Spending on farm subsidies to spike over the next three years

Posted February 2, 2016

According to new government spending projections released by the Congressional Budget Office, spending on farm subsidies will soar in the next three years. 

Subsidies in the 2014 Farm Bill will cost a lot more than initially projected, according to the Environmental Working Group, an advocacy group opposed to farm subsidies. 

Although Congress eliminated direct payments to farmers a few years ago, they replaced them with two subsidy programs known as Agriculture Risk Coverage (ARC County) and Price Loss Coverage (PLC). The 2014 Farm Bill authorized both programs. The Congressional Budget Office believed this change would save taxpayers billions of dollars over the life of the Farm Bill. 

However, the Environmental Working Group’s analysis of the CBO's projections contends that government payments for the Agricultural Risk Coverage and Price Loss Coverage subsidies will cost an additional $8 billion over the next three years -- 70 percent more than originally estimated by CBO when Congress passed the Farm Bill in January 2014.

Similarly, Agriculture.com’s farm subsidy analysis finds that the government faces three high-cost years, beginning with $5.8 billion in 2016. Low commodity prices will likely increase the cost of programs that help stabilize crop revenue. Furthermore, the CBO’s latest budget forecasts that crop subsidies will cost a total of $22 billion for fiscal 2016, 2017, and 2018 -- a 9% increase from the estimate it made a year ago of $20.1 billion for those years.

The main recipients would be corn, soybean, wheat, and peanut growers. Corn, soybeans, and wheat are the three most widely planted crops in the country, grown on 225 million acres while peanuts are planted on about 1.6 to 1.7 million acres annually. Corn farmers were projected to get $10.5 billion from 2016 to 2018, soybean growers $3.5 billion, wheat growers $2.9 billion, and peanuts $1.7 billion, per agriculture.com.

The Congressional Budget Office's newest estimates for Farm Bill spending may be viewed here.

USDA to determine whether cottonseed can be designated an “other oilseed”

Posted on January 26, 2016

A decision on whether USDA can make cottonseed an “other oilseed” is coming soon, according to USDA Secretary Tom Vilsack.

Supporters believe listing cottonseed as a commodity under the 2014 Farm Bill would help troubled farmers. US cotton producers, lawmakers and even soybean producers have pushed for cottonseed to be considered an “other oilseed” under provisions of the bill. Such a designation could make cottonseed eligible for safety net programs like Ag Risk Coverage (ARC) and Price Loss Coverage (PLC).

Several USDA agencies are involved in the process. At issue is whether USDA has the authority to do so and whether such a move would be WTO compliant. Vilsack told USDA Radio, “The General Counsel’s office is involved, the Foreign Ag Service is involved, the Farm Service Agency is involved, so that I get a 360-degree review of this issue so we can try to figure out what we can do to be as helpful as we can be within the confines of the law.”

The oilseed category includes other commodities such as canola and flaxseed.

Some believe budget issues are a major question regarding a decision, an issue reportedly raised by the Office of Management and Budget (OMB).

Earlier this month, 100 representatives in the U.S. House signed a letter to Vilsack supporting the designation. 

More information is available here. 

Agribusiness conference at Arkansas State University February 10

Posted January 21, 2016

Arkansas State University’s 22nd annual Agribusiness Conference will be held Wednesday, February  10. 

The conference provides information and education outreach to farmers, agribusiness professionals and educators across the Mid-South. This year’s conference focuses on the agricultural economy, environmental law and regulation, business transition planning, trade policy and the commodity market outlook. On-site registration begins at 7:45 a.m. in the Fowler Center at Arkansas State. Lunch will be served in the Convocation Center at noon. Afternoon sessions will follow and the conference concludes at 4 p.m.

The morning general session features five speakers and a panel discussion:

- Stan Miller, an attorney and partner with ILP+McChain, Miller and Nissman, will discuss succession and estate-planning issues for agribusiness owners.

- Harrison Pittman, director of the National Agricultural Law Center, will describe how the regulation of crop agriculture is evolving and discuss other environmental law issues.

- Bob Cummings, COO of the USA Rice Federation, will give an update on agricultural and trade policy and how it is impacting the rice industry.

- David Schweikhardt from Michigan State University will explain the economics and politics of the Trans-Pacific Partnership and how it will impact U.S. agriculture.

- Jason Henderson, director of Extension at Purdue University, will review the agricultural finance situation and the outlook for the farm economy.

Luncheon speaker John Phipps is a farmer and commentator on the U.S. Farm Report, America's longest-running farm television program.

Afternoon special-interest sessions include an update on Arkansas Department of Agriculture programs by the state’s Agriculture Secretary Wes Ward, three speakers on commodity market trends, and three presentations on poultry and beef industry issues.

Admission to the conference and luncheon is free, but pre-registration is encouraged. Detailed conference information and online registration is available here.

Rep. Kristi Noem: Congress Will Pass Farm Bill

Rep. Kristi Noem (R-SD), member of the House Agriculture Committee, says that Congress will pass a farm bill “in the coming months” according to an article by the Argus Leader, available here.  According the article, Noem indicated that:

“My leadership team has told me that it’s going to happen, because I’ve been pretty ugly with them at different times.”  She continued, “So I’m taking them at their word that they’re going to make sure it gets scheduled and they’re going to make sure we’ve got the votes.” 

The farm bill continues to be a contentious issue in Congress over issues including the nutrition title, farm program payments, and even a catfish inspection program.  For more background on these issues past posts on this blog are available here, here, and here. 

The Senate has had success passing a farm bill, but the road to success has been far more challenging in the House.  In 2012, the House Agriculture Committee passed a farm bill, but it was never brought up for a vote in the House.  The 2012 outcome illustrates the deep divisions on certain issues, which is on only display when the House initially failed to pass a farm bill earlier this year.  Later, the House split the nutrition title from the farm bill that paved a possible path forward for getting a competing bill that could be conferenced with the Senate.  Notably, the House-passed bill would also repeal the 1938 and 1949 permanent laws that have been the backstop to getting previous farm bills across the legislative finish line.  Indications have been that the House will bring up a nutrition-only bill in September, following the August recess, that would cut nutrition programs by about $40 billion.  That said, significant doubts have been expressed about the political viability of that approach.

Bigger Subsidies Projected Under Farm Bill Program

Posted March 10, 2015

The new farm programs for grain and oilseed farmers will pay them up to $7 billion annually over the next few years, according to an Agri-Pulse available here. Politico also published an article available here.

The Congressional Budget Office and the University of Missouri's Food and Agriculture Policy Research Institute (FAPRI) that provides analysis to the congressional agriculture committees prepared the forecasts.

Corn growers will receive the lion's share of payments, due to the sharp decline in market prices over the past two years.

CBO projects that total payments to corn and soybean producers from Agricultural Risk Coverage alone will be $3.37 billion in fiscal 2017, according to Politico.

With corn and soybeans enjoying record prices while the rest of the country struggled under the Great Recession, the House and Senate Agriculture Committees developed two substitute programs more sensitive to real needs and market changes.

ARC had an early-in, early-out approach, intended to buy time for a farmer to adjust to markets falling. The second program, Price Loss Coverage or PLC, followed the more traditional target price approach, slower to trigger but then defining a more permanent floor for producers.

Farmers have until the end of this month to sign up for one of the programs, according to Agri-Pulse.

Sixty percent of wheat growers nationwide are expected to choose PLC, while most soybean growers will choose ARC.

After 2018, ARC payments will decline dramatically as the five-year moving average begins to reflect the drop in commodity prices. FAPRI economists estimate that ARC payments will drop from $3.1 billion in fiscal 2018 to $1.8 billion in 2019 and then to $1.2 billion the following year.

For more information on commodity programs, please visit the National Agricultural Law Center’s website here.

Wheat Commission Agreement Unveiled

Posted September 17, 2014

An Oregon Wheat Commission administrator introduced terms of agreement between the commission and Oregon State University (OSU), according to a Capital Press article available here.

The terms were revealed at the OSU extension meeting and define how OSU spends royalties on OSU-developed wheat varieties.

According to the agreement, 75 percent of royalties collected by the university will be reallocated into the wheat breeding program. Five percent of royalties will support Crop and Soil Science Department, 10 percent will support variety inventors, and 10 percent to the OSU Research Office.

“That is much improved from the old system,” said Blake Rowe, Oregon Wheat Commission CEO. “I think it is a very good agreement.”

Mike Flowers, OSU Extension Cereals Specialist, stated that the agreement significantly decreases the percentage of royalty funds that will be recycled back into the wheat breeding program.

In the past few years, OSU has collected $1.2 million and $1.5 million a year in royalties through a 2 percent royalty on Clearfield varieties.

“(The Research Office) has been getting $400,000 or $500,000 a year the last five years or so,” Flowers said. “That is a big chunk of change, and growers wanted to see some of that come back into the program.”

For more information on commodity programs, please visit the National Agricultural Law Center’s website here.

NFU Withdraws from Beef Checkoff

Posted September 10, 2014

The National Farmers Union (NFU) board of directors has voted to withdraw from the beef checkoff working group, according to a NFU release available here. MeatingPlace also published an article available here and Cattle Network here.

NFU President Roger Johnson released the following statement:

“After three years of pushing for real reforms in the beef check-off program, NFU has decided that the process has become a bridge to nowhere and a waste of time and resources. The working group was designed to bring together vested parties from across the beef industry and to attempt to reach a consensus on substantial reforms that would make the check-off a stronger, more effective tool for the beef industry. Sadly, it has become clear that in reality, there is no willingness from key players within the group to allow real reforms to take place. NFU remains willing and eager to engage with others who are interested in reforming the beef checkoff, such that it operates in a manner like other checkoff programs.”

The NFU is asking U.S. Department of Agriculture (USDA) to consider several reforms such as allowing the Cattlemen’s Beef Board to conduct checkoff projects on its own, according to MeatingPlace.

The NFU recommends that USDA consider rewriting the program under the 1996 generic research and promotion act, according to Cattle Network.

For more information on commodity programs, please visit the National Agricultural Law Center’s website here.

GAO Released Crop Insurance Study

Posted September 9, 2014

The cost of the federal crop insurance program and farm sector income and wealth has grown significantly since 2003. The cost has risen from an average of $3.4 billion per year in 2003 to $8.4 billion a year for fiscal years 2008 through 2012, according to the U.S. Government Accountability Office’s (GAO) website.

Federally subsidized crop insurance, which farmers can buy to help manage the risk inherent in farming, has become one of the most important programs in the farm safety net. Revenue policies, which protect farmers against crop revenue loss from declines in production or price, are the most popular policy type accounting for 80 percent of all premium subsidies.

The GAO was asked to investigate the cost of the crop insurance program. This report examines "(1) trends in federal crop insurance costs and farm sector income and wealth from 2003 through 2012 and (2) the potential savings to the government and impacts on farmers, if any, of reducing federal premium subsidies for revenue policies."

GAO analyzed U.S. Department of Agriculture (USDA) crop insurance program data and farm sector income and wealth data from 2003 through 2012, reviewed economic literature and documents from stakeholders, including farm industry groups and researchers, and interviewed USDA officials.

For more information, the GAO report is available here. The highlights of the report are available here.

For more information on crop insurance programs, please visit the National Agricultural Law Center’s website here.

AMS Adjusted Representation on Cattlemen Board

Posted August 26, 2014

The Agricultural Marketing Service adjusted representation on the Cattlemen's Beef Promotion and Research Board, established under the Beef Promotion and Research Act of 1985.

The adjustments reflect changes in cattle inventories and cattle and beef imports that have occurred since the most recent Board reapportionment rule became effective in July 2011.

The rule went into effect August 13, 2014.

The Federal Register is available here.

Indiana Fish Feed Mill Creates Opportunities for Soybean Farmers

Posted July 10, 2014

A new fish feed mill is opening in Indiana that will utilize soybeans to feed the aquaculture industry across the Midwest, according to an Agri-News article available here. The Star Press also published an article available here and the Fish Site here.

The new Bell Farms feed mill in Albany will have the capacity to produce two million pounds of feed per month with soybean meal as a quality ingredient in most feeds.

“We congratulate Bell Farms in their commitment to producing sustainable, soy-based feeds here in Indiana,” said David Lowe, president of Indiana Soybean Alliance, the state’s soybean checkoff organization. “We believe a feed mill serving the aquaculture industry located within our state will not only benefit our state’s aquaculture producers by having a local source for quality feeds, but also our soybean farmers as it is another in-state market for our crop.”

The vertically integrated feed mill will include a 1000 metric ton fish farm, in-house processing facility, and production of products generated from capture and cultivation of byproducts, according to the Fish Site.

“A long time dream has been realized here today. I am very proud of our team, our partners and our community for working together to make this dream a reality and take this critical step toward providing a solution to our coming food deficit.” said Norman McCowan, president & CEO of Bell Aquaculture LLC.

Steven Craig, a nutritional biochemist and former associate professor at Virginia Tech, is the director of feed mill, and says that the process is similar to that of “dog food or Cocoa Puffs cereal,” according to the Star Press.

It consists of mixing ingredients, such as soybean meal and animal byproducts, grinding, extruding, drying, cooling, screening, oiling the pellets with fish oil, and bagging.

The feed will also be tailored to the nutritional, biological, and physiological needs of specific species at key points in the life cycle of the fish, according to the Fish Site.

For more information on aquaculture, please visit the National Agricultural Law Center’s website here.

House Passes CFTC Reauthorization Bill

Posted June 30, 2014

On Tuesday, the Consumer Protection End User Relief Act (H.R. 4413) was passed, authorizing the Commission Futures Trading Commission (CFTC) through 2018, according to a Delta Farm Press article by David Bennett available here. Farm Futures also published an article available here, the Wall Street Journal here, and Reuters here.

Forty-six Democrats and 219 Republicans passed the legislation. The Senate has yet to introduce companion legislation.

"I am pleased to have the support of my colleagues on a bill that touches nearly every part of the economy,” said Oklahoma Rep. Frank Lucas, chairman of the House Agriculture Committee. “This legislation reauthorizes the Commodity Futures Trading Commission through 2018 and ensures that the agency is working in the most efficient and effective way. It also cements key protections into law for futures customers, such as our nation’s farmers and ranchers, and reduces the regulatory load on end-users who represent 94 percent of American job creators.”

The White House opposes the bill stating that it “undermines the efficient functioning” of the CFTC and “offers no solution to address the persistent inadequacy of the agency’s funding,” which is supported by Senate Agriculture Committee Debbie Stabenow, D-Mich., according to Farm Futures.

"It is disappointing that the bill provides no additional funding mechanism and adds new layers of administrative burdens, hindering the agency's ability to do its job and effectively regulate these markets," said Stabenow.

The bill reauthorizes the agency’s mandate to reverse the CFTC’s strict rules on the U.S. businesses’ swaps with counterparties abroad, which would require a new regime with the Securities and Exchange Commission, according to Reuters.

Farmers and other small market players, who use futures to protect revenue from their crops against unpredicted market prices, would be exempted from some of the CFTC’s expensive new rules.

The CFTC would have to conduct a high-frequency trading study, ease restrictions against hedge-fund marketing to mirror looser Securities and Exchange Commission rules, and boost customer funds protection at futures firms. A review of the metals warehousing industry over the concerns of possible price manipulation would also have to be conducted, according to the Wall Street Journal.

For more information on commodity programs, please visit the National Agricultural Law Center’s website here.

$12.5 Million Available in Matching Payments under BCAP

Posted June 12, 2014

The Farm Service Agency (FSA) announced the availability of $12.5 million in matching payments under the Biomass Crop Assistance Program (BCAP) for the collection, harvest, storage, and transport of eligible materials to qualified Biomass Conversion Facilities (BCFs) in 2014. The Federal Register notice is available here.

The notice confirmed the requirements for BCFs to apply for qualification, and for eligible owners to apply for BCAP matching payments.

The effective date is June 9, 2014.

For more information on commodity programs, please visit the National Agricultural Law Center’s website here.