already been enacted, to stabilize the federal debt and begin to bring it down as a share of the economy.” And House Budget Committee Chairman Paul Ryan (R., Wis.) noted yesterday that, “I remain committed to building a bipartisan coalition for a principled reform agenda, and I invite the President and Senate Democrats to join our effort. The CBO’s latest alarm bell couldn’t be more ominous.” With respect to agriculture, yesterday’s CBO update stated that, “Mandatory spending for agricultural support totaled $15 billion in 2011; it is projected to average $16 billion in each year between 2012 and 2022, under the baseline assumption that current farm programs remain in place after the 2008 farm bill (the Food, Conservation, and Energy Act of 2008, P.L. 110-246) expires in 2012. That spending will dip in 2012, to about $13 billion, largely because of changes in the timing of mandated payments for crop insurance and commodity programs. Starting in 2013, spending for the crop insurance program is expected to rise as a result of projected increases in crop prices and the value of insured crops. The higher spending for crop insurance will be offset by the scheduled termination of some other agricultural support programs, such as agriculture disaster assistance and payments to tobacco growers” (at page 63). More specifically, Bloomberg writer Alan Bjerga reported yesterday that, “Corn prices that averaged $6 a bushel last year are headed for a decline as production in the U.S., the world’s top grower and exporter, catches up with demand, according to congressional analysts. “The average cash price will fall to $4.54 in the 2013 marketing year beginning Sept. 1, then rise to $4.82 by 2022, the analysts from the Congressional Budget Office said today in a document used as part of a government-wide estimate of federal spending during the next decade.” The article added that, “Slowing growth will keep corn-ethanol consumption at 5 billion bushels this year, unchanged from last year and down from 5.021 billion in 2010, according to CBO data. “Slower growth in the use of corn for ethanol is ‘giving trend corn production a chance to catch up and surpass demand growth,’ Keith Collins, a former U.S. Department of Agriculture chief economist, said in an e-mail. Yield gains may not keep pace with CBO predictions, and year-to-year variations in supply and demand may be greater than forecast, Collin said.” Mr. Bjerga explained that, “Soybeans will average $11 a bushel this year, then fall to $10.46 next year before rising to a new peak of $11.05 in 2022. Planted acreage will range from 75.2 million to 77 million acres over the next 10 years, the CBO analysts said. “The average wheat price is forecast to rise from $6.05 a bushel this year to $6.14 in 2022, dropping to a low of $5.63 next year.” (As a side note on commodity prices, USDA released its monthly Agricultural Prices report yesterday which stated that, “The corn price, at $5.90 per bushel, is up 4 cents from last month and 96 cents above January 2011 [related graph]; the soybean price, at $11.70 per bushel, increased 20 cents from December and is 10 cents higher than January 2011 [related graph]; and, the January all wheat price, at $6.86 per bushel, is down 33 cents from December but 17 cents above January 2011 [related graph].”) Yesterday’s Bloomberg article also noted that, “The estimates, which include forecasts for crops that receive government subsidies, are separate from the U.S. Department of Agriculture’s annual 10-year baseline forecast for farm production and prices. That report, scheduled for release next month, is used to formulate the White House budget proposal.” More detailed analysis regarding SNAP benefits (food stamps) and projected program participation in this program is available at this CBO page; while, a similar breakdown of cost estimates for child nutrition programs, including the School Lunch and School Breakfast programs, has been posted at this CBO page. In other budget developments, Senator Jerry Moran (R., Kans.) pointed out recently that, “[T]he President and Congress have failed to put forward a long-term plan to address our growing fiscal crisis. The recommendations put forward by the Bowles-Simpson Commission represent a good starting point and should be seriously considered by Congress. Given the bipartisan support for many of their proposals, I am disappointed their recommendations continue to be ignored.” Recall that the Bowles-Simpson plan contained $10 billion in farm spending cuts over ten years. And in a separate budget related concern, a news release earlier this week from Senator Tim Johnson (D., S.D.) stated that, “[Sen. Johnson], U.S. Senator John Thune (R-SD) and Representative Kristi Noem (R-SD) led an effort to get more information from Secretary of Agriculture Tom Vilsack on the proposed closing of Farm Service Agency (FSA) offices in Harding, Jackson, Campbell and Jerauld Counties. The delegation wants to ensure that producers at the local level will still have access to United States Department of Agriculture (USDA) offices that provide the kind of quality, face-to-face services they rely on.”   Farm Bill Developments An update posted yesterday at Farm Futures Online reported that, “Leaders of major farm and commodity groups will huddle Tuesday and Wednesday in Washington, D.C. to learn more about the Congressional timeline for writing a new farm bill.  They’ll also try to put an end to their very public feud over safety net priorities. “The meeting is expected to draw leaders from the American Farm Bureau, National Farmers Union and commodity organizations representing growers of corn, cotton, rice, soybean, wheat and minor oilseeds.  USA Rice Federation lobbyist Reece Langley organized the get-together.” Cynthia Lambert reported yesterday at the San Luis Obispo Tribune Online (Calif.) that, “Maintaining money for pest detection efforts, allocating funds for research programs and providing support during disasters, including drought, were three of several issues raised Monday during a local discussion of the next federal farm bill. “Rep. Lois Capps, D-Santa Barbara, met with local farmers and ranchers, Cal Poly students and faculty, and farm organizations to hear their concerns and input on a massive piece of legislation that will set farm and food policy for the nation.” And Brian Howell reported earlier this week at KFYR-TV Online (Bismarck, N.D.) that, “Senators Kent Conrad and John Hoeven [R., N.D.] are working with colleagues from Montana and South Dakota to finalize a new Farm Bill concept. “Conrad says the new outline would be based on crop insurance, but it would cover shallow losses in addition to catastrophic losses.” Meanwhile, Jerry Lackey reported recently at the San Angelo Standard-Times Online (Tex.) that, “Because of the worst drought since 1895 mingled with a summer of 105-plus degree daily temperatures and wildfires that scorched millions of acres, 2011 also will make the Texas history books for paying out $2.4 billion in indemnity payments to farmers and ranchers. “That’s according to a recent report published by National Crop Insurance Services. “Nationally, crop insurance companies have paid out a record $9.1 billion in indemnity payments to the nation’s farmers and that’s only an estimated 81 percent of expected claims which have been finalized. This already has surpassed the former record of $8.67 billion in indemnities paid in 2008, according to U.S. Department of Agriculture’s Risk Management Agency.” With respect to conservation issues, DTN Ag Policy Editor Chris Clayton reported yesterday (link requires subscription) that, “Landowners could still enroll acreage in the Conservation Reserve Program this year despite expectations that CRP could face a 7-million-acre cut in authorized enrollment in the next farm bill. “USDA is planning to announce on Wednesday a general sign-up period for CRP for the third consecutive year.” Mr. Clayton added that, “As of December, USDA reported 29.65 million acres in CRP [related fact sheet and summary], including both general and continuous sign-up. That’s down 1.5 million acres from a year ago, and down 4.9 million acres from 2008 when the farm bill was enacted. “Acreage has slipped even though rental rates for CRP land have gone up from a national average of $50.76 an acre to $57.26 an acre over that time.” Tom Steever reported yesterday at Brownfield that, “More than 40 percent of the acres signed up to be part of a popular conservation program won’t be accepted. The number of acres applied for exceeded what’s in the federal budget. “Sign-up for the Conservation Stewardship Program (CSP) that ended Friday is more than what was expected. “‘We were stunned with the size of this,’ said Dave White, Chief of USDA’s Natural Resources Conservation Service.”   Agricultural Economy Karla Zabludovsky reported in yesterday’s New York Times that, “A drought that a government official called the most severe Mexico had ever faced has left two million people without access to water and, coupled with a cold snap, has devastated cropland in nearly half of the country. “The government in the past week has authorized $2.63 billion in aid, including potable water, food and temporary jobs for the most affected areas, rural communities in 19 of Mexico’s 31 states. But officials warned that no serious relief was expected for at least another five months, when the rainy season typically begins in earnest.” A Dow Jones news item from yesterday reported that, “Mexico produced 19.2 million tons of corn in 2011 during the worst drought ever recorded in the north of the country, but production is expected to be stronger this year and prices should remain contained, Agriculture Minister Francisco Mayorga said.” Bloomberg writer Sandrine Rastello reported yesterday that, “Global food prices fell last quarter and may continue declining this year as supplies increase, according to the World Bank. “The bank’s food-price index decreased 8 percent in the three months through December, led by staples including wheat and corn, the lender said today in Washington. By the end of 2011, the index was 7 percent below its year-earlier level, the World Bank said.”   CFTC- MF Global Jeannette Neumann and Aaron Lucchetti reported in yesterday’s Wall Street Journal that, “Moody’s Investors Service told a congressional subcommittee that the ratings firm didn’t know about MF Global Holdings Ltd.’s huge bets on European sovereign bonds until three days before the downgrade that helped push the company into bankruptcy. “Moody’s, a unit of Moody’s Corp., said in a recent letter to lawmakers that it first learned about MF Global’s large European sovereign-debt investments on Oct. 21, three days before it cut the brokerage’s rating to just above ‘junk’ status, according to documents reviewed by The Wall Street Journal.” Reuters writer Christopher Doering reported yesterday that, “The U.S. futures regulator has shunned its responsibility to identify and fix ‘vulnerabilities’ in customer protection following the collapse of futures brokerage MF Global, an CFTC commissioner said on Tuesday. “Scott O’Malia, a Republican commissioner at the Commodity Futures Trading Commission, said the agency has mistakenly concentrated too much on implementing new swaps rules to comply with the 2010 Dodd-Frank law, while short-changing efforts to restore public confidence and protect the futures marketplace.” Julie Steinberg, Scott Patterson and Aaron Lucchetti reported in today’s Wall Street Journal that, “The chief risk officer when MF Global Holdings Ltd. collapsed is expected to tell a congressional committee that he sounded concerns about the firm’s European sovereign-debt bet in July 2011. “Michael Stockman is set to testify before the oversight-and-investigations subcommittee of the House Committee on Financial Services on Thursday.”   Trade The “Washington Insider” section of DTN reported yesterday (link requires subscription) that, “With partisanship still rampant in Washington, it is increasingly unlikely that Congress will vote on approving a Trans-Pacific Partnership (TPP) agreement this year. “The White House has said it would like to conclude TPP talks by the end of the year, but that doesn’t mean the final text of an agreement will ready for congressional consideration before Congress adjourns, likely in December this year. “One reason TPP is unlikely to be completed during 2012 is that there are nine countries currently participating in the negotiations, with three more —- Canada, Japan and Mexico —- considering joining the talks. Remember that the bilateral U.S.-South Korea free trade agreement took 11 months to complete and four additional years afterward before it was submitted to Congress.” And a news release yesterday from Rep. Dave Camp (R., Mich.) stated that, “House Ways and Means Chairman Dave Camp and Senate Finance Committee Chairman Max Baucus (D-MT) called on the Administration today to pressure China to stop unfairly undervaluing its currency at the upcoming World Trade Organization (WTO) symposium in March.  In a letter sent to Treasury Secretary Tim Geithner and U.S. Trade Representative Ron Kirk, Camp and Baucus noted that China has actively blocked currency undervaluation discussions at the WTO.  The letter makes clear China’s unfair trade practices, including its currency undervaluation, cost U.S. jobs.” Keith Good   January 31 Budget; Policy and Farm Bill Issues; Regulations; Ag Economy; and Trade Categories: Agricultural Economy /Budget /Farm Bill Budget- Payroll Tax Jennifer Haberkorn reported yesterday at Politico that, “Democrats are licking their chops over the idea of another Republican budget that attempts to dramatically reform the Medicare program. “House Budget Committee Chairman Paul Ryan (R-Wis.) has indicated that his budget will address Medicare and could include the revised plan he crafted with Democratic Sen. Ron Wyden of Oregon. Under their plan, seniors would get ‘premium support’ to help them buy private insurance coverage or traditional Medicare.” The article noted that, “Ryan on ‘Fox News Sunday’ said he hasn’t written the budget yet because the Congressional Budget Office baseline isn’t out, but he added, ‘We’re not going backward; we’re going forward. We’re not backing off of any of our ideas, any of our solutions.’” Meanwhile, Manu Raju reported yesterday at Politico that, “House Speaker John Boehner and Senate Minority Leader Mitch McConnell have expressed confidence that negotiations over extending the payroll tax cut will end in a deal that can pass Congress by the end of February, averting last-minute legislative hijinks that have become all too common in Congress. “Senate Minority Whip Jon Kyl (R-Ariz.) is not so sure. “Speaking to reporters outside the Senate chamber, the senior Republican negotiator said on Monday he was worried that foot-dragging by members of the conference committee could complicate a timely deal.” Yesterday’s article added that, “His warnings come ahead of a conference committee meeting Wednesday to talk about a range of fiscal issues: a yearlong extension of the Social Security payroll tax cut, jobless benefits and overhauling the reimbursement formula for Medicare. If Congress doesn’t act by Feb. 29, about 160 million workers will see a 2-point increase in their payroll taxes. Millions will begin to see their jobless benefits lapse. And there will be a sharp reduction in Medicare payments to doctors. “While Congress may very well seal a deal before the deadline, the same major sticking point remains over how to offset the costs of measures that would otherwise add billions of dollars to the burgeoning budget deficit. Asked how close Democrats and Republicans were to agreeing to offsets, Kyl said: ‘I don’t know. We haven’t even started working together yet.’” And with respect to the political tone, and legislating in this election year, John F. Harris and Jonathan Allen reported yesterday at Politico that, “‘This election is built to have a fight,’ Rep. Kevin McCarthy, a California Republican and the House majority whip, told POLITICO. ‘If you watch from the rise of the tea party [on the right] to the rise of the Occupiers [on the left]—in ’08, our country said they wanted a little more government. In 2010, they said, ‘Whoa, that was too much.’ I think 2012 is going to be the argument for the size and scope of what they want America to be, and that is healthy. We should have the debate of what we want this country to look like.’ “The correct response to Washington gridlock, by this reckoning, is not private deal-making but a public clash over core beliefs. Most Republicans don’t believe in raising taxes and would rather fight than split the difference. Most Democrats don’t believe benefits like Medicare should be cut or turned over to the states and are more than ready to take the argument to voters.”   Policy and Farm Bill Issues An article posted yesterday at Feedstuffs Online reported that, “American consumers ‘overwhelmingly support’ the agreement between The Humane Society of the United States (HSUS) and the United Egg Producers (UEP) and the legislation that was introduced in Congress last week to effect it, according to a survey that was released today. “The agreement transitions U.S. egg production from conventional cages to ‘enriched’ colony cages by the end of 2029, and the legislation would make colonies a national requirement, or standard, so that all egg producers will participate.” The article explained that, “Consumers support the transition to colonies by a margin of 12-to-1, support the federal legislation by a margin of 4-to-1 and support the federal legislation over state legislation by a margin of 2-to-2, according to the survey. “Consumers also said the two most important organizations to be involved in the transition are HSUS and UEP, and 59% of those consumers surveyed said they would be ‘more supportive’ of the legislation if they were assured that HSUS and UEP were actively involved in and supporting the transition and legislation, the survey found.” Sara Wyant reported yesterday at Agri-Pulse Online that, “A new survey indicates that American consumers overwhelmingly support national legislation requiring egg producers to switch to enriched cages – a move endorsed by the United Egg Producers (UEP) and the Humane Society of the United States (HSUS).” The Agri-Pulse article pointed out that, “As a result of state legislative efforts pushed by HSUS, several states already have established, or are in the process of establishing, different laws regarding the housing and sale of eggs in each of their states – creating costly and sometimes confusing requirements for egg producers, many of which sell eggs across state lines. “The UEP struck a compromise deal last year with HSUS in which the animal rights organization would stop pursuing state by state regulations and the two organizations would jointly seek a federal solution. The HSUS also agreed to drop demands for ‘cage free’ egg production. “‘This is legislation that egg farmers and consumers overwhelmingly support’ said David Lathem, a Georgia egg farmer and chairman of UEP.” Yesterday’s article added that, “However, some egg producers and national pork and cattle groups remain adamantly opposed to enactment of federal legislation, fearing that it would require costly new investments and give HSUS an opportunity to push for federal legislation on other species.” Rod Smith reported yesterday at Feedstuffs Online that, “A bill that would codify the agreement on hen housing between The Humane Society of the United States (HSUS) and the United Egg Producers (UEP) was introduced in Congress last week, and although it was embraced by HSUS and UEP, it was immediately panned by major U.S. agricultural organizations, other animal protection/rights activists and a group organized to keep food prices under control.” Mr. Smith noted that, “Eggs are marketed nationally, and egg producers need one playing field, not costly and different rules in every state, which is the direction the industry was heading, UEP CEO and president Gene Gregory said. “‘We need this legislation for our customers and consumers and for the survival of egg farmers,’ he said.” Dan Wheat reported last week at the Capital Press Online that, “Chris Huckleberry, [U.S. Rep. Kurt Schrader’s, D-Ore.] legislative director, verified the bill would nullify state laws and prohibit new state laws or ballot measures regulating egg production. “‘The whole idea is federal standards for consistency for animal welfare and to allow farmers to maintain their business models,’ Huckleberry said.” In more specific Farm Bill news, American Farm Bureau (AFBF) President Bob Stallman noted in a recent AFBF publication that, “Earlier this year, after much thought and deliberation, the American Farm Bureau Federation developed a plan to establish a catastrophic revenue loss program. This plan is unique in that it will help protect America’s farmers from losses that truly endanger the very core of their farms. At the same time, it recognizes today’s budget realities. It is also unique in that it can be applied to a broader range of commodities, like fruits and vegetables. “There have been several recent proposals for program crops with payments that kick in after only a small decrease in farm revenue for some crops and set up higher target prices for others. But, as Farm Bureau sees it, the government should take on the very serious, large-scale risks that happen infrequently instead of smaller risks. Agricultural programs are intended to help farmers deal with big challenges they cannot handle alone, not minimal losses. “We have serious concerns about the other proposals floating around, which dictate different rules, different crops and different payments. Not only would such programs be a nightmare for local Farm Service Agency offices to administer, but farmers would have the ability to cherry-pick which program works best for them. Because of distortions in price, we’d have a system of farmers deciding what to produce based on government payments rather than market signals.” Ron Hays reported on Friday at the Oklahoma Farm Report Online that, “While in Washington for the winter wheat industry meetings, we sat down in the offices of the American Farm Bureau and talked at length with AFBF lobbyist Mary Kay Thatcher- and we covered just a small amount of the waterfront on policy and regulatory issues that confront the general farm organization that she represents in our nation’s capitol.” With respect to the Farm Bill, Mr. Hays noted that, “Mary Kay Thatcher believes if Farm Bureau proposal became a key part of the 2012 Commodity title- crop farmers would see cheaper crop insurance premiums going forward; [and that], opponents of farm program spending in Washington have grown stronger since the writing of the 2008 farm bill.” The update noted that, “Thatcher expressed skepticism about the ability to move forward in this election year and complete a farm bill; [however], she does predict we have to do something with the 2008 bill expiring- an extension is very possible because of that.” To listen to a replay of the discussion with Ron Hays and Mary Kay Thatcher just click here. On the issue of nutrition, an Op-Ed published in yesterday’s Wall Street Journal (“The Myth of Starving Americans,” by Warren Kozak) stated that, “Perhaps of greater consequence is the belief of many that food should now be free. In a recent report in the magazine Wisconsin Interest, reporter Mike Nichols discovered that in the 2010-11 school year, approximately 373,000 children received free school lunches in Wisconsin. But there are nowhere near 373,000 kids in the state who come from families falling anywhere near the poverty line. The obvious explanation: A lot of middle-class and upper-middle-class kids are eating lunch at taxpayer expense. “This is not just a Wisconsin phenomenon. Nationally, one out of four school children received a free lunch in 1970, according to the state and federal government data examined by Mr. Nichols. Today, two out of three lunches served in schools are free or nearly free.” A recent update posted at the School Nutrition Association Online indicated that, “First Lady Michelle Obama expresses gratitude for the tireless efforts school nutrition professionals make to creatively prepare healthful meals for America’s children with tight budgets and limited resources. She applauds the progress that has been made and looks forward to working to continue and build on those efforts.” In food safety news, Julian Pecquet reported yesterday at The Hill’s Healthwatch Blog that, “A coalition of more than 30 food industry groups wrote to the Obama administration Monday urging officials to request more congressional funding for food safety efforts instead of relying on food taxes. “The request is laid out in a letter to Health and Human Services Secretary Kathleen Sebelius and White House Budget Director Jeffrey Zients, who are working on the president’s FY2013 budget proposal, due Feb. 13. Last year’s budget proposal requested unspecified user fees to pay for food safety efforts but the idea went nowhere in Congress. “‘As consumers continue to cope with a period of prolonged economic turbulence and food makers struggle with record high commodity prices, the creation of new food taxes or regulatory fees would mean higher costs for food makers and lead to higher food prices for consumers,’ the letter states. ‘As such, we believe imposing new fees on food makers is the wrong option for funding food safety programs.’”   Regulations (CFTC- MF Global) In other developments, a news release Friday from Rep. Tim Huelskamp (R., Kans.) stated that, “[Rep. Huelskamp] hosted a roundtable with Kansas Agricultural leaders and industry stakeholders on Friday morning at his Dodge City district office. Congressman Huelskamp, a member of the House Committee on Agriculture, hosted the meeting to solicit the input of Kansans on the next farm bill. The Agriculture Committee is expected to begin writing the farm bill this year (2012). “‘I wish everyone on the Agriculture Committee – make that everyone in Washington – would have the opportunity to hear what I heard today about how overregulation is killing agriculture,’ Congressman Huelskamp said.” Scott Patterson reported in today’s Wall Street Journal that, “The Commodity Futures Trading Commission is planning to take a closer look at high-frequency trading, with an eye on getting a clearer understanding of how electronic trading affects commodities markets and participants. “The push is being spearheaded by CFTC member Scott O’Malia, who on Tuesday plans to propose the establishment of a subcommittee on high-frequency trading. The subcommittee, part of the CFTC’s Technology Advisory Committee, would be led by CFTC chief economist Andrei Kirilenko, according to a draft of a proposal for the subcommittee reviewed by The Wall Street Journal.” And, Bloomberg writers  Zeke Faux and Phil Mattingly reported yesterday that, “A week before MF Global Holdings Ltd. collapsed, its chief financial officer told Standard & Poor’s in an e-mail that the futures broker had ‘never been stronger.’”   Agricultural Economy Reuters writers P.J. Huffstutter and Theopolis Waters reported yesterday that, “For more than a century, through a dozen dry spells when lakes disappeared and the land died, thousands of cows from the Swenson Land & Cattle Co have roamed the fields of Texas. “Yet the drought currently ravaging the southern Plains has done what the Dust Bowl could not: chased them off this land and driven them more than 600 miles north to Nebraska. “Now, as the worst drought in a century stretches into its second year, these ranchers and many of their peers are herding their animals in record numbers to the Cornhusker State and other points north, in search of grazing land that is not parched – a shift that is fueling a dramatic economic and cultural reshaping of the U.S. livestock industry.” The article indicated that, “While some Texas ranchers hang on, selling off their stock at an unprecedented pace that has reduced America’s cattle herd to the smallest in 60 years, many are carving new homesteads out of some of the richest grassland in North America, a bid for survival that falls somewhere between surrender and hope. “In cattle-car convoys that wind along routes cowboys used in the 1800s, this migration is also a stark illustration of the myriad threats facing the world’s future food supply: intense competition for land; increasing demands on limited water resources; and the growing threat of volatile weather.”   Trade DTN Tokyo Correspondent Richard Smith reported yesterday (link requires subscription) that, “Japan Prime Minister Yoshihiko Noda announced last November his government’s intention to enter negotiations to join the Trans-Pacific Partnership (TPP) agreement. The head of the biggest agricultural association told a Jan. 25 Foreign Correspondents’ Club of Japan luncheon his group will not fight over conditions of entry into the free-trade pact. “‘Rather, we will sustain our firm position of resisting against participation in TPP negotiations,’ said Akira Banzai, president of the Central Union of Agricultural Co-operatives (JA Zenchu), an organization of nine million members and employees. “Signed in 2005 by Brunei, Chile, New Zealand and Singapore, the TPP aims to eliminate all tariffs among member countries by 2015. Australia, Japan, Malaysia, Peru, the U.S. and Vietnam are negotiating to join the group.” The article noted that, “Banzai said his organization was not against free trade per se, but simply wants to protect Japan’s ‘food sovereignty,’ which he deemed the right of any country. ‘In order to protect food sovereignty in Japan, we need to emphasize food security by increasing the food self-sufficiency rate,’ officially standing at barely 40%, Banzai said.” And Ian Elliott reported yesterday at Feedstuffs Online that, “British Prime Minister David Cameron and German Chancellor Angela Merkel said last week they supported the idea of a free trade agreement between the United States and European Union.” Keith Good   January 30 Budget; Farm Bill; Ag Economy; CFTC (MF Global); and Regulations Categories: Agricultural Economy /Budget /Farm Bill Budget- Payroll Tax- Appropriations Pete Kasperowicz reported on Friday at the Hill’s Floor Action Blog that, “The GOP this week couldn’t stop President Obama’s request to raise the debt ceiling by another $1.2 trillion. Next week, House Republicans will counter by advancing bills that they hope will create an incentive to slow deficit spending through changes to the budget process. “Among other things, the House will take up bills that require a study on how spending bills affect the economy, and remove automatic inflation-related spending increases. Republicans will also be advancing other budget reform bills in committee that are not yet ready for floor action.” Mr. Kasperowicz added that, “In the background, members of the House and Senate are continuing to work on a compromise for extending the payroll tax holiday, unemployment insurance, and the doc fix beyond the end of February, when they expire.” On the payroll tax cut issue, an update posted yesterday at National Journal Online reported that, “Senate Minority Leader Mitch McConnell [R., Ky.] did not expressly rule out tax increases in order to get an extension of the payroll tax holiday through Congress, despite his stance against such increases in the past. “When pressed by CNN State of the Union host Candy Crowley on whether he would be willing to raise taxes to pay for the payroll tax holiday, McConnell would only say that he would not ‘negotiate this agreement with you this morning.’ He did, however, pledge that Congress would have the deal finished by the end of February. A conference committee is currently chewing on the issue.” Meanwhile, Kyle Trygstad reported yesterday at Roll Call Online that, “House Budget Chairman Paul Ryan said today that he will work off the budget Republicans passed last year when he begins writing the new budget in March. “‘We’re going to be working off it,’ the Wisconsin Republican said on ‘Fox News Sunday.’ ‘We’re not going backwards or going forwards. We’re not backing off any of our ideas, any of our solutions.’” Recall that last year’s House GOP budget stated that, “With crop prices – and deficits – hitting new highs, it is time to adjust support to this industry to reflect economic realities.  This budget proposes two major reforms to achieve this: First, reduce the fixed payments that go to farmers irrespective of price levels, to reflect that soaring commodity prices are reducing the need for high levels of farm-income support. Second, reform the open-ended nature of the government’s support for crop insurance, so that agricultural producers assume the same kind of responsibility for managing risk that other businesses do. “Recognizing that the Agriculture Committee is responsible for implementing these reductions, and to maintain flexibility for the Agriculture Committee, this proposal assumes that these savings do not take effect until the beginning of the next farm bill.  These reforms will save taxpayers nearly $30 billion over the next decade” (at page 36 of “The Path to Prosperity: Restoring America’s Promise”). More specifically, an update last April from the House Agriculture Committee Democrats stated that, “While the budget would leave it to the Agriculture Committee to choose what programs to cut, they have suggested a $127 billion cut to food stamp programs, an approximately $30 billion cut to commodity programs and about $20 billion cut to other programs, possibly conservation programs.” Back in June, Senate Agriculture Committee Chairwoman Debbie Stabenow (D., Mich.) pointed out that the cuts in the House passed measure for commodity programs, when coupled with potential cuts to conservation programs, could total some $48 billion. One of the most politically poignant aspects of the GOP budget however, will likely be the provisions dealing with Medicare. And with respect to the appropriations process, Daniel Newhauser reported today at Roll Call Online that, “With an aggressive agenda and a tight schedule, senior House Republican appropriators plan to urge their rank and file to withhold divisive or duplicative amendments that could derail their bills this year.”   Farm Bill Issues DTN Political Correspondent Jerry Hagstrom reported on Friday (link requires subscription) that, “Farmers would have a 90% crop-revenue guarantee for their individual operations under a proposal being crafted by Senate Budget Chairman Kent Conrad, a top aide said. “The program would replace the Average Crop Revenue Election, said Jim Miller, a former Agriculture undersecretary for farm and foreign agricultural services and the top agriculture aide to Conrad, a North Dakota Democrat. “‘This program is designed to build on the key component of the farm safety net — crop insurance — by addressing shallow farm level losses that are typically not covered by the insurance program but which can undermine a family farming operation,’ Miller said in an interview with DTN this week.” Mr. Hagstrom explained that, “Miller said Conrad’s proposal would build on the ‘shallow loss’ program developed by Sens. Sherrod Brown, D-Ohio, John Thune, R-S.D., and others that was included in the farm bill sent to the failed supercommittee on deficit reduction in December by Senate Agriculture Committee Chairman Debbie Stabenow, D-Mich., and House Agriculture Committee Chairman Frank Lucas, R-Okla.” Friday’s article added that, “Under Conrad’s proposal, farmers would be required to purchase a minimum catastrophic level of coverage or participate in the noninsured crop disaster assistance program to be eligible to participate in what the senator is calling the ‘Crop Revenue Guarantee Program.’ Depending on how much crop insurance a farmer takes out, the program would cover between 75% and 90% of historic revenue. “The marketing loan program would be extended. The countercyclical program would also be extended but target price would be at the same level as for the 2012 crop year. The payment acreage percentage would be reduced from 85% of base acres to 75%. Payments would be based on the average price received for the first four months of the marketing year for the eligible crop rather than the 12-month marketing year.” Lori Potter reported on Saturday at the Kearney Hub Online (Neb.) that, “‘I’ve been saying for a year that I think the direct payment is going to be attacked,’ [Neb. GOP Senator Mike Johanns] said. That will make crop insurance an even more critical piece of the overall legislation, as it becomes the primary safety net against economic losses due to weather, market conditions or other factors. “‘Number one is a greater reliance on crop insurance and less or no reliance on outright payments,’ [Retiring Neb. Democratic Senator Ben Nelson] said about farm bill priorities already discussed by the Ag Committee senators. ‘… It’s a way for farmers to generally get government off their backs.’” The article pointed out that, “He [Sen. Johanns] also knows that [farm policy] legislation is valuable only if it can be implemented without overwhelming USDA Farm Service Agency offices. ‘If you can’t administer it well, it doesn’t really matter what the program is,’ Johanns said.” Chris Hubbuch reported on Friday at the La Crosse Tribune Online (Wis.) that, “U.S. Rep. Ron Kind [D., Wis.] is hopeful this could be the year Congress reforms a farm policy that doles out billions of dollars in crop subsidy payments that support a shrinking number of producers.” The article added that, “Kind wants to cut commodity subsidies while protecting land and water conservation programs, which pay farmers to keep sensitive lands out of production to prevent erosion and pollution of waterways. “He also called for a bill that supports agricultural research, programs to help new farmers and biofuel development.” Meanwhile, Jim Spencer, Mike Hughlett and Jeremy Herb reported yesterday at the Minneapolis Star Tribune Online that, “With roughly 500,000 acres of sugar beets planted across Minnesota and North Dakota, American Crystal Sugar is the nation’s largest producer of refined sugar through beet farming. It generates 15 percent of the country’s sugar supply. “But much of the cooperative’s financial success is cultivated in Washington D.C. “American Crystal Sugar has become one of the country’s most powerful lobbying groups.” Yesterday’s article noted that, “‘I believe in the sugar program; it works,’ said Minnesota Rep. Collin Peterson, who received $10,000 last year from American Crystal Sugar and whose district includes the Red River Valley. He is expected to lead the effort to protect the sugar program in the 2012 farm bill. ‘I’m going to support the sugar program whether they give me money or not.’” And late last week, an opinion item from the Forum’s editorial board (Fargo, N.D.) stated that, “It appears that the world’s most successful system of agriculture is not good enough for the leading Republican candidates for president. During a debate this week in Florida, former U.S. House Speaker Newt Gingrich and former Massachusetts Gov. Mitt Romney took hard shots at the sugar beet program and farm supports in general. While the sugar comments got the most attention here in the sugar beet country of the Red River Valley, Romney’s blanket condemnation of all agriculture supports was more worrisome.” The editorial indicated that, “Carefully crafted farm bills have been good for farmers and the nation. The blanket condemnation of farm programs from Gingrich and Romney is unseemly and uninformed.” And the Bismarck Tribune editorial board opined on Friday that, “Agriculture represents about 2.91 percent of the federal budget, or $911 billion. Of that 76.9 percent goes to nutrition programs, the remaining 23 percent goes for crop insurance, conservation, Title I commodity programs, etc. In order to get big cuts out of agriculture, those nutrition programs — school lunch, food stamps, etc — will have to shoulder a share. It’s not just production agriculture that will see less spending, but urban state schools and welfare programs as well. As a result, the politics behind developing a new farm bill will be tricky.” With respect to nutrition programs, Richard Fausset reported yesterday at the Los Angeles Times Online that, “That sense of unfairness, plus a concern about the health of needy children, is the motivation behind a bill [Ronda Storms- a Republican state senator from Florida] sponsored that would prohibit people from purchasing ‘nonstaple, unhealthy foods’ with funds provided by the federal Supplemental Nutrition Assistance Program, or SNAP. “The bill, which was approved 4 to 2 last week by a committee on child and elderly affairs that Storms chairs, is the latest in a flurry of recent statehouse efforts to restrict what shoppers can buy under the federal government’s decades-old food stamp program.” The LA Times article noted that, “According to federal records, more than 46 million Americans are eating groceries bought with SNAP funds. In the last year, legislation seeking to restrict SNAP purchases was introduced in Illinois, Oregon, California, Vermont and Texas, though none was successful, according to the National Conference of State Legislatures.” Alfred Lubrano reported on Friday at the Philadelphia Inquirer Online that, “The federal official in charge of the U.S. food stamp program said Thursday that Pennsylvania’s plan to tie food-stamp benefits to people’s assets will save the state nothing and create more problems than it solves. “Secretary of Agriculture Tom Vilsack, in Philadelphia to discuss President Obama’s State of the Union message, said the asset test ‘is not going to save the commonwealth a single dime,’ and would, in fact, cost the state money to implement.” On Farm Bill conservation issues, Craig Cox of the Environmental Working Group, penned an Op-Ed late last week at The Des Moines Register Online, which addressed the following issue, “When the farm bill fight gets rolling again in Congress, one question will be at the heart of the debate: Is it fair to ask farmers to take a few basic steps to protect soil and clean up waterways in return for the billions of dollars that taxpayers spend each year to provide them with cut-rate crop insurance?” In other policy news, the AP reported late last week that, “Farmers whose land was damaged by Missouri River flooding expressed frustration Friday that a missed deadline will keep them from sharing in $215 million from one federal disaster program. “Farmers and communities had to apply for the aid by June 30, but many still had land under water then and couldn’t do a required damage assessment. Water didn’t recede from many farms in Iowa, Nebraska and Missouri until late September or early October.” And with respect to a recent bill introduced in Congress that would improve housing for egg-laying hens- the foundation for the legislation stems from an agreement reached this past summer between the United Egg Producers and The Humane Society of the United States- the Los Angeles Times editorial board stated yesterday that, “A federal law is the only way to mandate uniform standards, and this smart and focused measure is supported by the United Egg Producers, which represents 88% of the nation’s egg farmers. As legislation goes, it’s a good egg.” Reed Fujii reported yesterday at The Record Online (Stockton, Calif.) that, “California and other states adopted often-conflicting standards for egg production in recent years, in many cases applying those standards to eggs from out-of-state. Industry officials feared the trend would result in a patchwork of conflicting rules, making interstate commerce in eggs difficult, if not impossible. “The United Egg Producers, the nation’s leading egg trade group, said a federal standard is the only solution that both enhances hen welfare and ensures a sustainable future for U.S. egg farms. “However, the legislation has already drawn opposition from other farm groups, which oppose any new federal legislation regarding livestock care, fearing future impacts on their practices.”   Agricultural Economy Marshall Eckblad reported in Saturday’s Wall Street Journal that, “The U.S. cattle herd has shrunk to its smallest size in 60 years, the U.S. Department of Agriculture reported, due to a drought in the southern Plains that has forced ranchers to cull hundreds of thousands of cattle.”   Commodity Futures Trading Commission (MF Global) Scott Patterson and Aaron Lucchetti reported in today’s Wall Street Journal that, “Nearly three months after MF Global Holdings Ltd. collapsed, officials hunting for an estimated $1.2 billion in missing customer money increasingly believe that much of it might never be recovered, according to people familiar with the investigation. “As the sprawling probe that includes regulators, criminal and congressional investigators, and court-appointed trustees grinds on, the findings so far suggest that a ‘significant amount’ of the money could have ‘vaporized’ as a result of chaotic trading at MF Global during the week before the company’s Oct. 31 bankruptcy filing, said a person close to the investigation.” The Journal explained that, “So far, [James Gidden’s, the bankruptcy trustee for the securities firm's U.S.-based brokerage operation] office has returned about 72% of the money in customers’ U.S. accounts when MF Global filed for bankruptcy at the end of October. Money in accounts outside the U.S. remains frozen, and officials have gotten few big breaks in the case.” Hal Weitzman and Gregory Meyer reported on Thursday at The Financial Times Online that, “But the MF Global scandal is more than just a question of tarnished reputations. It has had a profound effect on the entire financial industry. The realisation that customers could lose money kept in segregated accounts separate from the firm’s own money – thought by many to be as safe as a bank – has severely damaged confidence in the 163-year-old US futures market. Before the financial crisis, futures were among the fastest-growing of all exchange-traded products. “‘This is unprecedented. It’s the single biggest blow the industry has ever had to its business and credibility,’ says a former senior CME executive. ‘It has forced us to ask the question: is the model of the futures industry so flawed that it can never be the same again?’” A news release Friday from Senate Agriculture Committee Chairman Ranking Member [corrected 1.30, kg] Pat Roberts (R., Kans.) stated that, “[Sen. Roberts] today blasted Commodity Futures Trading Commission (CFTC) Chairman Gary Gensler’s role in developing recommendations for new regulations and rules following the bankruptcy of MF Global. These actions have occurred even though the CFTC’s own investigation is not complete, and despite the Chairman’s own recusal of enforcement matters pertaining to MF Global. “‘Once again, I find it odd and confusing that Chairman Gensler can partially recuse himself or ‘non-participate’ in matters regarding enforcement on MF Global, but he can direct the Commission staff to make recommendations on the matter. It appears the Chairman is trying to recuse himself solely from questioning before the Senate.’ Roberts went on to say, ‘What is most concerning is that he is asking for these recommendations before the CFTC’s own investigation is complete and without stakeholder input. My constituents and victims of this bankruptcy who are missing thousands of dollars of their own funds ask me, ‘Just what is going on down there?’”   Regulations Juliet Eilperin reported in today’s Washington Post that, “Just as it pioneered curbs on greenhouse gas emissions from cars and light trucks a decade ago, California is championing standards that could transform the fuel that goes into their tanks. “But its new rule, which requires lowering the amount of carbon in fuel sold in the state, has become embroiled in a fierce public battle and has been barred from being enforced. In light of tight state budgets, litigation over California’s program and a strong lobbying campaign against them, the question is whether the ambitious climate policy will get off the ground.” The Post article added that, “Last month, a federal district judge ruled that California’s low-carbon fuel standard was unconstitutional, on the grounds that it discriminated against out-of-state ethanol producers by ascribing a higher carbon content to their fuels. The state has appealed the ruling, as well as the court injunction that bars it from enforcing the rule. Last Monday, U.S. District Judge Lawrence J. O’Neill granted California an expedited review of the case but denied its request to move ahead with the rule. “Mary Nichols, chairman of the California Air Resources Board, said in an interview that she is confident that amendments the board passed last month have addressed several of the concerns O’Neill highlighted in his Dec. 29 opinion.” Keith Good Posted by Keith Good • Jan   January 27 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   January 26 Budget Issues; Farm Bill; CFTC; Ag Economy; Trade; and Regulations Categories: Audio /Budget /Farm Bill Budget Issues, Payroll Tax Daniel Newhauser reported yesterday at Roll Call Online that, “Republicans today dismissed Democrats’ proposal to include a package of expired tax extenders in the payroll tax cut conference committee. “Rep. Dave Camp, the co-chairman of the committee, indicated that he does not think the group of about 80 tax provisions should be brought up as the panel looks to extend a payroll tax holiday, unemployment benefits and prevent cuts to doctors’ Medicare reimbursements.” The article explained that, “Senate Majority Leader Harry Reid (D-Nev.) and Sen. Max Baucus (D-Mont.), the conference committee co-chairman, both said Tuesday they would like the group of 20 lawmakers to tackle as many of the tax extenders as possible. “The measures include clean energy tax credits, deductions for tuition expenses, state and local taxes and teachers’ out-of-pocket expenses. “House and Senate staffers from both sides of the aisle will be working over the weekend to lay out what exactly the scope of the committee should be. Camp said Tuesday, at the group’s first meeting, that the panel will use its second meeting on Feb. 1 to narrow down the topics that should be discussed in conference.” Jonathan Weisman noted in yesterday’s New York Times that, “Presidential politics and a push by both sides to include pet measures could turn negotiations over the extension of President Obama’s payroll tax cut into the next partisan donnybrook on Capitol Hill, lawmakers made clear on Tuesday.” Mr. Weisman pointed out that, “But negotiators are far apart in how to cover the $160 billion it would cost to maintain the cut, extend expiring unemployment benefits and avoid deep cuts in fees to doctors treating Medicare patients. “They also differ on what other measures should be added to the legislation, which may be the last major bill that moves through Congress in an election year. Republicans said they wanted to include ‘job creation’ measures, including one blocking environmental regulations for commercial boilers and another forcing the construction of an oil pipeline from Canada to the Gulf of Mexico, which the Obama administration has blocked.”   Farm Bill and Policy Issues DTN Ag Policy Editor Chris Clayton reported yesterday that, “Despite election-year rhetoric in Congress, House Agriculture Committee Chairman Frank Lucas still sees an opportunity to finish a farm bill in 2012, saying he feels a strong urgency to accomplish that goal. “The Oklahoma Republican noted it would help if farm groups were able to come to some understandings on how commodity programs should work in the future. “‘This is something I have been harping on privately to various groups and publicly,’ Lucas said in a phone interview Wednesday with DTN. ‘If we don’t come to some sort of a practical consensus, if we can’t march together; if we are fractured up then we’re lost. There is this perception outside the ag committee and ag community that we just automatically move in lock-step. That is not the case.’” Mr. Clayton noted that, “The failed supercommittee process showed agricultural groups were divided over programs that would pay producers for shallow or steep losses, as well as whether target prices should be raised for crops and, if so, by how much. The bill crafted by the House and Senate Agriculture Committee leaders eliminated direct payments and used that $4.7 billion-a-year program not only for budget cuts but to craft a shallow-loss program, higher target prices and a stand-alone crop-insurance program for cotton producers. “Having worked through three farm bills, Lucas noted there are always commodity and regional differences, but groups tend to come together and compromise. Through the supercommittee process last fall, Lucas said it was clear a one-size-fits-all bill would not work and options were needed in commodity programs. “Several commodity and farm groups are set to have talks over the next week in Washington to see if they can come up with compromises and languages to satisfy their boards and member farmers.” The DTN article added that, “One of the major questions is how USDA programs are affected by the budget-cutting act passed last summer. Automatic budget cuts to existing programs are set to take effect Jan. 1, 2013. Nutrition programs are exempt from those cuts, but it’s not clear how that will affect other farm bill programs. For instance, Conservation Reserve Program contracts may be exempt as well because they are multi-year contracts. “‘The reason I bring this up is if big programs like nutrition are automatically left out and if big programs like CRP, because of the way they are put together, are exempt, then that just crams that much more cuts on everything else,’ Lucas said. ‘That does cause me heartburn, but it’s not clear yet how that’s going to work out.’” Also yesterday, Ed Richards of the Radio Oklahoma Network interviewed Chairman Lucas via a telephone call (audio replay available here); an unofficial FarmPolicy.com transcript of this conversation is available here. In part, Chairman Lucas noted that, “I’d remind my neighbors back home there are a lot of moving pieces in this process. I’ve got to not only work with my committee members, my ranking member, we’ve got to deal with the Senate and what they’re able to do on the other side of the body. There will be new scoring numbers from the Congressional Budget Office about how much money is available. There will be a budget resolution before too many months that will have to be addressed in the House. So we’ve got a long ways to go, but the hand has not completely been shown.” The Ag Committee Chairman added that, “Ed, if I could tie down existing policy for one more year, if I could take the ’08 Farm Bill and just add one more year to it in the form of a complete extension, you bet that’s the direction I would go. This has been a very successful farm bill. Producers are generally – nobody’s ever universally happy with a farm bill – but are generally pleased. My problem there is in the new budget reality we work in, I don’t know that there would be enough money allocated to us in this coming year to just do what we’ve been doing and move it forward. “But if we can’t get a farm bill done in 2012, then our listeners are very well aware the old farm bill starts to expire at the end of September this coming fall. If we can’t get a farm bill, then yes, the fall back is an extension. And short of that, then, trying to address, in a lame duck session of Congress after the November general election, which is the worst-case scenario. I think my neighbors, when they put their fall crops in the ground, want to know what the programs are, they want to know what the rules are, and I want them to know that, too. I just…there’s so many things in the air, I just can’t say with any certainty, Ed.” (Note that yesterday’s interview with Ed Richards also discussed issues associated with MF Global). Meanwhile, a news release earlier this week from Senate Agriculture Committee Chairwoman Debbie Stabenow (D., Mich.) noted in part that, “I was pleased to once again attend the State of the Union with Senator [Pat] Roberts, the top Republican on the Agriculture Committee, to help urge bipartisan cooperation in Washington.  Last year, the Agriculture Committee was the only Committee to develop a detailed bipartisan proposal to cut billions from our budget while strengthening initiatives that help farmers and businesses create new jobs. For the good of our country, Members of Congress must rise above election-year politics and come together to revitalize the economy, and I am confident the Agriculture Committee will continue to show this kind of leadership.” And on Tuesday, Ryan Johnson reported at that Grand Forks Herald Online (N.D.) that, “Newt Gingrich and Mitt Romney called for the end of federal sugar subsidies during Monday’s Republican presidential debate in Florida, but Sen. Kent Conrad, D-N.D., said Tuesday that the comments show the candidates are spreading ‘misinformation’ about a vital program that does not subsidize the sugar industry. “‘There is no cost to the government at all from the sugar program,’ he said. ‘The sugar program is critically important to tens of thousands of jobs in this country. They say they care about jobs; how about jobs in rural America?’” The article indicated that, “Rep. Rick Berg, R-N.D., defended the sugar program and said it helps keep sugar prices stable, allowing North Dakota farmers to remain competitive…[and]…Sen. Al Franken, D-Minn., said he will stand behind the program that has done a lot of good for his state and led to economic vitality for farmers.” Marino Eccher reported earlier this week at the Forum Online (N.D.) that, “Rep. Collin Peterson, the ranking Democrat on the House agriculture committee, said the [sugar] program safeguards growers against catastrophe. “‘The government isn’t guaranteeing anybody a profit. They’re just guaranteeing the industry can exist when the market collapses through no fault of their own,’ said Peterson, who represents the Congressional district that includes Moorhead. “Peterson said agriculture programs are common political targets as the country becomes more urbanized. The sugar program hasn’t faced a serious challenge in Congress in recent years, but Peterson said it also hasn’t faced a test vote with the current membership. The current federal farm bill expires at the end of this year.” In other news, a news release yesterday from Rep. Rick Crawford (R., Ark.) stated that, “Today, Congressman Crawford and Congressman Sanford Bishop, (D-GA) announced that they have co-founded the bipartisan Congressional Chicken Caucus. The Chicken Caucus will educate members of Congress and their staffs on the concerns and benefits of the U.S. chicken industry.” In an update posted yesterday at the USDA Blog, Deputy Secretary Kathleen Merrigan indicated that, “As I’ve traveled the country, I’ve talked with more and more consumers who want a personal relationship with their food and are demanding to know more about it, where it came from and how it got to their plate.  I’ve also talked with more and more producers who see the growing market demand for local food as a ripe business opportunity.  One of USDA’s goals is to connect the two. “We know that the local foods business is booming. For instance, a recent study by USDA’s Economic Research Service (ERS) reported that marketing of local foods by both direct-to-consumer and wholesale buyers grossed $4.8 billion in 2008.  And in 2011 alone, we’ve counted over 7,100 operating farmers markets in the country, and over 170 food hubs. “For the past two and half years, via the Know Your Farmer, Know Your Food Initiative (KYF), the USDA has developed interagency partnerships to support the development of local food systems.” And, over the past couple of days, both the Theodore Roosevelt Conservation Partnership and Advanced Biofuels USA set out specific policy recommendations relating to the future development of U.S. agricultural policy. In news regarding nutrition issues, Bill Tomson reported in today’s Wall Street Journal that, “First lady Michelle Obama unveiled new nutrition rules for school meals Wednesday in an effort to combat the nation’s high rate of childhood obesity. “Schools will have to offer students more fruits, vegetables and whole grains—a shift they worry will raise meal costs. And for the first time, the Department of Agriculture is setting calorie limits on school-cafeteria meals.” United Fresh, the Kids’ Safe and Healthful Foods Project, the National Milk Producers Federation, and the International Dairy Foods Association all issued news updates yesterday related to this USDA development. Dina ElBoghdady reported in today’s Washington Post that, “School cafeterias will be serving more-nutritious meals with twice as many fruits and vegetables, more whole grains and less sodium and fat under new guidelines that will revamp the federally backed school meals program for the first time in 15 years. “The meals will continue to include pizza and french fries because Congress, after heavy lobbying from the food industry, derailed the Obama administration’s original plan to limit tomato paste and starchy vegetables such as potatoes. “Even so, consumer groups hailed the changes as a major improvement over the current standards, echoing remarks by first lady Michelle Obama when she unveiled the new nutrition rules Wednesday at Parklawn Elementary School in the Alexandria section of Fairfax County.” Ron Nixon pointed out in today’s New York Times that, “About 32 million children participate in school meal programs each day. The new rules are a major component of Mrs. Obama’s campaign to reduce the number of overweight children through exercise and better nutrition.” In other policy developments, Howard Schneider reported in today’s Washington Post that, “After years that have seen riots over rice shortages in Asia and record low world reserves of staple crops such as wheat, software-billionaire-turned-philanthropist Bill Gates argues that there is a simple solution. “Grow more food. “In a new push for the Gates Foundation, the Microsoft chairman is focusing on basic research on crops such as cassava that hold little interest for the world’s agriculture multinationals but which are important for family farmers in some developing nations.”   Commodity Futures Trading Commission (CFTC) A news release yesterday from the House Agriculture Committee stated that, “Today, the House Agriculture Committee advanced by voice vote six bills that amend Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The legislation is the culmination of the committee’s oversight efforts of the Commodity Futures Trading Commission (CFTC) as it writes rules for Dodd-Frank. In the past year, the committee has held seven hearings on Title VII that have included testimony from market participants. They have shared consistent concerns that the CFTC is overreaching in its rulemaking and it will have a negative impact on businesses and on the economy.”   Agricultural Economy Ian Talley reported in yesterday’s Wall Street Journal that, “The global economy is slowing this year, the International Monetary Fund said on Tuesday, cutting its forecasts for growth and warning of a deeper downturn if Europe doesn’t take stronger action to stem its debt crisis. “The global economy will expand 3.3%, this year, down from 3.8% last year, said the IMF, which in September had forecast 4% growth in 2012.” Bloomberg writer Alan Bjerga reported yesterday that, “U.S. consumers will pay 2.5 percent to 3.5 percent more for food in 2012, the Department of Agriculture said, affirming its December forecast.” And Dow Jones news reported yesterday that, “Bank operating loans for U.S. farmers fell sharply in the fourth quarter versus a year ago in part because of strong farm income, the Federal Reserve Bank of Kansas City said. “Non-real estate loans to farmers fell 40%, the K.C. Fed said, ‘as more farmers paid cash for production expenses.’ High prices for crops have boosted farmer income during the past couple of years, even as the cost of items such as fertilizer and seed have risen. The high crop prices have helped drive U.S. farmland prices to record highs.” Ian Berry and Andrew Johnson Jr. reported in today’s Wall Street Journal that, “Drought may have ravaged key wheat-growing areas across the U.S. last year, but farmers still planted a surprisingly large crop this past fall, despite the dry soil…In all, the amount of the crop known as winter wheat that U.S. farmers planted was 41.9 million acres, up 3% from 2010, according to the latest data from the U.S. Department of Agriculture.”   Trade A news release yesterday from the National Pork Producers Council stated that, “A coalition of food and agricultural organizations led by the National Pork Producers Council expressed in a letter sent yesterday to the Office of the U.S. Trade Representative its support for a free trade agreement between the United States and the European Union. “Such an FTA is a likely option to be considered by a joint international working group on jobs and growth chaired by USTR Ambassador Ron Kirk and EU Trade Commissioner Karel De Gucht.”   Regulations A news release yesterday from the House Agriculture Committee stated that, “In his State of the Union Address last night, President Obama addressed criticisms of over-regulation by his administration.  He claimed success for exempting dairy farmers from an Oil Spill Prevention, Control and Countermeasure (SPCC) program mandate that would have regulated milk the same way as oil: “‘We got rid of one rule from 40 years ago that could have forced some dairy farmers to spend $10,000 a year proving that they could contain a spill – because milk was somehow classified as an oil. With a rule like that, I guess it was worth crying over spilled milk.’” The release added that, “The truth is that the Obama administration actually withdrew the Bush administration’s proposal to exempt dairy farmers from oil spill regulations, and then delayed their decision on this exemption for nearly two years. “In contrast, House Republicans responded to dairy farmers’ concerns and introduced legislation to force the Environmental Protection Agency (EPA) to finalize the dairy exemption. “Meanwhile, the president made no mention of other equally preposterous regulations that our farmers and ranchers still face.” Keith Good Posted by Keith Good • January, 26, 2012 • 5:58 am   January 25 Budget-Payroll Tax- State of the Union; Farm Bill; MF Global; and Biofuels Categories: Budget /Ethanol /Farm Bill Budget- Payroll Tax- State of the Union A House Budget Committee news release from yesterday stated that, “The House Budget Committee advanced three legislative reforms today to address the broken budget process. The reforms focused on bringing greater accountability and transparency, and stronger protections for hardworking Americans’ tax dollars. While the House Budget Committee works to advance solutions, today marks 1,000 days without any budget from the U.S. Senate.” And Alexander Bolton reported yesterday at The Hill Online that, “Senate Republican Leader Mitch McConnell (Ky.) pledged Tuesday that Republicans would pass a budget every year if they win control of the Senate in November.” However, Josiah Ryan reported yesterday at The Hill’s Floor Action Blog that, “Pointing to the Budget Control Act the Congress passed last summer, Chairman of the Senate Budget Committee Kent Conrad (D-N.D.) attempted to debunk the GOP’s repeated claims on Tuesday that the Senate had not passed a budget in a 1,000 days. “‘When our colleagues come out here and say we have not passed a budget in 1,000 days … wow,’ Conrad exclaimed from the Senate floor. ‘Could they have really missed … the consideration of the Budget Control Act? Did they really miss all of that or are they saying something they know not to be true?’” Yesterday’s update added that, “Conrad said the Budget Control Act, which the Congress passed last summer after weeks of horse-trading over raising the debt ceiling, included the budget for this year and next year and that in many ways it is ‘stronger’ and ‘more extensive’ than a traditional budget.” Meanwhile, Julian E. Barnes and Adam Entous reported in today’s Wall Street Journal that, “The Pentagon on Thursday will announce a proposal to spend $525 billion in fiscal 2013, the second year of reductions as the administration moves to roll back the military budget, U.S. officials said…The proposal is $6 billion lower than the 2012 base budget of $531 billion, approved by Congress, which was a cut of $22 billion from the administration’s proposal for the current year.” The Journal article added that, “The Pentagon is under a threat of even deeper cuts as a result of last summer’s deficit-reduction deal.” On the issue of the payroll tax cut extension, Daniel Newhauser and Humberto Sanchez reported today at Roll Call Online that, “Top Senate Democrats on Tuesday called for a package of tax extenders to be included in payroll tax cut conference committee discussions, adding yet another hurdle to the already arduous path to a bipartisan deal. “Conferees met for the first time Tuesday afternoon and showcased the wide gulf between the parties on the must-pass legislation and other provisions the parties want to include. The bicameral panel has about a month to craft a deal, or payroll taxes will go up for millions of Americans. “Already far apart on extending and paying for a payroll tax holiday, unemployment insurance benefits and a fix to doctors’ Medicare payments, Republicans dug in on the construction of a controversial oil pipeline and on the reversal of environmental regulations. Democrats resurrected their desire to impose a surtax on millionaires.” The article added that, “Rep. Dave Camp (Mich.), the conference committee’s Republican co-chairman, said he is chiefly concerned with how to offset the cost of the payroll tax cut.” Carol E. Lee and Laura Meckler reported in today’s Wall Street Journal that, “President Barack Obama offered Americans a populist economic vision in his State of the Union address Tuesday, seeking to draw a contrast with his eventual Republican rival and demonstrating the widening policy gulf between the two political parties. “Mr. Obama’s laundry-list of initiatives—steep tax increases on wealthier Americans, fresh investigations into the mortgage crisis and support for domestic manufacturing—was aimed at buttressing a re-election message that posits him as defender of Americans beset by inequality in the tax code and broader economy.” Helen Cooper reported in today’s New York Times that, “Mr. Obama also proposed a new trade enforcement unit that would add to the number of government investigators pursuing unfair trade practices and that would be responsible for filing lawsuits against foreign countries, namely China.” The American Soybean Association (ASA) issued a statement from ASA President Steve Wellman regarding last night’s address by the President that contained a nice summary of key issues.  In part, Mr. Wellman noted that, “ASA applauds the president’s emphasis on international trade, including the passage of free trade agreements with Panama, Colombia and South Korea. We encourage the administration and Congress to redouble its efforts to ensure the long-term success and sustainability of export markets for American agricultural products.”  (FarmPolicy Note: In other trade news, Reuters writer Doug Palmer reported yesterday that, “A coalition of over 80 U.S. business groups on Tuesday raised concerns about President Barack Obama’s plan to create a new department of trade by consolidating the relatively small office of the U.S. Trade Representative with five other agencies.”) The ASA statement added that, “Farmers are concerned about increasing regulatory requirements that impede their freedom to operate in producing safe and nutritious food. ASA applauds the president’s statements about farmers not needing a government agency to look over their shoulder, and we urge the administration to require that agencies review existing regulations with the view to reduce the regulatory burdens on farmers.” In last night’s address, Pres. Obama noted that, “We got rid of one rule from 40 years ago that could have forced some dairy farmers to spend $10,000 a year proving that they could contain a spill — because milk was somehow classified as an oil. With a rule like that, I guess it was worth crying over spilled milk. Now, I’m confident a farmer can contain a milk spill without a federal agency looking over his shoulder.” A news release yesterday from the House Agriculture Committee stated that, “This week during The Ag Minute [MP3], Chairman Frank Lucas discusses the need for President Obama to make good on last year’s promise to rein in regulations that put an unnecessary burden on businesses.”  (FarmPolicy Note: In other developments regarding regulations, a news release yesterday from Kansas GOP Sen. Jerry Moran stated that, “[Sen. Moran] has invited U.S. Secretary of Labor Hilda Solis to Kansas so she can personally see how proposed rules by the Department of Labor threaten the future of family farms. If implemented, the rules will impose overly-burdensome restrictions on many common farm activities of youth on farms or ranches not directly owned by their parents. These changes will fundamentally alter the rural way of life and disrupt agriculture practices across the country.”) And National Farmers Union President Roger Johnson stated yesterday that, “We are pleased that the president and the administration have renewed their pledge to the United States’ energy independence. As the president said, we need to seek ‘a future where we’re in control of our own energy, and our security and prosperity aren’t so tied to unstable parts of the world. An economy built to last, where hard work pays off, and responsibility is rewarded.’ Homegrown energy is how we keep money, jobs and families in rural America.”   Farm Bill Kevin Diaz reported yesterday at the Minneapolis Star-Tribune Online that, “Minnesota’s Collin Peterson, the ranking Democrat on the House Agriculture Committee, is only ‘relatively optimistic’ about renewing major farm legislation this year, while Tim Walz, another rural Minnesota Democrat, sees little prospect of ‘doing a farm bill of any type.’” With respect to budget implications, Mr. Diaz pointed out that, “But with the Obama campaign targeting congressional Republicans, and Republicans targeting Obama, the possibility exists of a no-deal Congress that kicks a major deficit reduction package into 2013, possibly even forfeiting the Bush tax cuts. “‘We’re good at doing nothing,’ Peterson said, ‘and that’s all you’ve got to do to make it happen.’” A Reuters news article from yesterday (posted at DTN, link requires subscription) reported that, “Senators will take a careful look before writing a new U.S. farm law as doubts rise if they can finish work before an election-year gridlock in Congress strands the bill, said the chairwoman in charge of the legislation. “‘It’s not about rushing,’ said Agriculture Committee chairwoman Debbie Stabenow on Tuesday in impromptu comments. “Farm policy experts say the odds are 50/50 for enacting a farm law this year.” The Reuters article pointed out that, “‘If something’s going to be done before the election, it has to be done fairly soon,’ said Iowa Sen Charles Grassley, an Agriculture Committee member, earlier on Tuesday.” In other developments, a news release yesterday from National Crop Insurance Services (NCIS) stated that, “For the first time in history, indemnity payments surpassed the $9 billion mark, [NCIS] said today, noting that payments made to farmers for damages to the 2011 crop would continue to climb. “From historic droughts in the Plains to flooding along the Mississippi River and deep freezes in the South, growers faced unparalleled challenges in 2011 and crop insurance reached record amounts. The record of $9.1 billion could surpass $10 billion as the remaining claims are settled, NCIS noted. The previous record of $8.67 billion was set in 2008. “‘Thanks to the foresight of Congress, crop insurance has been in place to weather enormous natural disasters and help ensure that farmers survive to plant yet another year,’ said Tom Zacharias, president of NCIS. ‘Those billions in damages would have landed on the plates of input suppliers, lenders, marketers and farm families if crop insurance wasn’t in place,’ he said.” Julie Buntjer reported earlier this week at The Worthington Daily Globe Online (Minn.) that, “According to the Minnesota Department of Natural Resources, an estimated 550,000 acres of Minnesota land will expire from the Conservation Reserve Program (CRP) in the next three years. “The federal program, which offers landowners an option to idle marginal lands in a 10-year or 15-year contract, can’t afford to keep all of those acres enrolled. Farmers, lured by higher grain prices, can in some cases earn more money by putting the land back into crop production.” For additional information on conservation issues, see this Congressional Research Service report from last week titled, “Agricultural Conservation and the Next Farm Bill.” With respect to nutrition issues, Nicholas Bakalar reported yesterday at The New York Times Online that, “In the fight against childhood obesity, communities all over the country are banning the sale of sweets and salty snacks in public schools. But a new study suggests that the strategy may be ineffective.” The Times article added that, “No matter how the researchers looked at the data, they could find no correlation at all between obesity and attending a school where sweets and salty snacks were available.” And the AP reported today that, “First lady Michelle Obama and Agriculture Secretary Tom Vilsack are expected to announce Wednesday that most school meals, including pizza, will have less sodium, more whole grains and more fruits and vegetables as sides. The popular pizzas will still be on school lunch lines but made with healthier ingredients. “Mrs. Obama and Vilsack were making the announcement at an elementary school in Alexandria, Va., with celebrity chef Rachael Ray.” In other news, the Congressional Research Servicer released a report Friday titled, “The Role of Local Food Systems in U.S. Farm Policy,” which stated that, “Although the 2008 farm bill included a few new provisions that directly support local and regional food systems, and also contains several programs that benefit all U.S. agricultural producers, it currently does not contain many programs that directly support local and regional food systems. Many community and farm advocacy groups have argued that such food systems should play a larger policy role within the farm bill, and that the laws should be revised to reflect broader, more equitable policies across a range of production systems, including local and regional food systems” (at page 29). The CRS report also stated that, “Those opposed to extending farm bill benefits to local food systems cite concerns about overall limited financial resources to support U.S. agricultural producers as well as concerns that the most efficient and productive use of natural resources be employed for producing food. As shown by challenges from some in Congress to USDA’s ‘Know Your Farmer, Know Your Food’ initiative, there are concerns about the perceived priorities of USDA and fear that a shift in priorities may result in fewer resources for ‘conventional farmers who produce the vast majority of our nation’s food supply’” (at page 30).   MF Global A news release yesterday from Sen. Kent Conrad (D., N.D.) stated that, “[Sen. Conrad] today reminded former MF Global customers that the deadline to submit claims against the now-bankrupt brokerage firm is January 31, 2012.  MF Global is accused of defrauding investors – including a number of North Dakotans – after making bad bets on European debt.” And a news update yesterday from The Futures Industry Association yesterday stated that, “The Futures Industry Association announced today that it has established a special committee to address issues related to the bankruptcy of MF Global. The Futures Market Financial Integrity Task Force will develop and recommend specific measures that can be implemented in the near term through both industry best practice and regulatory change. In addition to these measures, the FIA intends to work with end-users and other market participants to examine the adequacy of current customer funds protection models in response to concerns raised by the MF Global bankruptcy.”   Biofuels A news release Monday from the Renewable Fuels Association stated that, “Today, Judge Lawrence J. O’Neill denied the California Air Resources Board’s (CARB) motion to stay the decision he issued on December 29, 2011 that had halted the enforcement of the California’s Low Carbon Fuel Standard (LCFS) regulation because that regulation is unconstitutional.” And Josie Garthwaite reported Monday at the Green Blog (New York Times) that, “Seaweed often brings to mind thoughts of surf and sushi, not fuel. But that could change if a biotechnology start-up called Bio Architecture Lab succeeds in building a new kind of energy company from designer bacteria and a low-cost process for harvesting seaweed. “The key is a genetically modified strain of Escherichia coli bacterium, which can break down the sugars in brown seaweed, or macro-algae, to produce ethanol, according to new research published in the peer-reviewed journal Science.” The update added that, “Fast-growing, sugar-rich seaweed has much to offer as a biomass feedstock. Unlike corn and sugar cane, it does not compete with food crops for land, and it does not require freshwater. What is more, seaweed does not contain lignin, a compound found in the cell walls of some plants like corn that enables them to stand up and is difficult to break down.” Keith Good   January 24 Budget; Farm Bill and Policy Issues (Animal Agriculture); and Biofuels Categories: Agricultural Economy /Budget /Ethanol /Farm Bill Budget Issues Byron Tau reported yesterday at Politico that, “The Obama administration’s 2013 budget will be delayed by one week, an administration official told POLITICO. “The Office of Management and Budget will put out next year’s budget on February 13th, instead of February 6th. Under the law, the budget is supposed to be released on the first Monday in February, but the administration has released the budget late in the past.” In response to the President’s decision to delay the release of his Fiscal Year 2013 budget, House Budget Committee Chairman Paul Ryan (R., Wis.) issued a statement yesterday, which noted in part that, “I am deeply disappointed in this President’s abdication of leadership when it comes to prioritizing Americans’ hard-earned tax dollars.  The decision to delay the release of his budget again could not come at a more precarious moment for our fiscal and economic future.  This will mark the third time in four years the President has missed his statutory requirement to present a budget on time, while trillion-dollar budget deficits continue to mount.  As the President announces another missed deadline, tomorrow marks the 1,000th day Senate Democrats have gone without any budget at all.” On the Senate budget issue, a news release yesterday from Sen. John Thune (R., S.D.) stated that, “I hope President Obama will show some leadership during his State of the Union address tomorrow and demand that Senate Democrats pass a budget. The Democrat-led Senate, for 1,000 days, has failed to fulfill its most fundamental and basic responsibility to taxpayers, which is passing a budget. The president likes to talk about runaway federal spending and debt, but has been unwilling to call on his Democrat colleagues in the Senate to introduce and pass a budget. Until the Democrat-led Senate gets serious about balancing the government’s books by passing a budget, dangerous levels of debt will continue to be pushed onto future generations of Americans.” And David Rogers reported yesterday at Politico that, “If 2011 seemed like one long Civil War epic for Congress, 2012 is more like ‘Ragtime,’ a tale of small, interlocking battles, blending history and novel in the run-up to the next Big Bang — the November elections and a very bloody lame-duck session in December.” Mr. Rogers pointed out that, “[T]uesday’s [State of the Union] speech sets the stage for the Feb. 13 rollout of his budget for the fiscal year that begins Oct. 1, and that in turn will help frame the debate over how to cope with the great leftover business of 2011 — the failure of the deficit supercommittee and the threat of $1.2 trillion in automatic cuts early next year. “The administration’s posture is to map a path forward — averting the automatic cuts by offering deficit reductions of more than $1.2 trillion to meet the demands of the Budget Control Act agreed to last year. But there’s no confidence of real agreement before the elections, and the Pentagon — which begins to roll out its numbers this week — already faces the prospect of faster-than-expected cuts as a result of adjustments in appropriations caps dictated by the debt limit deal. “In this context, the payroll tax fight is a major first test, but what’s most striking is how little it has to do with the payroll tax itself.”  (Note that the Conference Committee on H.R. 3630: Temporary Payroll Tax Cut Continuation Act of 2011, meets today at 2:30). Meanwhile, Amie Parnes reported yesterday at The Hill Online that, “Even though he promised to bridge partisanship before coming into office, President Obama ‘accepts that there is still a regrettable level of hyperpartisanship,’ White House spokesman Jay Carney said on Monday.” “The spokesman said Obama believes there’s still an opportunity to work with Congress to accomplish ‘big things.’” The Hill update noted that, “‘He rejects the idea that nothing can get done in an election year,’ Carney said, adding that the president will ‘very much call for action’ in tomorrow’s State of the Union address.” With respect to the makeup of Congress, Alex Isenstadt reported yesterday at Politico that, “Republicans will hold the House next year and for the next decade, House Speaker John Boehner told POLITICO in an exclusive interview. “Boehner dismissed Democratic claims that House control is up for grabs and argued that the once-in-a-decade redistricting process has made the GOP’s hold on the majority ironclad.” The article added that, “Not everyone sees it that way. House Minority Leader Nancy Pelosi, speaking at a POLITICO Playbook breakfast last week, said Democrats are in a position to demolish the GOP’s 25-seat majority and could even gain as many as 35 seats.” A variable in the composition of Congress is the number of lawmakers who will not seek re-election.  Carl Hulse reported yesterday at The Caucus Blog (New York Times) that, “The race for the exits is gaining steam in the United States House of Representatives. “Thirty-two members so far have announced they have no intention of running again for their House seats in 2012, a considerable number at this point in the election cycle. And the total is almost certain to increase in coming weeks as the calendar forces lawmakers to make what can be an excruciatingly difficult decision about whether to give it another go in November.”   Farm Bill and Policy Issues (Animal Agriculture) Jonathan Knutson reported yesterday at AgWeek Online that, “Federal crop insurance is essential to U.S. agriculture, but the insurance can be made simpler and easier to use, said Sen. Kent Conrad, D.N.D. “Conrad proposes to combine the SURE and ACRE crop insurance programs into a single, streamlined program that protects against what he called ‘shallow losses.’” The article added that, “The U.S. farm bill, which is the federal government’s main agricultural and food policy tool, is up for reauthorization, and many in ag fear that federal crop insurance could see big spending cuts. “Conrad, Senate Budget Committee chairman and a frequent critic of the growing federal deficit, said that massive cuts to the federal crop program would be a big mistake. Federal crop insurance is a partnership of private companies, which deliver insurance products and services to farmers, and the federal government, which subsidizes the cost of the insurance premium.” Also on the crop insurance issue, Marcia Zarley Taylor reported yesterday at the DTN Minding Ag’s Business Blog that, “Iowa farmers are giving their seal of approval to the new Yield Trend Adjustment option meant to correct for yield drag in federal crop insurance coverage, attendees at a DTN-Iowa Soybean Association ‘Marketing Through Mayhem’ course told me last week. “‘It could be a game changer,’ say enthusiasts like Wayne Fredericks of Osage, Iowa. He expects to gain more revenue/acre coverage with an 85% Revenue Protection (RP) policy than the 90% GRIP (Group Revenue Income Protection) plan he’s carried since 2004. Better yet, switching to an 85% RP policy with enterprise coverage could save him about $50/acre compared to GRIP. (Last year he spent about $86/acre for GRIP, versus an estimated $35/acre for an 85% RP policy with enterprise coverage.)” The update indicated that, “Beginning in 2012, the Risk Management Agency (RMA) has announced that corn and soybean growers in more than 800 counties in 14 states will be able to elect a Trend-Adjusted APH Yield Option insurance plan. In effect, it will adjust their APH yields based on their county’s historical yield trend. It plans to expand to other crops and geographies in subsequent years.” In other news, National Council of Farmer Cooperatives President and CEO Chuck Conner was a guest on yesterday’s AgriTalk radio program with Mike Adams. In part, their discussion (MP3- 4:50) focused on the Farm Bill, and Mr. Conner indicated that,  “I think there is a reasonable case to be made that extending the current Farm Bill for a year or so may be as difficult a task as actually passing the Farm Bill in general.  And I think that point gives some hope to those who would like to get the Farm Bill done this year.  Extension may be equally difficult; therefore, we ought to just focus our time and effort on getting the longer-term bill. “But barring those circumstances developing, Congress is going to have to look at some kind of short-term extension through 2012.  We don’t know whether or not that would include an extension of direct payments going out for what in effect would be the 2013 crop.” In separate policy developments, a news release yesterday from the United Egg Producers (UEP) and The Humane Society of the United States (HSUS) indicated that, “[HSUS] and [UEP] announced that they will make passage of H.R. 3798, the Egg Products Inspection Act Amendments of 2012, introduced today by Reps. Kurt Schrader, D-Ore., Jeff Denham, R-Calif., Elton Gallegly, R-Calif., and Sam Farr, D-Calif., a top legislative priority in Congress this year. All of these lawmakers are deeply committed to agriculture, and their federal legislation will lead to improvements in housing for 280 million hens involved in U.S. egg production, while providing a stable future for egg farmers. “The bill will require egg producers to essentially double the space allotted per hen and make other important animal welfare improvements during a tiered phase-in period that allows farmers time to make the investments in better housing, with the assurance that all will face the same requirements by the end of the phase-in period. The legislation is strongly supported by UEP, HSUS, American Society for the Prevention of Cruelty to Animals (ASPCA) and other animal welfare groups, National Consumers League, the overwhelming majority of egg farmers, and state agricultural and egg producer groups, including the Association of California Egg Farmers, Colorado Egg Producers Association, Florida Poultry Association, Michigan Agri-Business Association, Michigan Allied Poultry Industries, North Carolina Egg Association and Ohio Egg Processors Association. “In recent years, a growing number of states approved often-conflicting standards for egg production, frequently applying those standards to all eggs sold in the state—including those produced out-of-state. As a result, egg farmers have said they foresee an unworkable patchwork of conflicting state laws that will make interstate commerce in eggs difficult, if not impossible. Egg farmers see a federal standard as the only solution that both enhances hen welfare and ensures a sustainable future for America’s family- owned egg farms, according to the United Egg Producers, which represents egg farmers who produce 88 percent of the nation’s eggs.”  (Note, additional background on this issue can be found here). The National Pork Producers Council, National Cattlemen’s Beef Association and The Humane Farming Association expressed criticism of the proposed legislation in separate news releases yesterday and today. Also, a column posted recently at Feedstuffs Online by United Egg Producers president Gene Gregory stated that, “Andy Vance’s Jan. 2 viewpoint in Feedstuffs accuses the United Egg Producers (UEP) and egg farmers, through its joint legislative initiative with The Humane Society of the United States (HSUS), of putting the fox in charge of the henhouse. “No, Mr. Vance, UEP and our members are trying to put the farmers in charge of the henhouse. UEP and HSUS have been adversaries as HSUS advocated for only cage-free production and UEP supported all forms of production and the right of consumers to make a choice in their egg purchases. We needed a way to resolve this conflict for not only egg farmers, but our customers and consumers as well. “In this legislative proposal, HSUS has recognized that enriched colony cage egg production can be humane. HSUS has also agreed to end any organized state ballot initiatives on eggs, given a single national standard. This does not seem much like the conduct of an organization that wants to put animal agriculture out of business when meaningful discussions are another option.” Mr. Gregory added that, “The UEP-HSUS legislative proposal will provide farmers with certainty of their future by which they can make the necessary housing and equipment investments without fear of being legislated out of business and it will create a level playing field. UEP has always been a leader in animal welfare standards and we believe the enriched colony cage will add further improvements. “If approved by Congress, the legislation would override any contrary state laws, just as Congress had done in the past for crop insurance, commodity futures trading, and meat and poultry inspection. Consumers will continue to have a choice about which eggs they buy and their eggs will remain affordable and safe.” And Andy Vance noted in a related column posted recently at Feedstuffs that, “Let’s face it, agriculture may be an industry and/or community defined by a common cause –- namely, producing food and other natural resources through stewardship of the land and its bounty –- but our hopes, needs and desires are as different as the products of our efforts. This is why we have both commodity-specific agricultural organizations like the National Cattlemen’s Beef Assn. and the National Corn Growers Assn. as well as general farm groups like the American Farm Bureau Federation and the National Farmers’ Union. This also explains why these various groups, though unified on any number of policy issues, often differ sharply on others. “I’ve been thinking about this philosophical dichotomy since reading a letter to the editor of Feedstuffs from Gene Gregory, president of United Egg Producers, an organization I took to task in Jan. 2 column. My comments (Don’t Let the Fox Roam the Hen House) centered on my basic criticism of UEP’s landmark agreement with Wayne Pacelle’s Humane Society of the United States to lobby Congress for a federal standard on hen housing systems. “Gregory’s rebuttal to my argument, appearing in this issue of Feedstuffs, is cogent, concise and well-reasoned. We opinion writers are known for reflection, though not necessarily for admitting another writer has made a point worth comment; Gregory’s letter is worth reading.” Mr. Vance added that, “By controlling the agenda on hen housing, UEP hopes to keep HSUS in check long enough for two things to happen: one, for Congress to enact reasonable federal legislation that will supersede the mishmash of state regulations governing egg production while not putting farmers out of business; and two, for agriculture en masse to get its act together and figure out how to deal with the HSUS problem before Pacelle achieves his goal of running all animal agriculture enterprises out of business.” *** The AP reported yesterday a California law that would require euthanizing downed livestock at federally inspected slaughterhouses to keep the meat out of the nation’s food system. “The high court ruled that the state’s 2009 state law was blocked from going into effect by federal law administered by the Agriculture Department’s Food Safety and Inspection Service.” A National Farmers Union (NFU) news release from yesterday noted that, “[NFU] is pleased with the U.S. Supreme Court’s recent unanimous decision in National Meat Association v. Harris in which the court ruled that hogs suffering from fatigued hog syndrome are fit for slaughter once they have rested and recovered from their travel. NFU was a party on the victorious side of this lawsuit. David G. Savage and Matt Stevens reported today at the Los Angeles Times Online that, “Now that the U.S. Supreme Court has struck down a California law against slaughtering pigs and other animals unable to walk, activists are pressing forward with efforts to get a tough federal measure passed.”   Biofuels The AP reported yesterday that, “Sen. Ben Cardin is calling for an end to the preferential treatment of corn-based ethanol and responsible development of alternative energy sources. “The Maryland Democrat made the comments Monday after participating by phone in a Delaware poultry summit held to discuss issues facing the industry that employs thousands on the Eastern Shore. Cardin called for a level playing field for the poultry industry that will help producers manage energy and feed costs.”   Keith Good   January 23 Budget; Farm Bill; Ag Economy; Biofuels; and Regulations Categories: Agricultural Economy /Budget /Ethanol /EU /Farm Bill Budget Issues Pete Kasperowicz reported on Friday at The Hill’s Floor Action Blog that, “Whatever show of bipartisanship Republicans and Democrats manage to put on during President Obama’s State of the Union address on Tuesday, 2012 is already looking like another year of bitter divide over what has become the political question of our time: How much should government spend? “Obama has made a recent nod toward cutting the deficit, by combining several economic agencies into one. He’s likely to remind his GOP critics of this proposal during Tuesday night’s speech. “But outside the glare of the speech, Republicans are already planning their next assault on federal spending. Tuesday and Wednesday, the House Budget Committee will mark up bills that seek to end the automatic inflation of budget items, require a macroeconomic analysis o the budget, and ensure that the congressional budget resolution has the force of law.” And Molly K. Hooper and Erik Wasson reported on Friday at The Hill’s On the Money Blog that, “Budget Committee Chairman Paul Ryan (R-Wis.) confirmed Friday that House Republicans will move a budget resolution this year. “Ryan’s comments appear to put to rest speculation that the House GOP would put the onus on the Senate to act first and defer until the upper chamber moves a budget, which is seen as very unlikely.” Meanwhile, Jackie Calmes reported in yesterday’s New York Times that, “President Obama will use his election-year State of the Union address on Tuesday to argue that it is government’s role to promote a prosperous and equitable society, drawing a stark contrast between the parties in a time of deep economic uncertainty.” Laura Meckler and Carol E. Lee reported in today’s Wall Street Journal that, “Mr. Obama’s State of the Union speech will be a continuation of the agenda he articulated last month in Osawatomie, Kan. He’ll push his jobs policies and some modest ways to revive housing, call for higher taxes on the wealthy, take a tougher stance on China and craft a vision of America that relies on manufacturing, domestic energy production, and education and training.” Alexander Bolton reported yesterday at The Hill Online that, “Senior administration officials have told allies in the progressive and labor communities that Obama will shift the focus away from budgets and deficit cutting, which dominated 2011, to job creation and the economy.” With respect to the House GOP, Jake Sherman and John Bresnahan reported yesterday at Politico that, “After a brutal year filled with infighting and legislative crises, the Republican majority has a simpler goal for the rest of this year: stay unified and tranquil during a presidential election year and avoid the battles that reveal the divides within their own party. “The 2012 GOP playbook is a poll-tested group of bullet points that seems to illustrate a fresh start for the majority. That means tackling issues that unify the party, such as the Keystone XL pipeline, domestic energy production, infrastructure spending and tax reform. It also means dodging the spending and deficit battles that hurt the party last year.” Reuters writer Richard Cowan reported on Saturday that, “With a national jobless rate of 8.5 percent and millions of long-term unemployed people losing hope, Republicans and Democrats will both try to convince voters in the November presidential and congressional elections that they hold the keys to an improving economy.” And on the issue of the payroll tax cut, Scott Wong and Seung Min Kim reported yesterday at Politico that, “On one side, Democrats are pushing a millionaires’ surtax reviled by the GOP. On the other, Republicans want to reverse President Barack Obama’s decision last week rejecting the Keystone XL oil pipeline.” “Neither provision may end up in the final deal as Congress seeks to avert a Social Security tax increase set to hit 160 million working Americans at the end of February. But for now, the millionaires’ tax and the oil pipeline are all about getting the base fired up again as negotiators look for a middle-of-the-road compromise.” The article added that, “The kickoff of the payroll-tax conference committee will take place just hours before Obama ascends the House podium and delivers the final State of the Union address of his current term — a speech in which he’s expected to press a deeply unpopular Congress to quickly pass the payroll bill.” Bernie Becker reported on Friday at The Hill’s on the Money Blog that, “Rep. Chris Van Hollen (D-Md.) has said that a tax break used by private equity executives should be sacrificed to pay for a full-year extension of the payroll tax cut.” More specifically with respect to USDA budget issues, a news release Friday from Sen. Kirsten Gillibrand (D., N.Y.) stated that, “With seven USDA offices across New York State facing closure, [Sen. Gillibrand], New York’s first member of the Senate Agriculture Committee in nearly 40 years, is urging U.S. Agriculture Secretary Tom Vilsack to keep all of New York’s USDA offices open and available to New York State’s agriculture communities.”   Farm Bill Scott Waltman reported on Friday at the Aberdeen News Online (S.D.) that, “Crop insurance programs have to be continued and strengthened if direct payments end when a new farm bill is crafted later this year, U.S. Sen. Tim Johnson, D-S.D., said in Aberdeen on Thursday. “Johnson spoke to a handful of invited guests from the agriculture sector during a listening session at the South Dakota Wheat Growers offices. “Audience members said they are OK with so-called direct payments — made to farmers regardless of yield or market prices — going away. But, they said, crop insurance, provided via the federal government through insurance agencies, is vital.” In this week’s Agri-Pulse Open Mic program, Agri-Pulse Senior Editor Stewart Doan interviewed House Agriculture Committee Ranking Member Collin Peterson (D., Minn.) and a portion of their discussion focused on the Farm Bill.  To listen to the Open Mic interview, just click here. An Agri-Pulse summary of the interview noted in part that, “Rep. Collin Peterson, D-Minn., one of the four House and Senate lawmakers who developed a farm bill package for the Joint Select Committee on Deficit Reduction, tells us why he believes Congress will pass new farm legislation in 2012. The top Democrat on the House Agriculture Committee endorses the concept of safety net options for ‘program’ crops and comments on competing ideas being floated by North Dakota Democratic Senator Kent Conrad and the American Farm Bureau Federation.” An update Friday from Inside U.S. Trade noted in part that, “If efforts to pass new farm legislation fail, even securing a one-year extension could be difficult. One public interest lobbyist noted that almost no legislation is getting off the floor in the House without some kind of concession on spending, meaning that even an extension could get wrapped up in difficult negotiations over cuts to farm programs. “Still, it is unthinkable that legislators will not pass some kind of extension if that proves necessary. “Failure to renew the current farm bill would mean U.S. farm policy would revert to the programs that were in place in the early half of the 20th century. Those programs entail drastically more spending on farm subsidies relative to today’s farm policy. It would also entail kicking some 43 million people off of food stamps, as that program did not exist at the time, sources noted.” An update posted on Friday at the Environmental Working Group Online indicated that, “With the 2012 Farm Bill fast upon us, Congress has an opportunity to make smart, timely changes to help fix our broken food and farm system by embracing a package of policy reforms outlined in the Local Farms, Food and Jobs bill. This legislation was recently introduced by Rep. Chellie Pingree (D-Maine) and Senator Sherrod Brown (D-Ohio) and is co-sponsored by 63 representatives in the House and 9 in the Senate.” In other policy news, the AP reported on Friday that, “It’s unclear whether farmers in Georgia and Alabama will face a shortage of workers due to tough new laws targeting illegal immigration, but some producers said they have begun changing their plans for planting and harvesting this year’s crops. “Some farmers said they might reduce the number of acres they plant or shift to less labor-intensive crops, while others are bracing for higher labor prices and have turned to new recruiting tools to attract workers.” And with respect to EU farm policy ideas, Bloomberg writer Rudy Ruitenberg reported late last week that, “The European Commission will resist calls by France, the European Union’s largest agricultural producer, to scale back environmental clauses within the 27- nation bloc’s new farm policy, a spokesman said. “The commission doesn’t intend to dilute plans to allocate 30 percent of national agricultural budgets for environmental measures, leave 7 percent of farm land free of crops and force farmers to diversify crops they plant, said Roger Waite, a spokesman for the commission, in Berlin today, speaking for Dacian Ciolos, EU agriculture commissioner. “Setting aside 7 percent of land for environmental purposes is ‘too much’ and in conflict with the need to produce more food, Bruno Le Maire, France’s agriculture minister, said this week in Dijon. He also said 30 percent of national farm budgets for environmental measures is excessive, and the crop-diversity plans are incompatible with crops such as corn.” The article added that, “‘I underline that this is not set-aside,’ Waite said. ‘The aim is to have a positive effect on biodiversity loss, climate change and environmental problems throughout the EU by making everybody do it.’ “The commission’s crop-diversity proposals don’t amount to forced crop rotation, according to Waite. Under the plan, farmers must grow at least three crops and can’t plant more than 70 percent of a single crop in order to get subsidies.”   Agricultural Economy Marshall Eckblad and Mark Peters reported in Saturday’s Wall Street Journal that, “Cattle prices rose to a record as a drought in the southern Plains is beginning to bear down on the nation’s beef supplies. “Faced with the worst drought since the Dust Bowl in the 1930s, ranchers in states such as Texas and Oklahoma culled their herds last year because they couldn’t afford to buy feed and water to replace the parched grass and dry ponds. They sold young cattle to feedlots, where the animals are fattened before they are slaughtered and butchered. “The ripple effects of those decisions are now being felt in the cattle market, as those sales are beginning to slow. The U.S. Department of Agriculture on Friday reported that 1.68 million head of cattle were sold to feedlots in December, a 6% drop from the previous year.” A news release Friday from Purdue University indicated that, “Hog producers have remained cautious about expanding their breeding herds despite the industry’s return to profitability – a wise decision considering there is still much economic uncertainty for them, Purdue Extension agricultural economist Chris Hurt says. “According to the December inventory report from the U.S. Department of Agriculture, the country’s breeding herd grew by only 0.4 percent even though 2011 profits averaged about $15 per head. While that is far from the $27 a head that producers made in 2006, producers lost money over the next few years as feed costs skyrocketed.” Annie Lowrey reported in Saturday’s New York Times that, “Two years ago, President Obama popped a surprise into his State of the Union address: His administration would double American exports in five years, helping to create two million jobs…[T]wo years later, the administration is on track — for now — to meet its ambitious goal. Growing exports have been one of the central drivers of the recovery, accounting for about half the nation’s economic growth since the recession ended. Economists say the administration deserves credit for some of the gains. It has pressured China to increase the value of its currency and open its markets to American businesses. It has worked closely with American companies looking to sell goods and services throughout the world.” Meanwhile, Alan Beattie reported late last week at The Financial Times Online that, “The US administration has urged Congress to pass legislation easing the imposition of anti-subsidy tariffs on imports from China, overruling a recent federal court ruling that restricted the practice. “The court ruling in December surprised and dismayed companies that compete with imports from China by saying the US could not impose both ‘countervailing duties’, which aim to compensate for state subsidies to exporters, and ‘antidumping’ measures, which are levied on imported goods priced unfairly low. “This week, Ron Kirk, US trade representative, and John Bryson, commerce secretary, sent a letter to Congress urging immediate legislation to overrule the court’s decision.”   Biofuels Bloomberg writer Rudy Ruitenberg reported today that, “The use of corn to make ethanol in the U.S. is helping to lift the grain price worldwide, said Jose Graziano da Silva, the new director general of the United Nations’ Food and Agriculture Organization. “‘FAO has been raising its voice against using food to produce bio energy,’ Graziano da Silva told 64 agriculture ministers in Berlin yesterday. That’s ‘especially’ the case for corn in the U.S. and oilseeds in Europe, he said.” Todd Neeley reported on Friday at DTN (link requires subscription) that, “As the budding cellulosic ethanol industry continues to struggle to achieve commercial production, an Iowa company received a financial jolt from USDA with a $25 million guaranteed loan to build a cellulosic ethanol plant in eastern Iowa. “Fiberight LLC has plans to build a 55,000-square-foot, $59.5 million plant on the site of an old corn-based ethanol plant in Blairstown, Iowa, about 25 miles west of Cedar Rapids. The company plans to convert municipal solid waste and other industrial pulps into advanced biofuels.” Meanwhile, the AP reported on Friday that, “The nation’s largest ethanol company, Poet LLC, announced Friday that it is putting on hold its plan to build a dedicated ethanol pipeline because of the lack of prospects for a federal loan guarantee.” And Reuters news reported last week that, “Ethanol derived from natural gas and coal would compete with corn-based ethanol for a share of the U.S. motor fuel market under a bill unveiled by six U.S. House members on Wednesday. “The bill would include ethanol produced from alternative sources, such as natural gas and coal, in the federal mandate for use of renewable fuels.”   Regulations Todd Neeley reported on Friday at the DTN Ag Policy Blog that, “Back in March members of the U.S. House Committee on Agriculture raised concern that the EPA was reaching legal settlements with environmental groups to allow the agency to draft regulations that could be harmful to farmers. “On Thursday a group of Republican lawmakers sent a letter to EPA Administrator Lisa Jackson, questioning the agency’s recent move toward settlements on two recent lawsuits.” Mr. Neeley added that, “In the letter Republican leaders of the House Transportation and Infrastructure Committee and Senate Environment and Public Works Committee, ask Jackson numerous questions about two recent lawsuits that resulted in EPA settlements with two environmental groups. “The lawsuits were brought by the Conservation Law Foundation and the Buzzards Bay Coalition. They allege EPA has a non-discretionary duty in the Clean Water Act to regulate groundwater pollution and to require states to regulate non-point source pollution.” Julie Harker reported on Friday at Brownfield that, “Agriculture department leaders from 10 states met with Environmental Protection Agency (EPA) officials in Kansas City, Kansas. “The ag directors – or their representatives – discussed with EPA region 7 and region 8 officials environmental regulatory issues involving agriculture – from air quality standards for particulate matter to water quality to CAFOs.” Keith Good   January 20 Budget Issues; Farm Bill; and Regulatory Issues (MF Global) Categories: Agricultural Economy /Budget /Climate Change /Farm Bill /Food Prices Budget Issues Pete Kasperowicz reported yesterday at The Hill’s Floor Action Blog that, “Rep. Doug Lamborn (R-Colo.) on Wednesday introduced a bill that would prevent Congress from considering an increase in the debt ceiling unless both the House and Senate have approved a concurrent budget resolution, something the Senate has not done in nearly three years. “Lamborn announced his bill as the House was debating whether to accept President Obama’s request to increase the debt ceiling by another $1.2 trillion. The House voted to disapprove of Obama’s request, but the Senate is not expected to follow suit, making the debt ceiling hike inevitable. “Lamborn said his bill would at least require a budget to be in place before these debt-ceiling increases can occur.” Meanwhile, yesterday’s Need-to-Know Daily Email from National Journal reported that, “Asked in a mid-afternoon briefing on Wednesday if President Obama’s rejection of the Keystone XL pipeline would factor into ongoing negotiations to extend the payroll-tax cut and other tax provisions, a visibly angry House Speaker John Boehner, R-Ohio, said ‘all options are on the table,’ adding: ‘This fight is not over – you can count on it.’” And Billy House reported yesterday at National Journal Online that, “House Republicans, intent on healing internal divisions and developing a unified message and legislative agenda for an election year, kicked off their annual three-day policy retreat on Thursday afternoon ready to receive some cold, hard facts about where they stand in the public’s opinion – if not each other’s. “In fact, their arrivals here at the Baltimore Marriott Waterfront hotel, some in busloads, follow a feisty closed-door meeting on Wednesday at the Capitol, where many members aired their disappointment in how 2011 played out.” Molly K. Hooper reported yesterday at The Hill Online that, “John Boehner’s focus for the next few days is to get his House GOP conference off the mats. “On day one of the House GOP retreat in Baltimore, the Speaker of the House attempted to rally his conference with a call to turn the ‘spotlight’ on President Obama’s policies.” The Hill update added that, “At this time last year, GOP lawmakers had the wind at their back – having just taken control of the House gavel after four years of Democratic control. “This year, however, they must attempt to repair the damage that occurred in late December, when House GOP leaders appeared divided over how to tackle the take-it-or-leave it Senate-passed two-month extension of President Obama’s payroll tax cut.” More specifically with respect to USDA budget cuts, the Department recently released a public meeting schedule for the proposed consolation of some Farm Service Agency (FSA) offices, the schedule can be viewed here. And a news release yesterday from Senator Sherrod Brown (D., Ohio) stated that, “Following last week’s announcement that the U.S. Department of Agriculture (USDA) plans to close 10 Ohio offices, [Sen. Brown] called on USDA to provide rationale for the office closures and to ensure access to high-quality service for Ohio’s agricultural and rural communities. In a letter to Sec. Tom Vilsack, Brown asked for assurances that service will be maintained and urged USDA to listen to community members before making final closure decisions.”   Farm Bill, and Other Policy Variables Ken Anderson reported yesterday at Brownfield that, “Many farm policy experts are predicting a highly contentious debate on the 2012 Farm Bill. “University of Nebraska extension policy specialist Brad Lubben is among them.” Yesterday’s update noted that, “And when you add federal budget woes and election year politics to the mix, Lubben doubts the farm bill will be approved before the November elections.” The AP reported yesterday that, “A top federal antitrust regulator for meat companies is stepping down. “J. Dudley Butler will end his tenure next week as head of the Grain Inspection Packers and Stockyards Administration, the agency said Thursday. “Butler oversaw key parts of the Obama administration’s effort to pass sweeping antitrust reforms covering the meat packing industry.” The AP article explained that, “A heated fight over the regulations pitted small farmers and ranchers against some of the nation’s biggest meat companies. The effort ended late last year after Congress killed funding for the proposed regulations. “Agriculture Secretary Tom Vilsack said Butler’s departure won’t weaken antitrust enforcement at the Department of Agriculture.” In more specific elements of federal farm policy, University of Illinois Agricultural Economists Gary Schnitkey and Bruce Sherrick penned an update this week at the farmdoc daily blog (University of Illinois) titled, “COMBO Crop Insurance Premium Changes in 2012.” The authors noted that, “The Risk Management Agency (RMA) undertook a study of corn and soybean premiums and found that insurance premiums were too high relative to insurance payments (see here). As a result, RMA adjusted corn and soybean premiums. In addition, RMA implemented other adjustments that changed premiums, with one of those adjustments relating to enterprise units. In this article, 2011 Revenue Protection (RP) farmer-paid premium are compared to 2012 premium for corn and soybean policies in Illinois.” After a brief but detailed analysis, the update stated that, “RMA re-ratings efforts generally result in lower premiums for Illinois farmer. These re-ratings efforts seem justified given the relatively low payments on corn and soybean policies compared to insurance premiums. This re-rating likely will bring loss performance closer in line with legislative target, although resulting loss experience likely will require further premium reductions to totally bring premiums in line with legislative targets. “Farmers will find the premium reductions of benefit, reducing the costs of insurance. How farmers react to this change is an open question. Some farmers may keep the same coverage level at a lower cost. Other farmers may choose to increase coverage level since the cost of insurance will be reduced.” An update posted yesterday at Agri-Pulse Online reported that, “A grocer who defrauded the USDA food stamp program was sentenced this week and ordered to repay almost $2.5 million he obtained illegally by swapping electronic benefit cards for cash. “Parviz Sheikh Rezaei, 56, the proprietor of Pariz Dollar Supermarket in Brownsville, Texas, will be serving 46 months in federal prison for defrauding the Supplemental Nutrition Assistance Program, commonly known as Food Stamp Fraud, United States Attorney Kenneth Magidson for the Southern District of Texas announced.” Meanwhile, Nancy Shute reported yesterday at The Salt Blog (National Public Radio’s Food Blog) that, “Food policy can sound like a dreary enterprise best left to Washington, D.C. But big-city mayors are starting to see local food policy as a key step in getting healthy, affordable food to their constituents. “This afternoon, the mayors of America are meeting in Washington, D.C., to launch their own food policy task force. The goal is to share information on projects that work, and also make sure that federal food policy doesn’t muck up those local efforts. “Baltimore is one of a handful of cities, along with New York and San Francisco, that have crafted their own food policy initiatives. Baltimore’s effort started in 2009, and involves the city departments of health, planning, sustainability and development, as well as an advisory group of 30-plus organizations.” And, Justin Gillis reported yesterday at the Green Blog (New York Times) that, “Agriculture has long been a stepchild in global negotiations over the climate. Hopes had risen that this might change at the latest big global climate session, in Durban, South Africa, in December. It did not. “Now, a group of experts led by John Beddington, the chief science adviser of the British government, is issuing a call for renewed research and advocacy regarding the future of the world’s food system. The opinion piece, to be published in Friday’s issue of the journal Science, highlights the potential role of scientists in making agriculture a higher global priority.”   Agricultural Economy Bloomberg writer Phoebe Sedgman reported earlier this week that, “Global demand for agricultural commodities is likely to remain ‘strong’ even as economic growth slows as rising populations and emerging markets drive consumption, according to Canada’s largest grain handler. “‘We’re confident that strong, long-term global market fundamentals will continue to support the agriculture industry as the nutritional needs of the world continue to grow,’ Viterra Inc. Chief Executive Officer Mayo Schmidt said. “The World Bank cut its global growth forecast this week by the most in three years, saying that a recession in the euro region may exacerbate a slowdown in emerging markets such as India. The world’s population is estimated to climb to 9 billion in 2050 from 7 billion now, and production of most food commodities will have to rise to meet expected demand, according to the United Nations’ Food and Agriculture Organization.” Robert Bryce noted in an Op-Ed published in yesterday’s Wall Street Journal that, “Food cultivation exemplifies the virtues of density. During the second half of the 20th century, hybrid seeds and synthetic fertilizers, along with better methods of planting and harvesting, produced stunning increases in agricultural productivity. Between the mid-1960s and mid-2000s, global production of all cereal crops doubled, according to U.N. data, even though the amount of cultivated acreage remained about the same. “Indur Goklany, a policy analyst for the U.S. Department of the Interior, estimates that if agriculture had remained at its early 1960s level of productivity, feeding the world’s population in 1998 would have required nearly eight billion acres of farmland, instead of the 3.7 billion acres that were actually under cultivation. Where in the world—literally—would we have found an extra 4.3 billion acres, an area slightly smaller than South America? “Meanwhile, a recent analysis of U.S. Department of Agriculture data, by plant pathologist Steve Savage, found that land devoted to organic farming produces about 29% less corn and 38% less winter wheat than the same acreage conventionally farmed. Since world population is growing and food prices are already at near-record highs, mandates for organic farming could be disastrous. For example, low-density agriculture could increase deforestation as farmers desperately seek more farmland—a result that should disturb environmentalists.” Bill Gates noted earlier this week at his blog (the gatesnotes) that, “But the world’s success in warding off famine led to complacency and a decrease in agricultural aid. Today, experts are again warning that there may not be enough food to feed everyone. Studies show a rise in global temperatures, more droughts, and more floods—all due to climate change—could wreak havoc with crop yields. The global population is predicted to grow by as much as 40 percent over the next four decades, and more people are eating meat. All of these factors, and more, are driving up food prices. “Yet, I believe that this is a solvable problem. In my annual letter that will come out next week, I talk about the need to find solutions so farmers—especially those in the poorest countries—have better tools and knowledge so they can grow enough food to feed their families. Investing in innovation and partnerships will help build self-sufficiency. This will not require a huge investment, but it will take more money than is available today. In a world as wealthy as ours, it is a small price to pay to save millions from needless suffering. And ultimately contributes to the stability and well-being of the entire globe.” In a closer look at domestic developments, Scott Kilman reported yesterday at The Wall Street Journal Online that, “U.S. Department of Agriculture economists are mulling whether to trim their 2012 food-price inflation outlook following an unexpectedly sharp rise in U.S. grocery prices in December. “Even though higher-than-expected grocery prices in 2011 is bad news for consumers, the U.S. Bureau of Labor Statistics report released Thursday signals to the USDA that some of the inflationary pressure it had expected to see this year was probably vented in late 2011. The survey found that grocery prices in December were 6% higher than in December 2010.” In an article posted yesterday at DTN (“Farm Finance Outlook, Debt-Free or Bust: Farmers Aim to Reduce Debts,” link requires subscription), Marcia Zarley Taylor reported that, “U.S. agriculture is entering the new year on its strongest financial footing in decades. In the 15-state region that stretches from Ohio to Wyoming and Minnesota to Arkansas, the Farm Credit System reported 99.6% of its loans were rated as acceptable at the end of the third quarter. “Even in Texas where the drought of the century lingers, farmland real estate gains remain positive and 90.3% of Farm Credit’s borrowers pass examiners’ scrutiny, according to most recent reports. Those borrowers with higher risk loans may need to secure Farm Service Agency loan guarantees, or be required to buy revenue-based crop insurance to qualify for loans in 2012. But considering the severity of the Southern Plains drought and the spring deluges that could have affected yields in the Ohio and Mississippi River basins, agriculture continues to perform well, lenders say.”   Regulatory Issues Todd Neeley reported earlier this week at DTN that, “Letters sent by EPA often arrive with warnings to farmers — either repair damage to a wetland or face tens of thousands of dollars in fines as a result of Clean Water Act violations. “In many cases the orders come even without the opportunity for landowners to challenge EPA wetland determinations. “That could all change.” Mr. Neeley pointed out that, “If the U.S. Supreme Court rules in favor of the plaintiffs in Sackett v. EPA — a case argued before the court last week — legal experts tell DTN that farmers could have a new legal leg to stand on in those EPA determinations.” An update posted yesterday at Feedstuffs Online reported that, “In the U.S., The Humane Society of the United States (HSUS) and the United Egg Producers (UEP) have negotiated an agreement in which both organizations will jointly seek legislation that would require the U.S. egg industry to transition to colonies, in well-defined phases, by the end of 2029.”  (Note: Click here for more detailed background on this topic). “About 95% of U.S. egg production currently is in conventional cages, but one U.S. egg producer, JEM Eggs LLC — formerly J.S. West & Co. in Modesto, Cal. — built a colony house two years ago and recently released data on hen performance in colonies versus conventional cages. “The data are on 151,200 Hy-Line hens in the colony house and are compared with Hy-Line standards. (Each hen in the colony house has 116 sq. in. of space, versus UEP standards for conventional cages of 67 sq. in.)” Yesterday’s update added that, “In the colony house, mortality was 4.22%, better than the 7.61% in the convention cage; eggs laid per hen were 421, versus 399; average case weight was 49.4 lb., versus 47.93 lb.; feed per 100 layers was 22.60 lb., versus 20.45 lb., and feed per dozen eggs was 3.19 lb., versus 3.00 lb.” “The HSUS-UEP legislation will be in the form of an amendment to the U.S. Egg Products Inspection Act, and both parties hope that the legislation will be achieved by June 30.” Ben Protess reported earlier this week in the New York Times that, “Lawmakers are considering new policies aimed at preventing a repeat of the MF Global debacle, in which the futures brokerage firm misused an estimated $1.2 billion in customer money as it collapsed. “The Senate Agriculture Committee’s decision to explore potential regulatory changes follows pleas from farmers, cattle ranchers and other futures industry customers who seek stronger protections for their money. As an initial step, the committee’s chairwoman, Senator Debbie Stabenow, sent roughly 20 letters on Wednesday to some of the industry’s biggest players, seeking suggestions for new policies. “‘The MF Global bankruptcy has raised questions about the regulatory framework that protects these markets,’ Ms. Stabenow, Democrat of Michigan, said in the letter.” The Times article added that, “The committee, however, is in the early stages of its examination and has not agreed to introduce legislation. “‘I would appreciate your evaluation of current policies and any recommendations you would like to make to this committee on changes that would create stronger, safer markets and provide customers with greater protection,’ Ms. Stabenow said.” Keith Good