Budget
and Farm Bill; Ag Economy; Biofuels; and Regulations
Posted
By Keith Good On January 3,
2012
Budget
and Farm Bill Issues
Alexander
Bolton reported yesterday at The Hill Online that, “Senate Republican
Leader Mitch
McConnell (R-Ky.) and House Speaker John Boehner (R-Ohio)
have their work cut out for them next month to reduce the simmering tensions
between their caucuses.
“McConnell’s and Boehner’s staffs kept in regular contact throughout
the year but it still was not enough to avert a blow-up before year’s
end.”
Yesterday’s
article noted that, “House
conservatives grumbled that McConnell jammed them by
agreeing to the two-month extension and a subsequent motion to adjourn the
chamber until January, giving the lower chamber a take-it-or-leave-it
ultimatum.”
“Senate Republicans blasted
their House counterparts for tarnishing the GOP brand by putting 160 million
Americans at risk for a January payroll tax hike, only to back down abjectly
right before Christmas.”
Mr. Bolton
added that, “Veteran
Republican insiders say the blowup between Senate and House Republicans has put
a strain on McConnell and Boehner’s relationship.”
The Hill
article indicated that, “The GOP strategist said it will be difficult for Republicans
to win additional concessions from Obama in exchange for
extending the payroll tax holiday a full year because they showed in December
that they are not willing to let it expire.”
“The silver
lining of the December payroll tax meltdown is that conservative Republican freshmen in
the House may have learned to trust Boehner’s political judgment.
They might be less likely to rebel, even if they believe themselves to be on
the correct side of a policy argument, if they trust their leaders’ judgment
about the political fallout.”
In other
budget developments, Elisabeth
Bumiller and Thom Shanker reported
in today’s New York Times that, “Defense Secretary Leon E. Panetta is
set this week to
reveal his strategy that will guide the Pentagon in cutting hundreds of
billions of dollars from its budget, and with it the Obama
administration’s vision of the military that the United States needs to meet
21st-century threats, according to senior officials.
“In a shift
of doctrine driven by fiscal reality and a deal last summer that kept the
United States from defaulting on its debts, Mr. Panetta is expected to outline
plans for carefully shrinking the military — and in so
doing make it clear that the Pentagon will not maintain the ability to fight
two sustained ground wars at once.”
The Times
added that, “Instead, he will say that the military will be large enough to
fight and win one major conflict, while also being able to ‘spoil’ a second
adversary’s ambitions in another part of the world while conducting a number of
other smaller operations, like providing disaster relief or enforcing a
no-flight zone.
“Pentagon officials, in the meantime,
are in final deliberations about potential cuts to virtually every important
area of military spending: the nuclear arsenal, warships,
combat aircraft, salaries, and retirement and health benefits. With the war in
Iraq over and the one in Afghanistan winding down, Mr. Panetta is weighing how
significantly to shrink America’s ground forces.”
In Farm
Bill related news, the “Washington Insider” section of DTN reported on Friday (link
requires subscription) that, “The Congressional Research Service is
projecting that federal spending on crop
insurance over the next 10 years will outpace spending
on traditional
commodity programs by more than 20%, a possibility that
‘might capture the attention of budget cutters looking for sources of savings,’
according to a recent CRS report to Congress.
“CRS says
that insurance companies, farm groups and some members of Congress are
concerned that additional reductions in federal support to crop insurance will
harm the financial health of the industry and possibly jeopardize the delivery of crop
insurance to farmers.”
The DTN
item noted that, “From a farm policy standpoint, policymakers and observers
alike remain concerned about how the crop insurance program interacts with farm
commodity programs and whether together they provide a means for helping
farmers deal with business risk at a cost that is acceptable to taxpayers.
“Farm and commodity groups have made
it clear they will be focusing on crop insurance as a major component of the
so-called farm safety net when Congress gets around to
writing the next farm bill. The costs associated with larger, more
comprehensive insurance protection will play a significant role in determining just
how much larger and more comprehensive a program the budget will allow.”
Ken
Anderson reported yesterday at Brownfield that, “It is widely
anticipated that the farm policy draft developed by the leaders of the House
and Senate Ag Committees will serve as the starting point for the 2012 Farm
Bill debate.
“However, the National Corn Growers
Association (NCGA) hopes the safety net that emerges from the upcoming regular
order process doesn’t mirror what committee leaders stitched together.
“‘We had
some very serious concerns about that product,’ says Sam Willet, NCGA’s
director of public policy, ‘and of course those concerns primarily revolved
around returning to a target
price program that was reminiscent of the 1980’s’”
The
Brownfield article stated that, “Willet says NCGA worries that the inclusion of
a target price option sought by rice, peanut and grain sorghum groups could
make farmers less likely to sign up for a market-oriented revenue protection
program backed by NCGA, along with the American Soybean Association and the
National Association of Wheat Growers.”
In other
policy related news, an update posted on Thursday at
Feedstuffs Online reported that, “The president of the American
Veterinary Medical Assn. (AVMA) sent
a letter Dec. 28 to Agriculture Secretary Tom Vilsack reiterating the risk of limiting antibiotic use
in food-producing animals without careful consideration of
the consequences for human and animal health.
“AVMA sent
the letter following remarks Vilsack made while discussing the Obama Administration’s
food safety efforts that were interpreted by critics of the use of antibiotics
in food animals as a sign that the U.S. Department of Agriculture was moving to
limit the use of antibiotics in food animals. The department later clarified
that no change in policy had been made.”
And Deborah
Barfield Berry reported yesterday at the Montgomery Advertiser Online
(Ala.) that, “As someone who appreciates the value of compromise, Terri Sewell has
found lots of reasons to feel frustrated during her first year in Congress.
“‘The
political gridlock has definitely been the most disappointing, no doubt about
it,’ said Sewell, the only Democrat in Alabama’s congressional delegation and
the first black woman elected to Congress from the state.”
The article
stated that, “As one
of the newest Democrats on the Science, Space and Technology
Committee and the
Agriculture Committee, Sewell doesn’t have much
influence. Still,
she hopes to have input in the debate over reauthorizing the next farm bill.
“Sewell has
conducted listening tours on farm-bill issues. She also has met with black farmers
and officials at black colleges to discuss funding for research and development.
“‘They all
know that the whole government is being asked to tighten its belt,’ Sewell
said. ‘The biggest
thing is trying to make sure that we protect the gains that we made in
agriculture development in Alabama.’”
Yesterday’s
item noted that, “[Bill Stewart, professor emeritus of political science at the
University of Alabama] said it helps Sewell that there’s a Democrat in the
White House. First
lady Michelle Obama was a mentor for Sewell when they were at Princeton
University. Last January, Sewell escorted President Barack Obama to
the chamber for his State of the Union address.”
Agricultural
Economy
Bloomberg
writer Alan
Bjerga reported yesterday that, “U.S. farmers are more optimistic
about their current and future economic situation than they were in September
after profitable harvests, according to a survey- based index
produced by DTN/The Progressive Farmer.
“Farmers
rated their confidence in the agricultural economy with an index score of
109.8, compared with 107.7 in September, the agricultural news service said
today in a report. The benchmark of 100 is based on sentiment in April 2010,
when the survey was inaugurated. Higher confidence may make farmers more likely
to boost purchases of Monsanto Co. seeds or Agrium Inc. fertilizers, said Greg Horstmeier, editor-in-chief of DTN, a unit of Madrid-based Telvent GIT SA.”
Mr. Bjerga noted that, “U.S.
net-farm income will increase 28 percent this year to a record $100.9
billion as livestock sales expand and exports push crop prices higher, the
Department of Agriculture said last month. Trade also reached a record $137.4
billion in the year that ended Sept. 30, the department said in a separate
report.”
And Richard
Piersol reported on Saturday at the Lincoln
Journal Star Online (Nebr.) that, “There was no real competition for the No. 1
business story of 2011 in our region and locale: Agricultural prosperity from
Scottsbluff to Falls City, and all points between.
“While most
of the nation continued to suffer the economic consequences of the real estate
bubble and subsequent recession, the parts of rural America that depend on farming, and
especially rural Nebraska, were doing well, thank you, as high commodity prices
and record land prices pushed the farm economy to a peak.”
Meanwhile,
as voters in Iowa consider the GOP candidates for president today, Catherine
Hollander reported yesterday at National Journal Online that, “In the run-up to an election that
will hinge on the economy, Iowa looks pretty good.
“As the
national unemployment level remains staggering at 8.6 percent, the rate in Iowa
is just 5.7 percent. Thirty-six states lost a larger percentage of jobs than
Iowa during the recession.
“But the relatively low unemployment
rate makes it easy to gloss over the impact of the downturn on this Midwestern
state. True, Iowa entered the recession later than the rest of
the country and avoided the brunt of its impact. The Great Recession, however,
left a mark on the Hawkeye State that citizens are still feeling, suggesting that Iowa, just like the
rest of the country, is going to vote on the economy.”
Yesterday’s
article pointed out that, “‘It really has been more a
depressed national economy than a strong Iowa economy,’ said Peter Orazem, an economics professor at Iowa State University. ‘We’re doing better than other
places, but we’re doing worse relative to where we were five or six years back.’
“That could help explain why Iowa’s
residents identified the economy as the country’s key concern in a recent
University of Iowa Hawkeye Poll. More than 40 percent of
respondents to the poll, which was conducted from Nov. 30 to Dec. 7, said the
economy and recession was the most important problem facing the United States,
more than double the figure for any other issue.”
Ms.
Hollander explained that, “Here’s the good news: Iowa’s economy has a lot going
for it. The housing sector largely sidestepped the recession by avoiding
the boom-bust collapse seen on the coasts. The state’s agricultural economy remains strong.
Transportation and warehousing—sectors that benefit from Iowa’s location right
between the large Canadian and Mexican economies—have grown in recent years.
“Economists and analysts expect Iowa,
like the rest of the country, to continue plodding forward in its recovery next
year.”
An update
posted yesterday at the homepage of the NBC television program Rock Center with
Brian Williams (“On
eve of caucus, a different boom in Iowa: Real estate prices soar for farmland”)
indicated that, “It’s the home stretch of campaigning for Republican
presidential candidates ahead of the caucuses in Iowa. On Tuesday night,
they’ll fold up their tried-and-true stump speeches about the state of the
economy – high unemployment and faltering property values; even though in Iowa, unemployment is
(well) below the national average and farms are selling for millions of dollars.
“In Iowa,
farmland is king with prices per acre soaring more than 30 percent in the last
year, sending everyone from local farmers to out-of-towners clamoring to buy
land. Demand
for farmland has created a real estate boom not only in Iowa but across the
Midwest.”
In other
developments, Jim
Carlton reported in today’s Wall Street Journal that, “California’s wet season has started
off bone dry, leaving water managers and the state’s huge agriculture industry
nervously eyeing the prospect that a dry spell could turn into another drought.”
The Journal
article explained that, “A renewed drought could have dire economic
consequences in the nation’s most populous state. California’s $20-billion-a-year
agricultural industry is just coming off several years of having to curtail
crop production due to water restrictions.
“In a
three-year drought that lasted until last year, federal water allocations for
farmers south of the Sacramento-San Joaquin River Delta were cut to as low as
zero, forcing
growers to idle tens of thousands of acres of cropland and lay off thousands of
farm workers. That, in turn, helped drive the Central Valley’s
unemployment rate to among the highest in California.
“After
heavy rains over the past year, though, many farmers have stepped up their
production and hiring. That has helped the economy in places like Fresno County,
where the unemployment rate dropped to 15.7% in November from 16.9% in the
year-earlier month, according to nonseasonally
adjusted state estimates. The state’s overall unemployment dipped to 11.3% from
12.4% over the same time, compared to a nationwide drop to 8.6% from 9.8%,
according to seasonally adjusted state and federal estimates.”
Biofuels
The
Washington Post editorial
board opined yesterday that, “There may not have been a party in Times
Square to celebrate, but
two of the most wasteful subsidies ever to clutter the Internal Revenue Code
went out with the old year. Congress declined to renew either
the 45-cent-per-gallon tax credit for corn-based ethanol or the
54-cent-per-gallon tariff on imported ethanol, so both
expired Dec. 31.
“Taxpayers
will no longer have shell out roughly $6 billion per year for a program that
badly distorted the global grain market, artificially raised the cost of
agricultural land and did almost nothing to curb greenhouse gas emissions. A
federal law requiring the use of 36 billion gallons of ethanol for fuel by 2022
still props up the industry, but the tax credit’s expiration is a victory for
common sense just the same.”
Regulations
A front
page story in today’s Washington Post provided a detailed look at a specific
case regarding the U.S. Environmental Protection Agency and issues associated
with the Clean Water Act (“Case
ignites conservative ire over EPA: High court to review Idaho couple’s claims
in wetlands dispute”).
And Agri-Pulse Senior Editor Stewart Doan indicated
in an update posted recently at Agri-Pulse Online that, “We kick off the New Year with a conversation
with Bart Chilton,
a member of the Commodity Futures Trade Commission. Chilton insists the CFTC is
a long way from answering key questions about giant broker MF Globals demise, but has already identified several
corrective steps that the agency and Congress can take to better protect
customer funds.”
To listen
to the Agri-Pulse Open Mic interview
with Bart Chilton, just
click here.
--
Keith Good
President
FarmPolicy.com, Inc.
Champaign, IL
(t) 217.356.2269
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