Keith Good

Farm Bill

Doug Finke reported on Saturday at The State Journal-Register (Springfield, Il.) Online that, "U.S. House Majority Leader Eric Cantor said Saturday that he expects a farm bill now being negotiated in Congress to include provisions requiring the able-bodied to seek work or perform public service to receive food stamps.

"The Virginia Republican said the requirements will be part of the reforms that will be included in the farm bill that's been held up for months as negotiators try to resolve differences between the House and Senate.

"'The bill is going to be a reform bill,' said Cantor, who was in Springfield on Saturday for a fundraiser to benefit U.S. Rep. Rodney Davis, R-Taylorville. 'There's no question the amount of spending in all areas of federal government needs to be examined. It will be aboutreform.'"

The article noted that, "One area of difference between the House and Senate on the farm bill is the amount of cuts to nutrition programs like food stamps. Both chambers agreed to cuts, but the House wanted far deeper cuts than the Senate.

"'Nutrition has not been finalized, although we are moving closer to resolution on that,' Cantor said."

"Davis said the conferees hope to have the framework of a new farm bill worked out by the end of the month when Congress returns to Washington," the article said.

Meanwhile, Erik Wasson reported on Friday at The Hill's On the Money Blog that, "Lobbyists for dairy farmers are conceding that their preferred dairy subsidy system will not be in the farm bill.

"The willingness of the lobbyists to negotiate an alternative compromise solution bodes well for the farm bill coming to a vote before the end of January in the House."

Mr. Wasson explained that, "At his point, House Agriculture Committee Chairman Frank Lucas (R-Okla.) and his Senate counterpart Sen. Debbie Stabenow (D-Mich.) are negotiating an alternative to supply management.

"The proposal could make insurance premium increases contingent on overproduction."

The Hill update added that, "So far, House Agriculture Committee Ranking Member Collin Peterson (D-Minn.), the lead proponent of dairy farmer interests, has not signed off on a compromise."

Chris Galen, the Senior Vice-President of Communications for the National Milk Producers Federation (NMPF) indicated on Friday's AgriTalk radio program with Mike Adams that, "Ultimately I think we won the policy battle, but lost the political battle."

Mr. Galen added that, "Unfortunately, we thought that we were in the driver's seat regarding the Farm Bill conference, the version of the dairy policy reform that we have been working on the past several years was in the committee language that was going to go to the full conference here soon, but the opposition from House Speaker Boehner just proved too much to surmount, and because he said that he would not even allow a vote on the Farm Bill containing our Market Stabilization Program- that has effectively killed our proposal.

"So now we are working on a different plan, I think reports, Mike, that there's a compromise and that the skids have been greased and everyone's happy with it; that's premature, we are at the start of the process, not nearing the end of the process of coming up with a different plan."

And, Mr. Galen also noted that, "So now what's happening Mike, is we're engaging in discussions with the Agriculture Committee staff on is there a way to create a very similar program that has some different inducements, some different incentives, to help achieve supply-demand balance on the farm."

Mr. Galen explained that, "We're just now beginning that process, as I said, we are certainly not going to sign off on any final deal that doesn't effectively provide for the needs of our members. So this is another thing that I think is going to be ongoing, we're still continuing that process now."

Jim Mulhern, the President and CEO of the NMPF stated in a Letter to the Editor in Saturday's Wall Street Journal that, "Given the Journal's oft-stated view that government programs should model the efficiencies of those in the private sector, it's baffling why you are so critical of the proposed dairy program in the pending farm bill ('To Minnesota Station,' Review & Outlook, Jan. 13), which ends a system of direct payments to dairy farmers in favor of a voluntary insurance program.

"Private insurance programs for life, auto and home typically contain a series of carrots and sticks to make them more cost-effective. Those with good driving records pay less than those who are accident-prone, for example. Smokers pay more-and are rewarded for quitting. These features reduce future insurance payouts. So why shouldn't those dairy farmers who enroll in this voluntary program be incentivized to reduce their production when milk supplies exceed demand?"

Mr. Mulhern's letter added that, "The related irony is that while many in Congress want to use this farm bill to curtail food-stamp costs-by requiring those receiving government assistance to look for a job-when it comes to the dairy program, the philosophy of some congressional leaders is the opposite. Under the competing approach, when the costs of the insurance program rise, the added price tag is borne by taxpayers, without expectations placed on program participants. With insurance payments flowing and no effort made to align supply and demand, milk processors profit from cheaper milk, farmers suffer and taxpayers are on the hook for more expenditures.

"The only thing 'Soviet-style' about all of this is the House speaker's dictatorial threat that elected officials on the House-Senate conference committee must bend to his view or he will block the farm bill."

And, an update on Friday at RadioIowa Online reported that, "While the dairy provisions need to be worked out, [Iowa GOP Sen. Charles Grassley] has also been told his provision putting a hard cap on the amount one producer can get out of the farm program is a sticking point."

The "Washington Insider" section of DTN indicated on Friday (link requires subscription) that, "Time is fast running out for the negotiators to get an agreement on the overall bill since both the Senate and House will be in recess next week. In the meantime, the administration is telling the conference that at least modest delays are OK, and Agriculture Secretary Tom Vilsack is promising that he 'has no plans to start the lengthy process of implementing permanent law,' at least not just yet."

"So, what's the outlook for the bill? It is still very hard to say, but much of the leaders' optimism seems based on wishful thinking. And, there are still trade policy problems with the bill, along with regional issues among many others. Have these been 'generally' worked out, as some advocates say? Possibly, but the differences are deep and the time is short. Thus, the process should continue to be watched carefully as it evolves," the DTN update said.

Meanwhile, Ron Nixon reported in Saturday's New York Times that, "In the nearly two-year effort to pass the $1 trillion bill, lawmakers have been able to reach a compromise on most of the farm and nutrition programs it covers, including what was expected to be the most contentious issue: cuts to the food stamp program. A deal was reached to cut about $9 billion from the program over 10 years, but was held up when Speaker John A. Boehner objected to a measure to help dairy farmers by limiting milk production to stabilize prices."

Mr. Nixon added that, "Progress has also been stalled by disagreements over a catfish inspection program at the Agriculture Department and over payment limits to farmers who receive subsidies. But it is the dairy provision that has brought talks to a standstill, people familiar with the negotiations said.

"A vote on the bill has been delayed until at least late January while lawmakers continue to work on a compromise for the dairy provision, catfish inspection program and subsidy limits."

In other policy related developments, DTN Ag Policy Editor Chris Clayton reported on Friday (link requires subscription) that, "A USDA spokesperson told DTN Friday that the department is reviewing the appropriations' language on country-of-origin labeling in the 2014 omnibus spending bill this week, but no decisions have been made on whether USDA should change course.

"'USDA is in the process of reviewing the explanatory statement that was attached to the appropriations bill. The final rule that modified the labeling provisions for muscle cut meat commodities covered under Country of Origin Labeling went into effect on May 23, 2013. During the six month period following the effective date of the regulation, USDA has conducted an industry education and outreach program concerning the provisions and requirements of this rule. USDA continues to assist retailers and suppliers with complying with the rule,' the spokesperson said in an email to DTN."

Mr. Clayton added that, "Thus far, it's unclear whether the farm bill conferees will take a vote on how to treat country-of-origin labels."



Agricultural Economy

On Saturday, the front page of both the New York Times and the Los Angeles Times highlighted the ongoing drought in California.

Norimitsou Onishi and Malia Wollan reported in the NY Times that, "Cattle ranchers have had to sell portions of their herd for lack of water. Sacramento and other municipalities have imposed severe water restrictions. Wildfires broke out this week in forests that are usually too wet to ignite. Ski resorts that normally open in December are still closed; at one here in the Sierra Nevada that is open, a bear wandered onto a slope full of skiers last week, apparently not hibernating because of the balmy weather.

"On Friday, Gov. Jerry Brown made it official: California is suffering from a drought, perhaps one for the record books. The water shortage has Californians trying to deal with problems that usually arise in midsummer.

"With little snow in the forecast, experts are warning that this drought, after one of the driest years on record last year, could be as disruptive as the severe droughts of the 1970s."

And Bettina Boxall and Anthony York reported in Saturday's Los Angeles Times that, "Politicians and agricultural interests who have urged Brown to declare an emergency welcomed the action as an important tool for coping with the unrelenting parched conditions.

"'Farmers across California face wrenching decisions today, as well as in coming months,' Paul Wenger, president of the California Farm Bureau Federation, said in a statement. 'Will they have enough water to plant crops, to water their livestock, and keep trees and vines alive?'"

Western Growers' President and CEO Tom Nassif indicated on Friday that, "We appreciate the action taken by Governor Brown today. Drought conditions are wreaking havoc on farmers in California, especially in the San JoaquinValley. The situation is dire and requires the full attention of state and federal leaders which is why the declaration is so important."

An update Friday from Rep. John Garamendi (D., Calif.) noted that, "With California facing the lowest rainfall levels in its 153-year history as a state, Congress Members [Garamendi (CA-3)], George Miller (CA-11), Mike Thompson (CA-5), Doris Matsui (CA-6), Jerry McNerney (CA-9), Jackie Speier (CA-14), and Ami Bera (CA-7) today thanked Governor Jerry Brown for declaring a drought emergency in California. The Members noted that the Omnibus Appropriations Act, voted on this week and now on the President's desk,restores the federal government's emergency drought programs."

Also with respect to the weather, Bloomberg writers Brian K. Sullivan, Elizabeth Campbell and Rudy Ruitenberg reported on Friday that, "Volatile weather around the world is taking farmers on a wild ride.

"Too much rain in northern China damaged crops in May, three years after too little rain turned the world's second-biggest corn producer into a net importer of the grain. Dry weather in the U.S. will cut beef output from the world's biggest producer to the lowest level since 1994, following 2013's bumper corn crop, which pushed America's inventory up 30 percent. U.K. farmers couldn't plant in muddy fields after the second-wettest year on record in 2012 dented the nation's wheat production."

In other news, an update Friday from Purdue University indicated that, "The U.S. pork industry has started a slow expansion driven by lower feed costs, which should lead to more rapid growth of pork supplies in the latter half of this year, says Purdue Extension agricultural economist Chris Hurt.

"That could result in 2014 turning into the best year for pork producers in nearly a decade."

Christopher Doering reported late last week at The Des Moines Register Online that, "Iowa farmers are bracing for a pullback in the agriculture economy this year, with a majority of those surveyed at a recent conference expecting to see a drop in land prices and less cash entering their coffers.

"A poll of nearly 40 Iowa farmers attending the American Farm Bureau Federation's annual convention last week in San Antonio found 54 percent of them expected their farm income to decline by more than 10 percent this year, with only 21 percent of those responding predicting an increase in profits."

Meanwhile, agricultural economists Scott Irwin (University of Illinois), Dwight Sanders (Southern Illinois University), and Darrel Good (University of Illinois) indicated on Friday at the farmdoc daily blog ("Evaluation of Selected USDA WAOB and NASS Forecasts and Estimates in Corn and Soybeans") that, "A number of agencies in the United States Department of Agriculture (USDA) are involved in collecting, analyzing, forecasting, and disseminating information about the production and consumption of the corn and soybean crops. Market participants rely heavily on estimates and forecasts provided by these agencies in order to form price expectations and to make business decisions. The estimates and forecasts are also used to guide and administer a variety of government commodity programs. In spite of on-going efforts to maintain the quality of information provided and the transparency of the methodology used, misunderstanding, concerns, or complaints about the information periodically arise. More recently (since 2006) those concerns have centered on the accuracy of the quarterly estimates of corn inventories and to a lesser extent on the methodology and accuracy of early season yield forecasts for corn and soybeans. The purpose of today's post is to summarize the results of a research report that evaluates USDA forecasts and estimates for corn and soybeans. The full report can be found here. This is the first of a series of farmdoc daily posts that will discuss the findings in the report. The research was funded by the Office of the Chief Economist of the USDA."

With respect to trade issues, Vicki Needham reported late last week at The Hill's On the Money Blog that, "Senate Republicans criticized the Obama administration for not being more involved in an effort to build support for passage of trade promotion authority (TPA) legislation.

"Senate Finance Committee ranking member Orrin Hatch (R-Utah) was among several Republicans who complained that U.S. Trade Representative Michael Froman did not accept an invitation to testify before the panel on Thursday to discuss their recently introduced fast-track legislation."

And The New York Times editorial board indicated yesterday that, "One of the most laudable American goals in negotiating the trade agreement known as the Trans-Pacific Partnership with 11 other countries was to strengthen environmental protections around the world. But a draft chapter of the agreement made public last week by WikiLeaks shows that many of the countries involved in the talks are trying to undermine that goal."

The Times stated that, "The Office of the United States Trade Representative said last week that it would not back down on its environmental agenda. In a statement, it said, 'we will insist on a robust, fully enforceable environment chapter in the T.P.P. or we will not come to agreement.'

"It is important that American negotiators stick to that policy. And members of Congress, who have to ratify all trade deals, should insist on it."



Biotech

AP writer Phuong Le reported on Saturday that, "Months after Washington voters narrowly rejected an initiative requiring the labeling of genetically modified foods, lawmakers are reviving the GMO debate in Olympia.

"Lawmakers on Friday heard a bill that would require labeling genetically engineered salmon for sale, even though federal regulators have not yet approved any genetically modified animals for food. Another bill would require many foods containing GMOs to carry a label."



Immigration

Daniel Newhauser reported on Friday at Roll Call Online that, "The annual House Republican retreat will feature an open session on an immigration rewrite, during which members will be allowed to freely speak about the contentious issue.

"The official schedule has yet to be released, but sources involved in planning the yearly getaway told Roll Call that the weekend event will feature a session dedicated solely to immigration policy changes.

"The session will focus on the principles of an immigration rewrite that GOP leaders are working to compile, according to sources familiar with the event's planning. Speaker John A. Boehner of Ohio is expected to release the document to members ahead of or during the retreat, which begins Jan. 29 in Eastern Maryland."