Farm Bill Update: Jan. 30, 2014

January 30, 2014 02:10 AM

via a special arrangement with Informa Economics, Inc.

Senate set to approve | Farmers have lots of decisions ahead | Farm program signup dates murky | $100 million to implement

NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.

As I have said for decades that just as important as what is in a new farm bill, is how and when USDA actually implements the measure. So the focus on USDA has now begun, and this version of the Ag Department has been hard to call. Let's hope they are farmer friendly.

-- Just a matter of time before Senate approves farm bill conference report. The Senate yet this week or early next could follow the House and approve the farm bill conference report. The House did so on Wednesday and as expected easily approved the measure, 251-166.

-- Farmers must choose between PLC and ARC via new farm bill options. If farmers do not make an election for the 2014 crop year to participate in either the Price Loss Coverage (PLC) or Ag Risk Coverage (ARC), then the farm will be considered to have elected to be in PLC for all covered commodities for the 2015-2018 crop years and will receive no ARC or PLC payments for the 2014 crop year. Contacts note this provision in the bill is largely to get producers to make a decision. Failure to make a decision means the farmer effectively is choosing to leave "money on the table" as they would not get a 2014-crop payment if they don't make a decision.

-- New farm bill program signup will come later and last into summer. No final decisions have been made on USDA implementation of new farm programs beginning with 2014 crops. But indications are signup could begin no sooner than April, with the timeframe extending into summer. That should give farmers enough time to be educated about their new options, and they have a lot, and to plug in their farm information into spreadsheets to determine which program they should opt into. Farmers will also be armed with more information to make their decision the later into the process they go. In addition, while the election to go into PLC or ARC is a one-time election, farmers still have to signup on an annual basis to complete all the necessary records and forms -- adjusted gross income certification, farm changes, etc.  Farmers say they will listen closely to what their crop insurance agents advise relative to which farm program option is best for their farming operations. Remember spread sheets are only as good as some of your assumptions on price, etc. And let's hope some of the universities are more balanced about farm program options than they were in the lengthy farm bill debate.

-- Farm bill has $100 million for USDA to implement commodity title. While most of that funding will go to USDA's Farm Service Agency (FSA), $3 million is "earmarked" for Extension to inform producers about the programs, and $3 million for universities to come up with a web-based farm program decision tool. It will be curious if universities have to bid on the process, or whether some universities which played an oversized role in the latest farm bill debate (Univ. of Illinois, Ohio State Univ., and Texas A&M Univ.) have an inside track for the funding.

-- Limited impact from food stamp funding cuts. The farm bill cuts food stamp funding by $8.645 billion, but added back $645 million for various worker/pilot programs, for a net $8 billion reduction for the program. The bill provides a $200 million increase in financing to food banks. Most of the food stamp funding savings will come by tweaking federal "heat and eat" benefits that have been exploited in recent years by several states and the District of Columbia to boost how much money some people receive from SNAP/food stamps. The changes will require the states and D.C. to pay more in "heat and eat" money, a move that will reduce, but not eliminate, SNAP payments by about $90 monthly for about 850,000 households. The farm bill also cuts SNAP funding by prohibiting USDA from spending money on television, radio and billboard ads to promote the program and on programs designed to recruit new beneficiaries. And in response to years of documented evidence of misuse and abuse of the program, USDA will need to ensure that illegal immigrants, lottery winners, college students and the dead cannot receive food stamps and that people cannot collect benefits in multiple states.

-- Stabenow could lead Senate Budget panel. Following what will soon be a Senate-passed farm bill conference report (this week or early next), Senate Ag Chairwoman Debbie Stabenow (D-Mich.) may become the top Democrat on Senate Budget next year, if current Chairwoman Patty Murray (D-Wash.) moves to Health, Education, Labor and Pensions, as expected. An expected shuffle among Democratic committee leaders would leave Stabenow in a good position for the Budget post. The second-ranking Budget Democrat, Ron Wyden of Oregon, is in line to replace Finance Chairman Max Baucus of Montana as the top Democratic tax writer. And Bill Nelson of Florida, the third-ranking Democrat on Budget, has his eye on Commerce, Science and Transportation. If Stabenow passes up Budget, Veterans Affairs Chairman Bernard Sanders (I-Vt.) would be next in line to succeed Murray as the panel’s top Democrat.

Congress via the recent FY 2014 omnibus spending bill may have wanted for USDA to wait until a coming WTO ruling on country-of-origin labeling (COOL) to implement the US May 24, 2013, rule on this matter, but Vilsack is making no sign of holding off.


The hot COOL issue. The WTO is expected in March or so to rule on a COOL challenge by Canada and Mexico. Report language in the omnibus spending package urged USDA to hold off enforcement while the case is pending. "Well at this point and time I will tell you that we continue to remain confident that what we’ve done complies with the WTO instruction. Our view of this is that WTO instructed us to become more specific with the labeling, which we have done, and we’re going to vigorously defend this," Vilsack said.


The failure of any adjustment to be made to the US COOL program via the US farm bill has prompted warnings of action from Canada, including trade retaliation, according to a statement released by Agriculture Minister Gerry Ritz and International Trade Minister Ed Fast. "We remain steadfast in taking whatever steps may be necessary, including retaliation, to achieve a fair resolution," the statement said. "By refusing to fix country-of-origin labeling, the US is effectively legislating its own citizens out of work, and harming Canadian and American livestock producers alike by disrupting the highly-integrated North American meat industry supply chain."


Canadian officials had pressed US lawmakers to alter the COOL law via the farm bill, but failed to convince them to make any shifts. Senate Ag Committee Chairwoman Debbie Stabenow (D-Mich.) led the charge to keep the law intact, promising that should the WTO decide the rule published May 24, 2013, by USDA doesn’t bring the US into compliance, Congress would change the measure then. "If the US loses the case, then COOL will be suspended, changed or repealed," said Stabenow. "It's just a matter of months before that determination, and then we will move forward at that point."


The disappointment didn’t stop with Canadian government officials as a spokesman for the Canadian Cattlemen’s Association also expressed disappointment. "They seem unwilling to consider any amendment," said John Masswohl. "It just seemed that through the negotiations, there was more to it for the COOL proponents than just consumer information; it seemed they were very intent on maintaining the discrimination — that was the fundamental objective they had."


Should the US rule not be changed, Masswohl said Canada would look at retaliatory measures such as hitting US exports to Canada with tariffs in the first half of 2015. He noted potential items would be beef, pork, cereals, cakes, cookies and fruit. Canada has charged the US COOL law has cost the Canadian livestock industry around $1 billion annually. Canada in June published a list of products totaling up to $1.1 billion that could be targeted with tariffs as retaliation over COOL and Mexico is seen announcing a similar list of US exports valued at several hundred million dollars.

Vilsack played down concerns that Brazil could retaliate against US exports via disgruntlement with the US farm bill’s cotton provisions. Brazil previously won a WTO ruling against the cotton subsidies. "I don’t know that the Brazilians are not happy," Vilsack said. "What I do know is that there are several growers who came to Washington, D.C., to express concerns, but I’ve not heard from my counterpart in Brazil. My hope would be that there would be recognition that the Congress is making an effort to change the way we support cotton growers in this country, that USDA is changing the level of assistance with export guarantees, and that would be a reflection of our desire to get this worked out, and at the end of the day it does get worked out."

NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.






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