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Rural/Farm Politics; Climate Legislation; Ag Economy; Dairy Assistance; Animal Agriculture; Crop Insurance; Trade; and Food Safety
Rural/Farm Politics
Dan Morgan noted in yesterday’s Washington Post that, “Climate change legislation was moving along in the House in June when it ran into a tractorcade. Dozens of farm-state lawmakers, led by the blunt-talking Minnesotan who chairs the House Agriculture Committee, blocked the way.
“Only after Democratic leaders agreed to a raft of changes drawn up by Rep. Collin Peterson (D-Minn.) did the bill squeak through the House, 219 to 212.
“It was a striking demonstration of agricultural interests stamping their imprint on key parts of the Democratic program. That may come as a surprise to those who thought the ‘farm bloc’ disappeared sometime around the end of the Eisenhower administration. In fact, its clout has been reshaping — and in some cases halting — the ambitious agenda of President Obama and Speaker Nancy Pelosi (D-Calif.).”
Mr. Morgan added that, “A bloc of moderate-to-conservative rural Democrats in both houses now holds the fate of health-care legislation in its hands. Meanwhile, the American Farm Bureau Federation, the nation’s largest farm organization, has vowed to kill the climate change bill in the Senate. And last week, farm groups forced significant changes in food safety legislation by limiting the Food and Drug Administration’s role in tracing suspected pathogens back to farms.
“You might call these newly empowered farm-state lawmakers the Agracrats. They’re Democrats, all right. In the House, many of them are newcomers who defeated Republicans in 2006 or 2008. In the Senate, Democrats have 12 of the 18 seats in the central farm belt and northern Great Plains.
“And while their influence is hardly new — over the years the farm bloc has fought off efforts to reduce farm subsidies and, in the 1990s, to raise gasoline mileage requirements for cars and trucks — this latest rise of the Agracrats poses a dilemma for the Democratic Party. Rebuilding the urban-rural coalition that enabled Democrats to control Congress for most of the final two-thirds of the last century has been a major achievement. Last year, 49 House Democrats were elected in districts carried by the Republican presidential candidate, Sen. John McCain (Ariz.). But Agracrats are putting the needs of farmers, ranchers and rural communities ahead of party loyalty, often to the chagrin of more liberal lawmakers.”
Yesterday’s Post item noted that, “It’s clear that, going forward, agricultural interests will press to either kill or further rewrite the climate change bill. The Farm Bureau, reflecting concerns of Southern rice and cotton growers, sees few advantages in the legislation. Peterson himself has said he will not vote for a final House-Senate compromise unless it includes further improvements and ‘meets my test for rural America.’
“Speaker Pelosi has actively courted rural America, and she has shown no signs of cracking down on the rural dissenters in her party. One of her first trips after taking office was to the annual meeting of the National Farmers Union, where she danced to the sounds of a Capitol Hill rock-and-roll band, the Second Amendments, in which Peterson is guitarist and lead singer.
“The farm bill, enacted in 2008, was an early sign of Pelosi’s support for rural interests. At Peterson’s urging, she backed it even though it continued billions of dollars worth of farm subsidies she had previously voted against. In return, using his connections to the Blue Dogs, Peterson helped pass the Democratic budget plan in the House this year.”
Mr. Morgan indicated that, “As head Agracrat in the House, Peterson has cast himself as a mediator, rewriting legislation to bring rural lawmakers on board. While many liberals smart at his activism, Pelosi has praised him publicly for helping pass the climate bill. And more accommodations may be coming on immigration and the administration’s plan to help African farmers grow more food.
“‘We have never had an Agriculture Committee chairman get into other areas of jurisdiction on behalf of rural America the way this chairman has,’ said Michael McLeod, a Washington lawyer and lobbyist who served as counsel to the Senate Agriculture Committee in the 1970s.”
Climate Legislation
More specifically on the climate debate, Philip Brasher reported in yesterday’s Des Moines Register that, “Forget the food-vs.-fuel debate for a while. The new issue is carbon vs. food.
“How this debate plays out could go a long way to deciding the fate of the Obama administration’s effort to reduce U.S. greenhouse gas emissions.
“The debate over a House-passed climate bill has focused on how much it will raise energy costs, including the cost of farming. When the Senate returns this fall to write its version of the bill, attention will turn to the impact on food prices.”
Mr. Brasher explained that, “This became clear at the Senate Agriculture Committee’s first hearing on the climate issue. Senators from both parties demanded to know what impact a cap-and-trade system would have on land use and food costs. Economists at the U.S. Department of Agriculture are working to learn the answers.
“The issue is simple: A cap-and-trade program, such as the one approved by the House, would allow utilities and other polluters to comply with caps on greenhouse gas emissions by purchasing credits from landowners who plant trees on their property.
“The question is how much land that’s now in crops or pasture is likely to be converted to forests.”
The Register article indicated that, “Quite a bit, according to the Environmental Protection Agency’s analysis of the House-passed bill. The analysis predicted there would be less cropland as a result of the bill because acreage would be converted to trees to earn carbon credits.
“Reducing the amount of available cropland likely would raise the price of commodities such as corn and soybeans, increasing feed costs and eventually food prices.”
Yesterday’s article pointed out that, “Agriculture Secretary Tom Vilsack said the lost acreage, however much it is, isn’t likely to be good cropland, and farmers can make up for it with higher yielding crop varieties and more efficient feed use.
“‘I’m not willing to concede that (cap-and-trade) will necessarily result in an acre-for-acre reduction’ in cropland, Vilsack said.
“But without more economic analysis, Vilsack is trying to sell the climate bill on a ‘hope and a prayer,’ said Sen. Mike Johanns, a Nebraska Republican and former agriculture secretary.”
In related news, Sen. Johanns issued a news release on Friday, which stated that, “Senator Mike Johanns and eight of his colleagues on the Senate Agriculture Committee yesterday sent a letter to Committee Chairman Tom Harkin (D-IA) supporting additional hearings on climate change legislation. The letter suggests that the hearings investigate the impact cap-and-trade legislation would have on agriculture; forestry; rural America; and other issues relating to agriculture. Additionally, the letter asks for a Committee mark-up where members can debate and offer amendments to this legislation before it reaches the Senate floor. Senate Democratic leadership has requested Senate committees finish holding hearings by September 28.”
Meanwhile, in a letter to the editor published in today’s Washington Post, J. Patrick Boyle, the president of the American Meat Institute, noted that, “Ezra Klein’s commentary ‘The Meat of the Problem’ [Food, July 29] was inaccurate and not scientifically based. The U.N. report ‘Livestock’s Long Shadow,’ the foundation for Mr. Klein’s commentary, asserted that the livestock sector is responsible for 18 percent of greenhouse gas emissions worldwide.
“The Environmental Protection Agency concluded that in 2007, only 2.8 percent of U.S. greenhouse gas emissions came from animal agriculture.
“Livestock production systems in the United States differ notably from livestock practices worldwide in genetic selection, feeding practices and other technologies. Assigning a percentage of global emissions to the U.S. system is misleading because the vast majority of global greenhouse gas emissions attributed to livestock production result from deforestation and the conversion of rain forests and other lands to crop or pasture land, which does not occur in the United States.”
In opinion regarding climate change legislation, Steve Cochran, the director of the national climate campaign at the Environmental Defense Fund, opined today at Roll Call Online that, “The Senate, of course, has its own personality, but the political challenges on the north side of the Capitol are essentially those the House has already grappled with. The House bill protects the biggest constituency of all — consumers — by giving a large amount of allowances to utilities with the requirement that they must be used to benefit customers. As a result, the Congressional Budget Office puts the cost to the average household at about a postage stamp a day.
“Industries like steel, glass and aluminum, which use lots of energy and face foreign competitors not yet under a cap, will be given allowances for a transition period. And thanks to the use of agricultural offsets, a comprehensive analysis by the Department of Agriculture says the bill will be a net plus for farmers, to the tune of billions of dollars.
“Just as in the House process, you can read a lot in the press right now from Senators who are concerned about consumer costs, protecting manufacturing and taking care of farmers. No doubt the Senate will put its own stamp these issues, and there is room for improvement. But in dealing with the policy challenges, House Members have provided solutions. And by passing the bill, they have shown that those solutions pass the political test as well. The Senate would be well-served to study those solutions as it crafts its own bill.”
Ag Economy
The AP reported on Sunday that, “Carl Rupp and his neighbors follow the old rancher’s creed: ‘Keep your money in your pocket.’
“Rupp has farmed his whole life. He lives in Goshen County, a rural spot along the Nebraska line where cattle outnumber humans 16 to 1 and you can still see the ruts cut by wagons that hauled pioneers along the Oregon Trail. ‘We’re very conservative,’ said Rupp, 62. ‘We don’t go out too far on a limb.’
“That prudent financial bent, matched with the high prices paid for crops and energy in the past few years, has largely protected Goshen County and a core group of several hundred other counties in 10 states from the recession’s chokehold. The Associated Press Economic Stress Index shows they make up a ‘safe zone’ that covers a long swath of middle America, from the Great Plains south to Texas.”
The AP article indicated that, “But the safe zone is shrinking. Energy production and prices are sliding, especially for coal and natural gas. Crop prices are dropping, too, as there’s less demand in Asia for American wheat, corn and soybeans. There were 800 counties in the safe zone a year ago, a number that dropped to about 300 counties in May and slid further to 200 counties in June.”
The AP writers added that, “But while not in a bust cycle, ag prices are still down enough from last summer’s highs to worry Doug Goehring, North Dakota’s agriculture commissioner.
“‘If you really want to hurt the economy, beat the heck out of agriculture,’ Goehring said. ‘It is a primary sector in our economy. It is generating new wealth. You can’t just rely on services to drive your economy.’”
With respect to price levels, the USDA’s National Agricultural Statistics Service (NASS) released its monthly Agricultural Prices report on Friday; in part, the NASS report stated that, “The corn price [related graph], at $3.33 per bushel, is down 70 cents from last month and $1.92 below July 2008…The soybean price [related graph], at $10.30 per bushel, decreased $1.10 from June and is $3.00 below July 2008…[and]… The July all wheat price [related graph], at $4.92 per bushel, is down 75 cents from June and $2.23 below July 2008.”
And in the dairy sector, Friday’s NASS report stated that, “The July all milk price of $11.30 per cwt is unchanged from last month but down $8.00 from July 2008 [related graph].”
Dairy Assistance
On the issue of low prices from the dairy sector, a news release issued on Friday by USDA stated that, “Agriculture Secretary Vilsack today announced that the Obama Administration is taking immediate action to support struggling dairy farmers by increasing the amount paid for dairy products through the Dairy Product Price Support Program (DPPSP). USDA estimates show that these increases, which will be in place from August 2009 through October 2009, will increase dairy farmers’ revenue by $243 million.”
More background on this announcement was included in a Daily Radio News audio item from USDA on Friday, which noted that, “Dairy producers should see somewhat better prices for their milk over the next three months as USDA is raising dairy support levels.”
Scott Kilman reported on Friday at The Wall Street Journal Online that, “An Agriculture Department spokesman said the agency doesn’t expect the temporary hike in price-support levels to result in higher dairy prices for consumers;” and added that, “Economists expect milk prices to climb next year, but that is due in part to forecasts that a broad shakeout could force many farmers to quit the dairy business.”
Reuters writer Christopher Doering reported on Friday that, “Farm groups and lawmakers applauded the increase but said it was a stop-gap move. Connecticut Rep. Joe Courtney, co-chairman of the Congressional Dairy Farmers Caucus, said there ‘is a systemic issue that we have to examine seriously,’ meaning a milk surplus.
“Several caucus members called for more federal action in the short term, including higher payment rates in the Milk Income Loss Contract subsidy.”
In reference to the USDA action, a news release issued on Friday by Senator Kirsten Gillibrand (D-NY) noted that, “‘While this is great for New York’s dairy farmers, this is only a temporary solution to the fundamental problems with the dairy pricing system,’ Senator Gillibrand said. ‘When I met with Secretary Vilsack on Wednesday, I made it clear that the current system is not working for New York dairy farmers – who have been pushed farther and farther toward bankruptcy. During these tough economic times, this increase will bring some much needed relief for our farmers.’
“New York farmers are facing a dairy pricing crisis. According to Farm Credit, it costs dairy farmers $17.58 to produce a hundredweight of milk. Yet the market is only paying $13.33 per hundredweight. The Milk Income Loss Contract (MILC) program was designed to be a safety net when there is a large price discrepancy. However, as the MILC program currently works, farmers are not even receiving enough income to cover the cost of staying in business. New York farmers have been forced to either take on massive debt to cover their costs or go out of business.”
Animal Agriculture
On Friday, The United States Agricultural & Food Law and Policy Blog pointed to a recent AP article, which reported that, “Michigan farms would have to meet the agriculture industry’s current animal treatment standards by 2020 under legislation that moved ahead Thursday despite a host of complaints from opponents.
“Michigan and most other states have no laws addressing the health and welfare of farm animals. The bills are meant to address consumers’ concerns following food recalls, but farm lobbyists hope they also will head off more stringent regulations like the ballot measures recently passed in California and two other states.”
The AP article explained that, “The legislation would put into law voluntary industry guidelines for farm animals’ care – ranging from how much living space they need to slaughter practices – and require audits of livestock farms. A 12-member council would review and possibly recommend updated animal care standards at least every five years.
“The House Agriculture Committee voted 7-1 to send two bills to the full House, meeting Chairman Mike Simpson’s goal of acting by the end of July. The Democrat from Jackson tried to alleviate concerns that the vote was held too quickly – three Democrats abstained from voting and another voted ‘no.’”
The Grand Rapids Press editorial board noted yesterday that, “The legislation is a preemptive strike against the Humane Society of the United States, which is considering a ballot measure similar to one passed in California that would mandate standards for farm animal treatment.”
Meanwhile, Stacy Finze reported on Friday at the San Francisco Chronicle Online that, “A New York congresswoman is trying to rally support for a federal bill that would restrict antibiotic use in food animals just months after a similar measure tanked in California.
“Despite being voted down in Sacramento, a proposal that bans feeding antibiotics to cattle, hogs and poultry to increase their growth seems to be gaining momentum in the nation’s capital, where the Obama administration has condemned the practice.”
Friday’s article added that, “But some ranchers and farmers argue that the measure would probably endanger livestock, flood the market with imported meat and raise the cost of producing food.
“‘I worry about unintended consequences of such legislation, such as increased need for therapeutic drug use in livestock, which has been seen in Europe,’ said veterinarian Michael Payne, a researcher and education coordinator from UC Davis’ Western Institute of Food Safety & Security. ‘Also, removing tools that allow us to more efficiently produce food may ultimately jeopardize our ability to feed ourselves.’
“Michael Apley, a clinical pharmacologist, veterinarian and professor at Kansas State University, said there is no doubt that keeping animals in close quarters ‘can allow some diseases to spread more rapidly.’
“‘But we couldn’t produce half of what we produce if we let them graze on pasture.’”
Crop Insurance
Friday’s edition of The Kiplinger Agriculture Letter reported that, “The national crop insurance program is growing like gangbusters. At $90 billion in ’08, the value of crops insured doubled in three years, largely due to the popularity of revenue policies, which insure against crop losses and low prices. Nearly 70% of crop coverage is now this type of policy. In ’08, policies for corn, soybeans and wheat were insured at robust spring prices while claims were based on lower harvest prices. The payout: $7 billion for insured growers of those crops, even though all three of them had good yields overall that year.”
And in a related research paper regarding the issue of conservation program benefit estimates and crop insurance, David A. Hennessy authored a paper entitled, “Land Retirement Program Design in the Presence of Crop Insurance Subsidies,” which was posted recently at the Center for Agricultural and Rural Development Online.
A summary of the paper indicated that, “The U.S. federal government implements environmental, biofuels and crop insurance programs that influence land use. They are not well integrated in that cost savings from crop insurance subsidies are not acknowledged when screening land for retirement or when calculating the cost of land retirement programs. We identify and evaluate an optimal benefit index for enrollment in a land retirement program that includes a sub-index to rank land according to insurance subsidy savings. All else equal, land ranked higher in the Lorenz stochastic order should be retired first.”
Trade
An update posted on Friday at the WTO Online stated that, “At a meeting of the Dispute Settlement Body (DSB) on 31 July 2009, a panel was established regarding US measures that, according to China, affect imports of Chinese poultry.”
A statement issued on Friday by the U.S. Trade Representatives Office noted that, “The United States is disappointed that China has decided to pursue its request for a panel in this matter.
“We understand that a panel will be established today. Nonetheless, we do not agree with China’s assertions that the measure at issue amounts to a discriminatory or protectionist measure.”
Food Safety
Kevin Bogardus reported on Saturday at The Hill Online that, “Trade associations representing everything from small farmers to pork producers are looking to the Senate for quick fixes to a food safety bill that passed the House Thursday.
“Several say they want to see the bill become law in order to improve the safety of a national food chain that is in dire need of reform. Many, however, believe the legislation is in need of improvement while others will work to defend language in the House bill that protects their respective industries.”
The Hill article explained that, “Representatives for agricultural groups are looking to food safety legislation by Sen. Dick Durbin (D-Ill.) that has attracted co-sponsors from both sides of the aisle as a vehicle in the Senate.
“But it is still unclear on who will take up the food safety bill in the upper chamber, which passed in the House 283-142 Thursday. In addition, the legislation will have to compete for floor space with a number of other priorities in the fall, such as healthcare reform and a climate change bill, creating ‘a bottleneck,’ according to [Roger Johnson, president of the National Farmers Union].”
Keith Good
