It has occurred to me as I was unloading corn (lots of free brain time there) that while we are all buzzing about the Average Crop Revenue option, it won't kick in until 2010. Some thoughts:
As some have noted, the idea of an option is a guarantee for serious laments after the choice is made. Wanna bet there is a heads-you,win-tails-you-win amendment in 2011?
The act should be called the Farm Economist, Extension Meeting, Farm Media, and Crop Insurance Full Employment Act. [Arguably, that beats "The Heartland, Habitat, Harvest and Horticulture Act of 2007"] Try to imagine how many magazine pages of explanations, downloadable spreadsheets, websites, extension meetings, PowerPoint paralysis, letters to editors, advisory services, and outright scams that will latch onto this complex scheme by 2010. You will be so sick of reading about ACR, you'll skip over those articles for the ads.
We can't predict ag conditions next summer, so who knows what will be going on in 2009 as we first make this choice? The possibility for legislator's regret could be significant.
Regardless, by 2009 this optional program will be sooo gamed out by everyone - not just early reactors such as what happened with the "Dakota shuffle". Ah - those were the days...
Most salient of all, the concept has to survive the floor vote, conference and even Pres. Bush's signature. With Mr. Johanns replaced, the administration position on developments has been unclear at best.
Still, if ACR is the future, my attention span has been challenged already.
Those crafty guys in the Ag Committees of Congress are about to do it again. They are going to raid the Treasury in broad daylight (albeit in the fog of farm legislation - to torture the metaphor). Jim Weisemeyer outlines the increasingly questionable cost assumptions behind the Senate Farm Bill.
One tiny little slice of his analysis:
How will the apparent inclusion of an ever-ready ag disaster program impact a producer's attitude toward buying up crop insurance?
What if.. If as I suspect that the CBO assumes in their analysis that x-percent of producers would buy up insurance to a higher level, the savings resulting from that assumption may not be realized near to the degree that CBO might have predicted. [More by subscription - seriously, ya need to find room for this in your budget]
I'll bet the idea of eliminating the LDP game won't survive conference either.
While not exactly the same, drafts of farm bill language in the Senate do contain a shift in when producers could claim the LDP to the day they lose beneficial interest in the crop. [More]
However I am inclined to believe these are tempests in a legislative teapot. Looking at the trends in trade, biofuels, and biotech, a huge fuss about a few billion per year is going to mean less and less to more and more producers.
Those commodities and communities who insist on government support as their primary business plan may discover they have not built a safety net, they've woven their own shroud.
Along with others, I have been trying to handicap the new twist the farm bill process (for lack of a better word) has taken. Shrugging what little pride I have aside, I can admit to not really grasping what the good Senators think they are trying to do for me with the revenue assurance option.
So. Let's assume my degree in engineering and years of familiarity with the "times table" (do they still teach that?) have some worth, and my hours of frivolous surfing are not totally misspent. Now consider I really have no analytical or intuitive idea whether I should like this idea or not.
Given these observvations, imagine what a landowner is going to make of this whole legislative puzzle. As we talked about earlier, many observers point out landowners are getting older. Which is a good thing, if you think about it.
But it won't make them really excited about figuring out not merely a new farm program - but A CHOICE to be made. Making choices is not what geezers like to do or do best.
Therefore, some outcomes could be:
Investing serious hours at the FSA and extension meetings learning the new program and getting the paperwork done.
Employment of more farm managers to act on behalf of landowners and select the optimum route.
Electing to reside total faith in the tenant via FSA power-of-attorney.
Just take a large rent check on 1 March and lose the whole headache.
Wait - don't answer that. It seems the Congressional Budget Office has an opinion regarding how swift farmers are.
The breakthrough apparently came when the Congressional Budget Office assigned a $3 billion savings to a proposal to offer farm program participants an option, beginning in 2010, to choose between traditional farm programs or a state-level revenue assurance program, an insurance program that provides income coverage when either yields or prices fall. Under his proposal, participants in farm programs would be allowed to plant non-program crops. Coupled with savings provided earlier this month by the Senate Finance Committee, Harkin said his "chairman's mark" next week will offer $4 billion in new funding for conservation programs. Of that, $1.28 billion is earmarked for the Conservation Security Program – which Harkin plans to rename the "Conservation Stewardship Program." Even though the House bill has no funding for the program, Harkin noted his bill is fully funded and theirs is not. "They will have to come our way" in the Senate-House conference, he predicted. Harkin projects the CSP, which provides "green payments" for conservation practices on working lands, will grow by 13 million acres through the life of the five-year bill. [More] [my emphasis]
If I understand this correctly (admittedly a big "if"), the CBO number-crunchers calculate that, given the choice, producers like me will opt for a payment scheme that over the long run reduces our payout by $3B. My goodness, how cleverly packaged will that option have to be?
So much for the efficient market, it seems. If our own best interests can be addressed by choosing a revenue policy vs. the usual scheme, we will probably figure out in a hurry that it's because we are getting more money from the government - not less.
Some specifics from Jim Weisemeyer - our man on the scene:
Harkin confirmed the proposal will include a yearly optional "average crop revenue program" (ACR) beginning in 2010 that would, according to sources:
-- be optional for a producer who could choose either the new revenue-trigger counter-cyclical program or the existing program, beginning in 2010 (the option would be on an annual basis); -- provide a $15 per acre payment to all program crops choosing the revenue option; -- eliminate current direct payments; -- eliminate marketing loans, and thus, loans would become recourse loans; -- base a revenue-payment on a state revenue concept; -- base payments on the lower of current acreage planted or the average of plantings from 2002-200); -- allow revenue program participants to no longer be bound by rules that now bar the planting of fruits and vegetables from land eligible for crop subsidies; -- not require a producer to purchase crop insurance in order to qualify for ACR. [More via subscription]
My guess is these savings will prove to be ephemeral. (How bad would you have to want to grow asparagus?) But if they are accurate, signup for the optional revenue program could be pretty slow.
As I follow various sources of information in the farm bill debate, I am struck by the lack of consensus on possible outcomes. For example, some feel Sen. Harkin is over-matched by hardball players like Sen Conrad.
But Conrad is a relentless political operator who never quits. And that’s the pity. Harkin is an idea man with a progressive vision of where U.S. agriculture is going and what the farm bill should look like. But as the weeks drag on and Senate work on the farm bill is delayed, he seems increasingly hemmed in by Conrad’s aggressive tactics and the real politik of Senate dealing making.
He acknowledged as much Tuesday in one of his regular teleconferences with reporters. While he still held out hopes for what he said would be “very modest” reforms of the basic subsidy programs, he twice noted that he was limited by “the art of the possible,” i.e., he can’t move a bill out of his committee without votes from hardline advocates of traditional subsidies. [More]
Meanwhile, the change in leadership at the USDA leaves some unsure where the administration will draw the line in the sand (if any).
* If there is a payment limit for farmers with an average gross income (AGI) of $200,000 that the Bush administration has suggested, or the $1 million limit in the House farm bill, why not pay those farmers up to that point of the limit? Why take an all-or-nothing approach?
"Remember," Conner said, "our approach is $200,000 averaged over three years. So I don't see that as all or nothing. This is a sustained person who is in the top 2.3 percent of tax filers in America -- of all tax filers. We understand there are boom and bust years, and there is always going to be, so it may not be fair if you just happen to hit a great year, and maybe even marketing even more than one crop in a particular year because of the price situation, that one year would throw a producer out. But if you manage to do that over a period of three years, you are just flat out one of the top income people in the United States of America. As we have said time and time again, we do believe that if you reach a point where you've realized the American dream to the fullest extent, and again, if you're one of the top income earners in America, you need to graduate. These programs today are income support programs." [More by ProFarmer subscription]
Meanwhile, back at the farm, incandescent prices could provide an interesting backdrop for any possible floor debate in the Senate. I doubt that will occur, but I do think the bizarre funding proposals (FICA exemptions?) may struggle to pass muster.
I also think a Doha agreement would put immense pressure on even a finished farm bill. Too many other sectors with political goals of their own would have to subordinate their interests to agriculture to pass up the trade benefits.
As always, the White House is a real wild card. This president looks veto-itchy to me.
To the surprise of this observer, President Bush appears to be dead serious about vetoing more than a few funding bills. A key test will be the expansion of health insurance for children.
Bush is trying to establish that he's a fiscal conservative after overseeing a sharp rise in the deficit, said Sen. Dick Durbin, D-Illinois.
"I think he has picked the wrong issues," Durbin said. "If he wants to fight over children's health insurance, I'm sorry but we're ready."
But Bush said lawmakers "are putting health coverage for poor children at risk so they can score political points in Washington." He and his aides have threatened vetoes on several other matters as well, including House representation for the District of Columbia and subsidized insurance against terrorist acts.
Bush also has threatened to veto nine of the 12 appropriations bills that would fund the government for the fiscal year beginning October 1. [More]
Many of these vetoes are targeting bills near and dear to the farm lobby - like WRDA.
The veto threat came as the House prepared to take up the bill, loaded with $5 billion in new drinking water and wastewater treatment plants proposed by Senate and House negotiators.
"Indeed, it seems a $14 billion Senate bill went into a conference with the House's $15 billion bill and somehow a bill emerged costing approximately $20 billion," complained Rob Portman, the White House budget director, and John Paul Woodley, Jr., the Army's assistant secretary of civil works.
Because the bill's authorization now "significantly exceeds the cost of either the House or Senate bill and contains other unacceptable provisions ... the president will veto the bill," they wrote to four Senate and House members whose committees oversaw the legislation.
Congress must not increase the Army Corps' already huge backlog of $38 billion in authorized projects by adding new ones for wastewater, drinking water, sewer overflows, waterfront development, transportation and abandoned mines - all of which are "outside of and inappropriate for the mission" of the Army Corps, Portman and Woodley wrote. [More]
Given the sudden resurgence of interest in Doha negotiations, the farm bill is a prime target as well, making the imaginative new funding sources being contemplated by both the House and Senate reasons the White House can force Congress to rethink.
Most of all, the rather stunning new enthusiasm for vetoes after a total of umm, none for six years seems to have flummoxed a Congress who thought they had the upper hand after last fall's elections.
Bush is like Capt. Renault in Casablanca, who feigns shock that there is gambling in Rick's Cafe, said Bruce Bartlett, a conservative economist and author of Impostor: How George W. Bush Bankrupted America and Betrayed the Reagan Legacy. "He's suddenly 'shocked, shocked' to find out there's all this pork-barrel spending in these bills," Bartlett said.
Bush's veto strategy "is the only card they've really got to play if they are indeed interested in restraining government spending," says Stephen Slivinski, director of budget studies at the libertarian Cato Institute. That has been "an open question" in the past, he added, but now the threats are aimed at "Democratic bills."
"He dislikes Democrats more than he likes big government," Slivinski said. [More]
The veto remains an incredibly powerful tool for the executive branch - and this is an administration that's all about executive power. Recent public relations Iraq victories have reignited his famed stubbornness, it seems.
Most observers still confidently boast "Congress writes the farm bill".
Although farm interests are adamant in reserving the right to dictate their own policy to the government, an array of converging interests seem to be increasing in intensity. These factors may not have time to be fully felt for this farm bill debate, but could certainly color the nature of farm programs considerably over the next decade.
The ever-mischievous French. We kinda expect it from farmers like the Danes, but...
France plans to present a "radical reform" of European agricultural subsidies when it takes over the presidency of the European Union next year, President Nicolas Sarkozy said Tuesday.
Sarkozy said a major overhaul of the EU's Common Agricultural Policy (CAP) was "indispensable to ensure that this policy once again enjoys legitimacy."
"The French presidency of the European Union will prepare a new political framework for our agriculture in Europe, based on fundamental principles," he said in a speech on agriculture delivered in the western city of Rennes.
France, Europe's agricultural powerhouse and the EU's top recipient of farm subsidies, will take over the rotating presidency of the 27-nation EU in July next year for a period of six months.
Sarkozy's call for reform of EU farm subsidies marked a major shift from his predecessor Jacques Chirac, who steadfastly opposed changes that would inevitably penalize French farmers. [ More]
Eroding popular support for farmers in general - even surprisingly, the much beloved agrarian sector.
Michael Pollan's bestseller, The Omnivore's Dilemma, has gotten people all riled up about farmers again. The last time this happened was when the first Farm Aid concerts reminded America that we have strong feelings about the family farm and its economic viability. The new round of farmer feelings is more directly related to issues of trade and the impact of globalization. As Pollan writes:
"I’m thinking of the sense of security that comes from knowing your community, or country, can feed itself; the beauty of an agricultural landscape; the outlook and kinds of local knowledge the presence of farmers brings to a community; the satisfactions of buying food from a farmer you know rather than the supermarket; the locally inflected flavor of a raw-milk cheese or honey. All those things—all those pastoral values—free trade proposes to sacrifice in the name of efficiency and economic growth."
My general feeling about farmers is that they can go f*** themselves. Perhaps this is strong. But farmers also come on strong in their own sort of farmer way. They take a homespun approach but they often wrap themselves up in a hell of a lot of self-righteousness. It all has to do with the land, I suppose, the importance and simplicity of the land. Americans love the simple even if we've been destroying it for generations. A few pithy sayings and we’re eating out of their hands. The farmers. [More]
Brazilian lawyers - these guys have tasted victory in the cotton case and see a chance for lots more billable hours.
Brazil will ask the World Trade Organization for a formal investigation of U.S. farm subsidy programs, which it says includes payments for ethanol production, a senior Brazilian official said Wednesday.
The South American country, which has already won a series of WTO rulings over U.S. cotton subsidies, will make its request for an investigative panel soon, said Roberto Azevedo, the Brazilian Foreign Ministry's trade chief.
The dispute could become a major case for the global commerce body, which has largely steered clear of energy issues in its 12-year history. Brazil is a major ethanol producer.
It also could become a hot topic for U.S. presidential candidates as they gear up for primary contests, including voting in Iowa, the state that produces the most ethanol.
"Brazil will have to ask for a panel," Azevedo told The Associated Press.
The two countries held consultations last month after Brazil accused the United States of exceeding the $19.1 billion that it is permitted under WTO rules to spend on the most controversial forms of farm subsidies in six of the past eight years. Brazil also accuses the U.S. of giving illegal export credit guarantees, largely echoing an earlier complaint by Canada.
While most of the measures it questioned Washington about concerned farm produce, Brazil included in its complaint what it called "energy subsidies," which included tax exemptions on diesel fuel and gasoline.
"Ethanol results from agricultural subsidies," Azevedo said. "You don't produce ethanol from rocks or underground. It's derived from agricultural commodities." [More]
All these separate influences could be dissected on their own merits, but it appears to me to be the actions the Adam Smith's fabled invisible hand. Our farm policy impacts the whole world, and the whole world is reacting. Even our reliable domestic political "lovability" may soon be more constrained to smaller, quainter operations. Oddly enough, I think one reason global pushback is picking up steam is because their economies are more and more like ours - market responsive.
Besides, it's becoming obvious farm policy isn't where we need to be. We're now clients of energy policy.
The U.S.' ethanol production capacity will probably total 20.43 billion gallons as of August 2009, up sharply from 6.707 billion gallons as of August this year, due to high profit forecasts and government support, a U.S. commodity risk management consultancy firm said Wednesday.
That means corn consumption for ethanol will total 7.46 billion bushels in the 2009-10 crop year, more than double the 3.62 billion bushels in 2007-08, Bill Tierney, executive vice president of research and marketing for John Stewart & Associates, said during the International Corn Industry Conference in Dalian. [More]
In other words we could win a skirmish on the farm program and be waylaid by the energy bill.
The latest proposal to send me more money is calling for tax credits in order to do an end-around on PAYGO rules.
Landowners who enroll acreage in some land-conservation programs could get tax credits instead of cash payments, under a plan being developed in the Senate.
The proposal by the Senate Finance Committee is designed to free up funding in the farm bill to pay for other agricultural programs.
The tax-credit idea is among $8 billion to $10 billion in agricultural and rural development tax measures that the committee is considering, the committee's chairman, Sen. Max Baucus, D-Mont., said Tuesday.
A Baucus spokeswoman said the committee was still working on ways to pay for the measures. The committee's top Republican, Sen. Charles Grassley, R-Ia., has said the panel is looking at earmarking some import duties to fund farm programs.
Under congressional pay-as-they-go rules, any spending increases or tax breaks must be offset by budget cuts or tax increases. [More]
If this works, couldn't it be used for just about any project Congress wants?
For dairy-illiterates like myself, an article in the current issue of Amber Waves, published by the ERS is a quick-and-dirty short course on current business trends in the dairy industry. I was struck by several points.
First, the cost structure seems to have no limit for economies of scale. The popular belief in grain farming is "small operations can be just as efficient as large". But that is clearly not true in dairy.
Small conventional dairies have higher average costs, 2005
Moreover, ERS suspects the trend continues beyond the current definition of "big".
On average, large dairy farms exhibit better financial performance than small. But ongoing structural change has led to even larger farms, with 5,000 and 10,000 cows. ERS’s financial database is not comprehensive enough to tell whether farms of that size have financial advantages over farms with 1,000 cows, but other evidence suggests that they might.
Finally, as in the post below, it strikes me that support programs are powerless to overcome the economics of consolidation, since this is all occurring as the government pays billions in dairy subsidies. The House version of the 2007 Farm Bill essentially continues current policy, so dairy producers are implicitly embracing the future suggested by the ERS, it seems.
I will be speaking to the 2007 Elite Producer Conference in November. I am looking forward to understanding how these farmers feel about their future.
As the Senate rouses itself to legislative action after a summer recess, one topic of huge debate is the idea of "payment limits". But in fact, there are two different types of restrictions under consideration.First, a limit on payments to any given person.
In another news conference Thursday, Grassley explained his motives for reforming the farm programs. "The idea is that when we're subsidizing farmers to the point where 10 percent of the biggest farmers get 72 percent of the benefits out of the farm program, then it's tilted toward subsidizing big farmers to get bigger. And what my legislation also does is put a $250,000 cap (on farm program payments). Now I know to Iowans that still sounds like a lot of money, but this is a compromise that we can get through, getting farmers from all over the country to back it. And get senators to back it." [More]
This type of limit is based, I think, in the egalitarian ideal: "one man - one pile of money". It has appeal to those in the middle, since it would immediately place them on the same level of government favor as the largest operator - something dear to their hearts. Second, a limit on how much money you can make and still receive any payment.
The current $2.5-million income cap on eligibility for farm program payments affectsonly a small number of farm program payment recipients each year. A reduction in thecap to $200,000 would affect a larger number of farm households but still only a smallshare of recipients. Based on IRS tax data for 2004, about 1.2 percent of all farm soleproprietors and about 2 percent of crop share landlords would be potentially subject tothe proposed lower adjusted gross income (AGI) cap. ARMS survey data suggest asimilar share of farm sole proprietors (1.1 percent) could be affected. When partnershipsand farm corporations are included, about 1.5 percent of all farm operator householdscould be affected because a larger share of farm partnerships (2.5 percent) and farmcorporations (9.7 percent) could be subject to the proposed cap. ARMS data indicatethat $807 million in payments were received in 2004 by farm operators organized asproprietors, partnerships, and corporations with incomes exceeding $200,000. However,not all of these payments would be affected by a $200,000 income cap on eligibility forpayments due to differences in IRS and ARMS data and changes by producers in howthey manage their incomes and expenses. The study also found that farm income aver-aged $271,749 and net worth averaged over $1.86 million for farm households with AGIestimated to be over $200,000 based on the ARMS data. [More]
This proposal is much more straightforward: stick it to the rich. It arises from the inherent fairness bias programmed deep within our old brains. As the distribution of income and assets is perceived to be shifting to the tiny number of uber-wealthy, even irrational retribution seems like a good idea.
A brain region that curbs our natural self interest has been identified. The studies could explain how we control fairness in our society, researchers say.Humans are the only animals to act spitefully or to mete out "justice", dishing out punishment to people seen to be behaving unfairly – even if it is not in the punisher's own best interests. This tendency has been hard to explain in evolutionary terms, because it has no obvious reproductive advantage and punishing unfairness can actually lead to the punisher being harmed.Now, using a tool called the “ultimatum game”, researchers have identified the part of the brain responsible for punishing unfairness. Subjects were put into anonymous pairs, and one person in each pair was given $20 and asked to share it with the other. They could choose to offer any amount – if the second partner accepted it, they both got to keep their share.In purely economic terms, the second partner should never reject an offer, even a really low one, such as $1, as they are still $1 better off than if they rejected it. Most people offered half of the money. But in cases where only a very small share was offered, the vast majority of "receivers" spitefully rejected the offer, ensuring that neither partner got paid. [More]
If you are like most of us subsidy recipients, you have been analyzing these proposals in a very personal way: "OK, how can I get around this one if I need to."
Most of us won't have to yet, of course. But the obvious solution in both cases is to become more farmers. Make the wife an operator - and the kids. So one immediate outcome of payment limits of either sort will likely be: more farmers (on the books, anyway). And simple economics tells us the marginal cost to create and maintain these alleged operators will be slightly less than a DCP.Payment limits will be a huge boost to a) attorneys, b) accountants, and c) "financial advisers" (a vague occupation at best). Limits will have to be brilliantly constructed to survive the onslaught of fevered minds seeking a workaround on commission.
Farmers will, I believe, contort themselves to "protect the downside" and in the process make their operations more unwieldy with artificial entities and bizarre bookwork. They will also hand over most of the government proceeds to the experts who manufacture these constructs.
But a few - an obnoxious few - will accept the limits in the spirit they were enacted and rise above federal control. Once beyond reach of the FSA, they will learn to operate like other businesses do - insuring their own risks and enduring the consequences of nature and decision. Those will be some scary dudes! Which leads me to my grand conclusion: Neither limit will grant much relief since they are therapy for a symptom - namely the declining number of farmers and the intense competition to stay in the game. But that is not caused by prices or subsidies nearly so much as this:
This $592,000 machine replaces lots of guys on the old farm. And it is typical of what technology is handing us to work with.
While that number might produce “sticker shock” for some growers, it can be argued — as Deere marketing managers did in Cincinnati — that the machine replaces at least two other pieces of harvesting equipment and one or two tractors (at $183,019 for one of Deere’s new 9230 tractors).
Currently, most producers operate a boll buggy ($70,000 or so), a module builder ($80,000 to $100,000) and at least two tractors with a conventional six-row picker ($300,000 to $325,000).
As Deere’s managers point out, the equipment savings represent only a part of the equation. Both Deere’s and Case-IH’s new module building pickers can reduce the employees needed to operate the equipment from three or four to one.
Deere is also expected to emphasize increased speed of harvesting — the company says operators won’t have to stop to unload the round module — and quality enhancements of the polyethylene-wrapped module when it begins selling the new picker next year.
The latter is expected to help keep more cotton in and moisture out of the module. Deere managers say wet cotton modules can cost growers up to a bale of lint when cotton wicks moisture from the ground. [More]
The problem we are facing - the rapidly decreasing need for warm bodies on the farm - is lightly affected by farm programs and mightily affected by technology. Farming is not rocket science, and hence we are watching much of our work shift to clever machines.
Our problem is actually creating some value machines cannot create.
If President Bush follows through on his tough line on health insurance for children, it leaves him less room to accommodate a farm bill he doesn't like and is strangely funded, I think.
Mr. Bush comes to this fight with an understanding of how Schip has played out in the states, which is why his administration recently instituted reforms to the program that aim to restrict eligibility to those it was originally intended to serve -- the truly needy -- and not provide an incentive for middle class parents to drop their private health insurance. Moreover, he has threatened to veto federal legislation that would allow states to expand their Schip programs.
It would be easy for Mr. Bush to give in on this fight. He is, after all, in the twilight of his administration. But next month, he'll square off against Congress to oppose an incremental advance of socialized medicine. We are fortunate he is today willing to do so at a time when Republicans in his home state were quick to abandon the fight. [More]
I mean, think about a"legacy" of scrimping on kids and porking it out to farmers - which is how political opponents will certainly frame it. And I still think his pattern of rewarding loyalty will help him back up Sec. Johanns - who has carried the White House message faithfully - with a farm bill veto unless it contains significant reform.
Current farm policy and especially the non-existent reform efforts by Congress have been savaged by all sides of the mainstream media - not to mention several creeks. A typical example:
It goes against the grain for farm subsidies to be handed out to the rich. But that's precisely what the House version of the next farm bill does -- it continues big handouts to wealthy farmers and landowners. It's going to be up to the Senate to get it right when Congress resumes next month.
Under the current farm bill, which expires this year, subsidies to farmers are cut off if their yearly incomes are above $2.5 million. The $286 billion, five-year House bill lowers that limit to $1 million -- an improvement, but far higher than the $200,000 limit suggested by President Bush and the $250,000 cap contained in a "Fairness Amendment" that was defeated on the House floor. Speaker Nancy Pelosi didn't support tougher reforms because she was trying to protect some first-term farm-state Democrats. [More]
It goes against the grain for farm subsidies to be handed out to the rich. But that's precisely what the House version of the next farm bill does -- it continues big handouts to wealthy farmers and landowners. It's going to be up to the Senate to get it right when Congress resumes next month.
Under the current farm bill, which expires this year, subsidies to farmers are cut off if their yearly incomes are above $2.5 million. The $286 billion, five-year House bill lowers that limit to $1 million -- an improvement, but far higher than the $200,000 limit suggested by President Bush and the $250,000 cap contained in a "Fairness Amendment" that was defeated on the House floor. Speaker Nancy Pelosi didn't support tougher reforms because she was trying to protect some first-term farm-state Democrats. [More]
Gosh, golly - you'd think with all this editorial outrage Congresshumans would be scrambling to build a better farm policy. Well, citizen, you would be wrong. As we saw in the House, reform is the last thing on Senate leaders' minds.
There is no change in the big ticket item in this farm bill cycle: $26 billion in direct payments, a leftover from "freedom to farm" payment contracts begun in 1996 that will be made, regardless of crop prices, over the next 5 years. Chairman Harkin has repeatedly criticized direct payments as "hard to justify" when crop prices are high, as they are now, and farmers will be making good money (in some cases record money) in the marketplace.
But with this draft he formally endorses continuing those very payments at the same level. He (suddenly) indicated he would do this a few weeks ago, just after Speaker Pelosi's House farm bill did the same.
They're simply accepting the reality that this is what every major farm and commodity group wants. And that's probably the most important take-away from this farm bill cycle. [More]
Regardless of your position the sheer immobility of farm policy would seem to demonstrate some powerful lessons:
There are more people than just farmers benefiting from those billions. The idea that a few hundred thousand voters who split their votes unpredictably can reliably raid the Treasury would be mildly believable if we were cunning financiers, but we're farmers, fer crying out loud! My theory is the farm lobby is so whackin' huge it has become the tail that wags the dog. Indeed, an interesting economic study could be made of the net proceeds to farmers after the effort of feeding these K street mouths is subtracted.
If you need proof of the dwindling readership and clout of the print media, this is Exhibit A. Following this argument the slow motion train-wreck that is the Chicago Tribune is hardly a surprise.
If change should miraculously come, it would be shattering to a number of institutions and arguably due to on-line campaigning for change. Not this blog, necessarily, but a much wider spread network of reform activists who have finally found a outlet.
And yet, despite all the frantic exchanges, my sense of industrial producer attitudes from conversations this month across the Corn Belt is mild disinterest. I think they have wisely realized staring at Washington for indications of the future will designate you as potential roadkill on the ethanol-fired expressway of farm evolution.
As Jim Weisemeyer has been telling us, this is one ugly farm bill process. My perspective is skewed because I find little to love in the existing farm policy, but regardless, the political maneuvering has been byzantine. I'm sure all bills are to some degree, and hence my fondness for as few laws as possible.
Here is an insight into how Speaker Pelosi managed to pass the House version.
The more serious threat to the handiwork of Pelosi and farm state lawmakers lies elsewhere.
For example, some on Chairman John Dingell’s Energy and Commerce Committee felt blindsided by air quality provisions in the final bill. Staffers pored through unfamiliar tomes on agricultural law after they learned late in the game that the measure contained a new provision allowing California farmers to use funds in the Environmental Quality Incentive Program to meet state and local clean air rules. EQIP has been mainly a clean water program. Air quality is firmly under the jurisdiction of Dingell, who didn’t earn his nickname “Big John” by demurring to turf raids by other committees.
The big losers in closed-door deal making that went on in Pelosi’s office until the wee hours last Thursday morning were the oil and gas industry and the crop insurance industry. Their lobbyists were caught short, but there is plenty of time for them to regroup as the bill goes to the Senate and then to a final House-Senate conference. [More]
Many in agriculture don't care how it happens as long as the final product arrives. But my take is all those lobbyists aren't there to make sure I get money - they are there because they will get money.
In a effort to be seen like "reformers" - suddenly a good thing in farm policy - Sen. Tom Harkin has indicated many in the upper house will push for modifications in various aspects. The biggest idea is fiddling with CCP's:
"I do want to move in that direction," said Harkin, an Iowa Democrat. He said the more he studied the revenue protection concept, the more value it held as a modification to the so-called counter-cyclical payments made when crop returns are below the targets set by Congress. [More]
A nip here, a tuck there, and our farm policy could actually be a different beast altogether. My guess of a Death of a Thousand Cuts could be closer than I had thought.
We could end up watching the Conference Committee from Heck in September or October.
In order to get Dems to sign off on the farm bill, Speaker Pelosi and her allies threw in quite a handful of goodies - one of which may come back to haunt the farmers who like the current subsidy scheme.
Democratic leaders did it by playing Santa Claus. To representatives from California and other states that don't grow the types of crops that traditionally get federal handouts, they doled out $1.6 billion for specialty crops such as vegetables and nuts. To the Congressional Black Caucus, they handed at least $100 million to help settle discrimination lawsuits by minority farmers. To urban liberals, they gave a needed expansion of the food stamp program. And to Democrats in farm states, they presented a bill that keeps in place all of the trade-distorting subsidies that made the 2002 farm bill a shameful violation of international agreements. [More]
But the real eyebrow-raiser was this bone for labor unions:
The bill is flush with subsidies to produce ethanol, the corn-based alternative fuel that still can't compete on a free-market basis. More ethanol requires more biorefineries. Democrats plan to mandate Davis-Bacon wages for workers building those refineries. With nonunion builders unable to compete on price, each new refinery could cost as much as 35% more. In many rural areas with little or no union activity, this artificially high labor cost could even make the prospect of building an ethanol plant a net loss. [More]
This is no problem if your ethanol plant is already up and running, but bad news for expansion plans.
Another reason used corn heads will be hard to find...
Margy Fischer, Farm Journal's Machinery editor, discovered this summer used corn heads are hot items in farm country as southern farmers gear up for corn instead of rice and cotton.(Read more about it in this summer's issue)
Looks like that market won't be cooling off soon. The WTO has issued a temporary ruling that could hardly be called unexpected.
The World Trade Organization largely ruled against the United States in an interim decision that it has failed to scrap a series of what the trade body says is illegal subsidies paid out to American cotton growers, U.S. and Brazilian trade officials said Friday.
The interim ruling was handed out confidentially to the parties late Friday. A final verdict, expected in September, could open the door for billions of dollars worth of Brazilian trade sanctions against the United States.
WTO panels rarely change their findings between preliminary and final rulings, and the apparent result is a major victory for Brazil's cotton industry and West African countries that have claimed to have been harmed by the American payments. [More]
I would guess the prevailing sentiment in cotton country in suppressed panic, but the House vote on the new farm bill preserves much of the disputed payment scheme supported by the cotton industry. Still with the massive shift in acres, one has to wonder if deep in their hearts cotton growers are not reading some handwriting on some wall somewhere.
The ruling offers another justification for a farm bill veto, something now slightly more thinkable. Certainly many non-farm sectors are dismayed by the adoption of what are now clearly trade obstacles.
The decision of most farmers to ignore possible WTO ramifications implies a growing ambivalence to export markets, especially for corn farmers - the largest single group. Heck - we'll just turn it all into ethanol, a seemingly endless demand source.
But corn is the only commodity with that luxury, and as nations retaliate legally, our choices of what we grow will dwindle to one. And once that happens, there will be few ways to adjust to rising input costs. By focusing on only one customer, we could discover what thousands of WalMart suppliers have: we have forfeited the control of our own business.
The unfolding farm bill drama ratcheted up significantly today as Republicans suddenly showed up and Sec. Johanns issued a mid-level veto threat. The trigger appears to be a poorly disguised tax built into the legislation to fund the general Santa-Claus economics of the House Ag Committee version.
A proposal from Democratic Rep. Lloyd Doggett would help pay for $4 billion in nutrition and food stamps by taxing U.S. plants of companies owned by firms located overseas. Republicans charge the increase would endanger tax treaties and raise the cost of doing business in the United States. [More]
The conservative Club for Growth interest group is planning to include the vote on the Fairness in Farm and Food Policy amendment in the group's 2007 congressional score card. The Club for Growth calls the bill supported by House Agriculture Chairman Collin Peterson and House Speaker Nancy Pelosi "disastrous." The club will distribute the score card to other members of Congress and the public. [More]
As we learned with former Speakers, control of the gavel counts for about 150 votes on its own. Regardless, this looks like a campaign issue for conservatives either way it goes, if they bother to take a stand. The real wild card is the veto threat. After the vote count on the Kind-Flake amendment, we might know if Pres. Bush has any leverage.
Great - I'm on the road during this whole kerfuffle. I'll be at the Commodity Classic in Maryland tomorrow.
How conveeeenient - a GAO report on payments to dead farmers smack in the middle the farm bill debate.
The Agriculture Department sent $1.1 billion in farm payments to more than 170,000 dead people over a seven-year period, congressional investigators say. [More of a rather formulaic story]
Some good questions to ask when you see articles like this.
How much total money did the FSA hand out during this period? If we do a rough estimate of $20B per year, then the dead guys got about 0.7%. In other words, 99.3% of these funds were NOT dispersed to dead people.
How does the above compare to other welfare programs of government (SS, Homeland Security, etc.)?
How much are we willing to spend in staff, auditors, investigators, etc. to recover that $1.1B?
Have you ever tried to close an estate in 2 years? I have and it's like trying to kill a zombie.
Of course, the obvious answer to this outrage: don't pay dead people; don't pay live people.
The arch-nemesis of lovable farmers who just want a few billion on subsidies to tide them over - Big Business - has stirred from its loathsome stupor. (I get all carried away with metaphors after a little caffeine).
In the hubbub surrounding the markup, few noticed some important news: The U.S. business community came out for reduced agricultural subsidies.
In a letter to House and Senate leaders, it called on Congress to “enact long-needed reforms” in farm policy that will “create a dynamic opportunity for U.S. trade negotiators to increase the pressure on our trading partners to offer substantial new market access opportunities that would benefit American farmers, manufacturers and services providers.”
It was signed by several of the biggest guns in corporate America, including the Business Roundtable (representing Fortune 500 giants), U.S. Chamber of Commerce, National Retail Federation, National Association of Manufacturers and Information Technology Industry Council. [More]
Could it be that Karl Rove once again has a better political sense of the nation than Speaker Pelosi? Like others, I think "farm states" will not be politically decided by the farm bill.
In 2005, a Kellogg Foundation-sponsored poll conducted in Iowa, Kansas and Minnesota found clear preferences for a strict $250,000 cap on farm program payments, which is the proposed cap in the Dorgan-Grassley bill reintroduced two weeks ago. All three states are considered farm states, and both farmers and non-farmers were surveyed. You can find the poll here. A quote from the poll summary:
[By] more than a two-to-one margin (67 percent to 31 percent) voters in these states support limiting direct payments to single farms to no more than $250,000. Interestingly, support is higher among farm income households and Republicans than among voters as a whole.
Since farm income households certainly understand farm programs and their impact, one might assume that their higher support for strict subsidy limits is significant. Not only do voters in these states support strict payment limits, they are willing to take that policy preference into the voting booth:
a majority of voters in each state describe themselves as more likely to support a member who supports limiting direct payments to single farms to no more than $250,000 and at least a third describe themselves as "much more likely" to support such a member. [More]
Lost in all this entertaining excitement is the ground truth that farms like mine are almost past caring. Industrial agriculture will shrug if our $25/A DCP payment shrinks or disappears. And if our "safety net" suddenly looks no bigger than our non-farming neighbor's, maybe we will be slightly more sympathetic to solutions for all of us.
One thing is sure, with all this hoo-hah, negotiating cash rents for 2008 and beyond has become NASCAR-like exciting.
Might President Bush veto a farm bill if it looks like the likely House version?
The Bush administration is signaling that it is prepared to veto the $300 billion farm bill that will probably come before the House of Representatives this week. Bush signed similar legislation in 2002, when his Republicans controlled the House, and he will face pressure to do so again with elections approaching next year. [More]
Hokey smokes, earthlings! While I sorta wistfully imagined him doing the right thing, the reality of it is stunning. Whether the threat can sway anybody is another guess.
Should he follow through, it would signal the cannon is well and truly loose about the deck for the next year and a half, and anything could happen, since he no longer cares about his own party members' political future, especially with them bailing out on Iraq.
What looks like the likely farm bill output for the House has received Speaker Pelosi's blessing. This is not endearing her to her district, but like all Speakers, she knows nobody is going to vote out a Speaker from their own district.
My guess is Rep. Pelosi would throw her own Maltese under a bus to maintain the Democratic majority, and the handful of Democrat freshman in rural districts were not expendable. If you stop and think about it, the only real effort at reform came when Republicans had a large edge in Congress. Stalemate has been very, very good for subsidy fans.
Still, Speaker Pelosi's approach is a clear indication of the one-dimensional image of agriculture. Do farmers vote solely on the basis of how much money we get in the farm bill? (I have never seen evidence of a "farm bloc" vote) Does Iraq not matter to us ? Or health care? Or gay marriage? Or immigration? Would we vote for Lord Voldemort if he came through with doubled loan rates?
Maybe farmers are content to be seen as self-centered simpletons with little interest in affairs beyond the farmgate. That picture does not correlate well with producers I know, but when I think of it, neither do they seem troubled to be viewed that way. Perhaps Ms. Pelosi's cynical arithmetic is right.
As usual, the gold standard coverage of this development is in Jim Wiesemeyer's column at ProFarmer (for which you have to pay - and should) but I'll risk stealing this one nugget that gave me pause.
Payment limitation changes are by far the biggest farm bill achievement in the House farm bill. While farm bill reformists say the alterations did not go far enough and deep enough, changes in payment eligibility (not only for farm program payments, but also for conservation payments), along with the end of triple-entity and a move to direct attribution clearly give this farm bill a reformist label.
Jim and I have a quantum difference on the meaning of the word "reform" but the more I ponder it, eliminating the three-entity rule at least opens the door for future ratcheting down of payment limits. While a very small step, if it is retained by the Senate - which I think very possible - it will force some innovative work-arounds at least by some large operations. [Hint: expect to see more 5 year-olds "materially participating"]
The Senate will have to pass different legislation of course, in order to be seen as contributors, so it may be this proposed legislation is the upper boundary for traditional subsidy recipients.
The one idea for farm bill reform I had thought least likely to survive seems to be the one most in play. Given my keen political instincts and personal record (0-for-4 in contested elections), I should have seen this not coming. Or something like that.
Anyhoo, the idea of real payment limits suddenly has leapt to the forefront as "proof" of sincere reform.
Some specifics:
The limit for DCP's would be umm... raised to $60,000 (What the heck?)
The limit for CCP's would stay at $65,000
The limit in MLG's would be ...eliminated. (OK - I get the joke)
Oh, we are going to take stern action with a handful of millionaires.
All seriousness aside, the idea of any payment limitation language at all is a surprise to me, and perhaps an open invitation for floor amendments - they wouldn't have to change the language, just tweak the numbers. Meanwhile the Senate may have some ideas of their own.
Grassley has been working with Sen. Byron Dorgan, D-N.D., on an effort to institute payment limitations in farm commodity programs. "We believe that if the House would include the Grassley-Dorgan payment limit language in their version of the farm bill, it would save close to $700 million," said Grassley. "With the Senate and House trying to find offsets this year, this seems to be a very good step in the right direction, considering the need to find offsets for spending. Our payment limit legislation would not only help find extra money, but it is real reform in the farm program as well." [More]
It cannot be easy trying to make foolproof plans to provide for every little problem on my farm all the way from Washington. It's amazing how much effort they are putting into it. And how little it may matter in the long run.
Farm policy reform advocates are sensing the battle has been lost, I think - or at least going badly. The varied pleas for change are taking on a note of desperation.
The House Agriculture Committee recommendations for Title I commodity subsidies extend the outdated, broken system of the past - moving policy in the wrong direction and making it worse. Congress cannot accurately forecast prices and loan rates for the life of the next farm bill. [More
George Will weighs in (somewhat wistfully, I think):
Agriculture policy -- another manifestation of the welfare state, another contributor to another faction's entitlement mentality -- involves a perennial conundrum of welfare, corporate as well as individual: How do you break an addiction to government without breaking the addicted? If Lugar and like-minded legislators can accomplish their aims, their achievement will be comparable to the welfare reform of 1996 -- the fecund year of the short-lived Freedom to Farm Act. As Lugar again puts his hand to the plow, attempting to plow under a New Deal remnant, wish him well. [More]
Note this stunning statistic that Big 8 growers ignore when arguing for farm policy status quo.
The specialty-crops industry accounts for nearly half of all the cash-crop receipts in agriculture. With 119 members of Congress supporting our initiative, we believe that congressional leaders and members of the House Agriculture Committee should roll up their sleeves and enact policy geared toward the 21st century. [More]
If there is any positive sign for reform, it could be with Speaker Pelosi and payment limits.
A spokesman for Pelosi said the two have spoken about payment limits, which she believes is necessary to reform the farm bill. Peterson met Pelosi on Thursday and was scheduled to meet her again on Friday. [More]
Still, it looks to me like simply by foot-dragging, proponents of the status quo can force extension of our current policy.
Since I seem to have fallen into a periodic summary of what's being written written about the farm bill debate, here is this week's contribution.
There are some clear themes emerging, such as maldistribution of payments.
For decades, the answer to that question has ranged from a tepid "not really" to a resounding "no." Understandably. In the past, rural interests -- diverse as they are -- have spoken with disjointed, and at times competing, voices. They have also been dominated by agriculture with a capital A -- not the small family farms that most of us care about and yet which receive little help, but the big commodity growers that grab the lion's share of federal farm assistance. [More]
and budget concerns
In an effort to cut back, some lawmakers want to reduce or eliminate direct payments, subsidies that are not based on current crop production or prices. The chairman of the Senate Agriculture Committee, Democratic Sen. Tom Harkin of Iowa, has supported this approach and encouraged spending more money on conservation programs. [More]
and the fruits-and-vegetable omission
Yet a promising drive to shift subsidies away from the largest and more profitable grain and cotton farms to smaller fruit and vegetable outlets, as well as to conservation programs to help farmers keep fertilizer out of the Chesapeake Bay, is faltering badly. [More]
and the wrong-food subsidy angle
Due in part to this imbalance, we are paying more than $100 billion a year in obesity-related medical costs. If our farm bills had also been healthy food bills, we would have distributed government support more equitably to make nutritious foods more accessible and more consistent with US Department of Agriculture dietary guidance, which encourages us to eat more fruits and vegetables. [More]
and a new one - good politics for freshmen Congresspeople
The answer, in a report to be released at noon today, is that farmers in 36 of 55 districts represented by freshmen members would receive a fairer share of federal farm spending if Congress shifted direct payments to share the cost of clean water or wildlife habitat. Farmers in 12 districts would see little or no change. Many of these districts are located in California, Florida, Pennsylvania, New York and Ohio — large farm states that currently receive little support from USDA. [More]
The level of activity in op-ed pages seems pretty high for a farm bill and metro papers. Still, this is the first farm bill with on-line monitoring, so what do we have to compare it to?
My goodness - the blogosphere is abuzz with the Scooter Libby commutation. (Would this guy be news if his nickname was "Stinky"?)
Like his veto pen, the power to commute and pardon has long lay unused in the White House. Too bad. I agree with David Boaz at the Cato Institute that more deserving pardons could have been issued.
President Bush has pushed the envelope of every aspect of executive power, except for two that might ease the burden of government, the veto and the pardon. Now he’s threatening to protect the taxpayers with his veto pen, and he’s just discovered his power to pardon or commute the sentences of people convicted of crimes. Whether Scooter Libby was an appropriate recipient of a commutation is subject to much debate. [More]
Given that 60% of individuals polled disagreed with the action, the President seems to be even more disconnected from the people he leads - depending on an internal compass to guide his decisions as even conservatives distance themselves from him.
This has strong implications for agriculture and the farm bill, I think. The loyalty he rewarded in the Libby case could be similar to the loyalty shown by Sec. of Ag Johanns, a true foot soldier who has tireless repeated the administration demands for a new form of farm policy.
This White House has nothing to lose and a legacy to gain. It looks to me like the President may side with fiscal conservatives and veto any bill that ignores reform.
I have taken the time to re-read most of my posts about the farm bill progress (?) through Congress [Note: you can do like wise by clicking on "farm bill" in the labels below.] The most upbeat spin I can put on them is they are not totally cynical.
But they are not far from it. Despite my efforts to write honestly, this likely is an unfair characterization of events, influenced no doubt by my strong belief farm policy could be so much better. (And at times my concerns about rain - foolish, but a typical farmer trait)
So it struck me hard to read these words from an observer whose work and opinion I admire immensely - Jim Weisemeyer.
Comments: Will Peterson confront the "magic beans" and "monopoly money" charges by detailing where the $17.5 billion to $18 billion from the so-called reserve funds will come from? He has failed to detail the offsets so far and most expect him to be silent again. If all this sounds bewildering, it is. It's no wonder the vast majority of voters are losing faith in their government. The House farm bill process is another sad example of how not to write a major bill.
The question Rep. Peterson should answer: How much funding has Speaker Nancy Pelosi (D-Calif.) agreed to, and where are the offsets coming from? Without answers to those questions, the farm bill process (or whatever you want to call it) is not transparent. Leadership on so many things in Washington is needed -- from both political parties.
Bottom line: If the split-personality farm bills go to the House floor, those seeking multibillion-dollar boosts in funding (food and nutrition, conservation, specialty crops) will likely cause a donnybrook. That is when we may finally get a true, open debate. We haven't had that in the House Ag Committee to date. And the Senate Ag Committee remains a work in non progress. [More - via a reasonable subscription]
I may get into hot water for borrowing rather liberally from subscription-firewalled material, but these thoughts are, I believe profoundly important. Jim rarely expresses even mild judgments of the politicians he chronicles meticulously in his professional writing, let alone lapse into frustration.
I do not suggest he is corroborating my low opinion of recent farm bill (in)action. His information is far purer than mine, but his thoughts do seem to address the growing concern about Americans' alienation from our own government.
How do people think the Democratic Congress is doing after six months? Lousy. But better than the alternative.
It's midyear, and the Democratic Congress is taking a break. Well-deserved? No, say Republicans.
"We are now halfway through the first year of the 110th Congress," Rep. Eric Cantor, R-Virginia, said. "And there is no question that the failure on the part of the Democrats in terms of their midterm exam is really a letdown to the expectations of the American people.''
Democratic leaders are inclined to agree. "I'm not happy with Congress, either," Speaker of the House Nancy Pelosi said.
And the American people? Look at the grades. President Bush is doing terribly -- an average of 30 percent job approval in six recent polls. Congress is doing worse -- 25 percent on the average in five polls. (Poll: Support for Democrats wavering)
Why the low marks? Democrats point to one issue where not much seems to be getting done. "The war in Iraq is dragging down people's confidence in what's going on in this country," Senate Majority Leader Harry Reid said. [More]
As many have pointed out, this discontent - which strikes me as truly more deeply felt than our usual contempt for politics - is occurring as our economy chugs along briskly. The American Way is to rank financial progress 90% of the score, right? Steve Chapman puts his finger on the reason, I believe.
A major cause of the misperception, though, is President Bush's sagging popularity. It's clear that many people let their discontent with the president color their view of everything. If he is failing to win the war in Iraq or curb illegal immigration, we assume he must also be coming up short on the economy.
The polls suggest that some people won't acknowledge anything good here lest it suggest competence on the part of a president they can't stand. According to a survey by the Pew Research Center for People and the Press, 43 percent of Republicans say the economy is fair or poor, but 79 percent of Democrats take that view. "People are giving partisan responses," says public opinion expert Karlyn Bowman of the American Enterprise Institute in Washington. [More - great read]
This rings true for me. It also forces me to reconsider if presidential popularity matters. I have always considered it to be simply news fodder - I mean, it's not like we could oust our leader at any moment by a show of hands. But perhaps there is something to political capital, and we are running a deficit.
Let me hazard a prediction. If farm bill reform of some kind is not enacted (a replay of immigration), it will simply add to the widening chasm between people and government, making any political progress even harder, and fueling a spirit of futility and even despair. The farm bill debate has achieved that level of national prominence and involvement.
This disillusionment, if eventually reflected in economic terms such as consumer spending, will make any recovery all the harder. The connection between business and politics is real, but subject to delays between actions and consequences.
The inability to effect collective change would seem to be good for conservatives, but that presumes we are in a happy place right now. And fewer and fewer citizens seem to feel that way. This creates a real political conundrum. If Americans lose faith in government, no legislation will receive acceptance, because it is the creation of distrusted authors. How then will we address those issues? This is what happened perhaps to immigration reform.
I think that if people did not already have the sense that their country was in some sense slipping away from them -- if they felt secure enough about our country and its direction -- then they would be a lot less inclined to think that illegal immigrants were taking it away from them. But the reason they think their country is slipping away from them need have nothing to do with illegal immigration itself, as opposed to a more general sense that the rules are stacked against them, and no one obeys the laws, and decent people who work hard get screwed. [More]
I have no ready answer. But he urgency to accomplish something has increased. Our national character depends on a hopeful future.
International reaction to our farm bill debate and the ag subsidy roadblock at the WTO is ramping up. The two issues seem to have merged in the international press. Australia (BTW, one of our few allies in Iraq, remember):
The 2007 Farm Bill is critical to Australia's interests because US subsidies to wheat, cotton sugar and dairy farmers have the potential to distort prices of some of our major agricultural commodities.
The 2002 legislation, which is due to expire in September, has long been a source of concern to the Australian Government because it directly subsidies the incomes of American farmers, making it harder for countries such as Australia, New Zealand and Brazil to compete, despite being efficient low-cost producers. [More]
Canada:
The White House and key members of Congress had been pushing for major reforms aimed at cutting overall subsidies, capping payouts to millionaire farmers and generally bringing the regime into line with international trade rules.
The agriculture committee chose to ignore all that.
If ever there was a sign that the United States isn't serious about reaching a global free-trade deal, there it was. Talk about backtracking and intransigence. [More]
California (OK, it's technically not a foreign country, but it's close):
Gov. Arnold Schwarzenegger is urging Congress not to forget their fruits and vegetables as they write a new federal Farm Bill.
Schwarzenegger and the governors of New York, Florida and Texas co-signed a letter sent Tuesday to the congressional Agriculture Committees that outlines what the four most populous states want out of the legislation.
But what California wants may not matter when it comes time to write the bill, because the committees are stacked with Midwestern members. [More]
As Congress marches on to make the US the Land of the Corn via ethanol mandates, it strikes me as an excellent opportunity to try to give a little ground on our farm subsidies. If you haven't noticed, America is very slowly drifting into an isolated position in the world community. It was one story when we dominated every vital economic statistic, but that is hardly the case now.
Crimony, if you can't get along with Canada, who's left to be friends with?
You don't even score. The battle to reform farm policy may turn out to be little more than a tantrum. Gosh, it was exciting for a while. Imagine treating farmers like grownups! Even the White House got caught up in it.
But we were just fooling ourselves. A House ag subcommittee just brought us back to reality.
The panel, a subcommittee of the House Agriculture Committee, brought each of several proposals for change to the farm bill to a vote before rejecting them, sending a strong message to those pushing for major changes to farm legislation. They include the Bush administration and a bipartisan coalition led by Representative Ron Kind, Democrat of Wisconsin.
The Bush proposal received one vote. The Kind proposal was defeated unanimously, as was an unusual proposal from Citigroup that suggested a voluntary buyout to farmers receiving subsidies. Even modest reforms introduced by committee leaders were rejected. [More]
Extending the current farm bill is easier, of course and will allow those of us who have been winners to continue current trends. We could know the outcome soon enough for 2008 cash rent bids, and without any meaningful payment limits, we can guess what that market will look like.
While there may be some minor drama on the House floor, or even the Senate, I'm sensing a political waxing here. The effort to persuade for rational treatment of our profession by our government is just one of a number of lost causes I have supported. Like the metric system.
I'm also cashing my checks with a slightly clearer conscience. (Not really - but it sounds tough, doesn't it?)
Regardless of your position on subsidies, this is impressive computer work. And to date, even the most vehement payment boosters have found no grounds to claim the EWG results are inaccurate. In fact, their database work informs the farm bill debate. (As opposed to having NASS or ERS generate numbers 5 years later)
I like the map feature, although it reinforces something I noticed a few years ago. Not too many farmers live around me.
Lots of farmland - just not many resident tillers in my area.
The USDA has made subsidy data much more personal.
It's not just wealthy individuals who get farm subsidies - state governments are reaping the benefits too. In Arkansas, for example, EWG ranks the state's Department of Correction as the top subsidy beneficiary, pulling in nearly $2.3 million from 2003-2005. The University of Illinois is first in Illinois, with nearly $1.3 million in payments for the three-year period. [More] [Emphasis added]
I just don't get any sense of outrage, but maybe the combined efforts of disparate voices such as Congressman Earl Blumenauer (D-OR) will have some effect:
Current farm policy favors corporate special interests. Fully 70 percent of the payments go to the top 10 percent of farmers, and even more of that benefit is concentrated for the large processors. What’s more, aid is so concentrated in a few powerful states that the support received by most states is almost negligible. We deserve a food and farm policy that serves all Americans, not just the politically-connected. [More]
It would be easy to giggle about a liberal from Oregon wandering into the farm policy debate like a choirboy into a pool hall, but efforts like these have sprung up all over. While they may be too diffuse politically to accomplish much, we DCP-collectors need to remember we can't fool all of the people all of the time.
If the issue is decided in committee, we can extrapolate our future pretty easily. If it is determined by the Congress as a whole, who knows?
Observers close to the action at Paris Hilton's court appearance were struck by her tearful denunciation of the action of the House Subcommittee on Specialty crops ignoring calls for reform to farm payments.
The draft also reauthorizes the peanut program, including an extension of the 2002 Farm Bill's direct and counter-cyclical payment and loan provisions for peanut farmers. The loan rate would be increased from $355 per ton to $375 per ton and payments acres would be lowered from 85% of base acres to 74%.
The Subcommittee voted to extend the current sugar program until 2012, requiring the USDA Secretary to continue to operate the program at no cost to the federal government by avoiding forfeitures of sugar. [More]
(Well, they were pretty sure that was what she was wailing about.)
I shed a tear as well. Given this development, the Pelosi position suddenly becomes more interesting.
Interesting commentary on how the farm bill process might develop.
“So this is a huge deal. If Pelosi blocks amendments on the bill, it is very possible that reforms suppported by the majority of the House will not be in the House version of the farm bill because votes will never be allowed. This would be a subversion of democracy- one committee being allowed to write an enormously important piece of legislation without regard to the desires of the rest of the House. In effect, this means that the citizens represented by Ag Committee members will get to write the farm bill- and to hell with everyone else.
“Let me go further. If Pelosi blocks amendments on the 2007 farm bill that are supported by a majority of the House, that would be a clear message that the change in leadership in the House means nothing at all; that the Democratic leadership intends to run the House in the same top-down corporate fashion as its predecessors.” [More good political analysis]
As I have said before, Pres. Bush (remember him?) is still a wild card, and could actually be a powerful reformer ally - regardless of whose side of the aisle they are on. The question is would reformers vote to sustain a veto?
With Rep. Peterson apparently aiming for equal dissatisfaction as a goal, the mechanism seems to be in place for achieving this lofty ambition.
As I read the op-ed columns and lobbying group papers on the farm bill debate one theme is fairly consistent and we all saw it coming.
One problem with the farm bill has been its historical lack of balance. For example, only 39 percent of all U.S. farmers and ranchers received crop subsidies in 2005. These farm-bill subsidies support the growing of commodities such as corn and soybeans, but have little support for fruits and vegetables.
These imbalances have consequences for eaters. Between 1985 and 2000, the real price of fruits and vegetables increased by 40 percent, while the price of soft drinks and other sugary and high-fat foods declined by as much as 20 percent. If our farm bills had been healthy-food bills, we could have distributed government support more equitably to make nutritious food more affordable. In part because of this imbalance, we are paying more than $100 billion a year in obesity-related medical costs. [More] [My emphasis]
Say what you will about the Environmental Working Group, but the power of one guy (yup - that's all) armed with a decent computer, good database skills, and well-run website is formidable. Subsidy proponents simply have been unable to counter these exposed numbers, especially when they contrast significantly with the traditional rhetoric of farm payments.
The maldistribution of government money also plays well for those who argue about local producers being short-changed.
There's growing demand to change how the subsidies are allocated. Some say it's unfair that commodity growers receive nearly all the money. And there's a push to spend more money helping farmers solve environmental problems and less on direct payments to individuals. [More]
Moreover, the breadth of the coverage and interest in the new farm bill seems greater. Opinions are popping up in places that never cared much before.
Each year the federal government makes payments worth millions to farmers across the country -- many of whom are massive corporations, not the average family farmer, like Maine farmers. These subsidies promote inefficiency and encourage growers to "game" the system in order to qualify for larger subsidies. [More]
This means there could be fewer easily-traded-for votes from urban legislators than in the past. When you don't have many farmers in your district/state, why not swap a farm bill "aye" for a vote that will impact your constituents? That type of thinking may not be as easy to come by anymore. Pressure groups have arguably lowered the "disinterest" in farm payments, I think.
The bottom line - if the forces at work in the farm bill debate cannot alter the path of this juggernaut legislation, it could be as close to as close to permanent as the Constitution. But as I mentioned in this week's USFR commentary, a number of small changes (slightly lower payment cap, wider distribution, less market-distorting, etc.) could essentially make our farm program an afterthought for industrial producers in the booming grain business.
This Death of a Thousand Cuts is starting to look like the optimal outcome to me.
Little Jimmy Weisemeyer comments on the farm bill to date and hits the nail on the head.
Farm bill wild cards: If President Bush vetoes many FY08 appropriations bill, this would muck up House and Senate floor debate for the farm bill and could push the end zone into 2008. Also, I am still not ruling out a presidential veto of the farm bill whenever it comes if it exceeds the spending level the White House eventually lays out, and/or if the bill doesn't provide most of the reforms reflected in the administration's farm bill language. [More, by subscription]
The farther we go into the sunset of the Bush administration the less predictable he becomes. Crimony, when your ratings are in the low thirties, what have you got to lose? The idea of Pres. Bush vetoing a generous farm bill is not unthinkable.
See, you just thought of it.
Nor would the farm bill be the only example. Consider the quiet efforts by the administration to reform food aid.
But critics say it does so in a way that benefits American shippers and food producers at the expense of thousands of people who die of hunger unnecessarily. That's because under its Food for Peace program, the U.S. buys only grain and other food produced in this country, and then ships 75 percent of that load on U.S.-flagged ships, which many say delays delivery of food aid that is needed in a hurry.
Now the Bush administration has joined those critics, quietly proposing a change to Food for Peace, the Eisenhower-era aid program that provides hunger relief overseas, a shift that the White House contends will save 50,000 lives a year. But the change faces sharp opposition in Congress and from states with influential farm and shipping interests. [More]
It could also be that the iron grip of the White House has been loosened allowing conservative administrators a chance to do something, well, conservative before hitting the consultancy road.
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.
The psychological scheme here is we farmers will opt for money now and to heck with the future. While I can entertain that strategy as plausible, it only seems likely if producers are convinced the subsidies are going to end anyway. There is the tough idea to swallow.
Editors across the country are wading into farm bill opinions. A current sampling:
Last year, the Minneapolis-based Institute for Agriculture and Trade Policy published a study by Heather Schoonover and Mark Muller that looked at the change in food prices from 1985 to 2000, the same period during which child and adult obesity began to escalate. In that time, the price of fresh fruits and vegetables increased by 38 percent. During the same time, the cost of soft drinks plummeted by nearly 23 percent, with significant declines in the costs of fats and oils, added sugars, and meat and dairy products. The authors cited farm bill spending priorities as a direct cause of this price disparity and resulting dietary imbalances.
In 2000, the surgeon general warned that the United States was in the throes of an obesity epidemic, with nearly two-thirds of Americans either clinically obese or overweight. As the link between obesity, Type II diabetes and heart disease has become clearer, a new dietary reality is emerging. According to the Centers for Disease Control, the estimated medical costs of dealing with the obesity and diabetes epidemic now surpass the total costs of the farm bill itself. The current subsidized food system, then, is anything but cheap. [More]
The source is worth noting as I think California is very much more in play for this farm bill. Just a few votes there, ya think?
For too long, the emphasis in agriculture legislation has been on handing handsome benefits to a small number of big-time farmers and farm businesses, at the expense of everyone else, including smaller farmers.
Instead, the program should be designed to pursue four goals: Help feed the hungry at home through food stamps and other programs; wean the farm industry from taxpayer support; protect the environment; and eradicate unfair trade practices built into the current system. [More]
Of course, the deeply-thinking tanks have lobbed some serious papers onto the battlefield as well. The powerful American Enterprise Institute offered these mild observations:
Elimination of farm subsidies for corn, wheat, and soybeans would have little effect on farm production or commodity prices. These Title 1 subsidies are in effect “money for nothing.”
Current dairy policy also transfers millions of dollars from consumers to dairy farmers; the cost to consumers and taxpayers far exceed the benefits to dairy farmers.
Tough talk - but just talk. It is hard for me to take the AEI seriously. Farm policy has been one sin they easily tolerate to accomplish some greater good elsewhere in the economy. The right wing has shown little inclination to invest effort in reforming agricultural policy.
Perhaps the sleeper idea is the bi-partisan reform bill offered by Sen. Dick Lugar and Rep. Jeff Flake (among others). Just like the immigration bill - which oddly may have a chance simply because we have forgotten the power of compromise - this idea may have legs by virtue of its bi-partisan authorship and the fact it actually addresses some of the concerns being trumpeted above.
Of course, Memorial Day will anesthetize Washington shortly, and the immigration issue seems to have sucked the oxygen from the political debate, but for some reason, this proposal strikes me as at least worth following.
The [lamentable] bulletproof nature of farm subsidies has attracted the interest of more than a few very bright minds lately. Since our quintennial chance to alter this flow of entitlement is at hand, the $20B or so of federal moolah has sparked some innovative thinking.
Citigroup proposes to provide subsidy recipients an alternative to the fixed DPs, CCPs and marketing loans (see Existing Programs, p. 12). The choice will be voluntary. Recipients would receive a fixed settlement amount to forego future payments. Recipients and U.S. taxpayers will benefit
Recipients linked by subsidies to the land will be free to make other life choices
Recipients will weigh the certainty of the Buyout vs. payments that could cease anytime
Assuming 50% of DP and CCP recipients accept the buyout offer, it generates:
– Savings to redirect for other needs
Budget savings of $18.9 billion over the first 10 years*
$47.6 billion future savings (assuming no other change in programs)
– A cash infusion that will stimulate the economy, promote rural growth, create jobs and accelerate tax receipts
– Enhanced Doha leverage -- payments should qualify as non-trade distorting support, exempt from WTO disciplines
A lower entry cost for new farmers and ranchers as subsidies are no longer capitalized into land prices
– Immediate compensation to landowners for losses in land values vs. simple reduction of benefits
– 2006 U.S. farm prices were up 15% partly due to corn price surge and drop in farm acreage (Bloomberg 2/20/07)
Buyout price can incorporate 2007 Farm Bill AGI limits as well as other provisions
Potential for tax benefit at lower AGI levels
Citigroup’s proposed buyout offers a voluntary path for recipients entitled to DPs or CCPs to receive upfront cash to spend as they choose. It could generate budget savings of $18.9 billion over the next 10 years.
* If fewer recipients accept the Buyout -- say 25% of DP and CCP recipients -- the savings would instead be $9.3 billion over the first 10 years
[Link removed by request - I'll keep looking for more detail to share as this proposal is more widely discussed]
Citigroup has devised an idea they are already marketing in the EU (more on that later). Basically put, it seems to me like a structured settlement similar to lottery winners and lawsuit beneficiaries.
After the tobacco buyout I was struck by the possibilities for buying out feedgrain/cotton/oilseed subsidies. But as the Citigroup author pointed out, the problem with the tobacco settlement as a prototype for other buyouts was, lacking a separate source of funding like the tobacco trustmany would consider it too generous. Obviously, he was not thinking from the farmer perspective. (We have no words that mean "too generous")
No, seriously, it could happen. And Sanjaya could win a Grammy. The farm lobby has consistently shown the ability to override any government funding constraints. We learned that from Freedom to Farm.
Regrettably, in order to hold back efforts to reverse the hard-won agriculture program reforms, both sides--Republicans as well as Democrats--wound up in a bidding war. Although the actual economic loss due to 1998 weather-related disasters was less than $1.5 billion, the Republicans proposed $4.2 billion in "emergency disaster relief." Ostensibly, part of the reason for this generosity was to make up for lost export markets. Eventually, to fend off Democrats' efforts to reopen the farm law and return to the old supply-control policies, Republicans upped the ante to nearly $7 billion. [More]
My conversation with the author also contained an interesting moment when he pointed out how many landowners are well, old. He offered a statistic something like 73% of all landowners are over "60" (70, 55, ? - my note-taking is not great).
There followed a significant pause - I think the implication was that older people would be likely to opt for up-front money versus variable subsidies. (Never underestimate the size of the industry building to deal with Boomer-geezers and wealth.)
Well, as someone within spitting range of 60, I think they overestimate both the flexibility and motivation for farm landowners. My experience is landowners like the predictability and simplicity of farm ownership, as opposed to any other asset -even money. My estimate is land is flowing into increasingly stronger hands, especially as it appreciates in value. In short, there aren't that many clueless, declining prime farmland owners.
Consider this point (page 3):
Recipients will weigh the certainty of the Buyout vs. payments that could cease anytime
Farm payments "ceasing at any time"? I wish.
And as for helping young farmers, this proposal will do little. That phrase is routinely included to add glamor. To be sure there are fewer young farmers, but the more logical reason is: we don't need them. The fact that younger people are backed up looking for an entry opportunity illustrates we don't have a recruiting problem, we have a technology addiction. This solution will do little to alter our demographic profile, IMHO.
Other questions leap to mind:
Is the land disqualified for subsidies in perpetuity or just for the current farm bill? (See comments)
In the days of ethanol-fueled gross incomes of say $800/A, is a $25/A DCP loss really going to hold down land prices?
Do you really, really believe the ag lobby is going to let this ride even if it should pass? We are in DC 24/7, ya know.
Outside of Reps. Flake and DeMint - neither of whom is a household name - does anyone in Washington care about fiscal propriety?
Giving money to farmers/owners is a notoriously poor way of helping rural economies the last time I looked. Why is this program any different?
A multi-billion trust fund seems like a great idea if you are in the trust fund/bond underwriting biz. But unless the idea is of boondoggle proportions neither the farm/agribusiness community nor their Congressional allies will give this proposal a sniff, I think.
I'm betting my farm's future on that assumption. And the fact that, as far as I know, only 6-7 (you never know about Larry) farmers agree with my opposition to subsidies.
Does Citigroup have a good idea? Absolutely. Buying out subsidy recipients is what passes for political courage these days.
Cotton producers are taking Will Rogers seriously:
"I originated a remark many years ago that I think has been copied more than any little thing that I've every said, and I used it in the FOLLIES of 1922. I said America has a unique record. We never lost a war and we never won a conference in our lives. I believe that we could without any degree of egotism, single-handed lick any nation in the world. But we can't confer with Costa Rica and come home with our shirts on."
With oddly optimistic reports of utterances from WTO Chief Pascal Lamy of an impending breakthrough, Big Cotton is fearing the worst. Add in the tide flowing away from open-ended access to the Treasury by enacting some sort of payment limits and ending the three-entity rule, and the business plan for cotton production looks shaky.
We'll be looking for any hints from USTR Susan Schwab at the Commodity Classic in Tampa. (Now with added fiber from Wheat!)My experience with is good negotiators don't drop hints, and if they did it would likely shoot over my head. My prediction is a pretty tightly scripted recital of administration policy, but ya never know. If she gives a press conference something might pop up.
I think there is immense pressure to salvage some hope of a deal, and any deal will mean goodbye to LDP's and CCP's. They are simply too market distorting. Now handing out rent stamps - er, fixed payments, I mean - seems to be trade neutral.
Compounding cotton's worries are upcoming meetings over Brazilian complaints against our cotton program. Cotton growers are not optimistic.
The NCC says the WTO has slated a compliance panel to hear oral arguments in the Brazil-United States Cotton Compliance dispute Feb. 27-28. Hard on the heels of that will be a “high profile” March session on cotton at the WTO headquarters in Geneva. The two meetings focus too much attention on U.S. cotton at a time when WTO leaders obviously are trying to restart the suspended Doha Round negotiations, according to Jay Hardwick, chairman of the American Cotton Producers, the producer arm of the NCC. The timing of the sessions is “an unfortunate turn of events that can severely undermine the credibility of the WTO dispute settlement process,” says Hardwick, a cotton producer from Newellton, La. [More]
Cotton will see the biggest changes, and it has already begun. Some cotton farmers will grow corn. In fact, Southeastern corn users such as Big Chicken (don'tja just love these "big" labels?), may be counting on it in case a supply crunch ignites the basis in August to ration the last 17 bushels of corn.
Completely off-topic: Under the heading of "What could go wrong?", while working on this post I found this great insight from Mike Woolverton at KSU:
Some producers have expressed concern that after luring them with tantalizing visions of historic profits, the corn market will collapse. Two things might cause that to happen, neither of which seems likely. First, if corn producers overshoot and plant 12 or 14 million more acres and if growing conditions give record breaking yields across the country, corn price would drop from the current level. One or the other of those might happen, but the likelihood of both happening this year seems small. Secondly, ethanol processing margins might go far enough into the red to cause some of the plants to shut down. The subsequent decrease in demand for corn would cause price to fall. In order for that to occur, oil price would have to fall more than it has in recent weeks; even then, Congress would likely raise the ethanol-in-gasoline mandate levels to prevent injury to grain producers, farmer/investors, and rural communities that would result from a demise of the ethanol industry. Soybeans, cotton, wheat, and other crops are on track to lose the battle for acres this year, although producers of those crops are already benefiting from prices higher than the fundamental supply and demand factors for each of those crops separately would justify. But this is just the first battle in the ‘ground war’ that is likely to intensify and continue for years to come. [More]
One thing the administration has successfully managed - their proposal has anchored the farm bill debate. By offering a full-range of ideas, they have co-opted isolated competing ideas for public scrutiny.
This is why everybody should do their own taxes...
Item One: The "adjusted gross income" means test proposed by the administration:
To receive commodity payments, producers must also meet a limit on Adjusted Gross Income (AGI), which includes wages and other income minus farm expenses and depreciation. This plan reduces the AGI limit of $2.5 million to a new limit of $200,000. If a producer has an annual adjusted gross income of $200,000 or more, that individual would no longer be eligible for commodity payments. Internal Revenue Service (IRS) data for 2004 indicate that 97.7 percent of all American tax filers have an AGI under $200,000.
"Two hundred thousand dollars to the average guy is a lot of money," Chambliss said. "But what we in agriculture know is, $200,000 in adjusted gross income means once you get to that point, then you've got to pay for that $250,000 combine, that $100,000 tractor that you've got to have to operate your facilities."
Folks, these are two unrelated events.
Let's review briefly. Grasping your Form 1040, skim down to Line 37, labeled oddly, Adjusted Gross Income. Now notice that it includes all income (wages, farm income, capital gains - the whole pile) minus adjustments for health insurance, moving, and whatever else Congress thought was a good political move at some time.
The important thing for farmers is Schedule F income shown on your 1040 (line 18) is NET farm income, not gross. The gross income goes on line 11 of Schedule F. The cost of new combines and fertilizers and pickups has already been accounted for by the time the AGI is calculated. We call the machinery stuff Sen. Chambliss moans about "depreciation" (Sch. F, line 16). Perversely, those rules have been seductively generous for some time. (Which is why I am sooo doomed in 2008 when all mine runs out thanks to Section 179)
You don't have to love the proposal, but at least read the instructions.
I had posted before about the seemingly odd dialog between evangelicals and environmentalists. A reader asked about my definition of "evangelical". I do not purport to be the "decider" of the meaning, but will use what I believe to be the common understanding of the word.
Evangelical as it is commonly used today refers to a particular segment of Christians:
John C. Green, director of the Ray C. Bliss Institute of Applied Politics at the University of Akron in Ohio, found in the 2004 American Religious Landscape Report [1] that despite many variations, evangelicals in the United States generally adhere to four core beliefs:
Salvation comes only through faith in Jesus and not good works. (in particular the belief in atonement[2] for sins at the cross and the resurrection[3] of Christ)
Individuals (above an age of accountability) must personally trust in Jesus Christ for salvation.
All Christians are commissioned to evangelize and should be publicly baptized[4] as a confession of faith.
In regard to "Biblical inerrancy", a notable American summit on Bible inerrancy was held in Chicago in 1978. The Chicago Statement on Biblical Inerrancy was signed by nearly 300 noted American evangelical scholars (see main article). There is no absolute consensus among evangelicals regarding Biblical inerrancy; however there is a general acceptance of Biblical authority. [More]
My personal beliefs are not far from the above with the exception of Biblical inerrancy. I respect and read the Bible. I choose not to worship it, considering such as a form of idolatry. [BTW - I have started listening to lectures from Great Courses during my 3 hour commute each week to South Bend to tape US Farm Report. I have just ordered "The Story of the Bible". I'll let you know what I think after I get into it.]
Evangelicals have become a political force, especially within the conservative wing of the Republican party. Indeed, what was formerly (pre-1980 or so) as religious classification of believers dedicated to evangelizing, that is converting non-believers, became a cohesive body whose major concern was to enforce the conduct of personal life in accordance with proscribed rules. The ability of Karl Rove to mobilize and motivate this group helped them become the most important electoral faction for the Republican party.
In fact, some critics charge, and I tend to agree, that the politics has become the core issue, not the religion. Andrew Sullivan coined the term "christianist" to indicate the politicization of belief. The evangelical movement is led by strong voices like James Dobson, Jerry Falwell, and to a decreasing extent, the slightly loopy Pat Robertson.
I am not attracted to nor convinced by their thundering broadsides of sanctimonious cant against abortion, homosexuality, or evolution. Evangelicals in turn tend to despise those of us who have doubts about our faith, but are struggling to apply it to our lives nonetheless.
In recent years, the evangelical movement has raised some more moderate voices, notably Pastor Rick Warren, the famed author of "The Purpose-Driven Life". I find this development and this new ministry approach encouraging. The biggest difference for me and self-described evangelicals seems to be I strongly support their right to disagree with me, and I am willing to entertain the thought that on some matters they may be right. Evangelicals for the most part cannot reciprocate that sentiment.
Which gets us finally to farm policy. While the Evangelical Lutheran Church (one example known to me) has long been involved in farm policy debate, the more political evangelicals have had little time for non-core issues. That may be changing, thanks to the linkage between environmentalism and farm policy.
The mellowing of evangelical Christianity may well be the big American religious story of this decade. The evolution of the evangelical movement should not be confused with the rise of a religious left. Although the margin of the Republican Party's advantage among white evangelicals is likely to decline from its exceptionally high level in the 2004 election, a substantial majority of white evangelicals will probably remain conservative and continue to vote Republican.
But the evangelical political agenda is broadening as new voices insist on the urgency of issues such as Third World poverty and the fights against AIDS and human trafficking. Among the most prominent advocates for a wider view of Christian obligation is Rick Warren, pastor of Saddleback Church in Lake Forest, Calif., and author of "The Purpose Driven Life."
In the meantime, Rich Cizik, vice president for governmental affairs at the National Association of Evangelicals (and a self-described "Ronald Reagan movement conservative"), has been a leader in urging evangelicals to make environmental stewardship a central element of their political mission. This has earned him attacks from such prominent leaders on the Christian right as James Dobson. [More]
Note also the issue of Third World poverty. Relief groups such as Oxfam have made strong cases that our farm subsidies contribute to poverty in poor countries. Now attach that concern to people who contribute time, money and prayer to mission work, and you have perhaps the seeds for change among those who formerly did not care much whether I got an LDP or not.
One of those listening on Bono's speaking tour was Shayne Moore, a 35-year-old mother of three in Wheaton, Illinois. Ms. Moore, a graduate of WheatonCollege, an evangelical Christian school near Chicago, says she "couldn't figure out what my conservative alma mater was doing giving Bono a voice." But "that night changed my life. Bono said something like, 'Politicians get nervous when rock stars and soccer moms get involved.' Well, I thought, I'm a soccer mom."
She traveled to Honduras and Kenya at her own expense, and also to last summer's meeting in Scotland of the leaders of the countries known as the Group of Eight, a trip that was paid for by aid groups. Back home, she tells groups what she has seen. "The person picking cotton in rags is just as important as the person picking cotton in an awesome combine," she says in an interview. "I don't begrudge him the awesome combine, but not at the expense of the farmer in rags." [More]
While some see this newfound global concern as temporary - a distraction from the goal of returning America to godly living - others view it as a maturation of belief, or even a true effort to attend Scripture and apply it to our lives.
To be sure the environmental movement is morphing at the edges into something like a religion. The strange (to me) Gaia hypothesis is typical of a kind of nature reverence that is profoundly appealing in our technological world. I cannot see these two groups truly bonding, but I can see their individual influences complementing each other politically. They need not merge to be effective. My personal conjecture is that concern for the environment and other people could prove to be an entry to faith, rather than a distraction for believers. At any rate, it certainly should rank low as a threat to Christians.
The test will come when from rural pulpits convicted Christian leaders mention the farm bill the same way they do other matters of social justice. Regardless of which side of the farm bill debate you are on, it will introduce a new influence into the discussion.
Economists love blogs and more than a few of them have been opining about inequality in the US and the globe. When Pres. Bush surprisingly mentioned it(where has this part of his personality been for 6 years?) along with admonishing Wall Street on CEO salaries, he poured gasoline on the debate.
But there is a linkage I believe between inequality of income/assets and the administration ideas for means testing "middle-class" benefits.
The budget represents a challenge to parts of the system of entitlements enacted as part of the Great Society agenda of the 1960s, with plans to cut Medicare spending, the main publicly funded health insurance programme for those over 65, by raising premiums for wealthier recipients.
That could save $66bn over five years, according to budget estimates, and up to $9,000bn during the next 75 years, according to some analysts.
Michael Franc, vice-president for government relations at the Heritage Foundation, said Mr Bush had considered means-testing as part of Social Security reform. “Now there is a shift to applying it across the board for all entitlements. The big change concerns the wealthy. Democrats want to tax them more. Republicans say they want to make them pay more for their middle-class benefits and shoulder more of the burden.” [More]
While normally associated with Medicare, the practice is exactly what prompted the "AGI Test" in the farm bill proposal.
"Going from a $2.5 million AGI to $200,000 AGI is huge," she said.
The AGI is a limit for farmers who wish to receive farm program payments. The lower AGI limit means a producer with more than a $200,000 AGI would not be eligible for commodity payments. The Internal Revenue Service data for 2004 indicated that 97.7 percent of tax filers have an AGI under $200,000. [More]
But here's where it gets weird. In theory, the fortunes of all the components of the Transport Index, which include shippers, truckers, railroads, and airlines, should move somewhat in tandem. Most goods that are sent by ship, rail, and air have to go on a truck at some point. It would be strange for one link in the freight chain to be doing well while others are dragging.
And yet that's precisely what seems to be happening. Truckers, who carry 70 percent of all domestic freight, are doing poorly. The American Trucking Associations' Truck Tonnage Index fell through 2006. And in the fourth quarter of 2006, the index was down noticeably from the fourth quarter of 2005, even after accounting for the temporary post-Katrina spike.
The reasons are weird as well:
A second rapidly growing energy source also helps rail companies while doing nothing for truckers: ethanol. As the Wall Street Journal reported this week, ethanol can't be pumped through existing oil pipelines. And it makes far more sense to ship the fuel in 30,000-gallon tank cars than in tanker trucks. Ethanol shipments tripled between 2001 and 2006 and are expected to rise 33 percent in 2007, the Journal reported.
Another large, but seemingly irrelevant, economic trend appears to be hurting truckers: gift cards. American Trucking Associations Chief Economist Bob Costello noted that "the fall freight season is changing." With the proliferation of gift cards, the holiday shopping season is spilling over into January. So, retailers aren't moving as much merchandise to stores in October and November as they have in the past. [More]
I've also been wondering about those farmers who have launched successful trucking companies as a sideline only to be knee-capped by the proposed AGI limits.
To receive commodity payments, producers must also meet a limit on Adjusted Gross Income (AGI), which includes wages and other income minus farm expenses and depreciation. This plan reduces the AGI limit of $2.5 million to a new limit of $200,000. If a producer has an annual adjusted gross income of $200,000 or more, that individual would no longer be eligible for commodity payments. Internal Revenue Service (IRS) data for 2004 indicate that 97.7 percent of all American tax filers have an AGI under $200,000. [More]
Our government has apparently decided all farmers should be corn farmers. The State of the Union speech tonight should officially make this One Nation Under Tassels. And when the US is one big cornfield, ag policy will be really easy.
We can finally start cooperating at the WTO. I mean, with $4 corn who is going to whine about losing LDP's or small direct payments?
Farm subsidies: The United States has offered to cut the amounts it is allowed to spend on subsidies to farmers under WTO rules by 60 percent. But the European Union and leading developing countries say that it could still spend over $22 billion a year, more than 2005 spending of some $19.5 billion. It is widely assumed that the United States has at least a further $5 billion of cuts up its sleeve made up of so-called “product-specific de minimis” support, which it rarely uses.
The United States is also under pressure to tighten disciplines in the so-called “blue box”, which is a half-way house between farm aid that is considered trade-distorting and aid that is not, like rural development spending.
The EU, which spends far more, has offered a 70 percent cut in subsidies, but could go to 75 percent if the United States went to 65. [More] [Another view]
We won't have to worry about cotton farmers or ranchers or livestock producers, but can just throw 'em under the bus as we all produce for wildly expanded mandated markets. Southern producers are not idiots - they are already gaming the shift from cotton to corn. And no doubt scientists will come up with new hybrids or something those guys can grow instead.
The Energy Future Coalition, a Washington-based proponent of alternative fuels, said yesterday that the group expects Bush will call for more than 60 billion gallons a year to be blended with U.S. gasoline by 2030, up from the 7.5 billion by 2012 mandated by current law. [More]
Agribusinesses will be ecstatic as demand for fertilizer, machinery, seed, etc. will be huge. My guess is we're going to need a bunch of trucks and roads to move all that stuff from where it is to where it is needed as well. If not, Iowa could soon be knee-deep in DDG's.
Mandates are easy, and don't show up on government budgets. They are also a side-effect of the strong-executive theory of government. If livestock operators think their study group report will have any more effect than the Iraq Report, they are fooling themselves. In fact, they might be the next big subsidy recipients.
This decision has been made, I think and there is small chance of turning back (we like to stay the course a lot).
Other voices in the Farm Bill debate (Volume 2)...
I've been noticing that casual web searches for "farm bill" yield some unexpected hits. While few farmers worry about do-gooders being able to touch our LDP's, there do seem to be a few more factions weighing in this time around:
Bread for the World hasn't released the kits yet, but the message will be this: America has a moral obligation to change the way it subsidizes farmers and put more money into conservation, nutrition and rural development.
"What we have learned is that the current system does not work for rural America," said the Rev. David Beckmann, president of Bread for the World. "Disproportionately, the money in the farm bill is going to a relatively few people, mostly prosperous people." [More]
My comment: It is hard to use "pit bull" defense tactics on benevolent organizations like this if you are a farm lobbyist, unlike say, complaints from the sugar users or the oil industry. Some of us may even find our consciences listening to them. Plus the incredibly concentrated distribution of farm payments is receiving more and more media coverage. It's hard to keep enough lipstick on this pig.
Maryland farmers are not getting their fair share of the money that the federal government hands out each year in farm production payments. That's a major complaint of the Chesapeake Bay Foundation, which says that if bay region growers received as much funding as their Corn Belt counterparts, the bay could be a lot cleaner.
An analysis by the environmental group shows that for every dollar's worth of food produced in Maryland, farmers receive 4.8 cents in federal support money. That is well below the national average of 9 cents. Farmers in North Dakota receive an average of 22 cents in federal payments.
The payment figures are based on the foundation's analysis of the U.S. Department of Agriculture farm support payment data for 2000 to 2005. [More]
My comment: While there has always some internecine squabbling between regions over farm payments, the EWG has demonstrated that one guy with a laptop can sort the numbers to reveal inequities - you don't have to wait years for the USDA to describe what happened in the past in vague terms. Now every group is doing their own number crunching.
Moreover, I don't know how to break it to these folks, but farm subsidies are not about food. If they were, we wouldn't send cotton farmers money, right? Farm payments are political subsidies - we get them because we can make Congress do it. And when acres vote (the Senate) ND will win over MD every time.
Democrats - the party of fiscal discipline (Benefit of the Doubt Rule #6) But seriously,
Also on Friday, Democrats will focus on "fiscal responsibility" through debate of measures promoting "Pay-As-You-Go" (PAYGO) budgeting and earmark reform, a reference to pork-barrel projects or line items inserted in "must-pass" legislation.
According to a Democratic fact sheet, PAYGO restrictions "will not allow consideration of any bill, amendment or conference report where the combined effect of provisions affecting mandatory spending (such as Medicare, Medicaid, Social Security and farm bills) and revenue would increase the deficit over the five-year and 10-year windows, relative to the Congressional Budget Office baseline." [More]
My comment: I'd sooner bet on Rex Grossman as Super Bowl MVP, but hey - they deserve their chance. The image of a Democrat Congress tackling farm bill costs only is possible for me to envision if I factor in a payment limit and/or increased money for conservation, and political voter polls which convince Democrats are going to lose southern rural voters anyway because of social issues.
Coming up in my next post about new voices in the farm bill debate:
It is a joy to begin to work with the Divine Universal Sisterhood and continue on my journey to become one of the few good men who will support our Queen Sister’s in the 2007 Farm Bill Debate, together we can eliminate forever low, low, low, low food insecurity in our nation. [More]
My comment: While doubtless well-meaning here, the um, "Sisterhood" probably means low food security, not insecurity. (Low insecurity is a good thing).
But for the first time, federal farm policy, and at the heart of it, the 2007 Farm Bill, have an opportunity to bring about major reversals of that trend. As a result of growing pressure from developing nations and from other sectors of the U.S. economy, the agricultural industry is beginning to face the reality that it's once-holy commodity subsidies are going to have to be dismantled, or at least substantially reduced, in order to open up free trade opportunities elsewhere.
At the same time, conservationists, environmentalists, hunters, fisherman, and a host of other interest groups have pulled up seats at the table and are demanding that inroads be made towards righting past wrongs, and that small but critical successes of the past two decades be matured into more meaningful long-term solutions. Where farm policy was once the problem, now many of them see it, hopefully, as a solution. [More]
My comment: I don't find the concept of lots of minor lobbying forces constituting a challenge to the ag lobby convincing. These groups have not demonstrated either cooperation or commitment to changing ag policy if it even mildly threatened core issues (like emissions control or in this case, urban planning), hence they are easily co-opted. If farm policy is going to be changed it will occur because fiscal hawks dig in their heels and the President follows through on a veto threat, IMHO.
CALL TO ACTION Each of us must use our own expertise in a particular subject matter area that you’ve heard mentioned today. § Do you know your Congressman? Her or his staff? See me afterwards. § Do you understand the positive effect that payment limitations would have on Farm Bill debate, on our relations with our trading partners, on our own farmers? Can you talk about it in a factual, passionate way? See me afterwards. § Are you a member of Western Growers Association (WGA)? California Farm Bureau Federation (CFBF)? Agricultural Council of California? A marketing order or commission? Can you work with your colleagues on areas of common concern? See me afterwards. § Have you used any of the programs in the Conservation title, like EQIP or WHIP? Do you have good relationships with NRCS? See me afterwards.
My comment: California has such a huge Congressional delegation this might amount to something in the House. In the Senate, cotton has a firm grip on both Sen. Feinstein and Boxer.[Sen. Boxer's site even refers obliquely (I think) to the payment limitation issue as "discrimination against California commodities such as cotton, rice, wheat, corn, and dairy".]
Speaker (presumed) Pelosi will be a different fellow altogether than her predecessor. She might even whip the House into near equality with the Senate on farm legislation. I'd call it a long shot, however.
Q. – Is the political situation in the United States conducive to them making major concessions at the WTO?
THE MINISTER – Given the budgetary situation in the United States, the American Executive is very keen for – and needs – a reform of the Farm Bill. It is finding this agricultural policy too expensive. To have outside pressure, in this instance the WTO negotiations, to compel Congress to accept such a reform is invaluable to the American administration./.
My comment: The French are masters at making any outcome look like they planned and delivered it all along. The issue for France is complicated by the public disdain for the Bush administration and their own elections. My guess is if the French want a given Farm Bill outcome, they would be wise to come out against it.
Will these non-traditional players have any impact? I dunno, but if any do - all could.
By now a few of you may have read the article in The Washington Post where I was interviewed on my farm about farm subsidies. The piece is part of a long series about farm policy. My opposition to subsidies is pretty well known here, I won't belabor it, but if you are interested in what it is like to be interviewed by a Pulitzer-prize winning journalist/author for a world-class newspaper, here is my impression.
First, while we in agriculture complain about our media image, the image of people in the media may be even more distorted. The movie/television depictions of journalists does not prepare you for the reality. Gil Gaul visited my farm after several e-mail exchanges. He was somewhat younger than me and upon arrival obviously unfamiliar with the farm scene.
Despite my firm conviction that he had his own agenda and without doubt I would be excerpted and misquoted, I have learned that what I think I said and what I said can be two different things. And from feedback from my columns and speeches, I also know that what I say may not be what people hear. My expectations of the outcome of this interview were not high, but I honestly viewed it as a chance to have a small impact on the farm bill debate.
About halfway through the morning Gil spent riding on the combine with me, I realized I really liked the guy. In turn, he told me what is was like to working in the print media today as the world shifts to on-line. (Not the most optimistic career vision, BTW). And for a guy who had won 2 - as in 1 + 1 - Pulitzers he was pathetically unassuming. I remember thinking his friendly demeanor was probably a professional act designed to lull innocent farm boys into lapses of judgment.
Later that afternoon I discarded that notion. After all, what the heck could they write that I hadn't said or written publicly, anyway? Besides, burning even one-time sources like me is a poor long term strategy for professionals.
Look and judge the article for yourself. And you can read what others are saying, both here on AgWeb and at the bottom of the article. My only slight misgiving is that the article seems pretty hopeless - that things could never be better. My personal conviction is if they stopped sending me money and didn't send you any either, we'd figure it out. We're not stupid or lazy.
All told, I've got no complaints. This experience has made me a little less cynical about the MSM (mainstream media) and a little more skeptical of those who dogmatically accuse them of bias. So if you ever have a similar chance, I would say go for it.
Besides, this episode will be forgotten with the next news cycle, I'm sure.
During the 1990s, then-Sen. Phil Gramm accurately described U.S. farm policy as "enough to make a Russian Commissar puke." The Republicans assembled the "Freedom to Farm Act," which, starting in 1996, put U.S. farmers on a glide path toward an end to subsidies. Somewhere between the field and the silo, however, we became mired in the political mud. In 2002, we repealed the Freedom to Farm Act and in its place installed the "Farm Security Act" -- those who value the adage about trading freedom for security can pause and shudder here -- with even more lavish subsidies.
Now, with reauthorization of the Farm Bill on the horizon next year, we have to decide whether we will up the ante with Democrats in terms of red state/blue state politics in the heartland, or whether we believe our own rhetoric about free markets. This debate will have implications larger than the fiscal one. Most notably, it will determine if we are serious about the future of free trade.
Does this mean the ag lobby should be concerned about the outcome of debate over Farm Bill '07? I think not, UNLESS for whatever reason the economy is struggling and interest rates are through the roof.
What it could mean is an agonizing choice for many rural "red" voters whose allegiance to the Republican party on social issues is sacrosanct and who are alarmed by the GOP embracing fiscal discipline.
In short, a lot of farmers could have to choose between gay marriage and LDP's .
US Farm Report host John Phipps surfs the Web so you don't have to...
About Me
Name: John Phipps
Location: Chrisman, Illinois, United States
Jan and I farm 1700 acres near Chrisman, IL. I have also written humor and commentary for Farm Journal and Top Producer for 13 years.
Please visit my website (www.johnwphipps.com) to learn about my speaking services for your group's next meeting.
