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June 2012 Archive for John Block Reports from Washington

RSS By: John Block, AgWeb.com

John Block has dedicated his professional career to the fields of agriculture, food and health.

Work to Do

Jun 21, 2012

 

I don’t remember a time when we had such a backlog of work and difficult decisions staring us in the face. Every time the federal government spends $1, we have to borrow 40 cents of that dollar.
 
We don’t have the money, and with high unemployment and a weak economy, we’re not going to have the tax money coming in to close the gap. Now we’re getting the word that because of the weak economy, the Congress will be asked to vote to raise the debt ceiling even sooner than expected. That will be after the November elections, but the debate and battle over what must be cut will be in full swing as the elections approach.
 
After the election, before the end of the year, there will be a "lame duck" session of the U.S. Congress. They will be expected to get everything done that has been piling up over the last year.
The Bush tax cuts will expire at the end of the year if the Congress doesn’t do something. President Obama wants to keep the cuts in place except for those making more than $250,000 per year. Republicans say leave the Bush cuts as they are because raising taxes would hurt our fragile economy. From the farmer and small business perspective, we don’t know what will happen with the death tax. If the Bush tax cuts expire, the death tax will spike back up to five times higher than it is today. If that is going to happen, for the good of our children, we should die before the end of the year.
 
I haven’t even mentioned the farm bill. Give credit to the Senate for their progress, but the House still must pass a bill and then the two bills, which will not be the same, will have to be reconciled. With all the other work to be done, I don’t expect the new farm bill to be completed until sometime next year. The old one will probably be extended for a few months.
 
One last thing that I forgot -- we don’t even have a budget for next year. The House passed one, but the Senate didn’t. Should we be surprised? The Senate has not passed a budget in three years. Do you know why they haven’t? They are afraid to take any tough votes.
 
Hopefully, this election will send a message that we expect our elected officials to have more courage than that.
 
In closing, I would encourage you to access my website, which archives my radio commentaries dating back 10 years and will go back 20 years when complete. Check on what I said back then. Go to www.johnblockreports.com.
 
Until next week, I am John Block in Washington.

 

Time for Sugar to Get with the Times

Jun 07, 2012

 

Both the House and Senate seem to be moving forward, for now, with reauthorization of the Farm Bill. Senator Stabenow has passed a package out of the Senate Agriculture Committee. The House has hung back a little; waiting on the Senate.
 
While it is expected that the two packages will be significantly different, one thing that is expected in both bills is major "reform" of farm programs. The Senate bill saves over $23 billion, and the cuts come from many different programs, from direct payments to SNAP (Food Stamps). However, one program that seems to have escaped reform so far is the sugar program.
 
We have had farm programs for as long as we have had a Farm Bill, and the programs have all been moving towards a more market-based approach. In addition, given the current fiscal state our country is in, government spending and programs must be reduced, and the pain should be spread around all sectors and programs.
 
For some reason, the sugar program has proved to be a unique case, somehow immune to the market-based movement. The sugar program began as a depression-era program, along with other commodity programs.
 
Go back to the 1940s, 50s, and 60s. For decades, the federal government was busy centralizing production with land set-asides and cropping restrictions to short the market and increase the price of commodities. Almost all of those control programs are gone today. Gone – for corn, soybeans, wheat, cotton, even tobacco and peanuts. But not sugar.
 
The government controls how much sugar can be produced in the U.S., and also controls how much can be imported. This drives up the price of sugar in the U.S. to sometimes double what everyone else in the world pays. This artificially increased price has impacted all the food manufacturers that use sugar, encouraging some companies to move to Canada and Mexico where sugar costs are so much lower.
 
There is no good reason that the sugar program should not become more market-based. Sugar plantation owners will tell you that their program is "no-cost," when actually the cost to consumers is approximately $4 billion a year. That cost comes directly to you when you go to the grocery store and buy bread, juice, or your 5 pound bag of sugar to make cookies. Part of the sugar program leaves taxpayers on the hook if sugar plantations produce too much sugar, forcing the government to buy the surplus at a loss.
 
It is time for sugar to get with the times, and for Congress to take action to make the sugar program more market-based.
 
In closing, I would encourage you to access my website which archives my radio commentaries dating back 10 years and will go back 20 years when complete. Check on what I said back then. Go to www.johnblockreports.com.
 
Until next week, I am John Block in Washington.

 

The History of Farm Programs

Jun 01, 2012

This is the year that we are supposed to write a new farm bill. Every 5 years, we write a farm bill. Over the years, farm programs and supports have evolved, driven by a series of changes in the U.S. and global environment. One of the biggest changes is that 75 years ago, 1/3 of Americans were farmers. Today, barely 3% are farmers.
 
Let’s look back to the 1950s. The 1954 ag bill re-established price supports and authorized commodity set-asides. The problem was the price support level could not be reached without cutting production. So the government took 60 million acres out of production – set-aside in grass. We had a land bank program buying more farm land out of production.
 
In the 1960s, we started the Food Stamp Program. We had a lot of excess production capacity. Government warehouses were storing surplus grain. Surplus dairy products were stored in caves in Kansas.
 
Then came the 1970s and an explosion in global food demand. Prices spiked. Secretary Earl Butz sold grain to the Soviet Union. "Cash on the barrel head."
 
In 1981, I came to town as Secretary of Agriculture. We tried to reform the farm programs by making them more market oriented. Get rid of set-asides. It is inefficient to take out of production some of the best land in the world. I proposed the Conservation Reserve Program which idled more fragile land. With lower price supports and less government interference, the market began to work better.
 
Everything seemed to be going along pretty well until in the mid-1990s and prices crashed. To help support farmers, the government doubled direct payments. The good thing about the farm bill written then is that it eliminated price supports and land set-asides.
 
In the decade since the bill written in 2002, we have tried counter-cyclical program payments. We still have direct payments. We have programs designed to eliminate the need for disaster payments.
 
As we write the new farm bill, we are going to see another big step. Direct payments will be gone. We must ensure that any support we provide does not distort planting decisions.
 
The WTO will not accept that. It looks like some level of crop insurance will be the primary support. Global demand for food is strong, and we don’t have the budget money to spend as much as in the past – nor should we.
 
In closing, I would encourage you to access my website which archives my radio commentaries dating back 10 years and will go back 20 years when complete. Check on what I said back then. Go to www.johnblockreports.com.
 
Until next week, I am John Block in Washington.


 

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