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Executive Branch Agricultural Priorities: Influences and Debate; and the Agricultural Economy

Executive Branch Agricultural Priorities: Influences and Debate- Background

In an opinion item published in Sunday’s Washington Post, conservative columnist George F. Will stated that, “Tom Vilsack, Iowa’s former governor, calls his ‘the most important department in government,’ noting that the Agriculture Department serves education through school nutrition programs and serves diplomacy by trying to wean Afghanistan from a poppy-based (meaning heroin-based) economy. But Vilsack’s department matters most because of the health costs of the American diet. If Michael Pollan is right, the problem is rooted in politics and, in a sense, Iowa.”

Mr. Will indicated that, “Corn, which covers 125,000 square miles of America — about the size of New Mexico — fattens 100 million beef cattle and at least that many bipeds. Much of the river of cheap corn becomes an ocean of high-fructose corn syrup, which by 1984 was sweetening Coke and Pepsi. Disposing of the corn also requires passing it through animals’ stomachs. Corn, together with pharmaceuticals and other chemicals — a Pollan axiom: ‘You are what what you eat eats, too’ — has made it profitable to fatten cattle on feedlots rather than grass, cutting by up to 75 percent the time from birth to slaughter. Eating corn nourished by petroleum-based fertilizers, a beef cow consumes almost a barrel of oil in its lifetime.

“Vilsack’s department is entwined with the food industry that produces a food supply unhealthily simplified by the dominance of a few staples such as corn. This diet, Pollan says, has made many Americans both overfed and undernourished.

“Hippocrates enjoined doctors: ‘Do no harm.’ He also said something germane to a nation that is harming itself with its knives and forks: ‘Let food be thy medicine.’ That should be carved in stone over the entrance to Vilsack’s very important department.”

Recall that Michael Pollan expressed his perspective on some aspects of food and agricultural policy in a lengthy piece contained in The New York Times Magazine back in October (“Farmer in Chief”- 10.12.2008). The item was written in the form of a letter addressed to the next president of the United States.

In part, Mr. Pollan noted that, “First, your administration’s food policy must strive to provide a healthful diet for all our people; this means focusing on the quality and diversity (and not merely the quantity) of the calories that American agriculture produces and American eaters consume. Second, your policies should aim to improve the resilience, safety and security of our food supply. Among other things, this means promoting regional food economies both in America and around the world. And lastly, your policies need to reconceive agriculture as part of the solution to environmental problems like climate change.”

A couple of months later in December 2008, New York Times columnist Nicholas D. Kristof (“Obama’s ‘Secretary of Food’”- 12.11.2008 ) noted that, “As [Michael] Pollan told me: ‘Even if you don’t think agriculture is a high priority, given all the other problems we face, we’re not going to make progress on the issues Obama campaigned on — health care, climate change and energy independence — unless we reform agriculture.’”

President Obama alluded to some of Mr. Pollan’s ideas, which have transcended some aspects of the conservative and liberal political divide, this past fall.

In an interview with Time Magazine writer Joe Klein in October, President Obama stated that, “I was just reading an article in the New York Times by Michael Pollen about food and the fact that our entire agricultural system is built on cheap oil. As a consequence, our agriculture sector actually is contributing more greenhouse gases than our transportation sector. And in the mean time, it’s creating monocultures that are vulnerable to national security threats, are now vulnerable to sky-high food prices or crashes in food prices, huge swings in commodity prices, and are partly responsible for the explosion in our healthcare costs because they’re contributing to type 2 diabetes, stroke and heart disease, obesity, all the things that are driving our huge explosion in healthcare costs.”

With this general and very brief background in mind, it follows that the executive branch federal budget proposal, as well as recent dialogue generated by Agriculture Secretary Tom Vilsack, has focused on issues such as direct payments to farmers, nutrition and climate change.

A National Public Radio item from yesterday (“Vilsack Proposes Changes To Farming”) stated that, “Agriculture Secretary Tom Vilsack is proposing radical changes to farming. Vilsack tells Steve Inskeep that farmers should see the Obama administration’s new energy initiatives as opportunities to make new money, at a time when traditional farming policies run in the face of a soaring deficit.”

And Dan Looker, writing yesterday at AgricultureOnline, reported on comments made recently to the National Farmers Union convention by Sec. Vilsack- “‘There are tremendous income opportunities for farmers and ranchers in climate change legislation,’ Vilsack said.

“It could amount to billions of dollars more than what’s offered today in the farm bill’s safety net, Vilsack said.

“Vilsack said that USDA is working with a White House task force on climate change legislation and championing ‘the need for agriculture to be an integral part’ of any bill Congress might pass this year on climate change and carbon trading.”

DTN Ag Policy Editor Chris Clayton added yesterday that, “That ‘climate change’ aspect of farm payments is a theme Vilsack has been building on in recent weeks. He spoke briefly about ‘green payments’ a few weeks ago, but at the NFU meeting and at the USDA presser, Vilsack built on the argument. He said farmer income from a potential cap and trade plan for carbon credits could replace traditional farm-subsidy payments. Vilsack indicated a farmer could draw more from a cap and trade plan than they now receive in direct payments.

“‘I believe that agriculture is aggressively engaged in the cap and trade discussion and is at the table as a cap and trade system is formed and its offsets are discussed,’ Vilsack said. ‘There are significant opportunities, far in excess of what we are talking about in terms of direct payments. And knowing these operators as I do, my guess is if you gave a choice between something like that, it would be something they would gravitate towards. That’s our goal, that’s our hope. We’re absolutely willing to work with Congress. They may have better ideas and we’re open to better ideas, but I think it’s important to pursue an agenda that creates new income opportunities.’”

Ledyard King, writing yesterday at the Argus Leader Online (South Dakota), reported that, “Agriculture Secretary Tom Vilsack defended the Obama administration’s plan to phase out federal direct payments to farmers whose yearly sales exceed $500,000, though a growing number of lawmakers from South Dakota and other states say it would unfairly hurt farmers. [See related press release from Senator Tim Johnson (D-SD)].

“Vilsack told reporters Monday that while it’s crucial a ‘safety net’ remains, the federal government’s skyrocketing budget deficit has forced a re-evaluation of what Washington can afford to do for America’s farmers.”

The article added that, “[Sec. Vilsack] also said the president’s push for alternative energy provides farmers ‘tremendous economic opportunity’ to use farmland in ways that would help make up for a loss in direct federal aid while reducing America’s dependence on foreign oil.”

Reuters writer Charles Abbott reported yesterday that, “The Obama administration should drop its proposal to end the direct payment subsidy to large U.S. farmers, the National Farmers Union said on Monday, pointing to a slump in dairy and crop prices.”

The article added that, “Senate Agriculture Committee chairman Tom Harkin, Iowa Democrat, has spoken against the proposal, as did the chairman of the Senate Budget Committee, North Dakota Democrat Kent Conrad.

“The two most direct routes to curtail direct payments go through the Agriculture and Budget committee. Opposition by committee leaders makes success doubtful.

“On Monday, two Senate backers of subsidy reforms, Iowa Republican Charles Grassley and Minnesota Democrat Amy Klobuchar, told the NFU convention that they opposed the White House proposal on direct payments.”

In more specific reporting on the executive branch budget proposal, Walter Alarkon noted yesterday at The Hill Online that, “President Obama’s budget doesn’t have enough support from lawmakers to pass, the Senate Budget Committee chairman said Tuesday.

“Sen. Kent Conrad (D-N.D.) said he has spoken to enough colleagues about several different provisions in the budget to make him think Congress won’t pass it.”

The Hill article noted that, “Conrad urged White House budget director Peter Orszag not to ‘draw lines in the sand’ with lawmakers, most notably on Obama’s plan for a cap-and-trade system to curb carbon emissions.

“‘Anybody who thinks it will be easy to get the votes on the budget in the conditions that we face is smoking something,’ Conrad said.”

According to a transcript of his remarks from yesterday, Sen. Conrad also stated that, “Second was on agriculture. And you know I represent an agricultural state. I just spent the last year-and-a-half getting a Farm Bill passed, and we paid for the Farm Bill. We paid for the Farm Bill, but precious little else paid for around here. I was a little taken aback to read that people are suggesting somehow the Farm Bill is not fiscally responsible, because of all the things that have occurred around here in the last two years, it was one of the very few that was actually paid for – and it was done at my insistence – the Farm Bill was paid for. So we made a lot of tough choices. We raised money. We made spending reductions. So those who suggest that it is not fiscally responsible, I don’t think they are very aware of the history of how we got a Farm Bill passed here with 81 votes, overcoming two presidential vetoes, and reopening that at this moment is probably not a real propitious way to advance this budget.”

In a tele-news conference with agricultural reporters yesterday, Sen. Charles Grassley (R-Iowa) was asked about the general concept of federal farm subsidy payments and potential substitutions for green-based climate change type payments. To listen to a portion of this exchange, just click here (MP3-three minutes).

Meanwhile, in a related article, Juliet Eilperin reported in today’s Washington Post that, “The Environmental Protection Agency plans to establish a nationwide system for reporting greenhouse gas emissions, a program that could serve as the basis for a federal cap on the buildup of carbon dioxide and other gases linked to global warming.

“The registry plan, which was announced yesterday, would cover about 13,000 facilities that account for 85 to 90 percent of the nation’s greenhouse gas output. It was drafted under the Bush administration but stalled after the Office of Management and Budget objected to it because the EPA based the rule on its powers under the Clean Air Act.

“‘Our efforts’ to confront climate change must be guided by the best possible information,’ said EPA Administrator Lisa P. Jackson in a statement. ‘Through this new reporting, we will have comprehensive and accurate data about the production of greenhouse gases. This is a critical step toward helping us better protect our health and environment — all without placing an onerous burden on our nation’s small businesses.’”

Philip Brasher, writing yesterday at The Green Fields Blog (The Des Moines Register) reported that, “Agriculture escaped almost untouched by the proposed greenhouse gas reporting requirements announced today by the Environmental Protection Agency.

“EPA estimates that fewer than 50 of the largest beef, dairy and hog operations would have to start reporting emissions.

“Farms would only have to report their emissions of methane and other greenhouse gases if they have more than 25,000 tons of emissions.

“According to EPA, that would affect beef operations with at least 89,000 cattle, swine farms with at least 73,000 hogs, and dairy operations of more than 5,000 head. Poultry operations would have to start reporting if they have more than 895,000 chickens.”

For more information on this EPA development, just click here.

Agricultural Economy

While debate regarding the future direction of federal farm policy, the budget and climate change continue to percolate, recent news reports offer anecdotal evidence regarding some current economic variables in the U.S. farm economy.

The Associated Press reported today that, “A survey showing Iowa’s farmland values dropped for the first time in nearly 10 years does not surprise agricultural experts.

“The survey released Tuesday by the Realtors Land Institute indicates farmland values declined by an average of 7.6 percent in the past six months. That hasn’t happened since September 1999.

“Iowa State University farm economist Mike Duffy said the decline fits a trend that began late last year, when the Federal Reserve estimated a 6 percent drop in farmland values during the fourth quarter.”

The AP article added that, “The land institute is part of the National Association of Realtors that specializes in farm and land sales, management and appraisals.

“Troy Louwagie, a trends and values chairman with the institute, said the overall numbers are not as bad when paired with last September’s 6.6 percent increase.”

Bloomberg writers Whitney McFerron and Tony C. Dreibus reported yesterday that, “The livelihoods of some Texas cattle producers may depend on rain forecast for the next five days after the driest three months ever drained water supplies and curbed growth of pastures where animals normally graze.

“‘If it doesn’t rain tomorrow, I’ll be out of the cattle business in a week and a half,’ said Bill Hyman, a rancher in Lockhart and the executive director of the Independent Cattlemen’s Association of Texas. ‘We have nothing green in our pastures. Our pastures just look like dirt.’”

The article noted that, “Parts of Texas received no rain in the past 90 days, Weather Service data show. About 10 percent of Texas is in an exceptional drought, the highest classification, and 44 percent is in a severe drought. The whole state is ranked at least ‘abnormally dry’ by the U.S. Drought Monitor.

“The dry conditions also have forced cattle producers to sell animals to feedlots earlier than usual because they lack pastures suitable for grazing.”

And in a separate Bloomberg article from yesterday, Tony C. Dreibus reported that, “Wheat rose for the second time in three sessions on signs that a prolonged drought in the southern Great Plains is damaging winter crops in the U.S., the world’s largest exporter of the grain.”

Bloomberg writer Jeff Wilson reported yesterday that, “Corn rose to a five-week high and soybeans gained on speculation the worst of the banking crisis may be over, boosting demand for food, animal feed and fuel made from the crops.”

However, Reuters writer Sam Nelson reported yesterday that, “The Obama administration’s call this week for an increase in the amount of ethanol to be used in gasoline in the United States is a positive sign for corn growers but it probably will not boost seedings or corn prices this year.

“‘It’s pretty good news for corn growers and will at least keep farmers committed to corn,’ said Gavin Maguire, analyst for Ehedger.

“However, for corn prices and plantings to get a big boost, it would take better exports and increased corn feeding and so far that isn’t happening as ethanol is only one part of the equation, Maguire said.”

The article indicated that, “‘The increase to 12-13 and maybe up to 15 is kind of expected, that’s what we’ve been talking about since the outlook meeting (USDA outlook conference in February) and it will take several months before we get an answer from the EPA,’ McCambridge said.

“Analysts cautioned that corn farmers shouldn’t get their hopes up too high because there is a mandated cap on the amount of corn that can be used to produce ethanol in the United States.

“‘Right now under the current mandates, we can only go up to 15 billion gallons for production of ethanol from corn. So if they go up to 20 percent mandate that would max out the 15 billion gallons of corn-based ethanol,’ McCambridge said.

“After the 20 percent mandate is reached ‘then we go into the next generation or cellulosic-based ethanol,’ he said.”

Keith Good

 Email This Post Posted by Keith Good • March, 11, 2009 • 4:30 am