Washington Report for 5-11-12

By Steve Kopperud

Senate Farm Bill on Floor After Memorial Day? House Panel Shoots for June Markup

Given the Farm Bill’s chance of enactment this year is all about timing – it has to be ready for conference action by September at the latest – Senate Agriculture Committee Chair Debbie Stabenow (D-MI) is pushing Senate Majority Leader Harry Reid (D-NV) to make good on his pledge to get the bill to the floor. She is supported in this effort by a letter this week from more than 100 of the nation’s major commodity groups who called for quick action on the bill. However, Stabenow and her panel’s ranking member, Sen. Pat Roberts (R-KS), continue to try to placate southern Senators who continue to rail against the pro-Midwest/anti-South configuration of the panel’s approved replacement of direct payments with a shallow loss Agricultural Risk Coverage (ARC) program. Reid, who’s pledged to find floor time for the bill if Stabenow produced a product with bipartisan support, hasn’t given the ag chair a date, but staff say it’s likely not until after the Memorial Day recess at the earliest. Senate Minority Leader Mitch McConnell (R-KY) says the bill will need at least a week to complete. Meanwhile, House Agriculture Committee Chair Frank Lucas (R-OK) says his committee will wrap up its Farm Bill hearings by the end of May and will be ready to dive into full committee markup by early- to mid-June. New hearings scheduled this week by the House ag panel include a May 16-17 hearing in the general farm commodities and risk management subcommittee on Farm Bill commodity programs and crop insurance, and a May 18 hearing in the conservation, energy and forestry subcommittee on energy and forestry programs in the Farm Bill. 

Southerners Still Not Happy with Senate Farm Bill

Peanut and rice producers, with tacit support from their cotton and sugar brethren in the South, continue to tell Senate agriculture leadership they’re not happy with the committee-approved package, meaning it’s unlikely the bill will get floor time until they are. Senate Agriculture Committee Chair Debbie Stabenow (D-MI) told one publication this week, “They don’t like change, but the change is coming … we spent hours and hours and hours and hours” talking about the bill, but no solutions have been reached, and she continues to urge southern crop producers to bring ideas to the table. She acknowledged the bill has provisions for peanuts and rice producers, but said right now, “The ball is in their court to help us with ideas.” She said the big hurdle is that rice producers particularly do not want to surrender their direct payments, but she said that’s a non-starter in discussions. Southern rice producers say they want congress to set a “target” or reference price below which a payment would be forthcoming, but that’s effectively maintaining the direct payment, she said. Stabenow allowed the House bill will likely have some form of target pricing, but not direct payments, saying the issue will have to be worked out in conference. 

Anti-Spending Groups Say House Farm Bill Must Cut Deeper

Tax reform, anti-government waste groups and other budget hawks called on the House this week to cut more deeply “Washington’s outsized and outdated role in American agriculture.” They called on the House to go farther than its Senate counterparts and view the $30 billion in cuts called for in the House-passed FY2013 budget resolution as the minimum that must be slashed from overall agriculture spending over the next 10 years, saying elimination of direct farm program payments “is long overdue.” They also called for major re-invention and reform of the federally subsidized crop insurance program. They warned Congress not to create what they termed “new entitlement programs” for farmers, and cited the Senate Agriculture Committee’s adoption of its shallow loss risk program as such a program. The coalition also said the Farm Bill should not undo “responsible cuts to biofuels programs” achieved last year, referring to the elimination of the blenders credit and tariff protections ended for corn-based ethanol. The groups said agriculture is one of the few sectors of the economy not feeling the effects of recession, citing record on-farm income and exports. The coalition said Congress must seize the opportunity to “re-assess unnecessary and complicated federal policies that manipulate market decisions.” 

Lenders Say “No” to Conservation Compliance Tie to Crop Insurance; Senate Looking at Crop Insurance “Reform”

Rural lenders this week told a House Agriculture Committee subcommittee hearing on the ag credit provisions of the 2012 Farm Bill that tying crop insurance qualification to conservation compliance is the wrong way to go. Meanwhile, their Senate counterparts said it’s time to further cut the federally subsidized crop insurance program which pays part of the producer premium while buying down the administrative cost of insurance carriers. The American Bankers Association, the Independent Bankers of America, the Farm Credit System and the Community Bankers of America told the House subcommittee that crop insurance is a traditional backstop for their customers, and they’re worried that tying conservation program compliance to crop insurance eligibility would hurt farmers’ ability to get and keep insurance coverage. Independent witnesses warned the subcommittee that interest rates will increase, prices will eventually drop and that the current good times are simply the cycle traditional to agriculture. In the Senate, Sens. Richard Durbin (D-IL) and Tom Coburn (R-OK) sent a letter to the Senate Agriculture Committee calling for more cuts to the crop insurance programs based on high commodity prices and the “alarming pace” of crop insurance costs to the U.S. Department of Agriculture. The two Senators cite a recent Government Accountability Office report that says imposing a $40,000 payment limit on premium subsidies would save the federal government $1 billion in 2011 alone. They also contended failure to set limits contributes to inflated land values that hurt small and beginning producers. Durbin and Coburn said their call for further cost cuts is not opposition to crop insurance – they called the program “critical” – but said it’s important to seize the opportunity to improve the efficiency of the program. 

Enviro Suit on Mississippi River Basin Run-off Gets Ag Intervention

The American Farm Bureau Federation (AFBF), 14 state farm bureaus and 16 national and regional ag groups came together this week and formally intervened in a March 2012 federal suit against the Environmental Protection Agency (EPA) filed by several environmental groups over the agency’s denial of a 2008 petition seeking new water quality standards and total maximum daily loads (TMDLs) on phosphorous and nitrogen runoff in the 31-state Mississippi River Basin (MRB) and Gulf of Mexico. It’s estimated that about 60 percent of the fertilizer used in the U.S. is applied in the MRB, and the ag groups contend this suit has broad implications for national policy on nutrient levels and runoff. The groups contend if EPA loses the suit, the court would likely force EPA to override state regulations and begin new rulemakings to set numeric water quality criteria for Total Nitrogen and Total Phosphorous throughout the MRB, as well as nutrient TMDLs for the river and portions of the Gulf. This translates, the groups say, into effluent limits and National Pollutant Discharge Elimination Systems (NPDES) permitting, TMDL loads and wasteload allocations, meaning local governments, industry and farmers in the MRB could also set new runoff limits. The groups contend the economic implications of these new regulations and standards would be significant. Similar action by EPA in just the state of Florida carries an estimated annual price tag of $298 million-$4.7 billion.

USDA Announces New Watershed Initiative

The U.S. Department of Agriculture (USDA) announced this week that it has launched a new National Water Quality Initiative aimed at improving one to seven impaired waters in every U.S. state and territory. The program is the brainchild of the White House Rural Council. USDA has selected 157 watersheds where on-farm actions have the best chance of improving water quality, and this selection was based on cooperation with state agencies, key partners and USDA’s Natural Resources Conservation Service (NRCS). NRCS will make at least $33 million in farmer/rancher assistance available to implement conservation practices to help clean up water. The money will come from the Environmental Quality Incentives Program (EQIP). All eligible applications must be submitted by June 15. Go to www.usda.gov for details.

Highway Bill Conference Action Slow Going

House and Senate highway bill conferees returned to Washington this week, but immediately hit roadblocks to reconciling the two vastly different versions of legislation to re-authorize federal highway, infrastructure and urban commuter system spending. While program items are generally painful to work out, but ultimately doable, the biggest challenge to conferees is how to try and pay for a bill the Senate says should cost $109 billion over two years and the House says should be a five-year bill and is willing to spend $260 billion. Senate Finance Committee Chairman Max Baucus (D-MT) argued strongly for full funding of the Highway Trust Fund, a move he says actually cuts the deficit over time. Sen. Orrin Hatch (R-UT), ranking member of the Senate panel, said he wants to see a package that’s paid for by the folks who benefit from the transportation system, and that a Baucus recommendation that Congress put $9.2 billion into the trust fund over the next two years and $14 billion over the next 10 years – essentially paying for two years of spending with 10 years of cuts – is the congressional equivalent of “searching under couch cushions for loose change.” House Transportation & Infrastructure Committee Chairman Dan Mica (R-FL) said the challenge is to avoid deficit spending and fund transfers by cutting waste, reforming programs and cutting the federal bureaucracy. Sen. Barbara Boxer (D-CA), chairwoman of the Senate Environment & Public Works Committee, said the conference report must be completed by early-June to get it through both chambers by the September 30 deadline. Unrelated to the financing challenge is a House provision taking away the President’s authority to review the Keystone pipeline application and mandate quick approval. Democrats oppose the provision, along with a GOP push for relaxed environmental reviews of transportation projects. Outside of the conference, trucking companies and independent operators were at odds over a Senate provision requiring computerized recording devices to be carried in all big trucks. The American Trucking Association supports using the on-board recording devices, while the independent truckers say the devices are too expensive and an invasion of their privacy.

GOP Pushes Immigration Hard Line; Season Visas Continue to Bother Growers

While some in the Republican Party – mainly at the presidential campaign level – are trying to moderate previously strident messages on immigration reform, others continue to beat the drum for a continued hard line on illegal immigrants in the U.S. as House members showed up at a talk radio host convention this week in Washington, D.C., to warn their brethren about straying from the playbook. Meanwhile, farmers and ranchers laid out their frustrations with the seasonal worker H-2A program, saying the government is making it nearly impossible to follow the rules and employ workers legally. Recently, six Senators wrote to the Department of Labor (DOL) voicing their concerns with the current system and how it’s restraining food production in their states. The six Senators urged DOL, the Department of Homeland Security and the State Department to hold regional meetings with growers to find solutions to the challenges of the visa program. Meanwhile, playing for the airwaves, some House members told the assembled talk show hosts they intend to stand tough on illegal immigration issues and urged GOP nominee-presumptive Mitt Romney to ignore pundits who urge him to soften the party stance on immigration reform.

Biodiesel Production Hits Record

In December 2011, U.S. biodiesel production hit 109 million gallons, a record and more than four times the amount produced in the same month in 2010, the Energy Information Agency reported this week. Part of the increase was attributed to a boost in production that month to take advantage of a $1-per-gallon blenders tax credit on biodiesel and renewable diesel that expired December 31. Annual 2011 production totaled 967 million gallons, also record when compared with 343 million gallons in 2010. Soybean oil was the number one feedstock at 4.2 billion pounds, followed by animal fats/oils at 41.3 billion pounds. Canola oil, yellow grease and corn oil also contributed.

Colombia Trade Pact Effective May 15

The U.S-Colombia Trade Promotion agreement goes into effect May 15 following the formal exchange of paperwork and the completion of legal requirements this week. When the agreement kicks in, there will be an immediate elimination of several U.S. ag export tariff rate quotas, particularly on poultry, but there will also be several extended phase-out periods for tariffs on other commodities.