Senate Ag hearing focuses on crop insurance, disaster aid, climate programs
In Today’s Digital Newspaper |
An abbreviated report today as I am about to give a speech at CIRB’s annual meeting, this year in Bonita Springs, Florida.
Russia to cut oil production, sending prices higher. Russia said it plans to cut its oil production by around 500,000 barrels a day, or about 5%, next month, sending crude prices higher in a move that Moscow said was in response to Western sanctions.
House easily clears measure condemning China for spy balloon, 419-0. The resolution won every GOP and Democratic vote, a major show of bipartisanship in the closely divided chamber. The measure condemned China for its spy balloon that flew over the U.S. for several days before it was shot down off the coast of South Carolina. The measure, introduced by House Foreign Affairs Committee Chair Michael McCaul (R-Texas), required two-thirds support to pass.
Chinese balloon update. An alleged Chinese spy balloon that traversed the U.S. had western-made components with English-language writing on them, members of Congress were told on Capitol Hill Thursday. Biden administration officials briefed lawmakers about the writing behind closed doors. The officials included representatives from the State and Defense Departments as well as the intelligence community.
Meanwhile, most of the debris from the Chinese spy balloon is still lying in the ocean. The FBI has so far recovered very limited physical evidence from the Chinese surveillance balloon shot down off the coast of South Carolina on Feb. 4, and senior FBI officials said that the bureau had not yet retrieved enough information from the debris to assess the balloon’s capabilities. “It’s very early for us in this process, and the evidence that has been recovered and brought to the FBI is extremely limited,” one official said during a Feb. 9 press briefing. Eric Pokorak, assistant director of the FBI’s Laboratory Division, said that was too early in the investigation to determine the intent and capabilities of the balloon.
Ukraine’s president: Military is defending “the European way of life” by standing up to the Russian military’s invasion, the one-year anniversary of which comes Feb. 24. “This total war that has been unleashed by Russia is not just about territory in one part of Europe or another,” President Volodymir Zelenskyy said Thursday to EU delegates gathered in Brussels. “We are defending ourselves against the most anti-European force in the modern world,” Zelenskyy said. “We are defending ourselves. We, Ukrainians, are on the battlefield with you.”
“We can never match your sacrifices,” said EU Commission President Ursula von der Layen after Zelenskyy spoke. “But we can stand up for you, and we have,” she said, emphasizing the EU’s €67 billion in support to Ukraine so far during the war.
Russian forces are on the offensive in occupied Luhansk, analysts at the Institute for the Study of War (ISW) wrote in their latest daily assessment (link). “The commitment of significant elements of at least three major Russian divisions to offensive operations in this sector indicates the Russian offensive has begun, even if Ukrainian forces are so far preventing Russian forces from securing significant gains,” ISW said.
Republican House Speaker Kevin McCarthy’s major challenge: He’s tasked the House Budget Committee with drafting a plan to balance the budget within 10 years — but they must achieve this without raising taxes or cutting Social Security, Medicare, or defense spending. Sources say the eventual details may include cuts in farm program spending, but contacts stress no final GOP decisions have been made. Also, any spending cut list would face likely hurdles in the Senate.
The following are some initial spending cuts being mentioned by some House sources:
- Limits on new discretionary funding, beginning in fiscal year (FY) 2024.
- “Structural reform” including work requirements for safety net programs, including Medicaid and the Supplemental Nutrition Assistance Program (SNAP/food stamps). Also included: selected farm program savings. Some GOP lawmakers are reportedly also pushing for savings via crop insurance expenditures.
- Retrieve unspent Covid-19 pandemic relief funds from state governments. House Republican aides point to gov’t estimates showing $4.61 trillion has been authorized in Covid-19 spending, but $4.12 trillion has been spent. That leaves nearly $500 billion in unspent funds, although a portion of that has been “obligated” to certain pots of money and may be difficult to return to the U.S. Treasury.
Do not get too excited about USDA’s farm income forecasts for 2023. Reason: It’s way too early for serious assessments. Case in point is USDA’s forecasts at this time last year for 2022 farm income. USDA in February 2022 forecast 2022 net farm income at $113.7 billion and net cash farm income at $136.1 billion. Those forecasts for 2022 are now at $162.7 billion for net farm income and $189.9 billion for net cash farm income.
Cotton AWP declines. The Adjusted World Price (AWP) for cotton is at 74.41 cents per pound, effective today (Feb. 10), down from 75.24 cents per pound the prior week. The AWP has not been below the level (52 cents per pound) that would trigger an LDP since Oct. 9, 2020.
Crop insurance, production costs, Phase 2 of ERP key topics at Senate Ag panel farm bill hearing. A Senate Ag Committee hearing Thursday on the new farm bill raised a issue that is now evident: the Title 1 farm bill safety net can no longer deal with the current ag environment of rising production costs and relatively high prices for some commodities. USDA officials also faced criticism about its handling of Phase 2 payments via the Emergency Relief Program (ERP).
Other topics that have previously surfaced included Republican concerns about climate and conservation changes to crop insurance, while Democrats continued to urge expansion of the program to more producers.
Senate Ag Chair Debbie Stabenow (D-Mich.) said the 2018 Farm Bill largely lived up to expectations, but she suggested its successor must deal with several challenges: increasingly damaging natural disasters and accelerated costs of production. “There are still gaps in the farm safety net as farmers continue to face global market uncertainty and climate-fueled weather disasters,” she said. “While many commodity prices are at historic highs, which is good, we also know that land and fertilizer and input costs are also near record highs.”
Stabenow praised federal crop insurance, calling it “the number one risk management tool for producers.” However, improvements are needed, she said, promising improvements to the program, “including specialty crop growers, organic producers, beginning and diversified farmers.”
Ranking Member John Boozman (R-Ark.) said a focus on boosting nutrition and climate programs has obscured the fact that farm safety net programs like Price Loss Coverage (PLC) are ill equipped to deal with the current situation. “Prices for many of our major commodities would have to drop sharply before the current Title 1 Price Loss Coverage safety net would start to work,” Boozman said, noting corn prices would need to plummet 46% before PLC would provide enrolled farmers any assistance. “By the time corn prices fell that low, the significant damage would have already been done.”
Sen. Tommy Tuberville (R-Ala.) asked if USDA had looked at how the two safety net programs respond to inflation, such as adjusting reference prices — which trigger payments under the PLC program. “I will tell you my legislative staff is always quick to tell me to emphasize that Congress writes the farm bill, and then that’s going to be important here too, obviously those reference prices are in statute,” USDA Undersecretary for Farm Production and Conservation Robert Bonnie told Tuberville. “When we talk to producers, there’s lots of concern about obviously rising input costs,” he added, but then emphasized USDA can only operate farm safety net programs as dictated by Congress.
USDA disaster aid implementation was both praised and criticized. Democrats and Republicans agreed with farmers who have complained about USDA’s methodology for payments under Phase 2 of the ERP, saying they do not adequately compensate farmers for their losses. “I appreciate USDA’s efforts through Phase 1 of ERP, which generally worked well in supporting producers with crop losses and [2020 and 2021],” said Sen John Thune (R-S.D.). “But the Phase 2 methodology… often does not accurately reflect crop losses that Congress meant to cover.” Thune urged USDA consider reverting to the approach used in Phase 1 of the ERP effort for 2022 losses, a suggestion echoed by Sen. Amy Klobuchar (D-Minn.), who said farmers in her state “are grateful for the quick and effective approach taken during the implementation of ERP Phase 1,” but “a number of them have been less enthusiastic of the income tax-based approach taken during the rollout of ERP Phase 2.” Bonnie said USDA’s approach on ERP Phase 2 focused on ensuring more producers had access to aid, but said if there are resources remaining after the effort the department may look at a shallow loss effort to address some of the concerns with Phase 2.
Bonnie said ad hoc programs like ERP have helped farmers facing disaster-related losses, but he stressed that federal crop insurance remains a key risk management tool, and that USDA has worked to expand the program to cover more producers.
Boozman again raised a concern voiced by many Republicans about any move to use crop insurance to incentivize climate or conservation practices — which GOP members contend could undermine the actuarial soundness of the program and move it away from its core focus as a risk management tool. “Can you commit to making sure that any efforts to expand the crop insurance programs are science based, peer reviewed, and protect the integrity of the program,” he asked Bonnie, saying a “one-size fits all” approach that elevates certain practices like cover cropping could disadvantage farmers in areas where those practices are not practical. Bonnie responded that “with respect to crop insurance, everything we have to do has to be actuarially sound as we’ve got to maintain the integrity of crop insurance.” He said recent incentives offered to farmers for cover cropping have taken the form of premium rebates — not changes to premiums or the overall premium subsidy paid by the government.
Regarding prevent plant coverage, Sen. Ben Ray Lujan (D-N.M.) asked if USDA was looking at expanding prevented plant coverage under crop insurance, which pays farmers when they are unable to plant an insured crop due to extreme weathers. He noted eligibility currently hinges on a farmer being able to plant, insure and harvest crops in one of the four preceding crop years — known as the four-in-one rule — and some farmers in the West are at more risk of losing coverage due to prolonged drought conditions. “One in four is very regionalized in a lot of cases,” acknowledged USDA Administrator Marcia Bunger. “So, for this coming year, we’ve made an exception for several western states to step outside of that one and four,” adding USDA would consult with stakeholders over the next year about a potential long-term solution to the issue.
USDA climate program efforts were raised by Sen. Chuck Grassley (R-Iowa), who noted concern over USDA’s move to tap more than $3 billion in funds from the Commodity Credit Corporation (CCC) to fund its Partnerships for Climate-Smart Commodities (PCSC) effort that funds climate-smart ag pilot projects. “Spending over $3 billion without input from Congress is a serious concern for everybody in the Congress,” he stated. Grassley asked Bonnie if USDA had any plans to tap CCC for additional USDA programs. Bonnie reiterated what USDA Secretary Tom Vilsack has said — that PCSC falls within the CCC’s charter as it looks to expand and create new markets for ag commodities. But he said there were no plans for new CCC-backed programs under the Farm Production and Conservation (FPAC) mission area.
GOP Sen. Lummis wants farm bill to undo WOTUS rule. Republicans wants the new farm bill to be a vehicle for changes to a rule that broadens the scope of waters subject to federal environmental protection. President Joe Biden’s Waters of the U.S., or WOTUS, rule is “so onerous” that Congress “will be working for every avenue it has to legislate it out of existence, if the Supreme Court leaves it alone,” Sen. Cynthia Lummis said during an interview with Bloomberg. The Wyoming Republican is a member of the Environment and Public Works Committee and leads the Senate Western Caucus. Republicans say WOTUS creates a regulatory burden on farmers, property owners, and small businesses. The Supreme Court heard oral arguments on the issue in October in Sackett v. EPA and is expected to rule on the case this year. All 48 GOP senators, and 152 House Republicans, filed a joint resolution of disapproval in early February under the Congressional Review Act to scrap the long-awaited WOTUS rule the administration published in December.
Washington D.C. police made an arrest in the Thursday morning attack on Rep. Angie Craig (D-Minn.). D.C. police announced late Thursday night that “26-year-old Kendrick Hamlin, AKA Hamlin Khalil Hamlin, of no fixed address,” was arrested and charged with simple assault. Hamlin allegedly struck Craig while they were riding in an elevator. Craig threw hot coffee on him and was able to escape. Craig later attended House votes, and she backed a GOP resolution disapproving of a revised D.C. criminal code.
China’s consumer inflation accelerated last month as the Lunar New Year holiday spurred demand following the nation’s reopening. The consumer price index rose 2.1% from a year earlier, the National Bureau of Statistics said Friday, matching pre-report expectations. That followed a 1.8% year-on-year gain in December. Core inflation, which doesn’t include volatile food and energy prices, rose to 1% — the highest since June.
KEY LINKS |
WASDE | Crop Production | USDA weekly reports | Crop Progress | Food prices | Farm income | Export Sales weekly | ERP dashboard | California phase-out of gas-powered vehicles | RFS | IRA: Biofuels | IRA: Ag | Student loan forgiveness | Russia/Ukraine war, lessons learned | Election predictions: Split-ticket | Congress to-do list | SCOTUS on WOTUS | SCOTUS on Prop 12 | New farm bill primer | China outlook | Omnibus spending package |