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House Names Conferees; WASDE Update- Food Issues; Doha
Farm Bill
Chris Clayton, writing yesterday at the DTN Ag Policy Blog, noted that, “The challenges with this farm bill right now come down to Senate Finance Committee Chairman Max Baucus, D-Mont., and House Ways and Means Chairman Charles Rangel, D-N.Y., coming to some terms on how to provide the $10 billion in offsets that congressional leaders agreed to give the farm bill.”
Mr. Clayton indicated that, “House Agriculture Committee Chairman Collin Peterson, D-Minn., vented frustration Tuesday about the difficulties having so many committee chairmen involved in the process. Peterson said too many lawmakers are advocating for certain dollar amounts in the farm bill, and ‘are being unreasonable,’ Peterson said. Lawmakers, likely pushed by lobbyists, are ‘locked into a number’ for funding in the bill rather than focusing on the best policy for the funding that an area receives.”
Also yesterday, Senate Ag Committee Chairman Tom Harkin (D-Iowa) held a press briefing with agricultural reporters. To listen to some audio clips from Chairman Harkin during this briefing, see this Senate Agriculture Committee webpage.
Dow Jones writer Bill Tomson reported yesterday that, “U.S. lawmakers, looking for money to help pay for nutrition, conservation, biofuels and agriculture disaster programs in the 2008 farm bill are considering cutting acreage-based farm subsidies, the Senate Agriculture Committee chairman said Wednesday.
“Sen. Tom Harkin, D-Iowa, talking to reporters, discussed the possibility of cutting 2% from the yearly $5.2 billion in ‘direct’ subsidies proposed for corn, soybean, wheat, cotton and other farmers over the five-year life of the next farm bill.”
Mr. Tomson noted that, “Bush administration officials have defended direct farm subsidies, calling them an important part of a safety net for farmers that does not distort trade in the eyes of the World Trade Organization.”
For more on the Bush administration’s perspective on direct payments, see pages 14 and 15 of their Farm Bill proposal.
Peter Shinn, writing yesterday at Brownfield, reported that, “A clearly frustrated Senate Ag Committee Chairman Tom Harkin told reporters Wednesday that Senate Majority Leader Harry Reid and House Speaker Nancy Pelosi will have to broker an end to the stand-off on farm bill funding that continues to hold up the legislation. At issue is how to find the extra $10 billion dollars in farm bill spending over the Congressional Budget Office (CBO) baseline for farm programs, a figure to which all farm bill players have agreed.
“‘I understand that Senate Majority Leader Harry Reid and Speaker Pelosi have again spoken about the farm bill this week,’ Harkin said. ‘Reportedly, Senator Baucus, the Chairman of the Finance Committee and Congressman Rangel, the Chairman of the Ways and Means have also met, and resolving this $10 billion funding and the tax issues are in their court, not in mine.’
“There are a variety of potential explanations for exactly why House Ways and Means Committee Chairman Charlie Rangel and Senate Finance Committee Chairman Max Baucus cannot seem to reach consensus on how to proceed on the farm bill funding issue. Last week, Harkin suggested Rangel wanted more money for nutrition at the expense of the $4 billion permanent ag disaster aid program that Baucus has championed. This week, Harkin intimated that Rangel and Pelosi don’t favor some or all of the tax provisions included in the Senate version of the farm bill.”
Also with respect to Farm Bill views expressed recently by Chairman Harkin, DTN writer Chris Clayton reported yesterday that, “The elimination of any new funds for USDA’s Rural Development programs just won’t work for the chairman of the Senate Agriculture Committee.
“Sen. Tom Harkin, D-Iowa, expressed disappointment with a budget framework for the farm bill that was devised partly without his involvement. Harkin said the negotiators made a poor decision to cut out any new spending for rural development over the next five years of agricultural programs.”
Mr. Clayton explained that, “Initially, in the Senate bill, rural development programs were to get $400 million in new money over 10 years. The House approved $150 million. But the budget framework released in late March would set aside no new money.”
And DTN Political Correspondent Jerry Hagstrom reported yesterday (link requires subscription) that, “Senate Agriculture Chairman Tom Harkin, D-Iowa, said he would like to get the bill through Congress by April 18, but other negotiators said they believe a short-term extension will probably be necessary. Although Agriculture Secretary Ed Schafer said Monday that he would recommend to President Bush that he agree to a short extension if Congress and the administration had agreed on the basic framework of the bill, Harkin told the North American Agricultural Journalists ‘I’m not pushing for’ the extension. Harkin added that he would be willing to hold farm bill conferences this weekend.
“Senate Agriculture Committee ranking member Saxby Chambliss, R-Ga., Senate Budget Chairman Kent Conrad, D-N.D., House Agriculture Chairman Collin Peterson, D-Minn., and House Agriculture Committee ranking member Bob Goodlatte, R-Va., all told the journalists that it’s more likely a short extension will be needed.”
Mr. Hagstrom explained that, “It’s important to finish the bill before the House and Senate reach agreement on the FY09 budget because that agreement would cause pressure to change the basis of the bill from the March 2007 baseline of $597 billion to the March 2008 baseline, Conrad said. The latter baseline is $636 billion, but the increase is mostly in food stamps while the baseline for commodity programs is either stagnant or has decreased, he said.
“But the biggest problem with switching baselines, both Conrad and Harkin said, is the amount of recalculation that would be needed.
“All the negotiators said the biggest roadblock to finishing the bill is still the issue of what offsets the Senate Finance Committee and the House Ways and Means Committee will provide to pay for farm bill costs above the baseline of the 2002 farm bill.”
In a press conference with reporters yesterday, Senate Finance Committee Ranking Member Charles Grassley of Iowa was asked about the Farm Bill. To listen to Sen. Grassley’s remarks, which included very interesting statements on funding allocation progress, as well as Farm Bill extension issues, just click here (MP3-2:36).
And, on yesterday’s AgriTalk Radio program, host Mike Adams visited briefly with Mary Kay Thatcher, Director of Public Policy for the American Farm Bureau- they talked about the Farm Bill. In particular, Farm Bill extension issues, among other topics, were discussed. To listen to the exchange between Mike Adams and Mary Kay Thatcher on yesterday’s AgriTalk program, just click here (MP3-1:59).
Meanwhile, Dow Jones News writer Bill Tomson reported yesterday that, “The U.S. House of Representatives Wednesday appointed conferees to work with senators to create a unified farm bill, laying down a blueprint for agricultural and nutrition policy for five years.
“The appointment of conferees paves the way for Congress to finish work on a five-year 2008 farm bill, House Agriculture Committee ranking minority member Bob Goodlatte, R-Va., said.
“Rep. Dennis Cardoza, D-Calif., said in a statement: ‘The appointment of conferees is a significant step towards completion of the Farm Bill.’”
For a list of the House conferees, see this House Ag Committee press release from yesterday.
Mr. Tomson added that, “Bush administration officials have said recently that another short-term extension would only be signed by President George W. Bush if Congress showed it was mostly finished with the farm bill. If that hasn’t happened by April 18, U.S. Department of Agriculture Secretary Ed Schafer said recently, a one- or two-year extension of the current 2002 farm bill may be necessary.”
“The House, in a 400-to-11 vote Wednesday evening, approved a non-binding ‘motion to instruct’ farm bill conferees not to use tax measures to fund the 2008 farm bill,” the article said.
For more on this “motion to instruct,” see this press release issued yesterday by Agriculture Ranking Member Bob Goodlatte (R-Virginia).
WASDE Update- Food Issues
The World Agricultural Outlook Board (WAOB) released the monthly World Agricultural Supply and Demand Estimates (WASDE) report yesterday.
Specifically, yesterday’s WASDE report stated that, “Projected U.S. wheat ending stocks for 2007/08 are unchanged this month as lower feed and residual use offsets an increase in exports. Feed and residual use is projected 50 million bushels lower as the March 1 stocks indicated lower-than-expected use in the December-February quarter. Exports are projected 50 million bushels higher as export sales and shipments remain strong with several major export competitors taxing or otherwise restricting shipments. The projected range for the season-average farm price is narrowed 5 cents on each end to $6.55 to $6.75 per bushel.
“Global wheat supplies for 2007/08 are raised 1.5 million tons this month on late-season revisions to production in non-exporting countries.”
For reference to historic price levels of wheat, see this graph.
With respect to rice, the WASDE report indicated that, “No changes are made to the U.S. 2007/08 rice supply and use projections. However, the season-average farm price is raised 20 cents per cwt on each end of the range to $12.05 to $12.35 per cwt, compared to $9.96 per cwt for 2006/07.”
For reference to historic price levels of rice, see this graph.
Regarding oilseeds, the WAOB noted that, “U.S. soybean exports for 2007/08 are increased 50 million bushels to 1,075 million this month reflecting strong year-to-date shipments. Despite record high soybean prices, exports have remained strong, especially to China, where imports from the United States are likely to exceed the 2004/05 record. Soybean crush is raised 5 million bushels to a record 1,840 million bushels, mainly on stronger-than-expected soybean meal and oil exports. Seed use is raised to reflect expected plantings for 2008 reported in USDA’s March 31 Prospective Plantings report. U.S. soybean ending stocks are raised 20 million bushels to 160 million, still down sharply from the record level set in 2006/07. Residual use is reduced based on indications from the March 31 Grain Stocks report.
“Price forecasts for soybeans, soybean oil, and soybean meal are all reduced this month. The U.S. season-average soybean price range is projected at $10.00 to $10.50 per bushel, down 30 cents on the high end of the range.”
The report added that, “Global oilseed production for 2007/08 is projected at 390.8 million tons, up 0.7 million tons from last month.”
For reference to historic price levels of soybeans, see this graph.
With respect to corn, the WASDE report stated that, “U.S. corn ending stocks for 2007/08 are projected 155 million bushels lower this month as increases in feed and residual use and exports more than offset a reduction in corn use for ethanol. Feed and residual use is projected 200 million bushels higher as March 1 stocks indicated higher-than-expected disappearance during the December-February quarter. Ethanol corn use is projected 100 million bushels lower as the pace of new plant startups lags earlier expectations; however, rising ethanol prices continue to support producer margins and capacity utilization for existing plants remains strong. Partly offsetting is a 5-million-ton increase in other food, seed, and industrial use.
“Exports are projected 50 million bushels higher based on the strong pace of shipments and large outstanding sales balances. The projected season-average farm price for corn is raised to $4.10 to $4.50 per bushel compared with $3.75 to $4.25 per bushel last month. Record use during the first 6 months of the 2007/08 marketing year and prospects for smaller-than-expected production in 2008 are expected to support cash and futures prices near current record levels through the summer.”
For reference to historic price levels of corn, see this graph.
To listen to a brief audio summary of the WASDE report, just click here (MP3-0:54, Rod Bain, USDA Radio).
Associated Press writer Stevenson Jacobs reported yesterday that, “Corn prices soared to a record Wednesday after the U.S. government said stockpiles were falling faster than expected, raising concerns of a shortage of the grain used to feed livestock and make biofuel.
“Corn’s rally came amid a big upswing in the wider commodities complex, with copper, crude oil and other energy futures all hitting record highs.
“The U.S. Department of Agriculture lowered its April corn stockpile estimate to 1.283 billion bushels, down from 1.438 billion just last month and sharply lower than expectations. Analysts surveyed by Dow Jones Newswires predicted that corn ending stocks would fall to about 1.303 billion bushels.”
The AP story added that, “Corn for May delivery jumped 13.75 cents to settle at $6.05 a bushel on the Chicago Board of Trade, after earlier rising as high as $6.16 a bushel, the highest ever.
“Prices for corn have shot up 30 percent this year amid dwindling stockpiles and surging demand to feed livestock and make alternative fuels including ethanol. Moreover, cold, wet weather in parts of the U.S. corn belt may force farmers to delay spring planting, potentially sending prices even higher.
“Corn first breached the $6 threshold last week after the government predicted that American farmers -the world’s biggest corn producers- will plant sharply less of the crop in 2008 compared to last year. The Department of Agriculture projected that farmers will plant 86 million acres of corn in 2008, an 8 percent drop.”
***
The New York Times editorial board indicated today that, “Most Americans take food for granted. Even the poorest fifth of households in the United States spend only 16 percent of their budget on food. In many other countries, it is less of a given. Nigerian families spend 73 percent of their budgets to eat, Vietnamese 65 percent, Indonesians half. They are in trouble.
“Last year, the food import bill of developing countries rose by 25 percent as food prices rose to levels not seen in a generation. Corn doubled in price over the last two years. Wheat reached its highest price in 28 years. The increases are already sparking unrest from Haiti to Egypt. Many countries have imposed price controls on food or taxes on agricultural exports.”
The Times added that, “The United States and other developed countries need to step up to the plate. The rise in food prices is partly because of uncontrollable forces — including rising energy costs and the growth of the middle class in China and India. This has increased demand for animal protein, which requires large amounts of grain.
“But the rich world is exacerbating these effects by supporting the production of biofuels. The International Monetary Fund estimates that corn ethanol production in the United States accounted for at least half the rise in world corn demand in each of the past three years. This elevated corn prices. Feed prices rose. So did prices of other crops — mainly soybeans — as farmers switched their fields to corn, according to the Agriculture Department.”
Reuters writer Mayank Bhardwaj reported yesterday that, “Food riots which have struck several impoverished countries could spread with shortages and high prices set to continue for some time, the head of the United Nation’s Food and Agriculture Organization (FAO) said.
“A combination of high oil and fuel prices, rising demand for food in a wealthier Asia, the use of farmland and crops for biofuels, bad weather and speculation on futures markets have pushed up food prices, prompting violent protests in a handful of poor states.”
Doha
To listen to a brief audio summary of perspectives on the Doha Round of WTO trade talks from yesterday, which includes a comment from Chief U.S. Ag Negotiator Joe Glauber, just click here (MP3- 0.58, Gary Crawford, USDA Radio).
Keith Good
