Ag
Policy Update–31 Jan 01 (Sunup Program to be aired 1 Feb)
1.
The 2 big pieces of news for farmers this week are the release of
recommendations for the next farm bill and the Fed looking at lowering
interest rates once again.
What’s up with the farm bill debate?
–Recall that the 1996 farm act called for a Commission on
21st Century Agriculture to evaluate the status of agriculture
and begin to make recommendations to Congress and the Administration.
–Barry Flinchbaugh, chair of the Commission, presented the
report to the Senate and House Ag Committees this week.
–The Commission was composed of a broad-based
representation from farm states.
–The report was based on testimony gathered in hearings
around the country, public comments and analysis of data from USDA and
universities.
–The Commission’s recommendations covered 6 areas: income
safety net, risk management, environment, trade, special commodity
policies, and small farms.
2.
What kind of recommendations did the Commission come up with for an
income safety net?
–Flinchbaugh, on behalf of the majority of the Commission,
recommended the following:
1. Continue a fixed AMTA payment based on existing allocations and a counter-cyclical income support program based on the Supplemental Income Support (SIS) program as a flexible safety net.
2. Retain loan deficiency payments and marketing loans, but adjust the marketing loan to balance inequities among crops. Key here is that the Commission is recommending that the limitation on payments be removed.
3. What about in the area of risk management?
1. Create an actuarially sound insurance program with coverage provided by private companies. Federal vouchers to offset the cost of insurance premiums would be provided.
2. Implement a farm & ranch risk management (FARRM) account allowing producers to save money in years of high net farm income & draw it out in low net farm income years, with taxes deferred until withdrawn.
4. The Commission also made recommendations with respect to conservation and the environment. Review these.
1. Continue the CRP, with increased acreage going to buffer strips, filter strips, wetlands, grass waterways & partial field enrollments.
2. Continue the EQIP.
3. Research to
–provide voluntary incentive-based programs for ag’s contributions to air/water quality
–provide compensation to producers w/environmental practices
–consider benefits of carbon sequestration, control greenhouse emissions, manure management & alternative fuels.
5. What did the Commission recommend on ag trade?
1. Endorsement of the comprehensive US position at the WTO June 2000.
2. Include agriculture in comprehensive negotiations.
3. Grant the President trade negotiating authority (TNA).
4. Leave environmental & labor issues out of the WTO talks.
6. The Commission also made suggestions on individual commodity policies.
–That’s right. They made specific comments on dairy, sugar, peanuts & tobacco.
1. For Dairy policy, look at federal marketing order reform, extension of dairy compacts, federal price support, and international market opportunities.
2. For Peanuts, examine: a phased reduction of the quota system w/compensation to existing quota holders; allowing transfer of quota across state boundaries; subsidize manufacturers to stimulate purchase domestic peanuts; marketing loan; direct payment; incentives for more competition to reduce concentration.
3. For Sugar, consider an alternative to the current program.
4. For Tobacco, increase transferability of quota across county/state lines, buyout program to phase-out quota program, and a marketing loan.
7. Did they make any recommendations for small and limited farms?
–The work of the Small Farms Advisory Committee should be formalized by USDA & provided Congressional funding/staffing.
8. I understand there were some minority views on some of the recommendations. Can you highlight some of these?
–Yes, it is clear that the conservative view led the majority view.
–Most minority views were led by Farmers Union President Leland Swenson.
–Among other things, the minority views stated the following:
1. The 96 farm act (freedom to farm) has failed & should not be continued.
2. Change the calculations of marketing loan rates, target benefits, encourage long-term stewardship.
3. Free trade benefits are over-stated; consider producers who suffer from currency value changes; eliminate export subsidies; harmonize environmental, labor, intellectual property and competition policies; eliminate nontariff barriers not based on science; increase transparency; others.
4. Regarding concentration, promote competition and transparency.
9. So where do we go from here? Is this the outline for the next farm bill?
–It’s a starting point, or a point of departure, and not much more.
–How the farm economy and general economy are doing over the next 12-18 months will have a strong impact.
–There will be much to cuss & discuss over that time.
–Over the coming weeks, and months, we’ll examine these options more closely.
10. Ok, let’s turn to the general economy. The Fed had an unusual 2-day meeting this week. What’s the result?
–As discussed here the past few weeks, the Fed is very concerned about the slowdown in the economy.
–They are again lowering interest rates a half point, to jump start the new sluggish economy. The rate is dropped to 5.5%, the lowest since December ‘99.
–Even though the economy is much better off than it was 8 years ago, we’ve been discussing the concerns about the Fed raising interest rates too high since last summer.
–This reduction in rates will reduce producer cost of borrowed capital, and businesses who hire farm families may be encouraged to maintain or expand activity.
–The Fed’s action, along with tax cuts and Federal spending because of budget surpluses will reduce the likelihood of a recession.
–Oil and natural gas prices continue to increase & layoffs are increasing.
11. 107th Congress:
a. Recent/Current:
–Primary focus is to complete action on remaining Cabinet nominees.
–Senate Ag Committee–business meeting (30 Jan); POSTPONED.
–Senate Ag Committee–21st Century Commission reports farm policy recommendations (30 Jan).
–House Ag Committee–21st Century Commission report (31 Jan).
–Few House and Senate sessions in new Congress
–Few committee meetings in new Congress
b. Upcoming:
c. Congressional Calendar:
--As of 5, about 122 weekdays remain in this Congressional session.
February 12 Lincoln's Birthday
February 19 Presidents Day
February 16 ‑ 26 Presidents Day District Work
Period
April 1 Daylight Savings Time Begins
April 7 ‑ April 23 Spring District Work Period
April 8 Passover
April 15 Easter
May 13 Mother’s Day
May 25 ‑ June 4 Memorial Day District Work
Period
May 28 Memorial Day
June 14 Flag Day
June 17 Father’s Day
June 30 ‑ July 8 Independence Day District
Work Period
July 4 Independence Day
August 4 ‑ Sep 4 Summer District Work Period
September 3 Labor Day
September 18 Rosh Hashanah
September 27 Yom Kippur
October 5 Target Adjournment
e. Key issues for this session of 107th Congress include:
--dealing w/Social Security, Medicare, Medicaid.
--consideration of tax cut & appropriations bills
(tax cuts for farmers appear dead)
–campaign finance reform
–education reform
–moratoria on mergers in agribusiness
–farm income emergency aid
–Endangered Species Act reform
–energy policy reform
–framing the debate for the 2002 (?) farm bill
–Trade Negotiating Authority (TNA–formerly fast track authority)