Staying good to his word, House Agriculture Committee Chairman Frank Lucas (R-OK) late this week released his committee’s version of the 2012 Farm Bill, complete with target prices to mollify southern farmers, and cutting nearly $12 billion over five years and more than $35 billion out of agriculture spending over the next decade, according to the Congressional Budget Office (CBO). Lucas’ full committee will markup the bill July 11, and standing strong with Lucas to get the bill not only through committee, but to the floor and through what promises to be a major floor fight is committee ranking member Rep. Collin Peterson (D-MN). The House bill’s overall savings is over $12 billion more than the $23 billion cut in the Senate-passed version of the bill, with food stamp program cuts in the House bill coming in at $16.1 billion, compared with around $4.5 billion in the Senate package. Lucas pledged he’d “balance” cuts in farm programs with cuts in entitlement sections of the U.S. Department of Agriculture’s (USDA) overall authority. The savings expected from House re-invention of farm programs at $23.6 billion, however, is offset by an increase in federal crop insurance spending of about $9.5 billion, bringing the net savings on crop payment spending to about $14 billion. The remainder of the overall savings is generally the result of consolidating 23 conservation programs into about 13 remaining programs and eliminating several other programs that have expired or will expire shortly. The full text of the bill and a digest can be found by going to www.agriculture.house.gov.
Crops: The bill’s commodity title modifies the Senate’s shallow loss approach to protecting farmer income and repeals direct payments, countercyclical payments, ACRE and SURE programs, replacing it with a choice of two programs based on and acting as complements to the federal crop insurance program while including target or “reference” prices in both options. The first is called Price Loss Coverage (PLC) that will work to address “deep, multiyear price declines.” PLC will use yields and an index of below-cost-of-production prices to create a price-based risk management system, but will only cover multiyear losses based on price while preventing “the need for costly and unbudgeted bailouts when markets collapse,” the committee said. The second option is called Revenue Loss Coverage (RLC), which the House said is similar to the Senate bill’s Agriculture Risk Coverage (ARC) shallow loss program, but with “key improvements.” The RLC program requires farmers to have at least a 15 percent loss, “helping ensure that all risk is not removed from farming and that no growers are guaranteed profits.” The coverage is based on county-wide losses so that it doesn’t provide a no-cost farmer protection program, and uses yield “plugs” and a below-cost-of-production prices as the benchmark in setting revenue-based risk management. There is no commodity restriction on either the PLC or RLC programs allowing farmers to plant for the market, while remaining eligible for marketing loans. Target prices, a per-bushel basis, included in the bill are wheat, $5.50; corn, $3.70; soybeans, $8.40; sorghum, $3.95; barley, $4.95; oats, $2.40; rice, $14 cwt; other oilseeds, $20.15, and peanuts, $535 ton.
Crop Insurance: The House ag panel says its bill “does no harm to crop insurance,” recognizing the $12 billion in cuts the program has sustained over the last five years. It also says that by cutting farm programs by 23 percent, crop insurance is more important than ever. The Supplemental Coverage Option (SCO) that provides area-wide, group risk policies is created to cover losses not directly covered by individual farmer policies. Unlike the Senate bill, there is no conservation participation required for crop insurance coverage.
Dairy: The House bill will give dairy producers the option of voluntarily signing up for a margin protection program based on feed costs and milk prices – Peterson’s program and similar to the Senate bill – but participants would be required to follow “supply management controls” under which “proceeds of milk sales normally received … would be reduced” for production that exceeds the farmers base. Any funds collected under this program by the government would be used to buy surplus dairy for donation to food banks and other programs, the committee said. The basic margin protection covers 80 percent of production history when the margin falls below $4 for two consecutive months, and producers could buy additional protection up to an $8 margin. The first 4 million gallons of milk have a lower premium rate to benefit smaller producers, and supply management kicks in when margins are below $6 for two consecutive months, reducing producer payments by 2-8 percent depending on the market. Also re-authorized are the dairy forward pricing program; the dairy indemnity program and the dairy promotion and research program. Gone are the dairy product price support program, the milk income loss contract program, dairy export incentive program and the federal milk marketing order review commission.
Livestock: Supplemental Agriculture Disaster Assistance (SADA) is re-authorized for livestock producers, with the Livestock Indemnity Payments, Livestock Forage Disaster Program, Emergency Assistance for Livestock, Honey Bees and Farm-Raised Fish, and the Tree Assistance Program all “generally” re-authorized.
Conservation: The Conservation Reserve Program (CRP) is capped at 25 million acres with enrollment focused on the “most environmentally sensitive lands” for a savings of about $4 billion. Expiring acres will get priority consideration for working grassland contracts and Conservation Stewardship Program contracts, and producers will be given the ability to enter into contracts of working land programs before CRP expires. The Environmental Quality Incentives Program (EQIP), a favorite of livestock producers, is re-authorized.
Trade: Market Access Program (MAP) and the Foreign Market Development (FMD) program and the GSM-102 program are all re-authorized. Foreign food assistance programs are modernized, but continue.
Research: Several programs are repealed, but 47 research, extension and education programs are re-authorized. Nearly 80 research and extension programs and reports are also repealed, along with elimination of five additional research and extension programs that have or are about to expire. Overall funding is reduced $500 million, and direct spending is cut $83 million over five years. The shortage of veterinarians is addressed by requiring development of programs to support private vet practices and tie specific service requirements by vets to that support. There is no mention in the House bill of new programs to permit public/private research programs as there is in the Senate.
Energy: The program authorizes or re-authorizes the Rural Energy for America Program (REAP); the Biomass Crop Assistance Program (BCAP); the Biorefinery Assistance Program (BAP), the Biobased Markets Program (BMP), and the Biodiesel Fuel Education Program (BFEP), along with several other advanced biofuels, research, feedstock flexibility and wood energy programs. The bill kills several programs, including the Renewable Fertilizer Study, the Biomass Research & Development Program and the forest biomass energy programs.
Reaction to the just-released House 2012 draft Farm Bill has been generally mixed depending on the political philosophy and program priority of the group. And no matter how the July 11 markup goes, the bill is facing an uphill trek because if the bill is approved next Wednesday, there are only 18 working days left in the House schedule and House leadership has still not publicly signaled its willingness to bring the bill to the floor. Meanwhile, Senate Agriculture Committee Chairwoman Debbie Stabenow (D-MI) said she’s concerned about differences between her bill and the House ag panel’s bill. In a statement she focused on the dramatically different approaches to cutting foods stamps, saying, “Rather than focusing on fraud and misuse like the Senate bill, the House bill takes far greater cuts in food assistance by changing eligibility rules. …” Most commodity groups praised the bill generally, but it’s known most also believe any major changes not achieved in committee or during floor debate will be sought in conference with the Senate. One sustainable ag group said the House bill “flunks the reform test,” meaning it lacks “hard caps” on per-farm subsidies for all producers. Both Lucas and Peterson contend they can get a committee-marked up bill ready for conference with the Senate if House leadership is friendly. If not, then Lucas has a one-year extension of current programs ready to go, effectively kicking the omnibus farm legislation into the next Congress where House and Senate start from scratch. Also hanging over an extension is the operational and cost complications it creates. Several USDA programs do not operate on the congressional October-September year, meaning several programs would be suspended or killed outright by an extension. The Congressional Budget Office (CBO) estimates a one-year extension of existing programs would cost in excess of $8 billion. Further challenging Lucas is a band of conservative House members now calling the Farm Bill the “food welfare bill” because 80 percent-plus of the bill’s cost is wrapped up in food stamps. These budget hawks and their opposition were expected, while Democrat opposition to cutting the food stamp program will be significant. A conservative member’s staffer told a Capitol Hill newspaper, “We’re trying to figure out how to keep this bill from coming to the floor altogether.” Secretary of Agriculture Tom Vilsack politicized the timing dilemma, criticizing House Speaker John Boehner (R-OH), a former ag committee member and no fan of farm bills generally, and Majority Leader Eric Cantor (R-VA) for “turning their backs on farmers” and “hitting the pause button” on the Farm Bill. Boehner and Cantor have already announced they will hold a chamber vote on repealing the Affordable Care Act (ACA) on July 11. Vilsack said such political moves jeopardize the chances of getting a bill done and to the President’s desk before programs expire, and cited the need for disaster assistance programs in the wake of fires out West, and drought in the Midwest and Southwest. Others are concerned that while food stamps is one target, spending in other areas of the bill is also in the bullseye for members looking to use the Farm Bill as a candidate for slash and burn budget cuts.
The U.S. Department of Agriculture (USDA) says corn acres planted for all purposes are up 5 percent from last year to 96.4 million acres, the highest planted acreage since 1937. Farmers are expecting to harvest about 88.9 million acres for grain, up 6 percent from last year, but lower than earlier forecasts due to drought abandonment and more silage use than previously thought. At the same time, the University of Illinois says that because of “current and upcoming weather conditions,” average yield will fall below 150 bushels per acre. Soybean planted area is estimated at 76.1 million acres, up about 1 percent from last year, and all wheat acres are estimated at 56 million acres, up 3 percent from last year. Again, yields are reliant on relief from current high temperatures and a lack of rain. Illinois analysts Darrel Good and Scott Irwin said previously hoped for corn yields averaging 166 bushels per acre are “above trend” and rely on very favorable weather conditions over a wide area through the entire growing season. Above average rain and below average temperatures from late-June through August are needed for such high yields, but because of weather conditions so far and the near-term hot, dry forecast, an “above trend yield is clearly not in the cares this year.” Corn stocks are down about 14 percent from last year, USDA said in a separate report, at a total 3.15 billion bushels. About 1.5 billion bushels are stored on-farm, down 12 percent, and off-farm stocks at 1.67 billion bushels are down 16 percent from last year. Wheat stocks are down 14 percent from last year to 743 million bushels. On- and off-farm stocks are both down 14 percent from last year. Soybean stocks are estimated at 667 million bushels, up 8 percent from June, 2011. On-farm stocks are 179 million bushels, down 18 percent from last year, and off-farm stocks 488 million bushels are up 22 percent from last year.
The World Trade Organization (WTO) last week denied the U.S. appeal of an earlier decision holding the U.S. country-of-origin law (COOL) – by virtue of its recordkeeping requirements and origin verification standards – violates trade agreements “by according less favorable treatment to imported Canadian cattle and hogs than to like domestic cattle and hogs.” However, the appeals panel reversed itself in part, saying labels do provide consumer information and the U.S. has the right to label products to provide such information. U.S. Special Trade Representative Ron Kirk said this reversal affirmed the U.S. right to label. The American Meat Institute (AMI) said the U.S. must abide by the WTO ruling, and said it’s time for Congress to act to change the law so it meets WTO obligations. The National Cattlemen’s Beef Association (NCBA) and the National Pork Producers Council (NPPC), both of which opposed the original COOL law and warned of trade implications, said the WTO decision means COOL is now an unnecessary burden to trade, and urged the Obama Administration to abide by the WTO ruling. The governments of Canada and Mexico, which filed the original complaint, applauded the WTO decision.
Seventeen national feed, livestock, poultry and animal science groups this week sent a letter to the leaders of the House and Senate Agriculture Committees disputing a recently released Consumers Union (CU) “survey” on consumer concerns about antibiotics used in livestock and poultry production. Meanwhile, Rep. Louise Slaughter (D-NY) released her survey of food retailers and their sourcing practices when it comes to antibiotics use in feed. The aggie letter went into great detail correcting gross misstatements of fact and misinterpretation of data used in the CU poll of consumers and their priority on buying antibiotic-free meat. However, the groups also challenged CU’s assertion that one production system is better than another and that by implication one food source is safer than another in its reporting of its polling. “We do not believe it serves the consumer to stigmatize certain production systems to boost others. Blanket actions to restrict antibiotic use would actually make our food system less safe, limit our ability to prevent, control and treat disease and hurt countless animals … we stand firm that antibiotics, when used properly and under the oversight of a veterinarian, are critical to making safe food,” the groups said. Slaughter, who wrote to 60 national supermarket and restaurant companies asking for details of their meat sourcing programs when it comes to antibiotic use on farms, said that while a small number of companies – Whole Foods, Chipotle, and Niman Ranch – provide “antibiotic-free” meat, an overwhelming majority of companies don’t. The companies cited by Slaughter – all long-time critics of antibiotic use on farms – were praised for their “transparency.”
Rep. Floyd Flake (R-AZ), running for his state’s open Senate seat, last week introduced a bill that would require the Environmental Protection Agency (EPA) to mandate blending rates for cellulosic biofuels based on the actual production of the fuel, not on levels required under the federal Renewable Fuel Standard (RFS). Flake’s bill is aimed at the RFS mandate EPA is required to impose on gasoline makers to blend 8.65 million gallons of cellulosic biofuel this year despite the fact there are no commercially viable cellulosic plants operating in the U.S. While the oil and gas industry is challenging the “projected volume” mandate in federal court and is asking for credits given there’s no fuel to blend, Flake said the so-called “phantom” production figures add millions to the cost of energy production. The American Coalition for Ethanol (ACE) said the Flake bill “panders to oil companies” and ignores a number of cellulosic biofuels plants slated to come on line in the next 18 months. EPA has lowered the cellulosic blend mandate twice over time given the lack of commercial production.
A bill that would allow states to opt out of regulations under the Clean Water Act (CWA), Clean Air Act (CAA) and the Resource Conservation & Recovery Act (RCRA) if rules were deemed to be “overly burdensome” to farmers, ranchers and other ag producers was introduced late last week by Rep. Ann Marie Buerkle (R-NY). Under Buerkle’s bill, if the governor or “state chief executive officer” found the regulations burdensome to farmers they could specify which rules their state would ignore. “EPA has been issuing rules and regulations at an alarming rate over the past several years,” Buerkle said. “This relentless activity has hurt many farmers and other agricultural producers across the U.S. who are struggling to keep up with the government’s … intrusion.” Buerkle is expected to offer her bill as an amendment to the Farm Bill if it ever gets to the floor.
The Commodity Futures Trading Commission (CFTC) will hold a July 10 meeting in Washington, D.C., to consider two final rules and a proposed rule. The two final rules are those covering the definition of “swap” and the end-user exception to clearing. The proposed rule deals with an exemption to clearing rules for certain swaps by cooperatives. The meeting will be held at CFTC headquarters, Three Lafayette Center, 1155 21st St. NW, Washington, D.C., and will begin at 9:30 a.m. The meeting can also be accessed toll-free by dialing 1-866-844-9416, or can be watched as a webcast at http://www.cftc.gov/.
Following last week’s U.S. District Court of Appeals in Washington, D.C., ruling upholding the Environmental Protection Agency’s (EPA) 2009 “endangerment finding,” the basis for the agency’s action on regulating greenhouse gas (GHG) emissions, the agency this week re-assured small business by finalizing its permitting threshold regulations, explaining it will only regulate carbon dioxide (C02) emissions from sources that emit 50,000 tons or more a year. The threshold announcement “maintains the focus on the nation’s largest emitters that account for nearly 70 percent of the total GHG pollution from stationary sources while shielding smaller emitters from permitting requirements,” EPA said. The agency is also finalizing regulations that allow companies to set company-wide emissions limits for C02, which it says will streamline the permitting process.
The recently enacted two-year federal highway program extension package – which carries a federal student loan interest rate extension and a re-authorization of the federal flood insurance program – also protects certain agriculture exemptions to federal trucking regulations applicable to other commercial drivers. Protected is the exemption won in 2009 that farm trucks under certain conditions are exempt from hours-of-service rules (HOS) and drivers license requirements as long as they haul inputs and other commodities from source to retail or retail to farm during planting and harvest times. Drivers are not required to take some drug tests nor are they mandated to have commercial drivers’ licenses under certain conditions. The exemption applies to all farm vehicles under 26,000 pounds that are hauling commodities – including fertilizer, feed and ingredients – livestock and equipment and are operated by a farmer, rancher or their employee. Heavier trucks are exempt if they are within 150 air-miles of the farm or ranch.