Farm Bill- Policy Issues

USDA Deputy Secretary Krysta Harden was a guest on yesterday's AgriTalk radio program with Mike Adams where the conversation focused on Farm Bill implementation.

Mr. Adams queried on the radio program yesterday: "What is the biggest challenge, when you're looking at that commodity title and you say it's going to take the rest of this year, what is the biggest hurdle you have to overcome to get that thing going?"

Dep. Sec. Hardin indicated that, "It is complicated. And because it does lock in producers for the life of the farm bill, we want to make sure that they can make decisions that is right for them. A lot of changes. There are IT changes, you know, getting our systems up-to-date and making the changes, training our personnel, making sure we're communicating with producers so that they have the information to make informed decisions. There's a lot of steps in this process. We're going to make sure we take each step and do it right so producers can make good decisions and not just a quick decision."

Mr. Adams also asked, "We knew all along about direct payments going to go away and the shift now over to these other types of programs. How big of an adjustment is that for you at USDA to make that kind of a shift?"

Dep. Sec. Harden noted that, "It's a big difference, it really is. It is a change in course. Obviously a lot of folks saw that coming. We assumed direct payments would go away. That had been the talk for some time, you're exactly right. But what would replace it we didn't really know, and you can't preempt what Congress might do, so we really could only prepare up to a point before Congress actually acted. So it is complex, it's complicated, but in the long run I think it will be good for producers. We'll get the right information out there. We're hopeful they'll make really good decisions. We've just got to make sure we do this in a systematic, careful process."

And with respect to the Brazil cotton case, Dep. Sec. Harden pointed out that, "I think we're in a good place. That is my hope, that we are. We have a cotton transition payment until we can get STAX, the new cotton crop insurance program, up and running. I believe we're in a good place. There will be some questions, I'm sure, for producers. This is a change for them, so they're adjusting. You know this well, and maybe your listeners do, but I'm from Georgia, so I'm from cotton country. A lot of questions. But hopefully we're on the right path with our Brazilian counterparts."

The Senate Agriculture Appropriations Subcommittee held a hearing yesterday and heard testimony from Sec. of Agriculture Tom Vilsack.

Chris Clayton reported yesterday at the DTN Ag Policy Blog that, "Once again, Agriculture Secretary Tom Vilsack got a lot of questions and concerns expressed Wednesday by members of the Senate Agriculture Appropriations Subcommittee about USDA plans to close as many as 250 county Farm Service Agency offices nationally.

"At a subcommittee hearing, senators said they were worried about USDA attempting to make such cuts while implementing a new farm bill - one with a far more complex commodity program than the 2008 legislation. Moreover, a lot of farmers just don't have the capability to do some of the work needed for the FSA at home. Another problem is making sure the offices that remain open have adequate computer programs to service farmers, said Sen. Jon Tester, D-Mont. 'We are setting ourselves up for real explosives in rural America,' Tester said.

"Vilsack replied, 'We're not going to have that.'"

Mr. Clayton indicated that, "The secretary noted at least 30 FSA offices have no employees in them at all. Another 111 offices have one full-time or part-time employee. Then there are another 100 or so with one employee that are within 30 miles of another FSA office. Vilsack said the consolidation is about improving services by ensuring more cross-trained people will be at bigger offices to offer services.

"'This is about better service,' he said. 'It's not about services going away. It's not about consolidation for the sake of consolidation.'

"Subcommittee Chairman Mark Pryor, D-Ark., said he believed people in the most rural areas need USDA services the most."

To listen to an exchange on this issue from yesterday's hearing with Chairman Pryor and Sec. Vilack, just click here (MP3- 2:28).

A news release yesterday from Sen. Tim Johnson (D., S.D.) noted that, "[Sen. Johnson] today questioned [Sec. Vilsack] during the [Appropriations hearing] to review the U.S. Department of Agriculture's proposed budget for Fiscal Year 2015. During the hearing they discussed payment limitations, the status of Country of Origin Labeling (COOL), the Sun Grant Initiative at South DakotaStateUniversity, and implementation of the livestock disaster assistance programs."

To listen to Sec. Vilack's remarks on livestock disaster assistance, just click here (MP3- 0:37).

A portion of Sec. Vilsack's comments on the payment limitation / "actively engaged" issue can be heard here (MP3- 0:48).

And an exchange with Sen. Johnson and Sec. Vilsack the COOL issue is available here (MP3- 0:59).

Also yesterday, the House Appropriations Agriculture Subcommittee held a budget hearing on USDA's research agencies. Testimony from that hearing is available here.

The House Agriculture Committee's Subcommittee on Conservation, Energy, and Forestry, which is chaired by Glenn Thompson (R., Pa.), held a hearing yesterday "to review the impact of the Endangered Species Act (ESA) and related legislation on the U.S.Forest Service."

A Committee news release stated that, "[T]he ESA contains a citizen suit provision, which allows private citizens to sue federal agencies and private landowners for allegedly failing to fully comply with the Act. A recent study in the Journal of Forestry examined 1,125 management cases filed against the Forest Service in federal court between 1989-2008. Though the costs borne by taxpayers responding to these lawsuits is likely significant, federal agencies do not track these costs, nor are any of these costs recouped particularly in cases where the federal agency prevails.

"Today, the subcommittee members examined the direct and indirect costs associated with the lawsuits…"

Meanwhile, Reid Wilson, writing on the front page of today's Washington Post, provided an overview of the recent Farm Bill issue regarding states "using a loophole…to restore food aid for thousands of low-income families, potentially wiping out billions of dollars in savings Congress agreed to last month."

A related news release earlier this week on this issue from Rep. Jack Kingston (R., Ga.) stated that, "In response to recent flagrant maneuvers by state governors to extract federal taxpayer dollars, [Rep. Kingston] requested the 2015 House Budget begin the process of closing the loophole in federal heating and food stamps benefits, often called 'Heat and Eat,' whereby those receiving nominal amounts of subsidies for their electric bills are given disproportional SNAP benefits, saying, 'This exploitative action by some state governors undermines the reforms Congress passed and the President signed just months ago and we need to close this loophole once and for all to protect taxpayers, reduce our debt, and encourage responsible budgets at the state and federal level.'"

The release added that, "Kingston's requested Congressman Paul Ryan (WI-1), Chairman of the Budget Committee, address the 'categorical eligibility' and require those seeking home energy and food assistance to sign up separately in his 2015 budget. This change would provide significant savings over the CBO estimate of the Farm Bill language."

In other policy related news, David Pierson reported yesterday at the Los Angeles Times Online that, "The Food and Drug Administration said 25 of 26 drug companies that were asked to phase out antibiotics to promote growth in farm animals have agreed to comply with the agency's voluntary plan.

"The development announced Wednesday clears a major hurdle in the FDA's push to combat growing human resistance to antibiotics because of their overuse."

Mr. Pierson noted that, "The FDA first proposed a plan in December that asked major drug makers to remove growth promotion claims on their products, effectively making it illegal to prescribe the drugs to livestock for anything other than medical reasons."

EPA Issues

DTN writer Todd Neeley reported yesterday that, "Some current farming practices were not exempted from a proposed new Clean Water Act rule, but EPA Administrator Gina McCarthy told a Senate committee Wednesday that doesn't mean permits will be needed for those practices.

"As part of an EPA announcement on the new CWA rule Tuesday, the agency also announced a so-called interpretative rule that would exempt many conservation practices defined by USDA's Natural Resources Conservation Service from having to get clean water permits.

"An interpretative rule is developed by administrative agencies when Congress finds areas in statutes where it is impractical for lawmakers to apply expertise."

Mr. Neeley noted that, "'Under the proposed rule, 53 farming practices are exempt,' Sen. John Barrasso, R-Wyo., said during a U.S. Senate Committee on Environment and Public Works EPA budget hearing Wednesday. 'The list does not cover all existing practices. Will farmers and ranchers need to get permits?'

"McCarthy said farming practices that do not require permits today won't need them when the rule becomes law."

The DTN article added that, "Barrasso Press Secretary Laura Mengelkamp told DTN there are noticeable ag practices absent from the EPA proposal.

"'Anything that meets the definition of point source is not exempted,' she said. 'This would include rolling stock, any rolling applicator used by farmers and ranchers - like a fertilizer or manure spreader. Pesticide applications is a big one.'"

"The interpretative rule exempts additional conservation and other agriculture practices, that includes irrigation canals, conservation cover, windbreaks, irrigation field ditches, filter strips, structures for water control, wetland restoration and many other practices."

Yesterday's article added that, "The release of the proposed Clean Water Act rule Tuesday did little to change minds on both sides of the issue, as the few agriculture groups that did respond publicly to the proposal remain entrenched in their positions on the rule."

In news releases yesterday, both Sen. Roy Blunt (R., Mo.) ("another brazen power grab") and Sen. Pat Roberts (R., Kans.) ("These technical definitions and changes to the Clean Water Act lay the groundwork for continued environmental regulation and potential future regulatory efforts") expressed concern about the EPA proposed CWA rule.

Agricultural Economy

Emiko Terazono reported yesterday at The Financial Times Online that, "Fear has taken hold of the wheat market. Prices have soared on the back of an investor buying spree spurred by the unfolding crisis in Ukraine.

"The crisis has added to concerns caused by freezing weather in key growing areas of the US, the world's largest exporter.

"At more than $7 a bushel, the grain has jumped almost 20 per cent since the end of February, when Vladimir Putin, Russian president, escalated tensions between Moscow and Kiev."

The FT article stated that, "Despite the tensions, grain exports from Ukraine and Russia have been flowing smoothly without notable delays, according to one leading commodities trade financing bank, and the crisis has not resulted in any planting delays.

"'The wheat move seems to have been driven by fear rather than fundamentals,' says Chris Gadd, analyst at Macquarie in London."

Yesterday's article added that, "Elsewhere, dryness in the southern Great Plains of the US, where farmers wait to see the wheat crop come out of dormancy, is supporting wheat prices. Farmers are also concerned about the lack of rain in Australia and in eastern Europe, including Germany, and Poland.

"In the latest crop progress report from the USDA, scouts reported dust storms in Kansas, Oklahoma and Texas, and significant lack of moisture. The reports showed that more than half of Texas's winter wheat crop was 'poor to very poor', while only 11 per cent was 'good to excellent'. In Kansas, the 'poor to very poor' figure was just over 20 per cent and a third of the crop was 'good to excellent'".

See also this related one-minute FarmPolicy.com recap on the USDA reports and wheat price issues from earlier this week.

Also, Bloomberg writer Aya Takada reported yesterday that, "Japan, Asia's second-largest wheat importer, raised its purchasing plan from the lowest level in four years after domestic production of the grain declined, the Agriculture Ministry said today in a report.

"The government plans to import 4.93 million metric tons of wheat for food in the year beginning April 1, from 4.91 million tons this fiscal year, the lowest amount since the year ended March 31, 2010, according to the ministry."

And Bloomberg writer Jeff Wilson reported yesterday that, "In the 60 years that Ursa Farmers Cooperative has been loading Midwest soybeans onto boats along the Mississippi River, business has never been this good.

"Barge convoys are heading south along the world's busiest inland waterway to New Orleans export depots at a record pace as demand surges from pig farmers in China, the largest pork-eating country. Soy stockpiles in the U.S., where farmers harvested the third-largest crop ever just six months ago, are the lowest relative to demand in at least five decades, fueling the second-biggest rally in prices to start the year since 2005."

The article noted that, "'The soybean stocks estimate this year may be more important than is normally the case due to the rapid pace of U.S. exports, concerns about the size of the South American harvest, and prospects for generally tight stocks at the end of the marketing year,' said Darrel Good, an agricultural economist at the University of Illinois in Champaign-Urbana. 'Prices will stay elevated longer until there is evidence that demand is slowing relative to available supplies.'"

Reuters news reported yesterday that, "The Canadian government introduced legislation on Wednesday that would require the country's two big railways, Canadian National Railway Co and Canadian Pacific Railway Limited, to each move at least 500,000 tonnes of grain weekly from April 7 to Aug. 3, 2014."

And Bloomberg writer Matthew Brockett reported earlier this week that, "Fonterra Cooperative Group Ltd., the world's largest dairy exporter, said it will accelerate investment in milk-powder production to meet global demand after first-half profit slumped."

Biotech

Bloomberg writers Shruti Date Singh and Jeff Wilson reported yesterday that, "Archer-Daniels-Midland Co. and Bunge Ltd., two of the world's largest grain traders, are facing a new obstacle in their quest to expand corn exports to China - U.S. farmers.

"Six months after China began rejecting shipments of a genetically modified corn, Bunge says it won't take deliveries of the variety developed by Switzerland's Syngenta AG. ADM will test the corn and may reject it as well. Even so, farmers will soon begin planting it this spring, more interested in its high yield for the domestic market than for exports.

"Exporters and farmers going in two different directions on GMO corn underscores a new set of challenges faced by international agricultural commodity traders. Even as demand continues to grow in line with the global population, China and other countries have been slower than the U.S. to approve new types of crops amid concerns about food safety and threats to biodiversity from genetically modified organisms, or GMOs. China's curbs on some modified corn threaten to block millions of tons of imports and in so doing cut into the profits of international trading houses."

Tax Extenders

A news release yesterday from Sen. Al Franken (D., Minn.) stated that, "Today, [Sen. Franken], Chairman of the Energy Subcommittee, put his support behind a bipartisan bill to bring back a tax incentive for the production of domestic biodiesel to help spur job creation and decrease our nation's dependence on foreign oil.

"The bipartisan Biodiesel Tax Incentive Reform and Extension Act will extend the $1-per-gallon tax credit for biodiesel producers. The tax credit lapsed at the end of 2013."

Also, the "Washington Insider" section of DTN reported yesterday (link requires subscription) that, "The House Ways and Means Committee will hold hearings and markups in April to decide which of the nearly five dozen temporary tax provisions (including biodiesel) that expired at the end of 2013 should be kept, Chairman Dave Camp, R-Mich., said in a March 24 memorandum to committee members.

"Camp said he wants the committee to 'continue its work by going policy by policy' to determine which tax provisions deserve to be made permanent."

And Bernie Becker reported yesterday at The Hill's On the Money Blog that, "The Senate Finance Committee is expected to consider legislation next Wednesday to revive most of the dozens of temporary tax breaks that expired at the end of last year, according to members of the panel.

"Finance Chairman Ron Wyden (D-Ore.) declined to comment on when a mark-up might occur, or about the details of the measure."