Follow us on twitter
Site Feed
Podcast
Email Updates
House Ag Committee: Farm Bill Reauthorization Starts Today
Wall Street Journal writer Lauren Etter reported in today’s paper that, “Three years ago, the Food Bank for Monterey County would receive a truckload filled with as much as 40,000 pounds of dented soup cans, mislabeled cereal boxes and other salvage products every three weeks, says Leslie Sunny, the bank’s executive director. Now the bank receives one truckload every three to four months ‘if we’re lucky,’ she says.
I. Farm Bill News
II. Ag Economy
III. Food Banks
I. Farm Bill News
A message from House Ag Committee Chairman Collin Peterson (D-Minnesota), which was posted yesterday at the Committee’s webpage, stated that, “The House Agriculture Committee has started the process of writing the 2007 Farm Bill. This will be an open and public process, allowing for debate and discussion about all of the issues included in the Farm Bill. We have received feedback from farmers, ranchers, and advocates nationwide about each and every part of the Farm Bill. The full spectrum of proposals and ideas that we have received will be included in the Farm Bill debate.
“I encourage the public to follow the development of the Farm Bill. Every American who eats should recognize the importance of farm and nutrition policy in everyday life. The Farm Bill ensures that all Americans have access to a safe, secure and inexpensive food supply and provides a safety net for farmers and ranchers. It also authorizes important nutrition programs, encourages environmentally friendly conservation programs, and supports the development of agriculturally based renewable energy, which will help to reduce our dependence on foreign oil.
“We have created a Farm Bill Homepage where you can get all of the information available from the Agriculture Committee that is related to this year’s Farm Bill process.
“Live audio access to all of the business meetings held by the House Agriculture Committee’s subcommittees and full committee will be streamed online here.”
Also yesterday, the House Ag Committee issued a publication notice, which stated that, “The preliminary discussion draft for the research section of the Farm Bill was released today.”
Yesterday, USDA’s National Agricultural Statistics Service estimated that, nationwide, 92 percent of the corn crop was planted, compared with an 86 percent average in the last five years. (USDA Photo by: Tim McCabe “Field of corn”).
As of this morning, draft proposals for the conservation, credit, energy and research titles have all been posted at the Committee’s webpage.
With respect to the conservation title, Congressional Quarterly writer Catharine Richert reported yesterday that, “A House subcommittee kicks off the farm bill reauthorization process Tuesday when it debates conservation programs.”
The CQ article added that, “The draft conservation language met with mixed reviews from conservation groups, which support efforts to make some farmland protection programs more rigorous but question the adequacy of the funding.
“The proposal ‘provides a road map to a healthier environment but includes too little fuel to reach the destination,’ said Scott Faber, farm policy campaign director for the advocacy group Environmental Defense.”
Recall that yesterday’s FarmPolicy.com update contained a summary of some of the major provisions of the conservation draft proposal that was written by DTN’s Chris Clayton.
On Monday, Mr. Clayton penned an article at DTN (link requires subscription) discussing the energy draft proposal, which noted in part that, “The proposed farm-bill energy provisions that will be considered by the House Agriculture Committee focus heavily on loan guarantees to biofuel facilities over the next five years.”
The article indicated that, “These proposals are married to another plan by the House Agriculture Committee that would increase the Grassland Reserve Program by 5 million acres in the next farm bill as well. Agriculture Committee Chairman Collin Peterson, D-Minn., has repeatedly suggested setting aside 5 million acres that would be dedicated to growing switchgrasses for cellulosic plants.”
Reuters writer Charles Abbott provided an excellent summary of the energy proposal in an article from yesterday, “The U.S. government would underwrite up to $2 billion in construction of biorefineries and bioproduct plants under a House Agriculture Committee plan being considered this week.
“The bioenergy package would authorize a total of $4.5 billion for biomass research and loan guarantees to biofacilities through fiscal 2012. An Agriculture subcommittee was scheduled to discuss the package on Tuesday.
“At least 14 plants could be built under the loan guarantee program. It would allow $1 billion for projects costing up to $100 million each and $1 billion for projects costing $100 million to $250 million each.”
Mr. Abbott added that, “Agriculture Committee Chairman Collin Peterson, Minnesota Democrat, said the House vote early this year to repeal some tax breaks for oil companies should save enough money to pay for the committee’s biomass initiatives.
“Major proposals in the package, along with the loan guarantee program, are:
“–$1.5 billion for fiscal 2008-12 for bioenergy research into crops and cellulosic biomass, mill residues and agricultural and forest residue including used vegetable oils and animal waste;
“–$500 million during fiscal 2008-12 for biomass research, mostly on less costly and more efficient ways to use cellulose in biofuels and bioproducts;
“–$500 million in grants for development and use of renewable energy in rural areas during fiscal 2008-12.
“Like the loan guarantees, the three research and development programs would be financed by the reserve fund if possible. If not, Congress would be asked to appropriate the money.”
Also yesterday, the American Soybean Association and the National Biodiesel Board issued a joint news release regarding the energy proposal, which noted that, “The American Soybean Association and the National Biodiesel Board today applauded House Agriculture Committee Chairman Collin Peterson (D-MN) for proposing to reauthorize and double funding for the CCC Bioenergy Program in the 2007 Farm Bill.”
The release added that, “The Bioenergy Program reauthorization was included in a draft Energy Title released last Friday by Chairman Peterson for this year’s omnibus Farm Bill legislation. It would extend the original Program authorized in the 2002 Farm Bill for 2008 through 2012, and provide a total of $1.5 billion in funds (an average of $300 million per year) from the Commodity Credit Corporation (CCC) to encourage increased production of biodiesel, ethanol, and other energy products derived from biomass by U.S.-based companies. This amount is twice the annual funding level of $150 million provided under the previous Bioenergy Program, and reflects the growth of domestic bioenergy industries, including biodiesel, over the past five years…In addition to biodiesel, the program would support increased production of cellulosic ethanol and other energy products derived from a variety of feedstocks. The draft Energy Title also proposes reauthorizing and funding the Biodiesel Fuel Education Program,” the news release said.
In other policy developments, Ken McCauley, president and Ron Litterer, first vice president of the National Corn Growers Association prepared an opinion item that was posted yesterday at The Des Moines Register Online.
In part, the item stated that, “To keep agriculture viable in the long term, corn growers recognize changes must be made to farm policy to ensure development of a safety net that would better protect producers against crop losses and volatile commodity prices. The National Corn Growers Association’s National Farm Security Act offers a viable, innovative policy direction for the 2007 farm bill. Through its focus on farm-based revenue, we believe our organization’s proposal is compatible with U.S. commitments in the World Trade Organization and would position the United States very well for future trade agreements. The proposed act is designed to increase the market orientation of U.S. agricultural policy and to enhance the targeting of farm support.
“Our organization’s proposals include: direct payments as currently provided; a revenue-based subsidy to compensate producers when there is a shortfall in a crop’s county revenue; integrating the existing Federal Crop Insurance Program with the revenue-based subsidy; and changes in the Marketing Loan Program that would prevent crop prices from being artificially propped up. To ensure a more prudent use of public funds, the proposed act would cap projected commodity prices used to determine revenue guarantees.
“The National Corn Growers Association believes these changes to the current farm-support programs will protect both producers and taxpayers. Combining the revenue-based subsidy program with crop insurance provides a more effective and efficient safety net, minimizing the need for costly ad-hoc programs. Our proposed reforms also address the biggest hole in the current safety net – low yields in years of either low or high prices.”
A separate policy proposal was summarized yesterday in a piece by Sallie James, a policy analyst at the Cato Institute’s Center for Trade Policy Studies, which was posted at ReasonOnline.
In part, Dr. James stated that, “But a confluence of events this year—a Doha round of free trade agreements in need of a kick-start, budget pressures and renewed commitment to fiscal responsibility from the Democrats in Congress, and growing public awareness of the failures of farm programs—all point to the need for reform. The question is: with what do we replace the current expensive and outdated programs?
“How about nothing? A commitment to phase out farm subsidies, ‘rural development’ programs, and ad-hoc disaster payments is the best action Congress could take in September. They should couple this with repealing the permanent legislation that would allow agriculture programs to be reinstated in future. If Congress had to start from scratch every time the farm lobby wanted more taxpayer-funded largesse, they would have a harder time passing it.”
The item went on to state that, “Unfortunately the very political power that keeps farmers on the government payroll means that an outright and overnight end to farm programs is unlikely without ‘financial inducement.’ An up-front buyout of existing trade barriers and farm subsidies, based on (but less than) the present discounted value of seven years of expected payments—5 years representing the approximate tenure of a farm bill, plus two bonus years—might do the trick. Based on current spending projections, that could cost somewhere in the vicinity of $75 billion.
“That’s a lot of money, even in Washington. But it is significantly less than the $1.7 trillion that a recent Cato Institute study estimated was lost to taxpayers and consumers over the last 20 years of farm programs. And if it would ensure permanent freedom for farmers, consumers and taxpayers, it would be a worthwhile investment indeed. It would compensate farmers for the likely fall in land values in some counties, and farmers could invest that money in their farms, purchase private insurance for tougher times, or acquire education and training to ease a transition out of farming altogether.”
II. Ag Economy
As the reauthorization process gets going and various proposals receive more attention and scrutiny, a quick look at some factors associated with this year’s crop and the agricultural economy is warranted.
The Associated Press reported yesterday that, “Corn prices gained Monday amid reports of hot, dry weather in the eastern Corn Belt.”
The AP article indicated that, “The corn market is ‘hypersensitive’ given the expanding demand for ethanol in this country, said DTN analyst Gary Wilhemi. Weather too hot or too dry can damage a corn crop.
“‘We only have to lose a couple of bushels of national yield and we’ll be in a really tight spot,’ Wilhemi said.”
(For more detailed analysis on this concept, see this University of Illinois report, “2007 U.S Corn Production Risks: What Does History Teach Us?” which was summarized yesterday by Stu Ellis, who writes each day on agricultural issues at The Farm Gate blog).
With respect to the progress and condition of this year’s crops, Jerry Perkins reported yesterday at the Des Moines Register Online that, “Iowa farmers used good weather last week to play catch up with their rain-delayed planting chores, according to the Iowa Crops and Weather Report issued Monday.
“‘A busy and productive week in the fields brought planting near normal percentages,’ the report said.
“As of Sunday, corn was planted on 93 percent of the intended acres, the report said, which is 5 days behind last year’s pace but just a day behind the five-year average.
“The 65 percent of the corn that has emerged in the fields compares to last year’s 67 percent and the five-year average of 62 percent.
“Condition of the state’s corn crop is rated 1 percent very poor, 2 percent poor, 18 percent fair, 62 percent good and 17 percent excellent.”
Bill Hord, writing in this morning’s Omaha World-Herald added that, “After a rainy and worrisome start, Nebraska and Iowa farmers have caught up with planting.
“Ninety-two percent of the corn is planted in Nebraska, the U.S. Department of Agriculture reported Monday, on track with the average for this point in the season. Ninety-three percent of the corn crop is planted in Iowa.
“‘Most of the farmers are now working on soybeans,’ said Washington County extension specialist Jim Peterson in Blair. ‘If they have a couple more good days, it will be done.’
“Nationwide, 92 percent of the crop was planted, compared with an 86 percent average in the last five years.”
Click here for the complete nationwide Crop Summary report that was released yesterday by USDA’s National Agricultural Statistics Service.
In recent livestock developments, Purdue University Agricultural Economist Chris Hurt noted yesterday (“Hog Producers Not Yet Bashed by High Feed Cost”) that, “Hog prices have generally kept up with the high costs of production due to higher priced feed. In the first quarter of the year, live prices averaged $46.20 per hundredweight, slightly under costs of production. Since the end of March, hog prices have seen a strong seasonal surge, actually putting some green in bank accounts of hog producers. Hog prices were about $42 in late March, but rallied as high as $54 in the past few weeks. Current costs of production are estimated to be in the $47 to $49 range for farrow-to-finish production.”
Later, the report noted, “Can hog prices stay ahead of costs? That will depend not only on hog prices but also on weather conditions and feed prices. The answer right now is both yes and no! First, a look at hog prices. Prices look strong for the months of June, July, and August, when they are expected to average in the $52 to $53 range. However, by August prices may drop below $50 and may even drop into the mid-$40s for the last quarter of the year. Prices also tend to be relatively weak in the winter, with an anticipated average in the $45 to $49 range, and then tend to increase seasonally, with an anticipated average in the low $50s in the spring of 2008.
“While this hog price outlook is for an average price near $50 for the next 12 months, given current corn and soybean meal futures prices, this will mean some periods of profits and some periods of losses. Expected profits are on tap for this summer when they could average about $4.00 to $5.00 per hundred and next spring when they may be about $2.00. However, there may be some periods of losses as well, especially around the seasonal low for hog prices in the fall and winter of 2008. Losses at that time are estimated to be from $1.00 to $3.00.
“The financial view over the next 12 months for pork producers is for breakeven to $2.00 of profits per hundredweight. This means the industry overall cannot handle much higher corn and meal prices. Given current hog price forecasts and meal futures prices, the breakeven price for corn is estimated to be around $3.80 per bushel over the next 12 months. This means hog producers will be watching weather forecasts almost as closely as crop producers in the next few months.”
III. Food Banks
Wall Street Journal writer Lauren Etter reported in today’s paper that, “Three years ago, the Food Bank for Monterey County would receive a truckload filled with as much as 40,000 pounds of dented soup cans, mislabeled cereal boxes and other salvage products every three weeks, says Leslie Sunny, the bank’s executive director. Now the bank receives one truckload every three to four months ‘if we’re lucky,’ she says.
“Nationwide, food banks — clearinghouses that distribute food donations to local charitable pantries and emergency shelters — report receiving fewer donations in the form of imperfectly packaged canned and boxed edibles.
“It is the down side of a drive in recent years by manufacturers and retailers for greater supply-chain efficiency. Toward that end, many food manufacturers began producing food in quantities more closely tailored to individual retail customers’ needs. That in turn has reduced the amount of food that gets sold to retailers and ultimately returned to the manufacturers.
“At the same time, new technology has helped eliminate production errors such as processing canned food without labels or producing an entire order of cereal boxes using upside-down text. To make up for the product loss, food banks are seeking ways to raise money to buy more food. They are also looking for new types of food, including perishables. Some food banks are hiring trucks to pick up food directly from farms.”
Keith Good
