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PFA Pioneer Blog

RSS By: Chip Flory, Pro Farmer

This is a private blog for Pioneer.

Getting ready for acreage, grain stocks and a 2012 farm bill.

Mar 26, 2012

Pro Farmer Extra

- From the Editors of Pro Farmer newsletter

Getting ready for USDA Reports and 2012 farm bill

March 26, 2012

Thought we'd talk about a couple of things this week: 1) build up to Friday's USDA reports; and 2) some perspective on the current farm bill process from Pro Farmer Washington consultant Jim Wiesemeyer.

Build up to Friday's USDA reports will focus on the Prospective Plantings Report... and corn acres in particular. Traders expect corn plantings to reach at least 95 million acres, up about 3 million from last year. Soybean acres are expected to be about steady with year-ago at 75 million. Unfortunately, if USDA's survey work reveals corn planting intentions of 95 million acres, most traders will immediately assume corn plantings will reach 96 million this spring. If corn planting intentions come in under 95 million, that estimate will probably be ignored in anticipation that plantings will reach at least 95 million acres.

Yeah... simply put, it will be really difficult to get a price-positive acreage estimate for corn. Traders believe they know more than USDA's survey of farmers.

However, when everything is released Friday, the market may be more responsive to the Quarterly Grain Stocks Report. The quarterly corn stocks data has been exceptionally unpredictable the last few quarters with examples of stocks being above and below average pre-report trade expectations.

Last week's Pro Farmer newsletter also included a look at the summer weather outlook from three well-respected weather-watchers. The long-term outlook calls for La Nina to continue to fade, bringing mostly normal conditions to the Midwest. The risk area is the northwest Corn Belt where drier-than-normal soil conditions could persist through the growing season. But, traders are beginning to become more optimistic about the potential to reach a national average corn yield of 160-bu.-per-acre or bigger this year.

Now... on to Washington. Last week, Pro Farmer Washington consultant Jim Wiesemeyer's daily column on included a summary of his frustrations over the lack of leadership around the 2012 farm bill. Jim's full "rant" is reserved for Pro Farmer Members, but we did summarize his opinions in Pro Farmer newsletter last week and we'll share that with you here:

The real farm bill issues lawmakers and stakeholders must confront
by Pro Farmer Washington Consultant Jim Wiesemeyer

Lawmakers, especially from this Congress, are quite adept at pointing to reasons they can’t get something accomplished. This is magnified in the case of trying to get an omnibus farm bill done, especially before the Nov. 6 elections. But the timing of that measure is just one of several contentious issues that Ag Committee leaders, stakeholders and others will have to deal with for the omnibus measure.

Farm bill timeline: Ag panel leaders (at least three of the top four) were ready to sign off on a farm bill plan last fall that would have been linked to the so-called Super Committee. That version was basically written behind closed doors and would not have been subject to amendments nor a filibuster, but it had the needed details.

Now several Ag panel members are citing all sorts of hurdles in getting a farm bill done, including complaints that House and Senate leadership won’t provide floor time for debate. But all the panel leaders have to do is lead: Hold a markup session, using last fall’s farm bill as a foundation, and see if there are enough votes for passage (which is likely the case). Only then can they blame leadership for not allowing floor time (it’s only March 24) to consider the measure before the elections.

Cuts ahead: The latest GOP House budget proposal directs House Ag Committee leaders to cut $33.2 billion from farm spending over 10 years. And the proposal tasks the Ag Committee to deliver details on those cuts by May 1 — this year. So the House Ag Committee now has a number and a date. Let’s see if they meet both. The House Ag panel’s last farm bill field hearing is April 20, followed by DC-based sessions. The Senate Ag Committee actually moved up its final hearing so that members could get started writing the bill.

But is the House Ag Committee really bound by the budget instructions? Sources tell us the House Ag panel will proceed with its farm bill work, which may not contain that level of cuts.

Lame duck? Some believe a new farm bill will be debated and voted on in a post-election, lame-duck session of Congress. But the lame-duck session is already jam-packed with the expiring 2001 and 2003 Bush tax cuts, a possible increase in the debt limit, a surface transportation bill, Fiscal Year 2013 spending bills and more.

What if Obama loses? Do you think President Obama will want to deal with Republicans in writing a farm bill and extending the Bush tax cuts if he loses reelection? We would see a far different Obama if he loses.

Farm bill hangups: There is a long list of farm bill issues farm-state lawmakers and commodity group lobbyists have identified, including:

• Eliminating direct payments impacts rice and cotton producers and, to a degree, wheat, more than other program crops. (True.)

• Keeping target (reference) prices and raising them is more important for rice producers in the mid-South and Delta. (True.)

• Per-farm vs. county-triggered price levels for a revenue-assurance program. (Here is an opportunity for Ag Committee leaders to lead. Why should farmers in states like Illinois and Iowa “pay” via big revisions to a revenue-assurance program to deal with problems in other states? Much more on this at

• Crop insurance doesn’t fit some crops (rice) like other crops. (True.) That is why a farmer’s-choice safety net is the right approach. The debate will still be on how much target prices should be increased, and the method used to determine those levels. (That is a good discussion to have.)

• Keep farm programs simple. (Can’t happen.) An effective safety net is not simple. To FSA officials who say they may not have the time/people to implement a more complex farm bill — that doesn’t square with the push to move portions of crop insurance into their offices.

Long-term crop insurance outlook: The program pays up to 62% subsidies for buy-up policies and crop insurance has bigger spending than current farm program outlays. In debt debates, budget-cutters go where the money is, so future cuts are likely. (And the Environmental Working Group (EWG) is refocusing on crop insurance with direct payments likely gone. See for more on this topic!)

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