Today’s update looks at the latest activity by the House Agriculture Committee on the Farm Bill, a listening session held earlier this week in Texas.
Keith Good
Keith Good is the Farm Policy News editor for the farmdoc project. He has previously worked for the USDA’s National Agricultural Statistics Service, and compiled the daily FarmPolicy.com News Summary from 2003-2015. He is a graduate of Purdue University (M.S.- Agricultural Economics), and Southern Illinois University School of Law.
Drought Persists in the Plains
Last week, Billings Gazette writer Tom Lutey reported that, “The life had been fading from Grant Zerbe’s stunted chickpeas for the better part of a month, and now drought’s hot breath was burning through the final green inch of every plant stem. The Montana farmer’s worst growing season in 30 years was coming to a brutal end. There are few crops to harvest in the region, and with a lack of food and water, unwanted livestock are headed to auction.”
House Ag Committee Examines NAFTA- Trade Issues
Since President Trump took office in January, many in the agricultural sector have been leery of potential executive branch actions on trade, particularly with respect to China and our NAFTA trading partners. As the NAFTA renegotiation process begins to unfold, the House Agriculture Committee held a hearing yesterday titled, “Renegotiating NAFTA: Opportunities for Agriculture.” Today’s update looks at some of the issues that lawmakers highlighted at yesterday’s Ag Committee hearing.
Senate Farm Bill Hearing, Risk Management- Crop Insurance, Payment Limits, Base Acres
On Tuesday, the Senate Agriculture Committee held a Farm Bill hearing that focused on commodity, credit, and crop insurance programs. This follows previous Farm Bill field hearings in both Kansas and Michigan, as well as Committee meetings on the farm economy, agricultural research, and conservation issues. Today’s update highlights issues that lawmakers discussed at yesterday’s hearing, including crop insurance, payment limits and eligibility for farm programs, and base acres.
Policy Change on U.S. Beef Exports to China- Early Impacts Explored
Recall that last month, trade rules regarding U.S beef exports to China were finalized. The U.S. had not exported beef to China since 2003, and on June 30th, an update from USDA indicated that, “U.S. Secretary of Agriculture Sonny Perdue today joined with U.S. Ambassador to China Terry Branstad to slice a Nebraska prime rib in a Beijing ceremony, formally marking the return of U.S. beef to the Chinese market after a 13-year hiatus.” Today’s update highlights a recent news report describing how this important trade policy change is beginning to impact market participants.
Budget, Appropriations Issues Continue to Unfold- Agriculture, Farm Bill
This week, the House Budget Committee unveiled, and subsequently passed, a 2018 fiscal year budget resolution. Meanwhile, the Senate Appropriations Committee on Thursday approved its fiscal year 2018 agricultural appropriations measure. Today’s update provides additional details on these budgetary developments as the legislative process advances in anticipation of the next Farm Bill.
Farm Lending Variables- Updated Analysis From the Kansas City Fed
On Friday, Nathan Kauffman and Matt Clark, of the Federal Reserve Bank of Kansas City, penned an update titled, “Farm Lending Steady, but Risks Remain,” which noted that, “Agricultural lending at commercial banks was steady in the second quarter, but risks in the farm sector continued to weigh on loan growth and credit conditions.” Today’s post looks at the Kansas City Fed article in more detail.
Drought in High Plains- “Simple Survival” a Goal for Some
Associated Press writer Blake Nicholson reported on Saturday that, “Drought in North Dakota is laying waste to fields of normally bountiful food and hay crops and searing pastures that typically would be home to multitudes of grazing cattle. Some longtime farmers and ranchers say it’s the worst conditions they’ve seen in decades — possibly their lifetimes — and simple survival has become their goal as a dry summer drags on without a raincloud in sight.”
Spending and Budgetary Issues- Agriculture, Farm Bill
Today’s update looks at recent spending and budgetary issues impacting agriculture and the Farm Bill. The House Appropriations Committee this week passed the fiscal year 2018 appropriations bill for USDA. Meanwhile, recent reporting from Politico indicated that House Agriculture Committee Chairman Mike Conaway (R., Tex.) reached a “handshake agreement” with House Budget Chairwoman Diane Black (R., Tenn.) on potential cuts to ag and nutrition programs. And, the Congressional Budget Office recently released its latest baseline for farm programs.
Federal Reserve: Observations on the Ag Economy- June ’17
On Wednesday, the Federal Reserve Board released its June 2017 Beige Book update, a summary of commentary on current economic conditions by Federal Reserve District. The report included several observations pertaining to the U.S. agricultural economy.
U.S. Ag Trade Data Update: Some Interesting Observations
Late last week, the U.S. Department of Agriculture updated its monthly agricultural trade data. The data contained some interesting information with respect to U.S. agricultural exports. The U.S. ran a small, but very rare monthly agricultural trade deficit in May; and, U.S. corn exports to Mexico from January through May of this year were down approximately seven percent from the same time last year. Today’s update also includes recent perspectives on NAFTA renegotiation and agricultural issues.
Dallas Fed Ag Credit Survey
Earlier this week, the Federal Reserve Bank of Dallas released the results of its 2017 Second Quarter Agricultural Credit Survey, which stated that, “Demand for agricultural loans overall decreased for a seventh consecutive quarter. Loan renewals and extensions continued to increase, albeit at a slower pace. The rate of loan repayment stabilized after declining for two years. Overall, the volume of non-real- estate farm loans was lower than a year ago, as was the volume of farm real estate loans. The volume of operating loans increased; all other loan categories’ volumes fell year-over-year this quarter.”
Despite Some Alarming Signs, Repeat of 1980’s Farm Crisis Seen as Unlikely
In the spring edition of the Agricultural Policy Review, Iowa State University agricultural economist Wendong Zhang penned an article titled, “Four Reasons Why We Aren’t Likely to See a Replay of the 1980’s Farm Crisis,” where he explained that, “There are plenty of alarming signs indicating a possible farm crisis: current corn prices are half the 2013 peak level of US $7/bushel; farm income has declined for major commodities (corn, wheat, cattle), falling from the previous year to levels well below recent years; weak farm income and worsening credit conditions continue to trim farmland values, which are expected to trend lower in the months ahead, thus weakening the equity position of producers and the collateral value for lenders. Given the heightening farm financial crisis, many agricultural lenders, academics, and other stakeholders in the US farm sector worry another farm crisis is looming. However, there are four economic and legal reasons why this farm downturn is unlikely to slide into a sudden collapse of agricultural markets.”
Senate Farm Bill Conservation Hearing- Conservation Reserve Program
On Thursday, the Senate Agriculture Committee held a Farm Bill hearing that focused on conservation and forestry issues. This follows previous Farm Bill field hearings in both Kansas and Michigan, as well as Committee meetings on the farm economy and agricultural research. Today’s update highlights issues associated with the Conservation Reserve Program, a subject that lawmakers discussed in some detail at last week’s hearing.
House Ag Appropriations Bill Passes Subcommittee- Ag Spending in Broader Budget Context
On Tuesday, a news release from the House Appropriations Committee indicated that, “The House Appropriations Committee today released the fiscal year 2018 Agriculture Appropriations bill, which will be considered in subcommittee [on Wednesday]…The bill totals $20 billion in discretionary funding, which is $876 million lower than the fiscal year 2017 enacted level and $4.64 billion above the President’s budget request. The legislation prioritizes this funding in programs for rural communities, farmers, ranchers, food and drug safety, and nutrition for those in need.”
EPA Moves to Rescind “Waters of the U.S.” Rule
Coral Davenport reported yesterday at The New York Times Online that, “The Trump administration on Tuesday took a major legal step toward repealing a bitterly contested Obama-era regulation designed to limit pollution in about 60 percent of the nation’s bodies of water. The rule, known as Waters of the United States, or Wotus, had extended existing federal protections of large bodies of water, such as the Chesapeake Bay and Puget Sound, to smaller bodies that flow into them, such as rivers, small waterways and wetlands. Issued under the authority of the 1972 Clean Water Act, the rule has been hailed by environmentalists. But farmers, ranchers and real estate developers oppose it as an infringement on their property rights.”
Interest Deduction Tax Proposal Concerns Farmers
Richard Rubin reported yesterday at The Wall Street Journal Online that, “Republicans looking to rewrite the U.S. tax code are taking aim at one of the foundations of modern finance—the deduction that companies get for interest they pay on debt. That deduction affects everyone from titans of Wall Street who load up on junk bonds to pay for multibillion-dollar corporate takeovers to wheat farmers in the Midwest looking to make ends meet before harvest. Yet a House Republican proposal to eliminate the deduction has gotten relatively little sustained public attention or lobbying pressure.”
Farm State Senators to USTR: On NAFTA, “Do No Harm.”
The Senate Finance Committee held a hearing yesterday to examine the administration’s approach to trade policy, and heard testimony from U.S. Trade Representative Robert Lighthizer. Farm state lawmakers expressed concern regarding agriculture and NAFTA renegotiation, admonishing the executive branch to “do no harm” with respect to gains in agricultural trade that have resulted from the agreement. Timelines for the renegotiations were also discussed, as well as agricultural trade issues with China. Potential future bilateral trade negotiations were also mentioned.
As Mexico Explores Options to Reduce Reliance on U.S. Ag Imports, NAFTA Ag Ministers Meet in Georgia
Wall Street Journal writer Jacob Bunge reported late last week that, “Friction between the U.S. and Mexico over trade is starting to cut into sales for U.S. farmers and agricultural companies, adding uncertainty for an industry struggling with low commodity prices and excess supply. Over the first four months of 2017, Mexican imports of U.S. soybean meal—used to feed poultry and livestock—dropped 15%, the first decrease for the period in four years, according to data from the U.S. Department of Agriculture. Shipments of U.S. chicken meat fell 11%, the biggest decline for the period since 2003. U.S. corn exports to Mexico declined 6%. Mexico is the largest U.S. export market for those commodities.”
Rural America “Stranded in the Dial-Up Age,” Rural Broadband Issues
Last month, a Wall Street Journal article provided an in-depth look at a variety of statistical indicators from rural America in an article titled, “Rural America is the New, ‘Inner City.'” That article explained that, “In terms of poverty, college attainment, teenage births, divorce, death rates from heart disease and cancer, reliance on federal disability insurance and male labor-force participation, rural counties now rank the worst among the four major U.S. population groupings (the others are big cities, suburbs and medium or small metro areas).” The Journal continued its “One Nation, Divisible” series with a front page article in Friday’s paper that focused on a different aspect of rural development: Broadband Internet access.