Washington Report for 6-15-12

By Steve Kopperud

Farm Bill Update

Progress Minimal on Senate Farm Bill as Deal on 250 Amendments Remains Elusive – Senate Majority Leader Harry Reid (D-NV) once again this week pleaded with his colleagues to withdraw most of nearly 250 amendments filed on the pending 2012 Farm Bill. All eyes now turn to next Monday evening when it’s hoped Reid and Senate Minority Leader Mitch McConnell (R-KY) will announce they’ve reached an agreement on which amendments will be debated and voted upon and which will simply be talked about. The vast majority of amendments filed so far are unrelated to the Farm Bill or are parochial interests of individual Senators with little relationship to the underlying bill, but some Senators have made public threats to vote against the bill if their particular amendments are not at least considered. Sen. Pat Roberts (R-KS), ranking member on the Senate Agriculture Committee, told one reporter this week, “There are people who want to throw a monkey wrench into the gear box if, in fact, they don’t get their particular amendment.” Votes on unpopular amendments this week included one by Sen. Jean Shaheen (D-VT) designed to kill the sugar support program and another by Sen. Rand Paul (R-KY) to turn the federal food stamp program into a state block grant program. Both amendments were tabled. Key to killing both amendments was a bloc of conservative 33 GOP Senators, including many southerners, led by Roberts. When Reid proposed moving to four other amendments, he was blocked by Paul and then by Sen. Tom Coburn (R-OK) who proposed the Senate set a limit on amendments at 40 and take them up in rapid-fire succession. Reid seemed to like the Coburn plan, but Sen. Saxby Chambliss (R-GA), who’s leading the fight against the committee-approved commodity title as discriminating against southern producers, said he’d seen a preliminary list of possible amendments and it did not include several he’s brought forward, including one that would create an “alternative countercyclical “ program exclusive to rice and peanuts. Chambliss said he wants any and all amendments debated, and that Farm Bill consideration should be debated “for weeks.”

Conrad/Chambliss Amendment on Target Prices May Break Logjam on Farm Bill – Senate Agriculture Committee Chairwoman Debbie Stabenow (D-MI) is the voice of optimism on the future of her committee’s 1,000-page 2012 Farm Bill – predicting this week that a final floor vote could come as early as next week – despite 250 amendments filed to modify the bill and the continuing rebellion of southern Senators against the commodity title of her bill. The committee-passed bill includes an Agriculture Risk Coverage (ARC) shallow loss income protection program – a risk program covering 15 to 21 percent of losses not covered by crop insurance – that southerners contend discriminates against rice and peanut farmers. However, late this week, Sen. Kent Conrad (D-ND), chairman of the Senate Budget Committee and ag committee member, joined with Sen. Saxby Chambliss (R-GA), former chairman of the committee, to file an amendment that would preserve target prices as an add-on to the ARC program. They were joined by Sens. Max Baucus (D-MT), chairman of the Finance Committee, and ag panel member Sen. John Hoeven (R-ND). Many say the Conrad/Chambliss plan is the needed breakthrough to mollify southern farmers and move the bill forward. The amendment would increase target prices 4 to 7 percent from current levels, a more conservative approach than proposed last December to the deficit reduction “super committee.” It would also pay farmers on a maximum 75 percent of base acres planted or prevented from planting, and carries a separate payment limit on countercyclical payments of $65,000 a year. This “moderate” target price approach would have to include offsets or buy-downs on its cost, but most consider the Baucus-Conrad alliance as key to finding the money to pay for the program. One way to offset the cost is to remove a provision that now allows farmers who haven’t grown a crop to use an “actual production history plug” – essentially a “what-if” number that would be used to qualify for crop insurance. This would be coupled with a cut in the new peanut revenue insurance program now included in the committee bill. Southerners are quietly embracing the Conrad/Chambliss approach, not as a solution to their complaints, but as a means of getting the bill through the Senate and into conference with a House bill, which is expected to be far more generous on the target price side of farm income protection.

McConnell Lays Out Anti-Regulation Amendments to Farm Bill – This week Senate Minority Leader Mitch McConnell (R-KY) laid out a list of five initiatives he wants included in the Farm Bill to overturn or block pending Environmental Protection Agency (EPA) and other government agency rulemakings. The package includes language on financial derivatives, non-navigable waters, worker safety rules affecting farm children and EPA’s dust rule. An amendment by Sen. Mike Johanns (R-NE) would block EPA from regulating ag dust, a demonstration that he doesn’t trust EPA’s assurances it has no intention of regulating farm dust. McConnell specifically referred to a separate action to bar EPA and the Army Corps of Engineers from extending their regulatory authority under the Clean Water Act (CWA) to ponds, ditches and other non-navigable waters. Sen. John Thune (R-SD) filed an amendment that would require the Department of Labor to consult with Congress before worker safety rules affecting children are proposed. Johanns and Sen. Mike Crapo (R-ID) filed an amendment that would bar the Commodity Futures Trading Commission from imposing end user margin requirements on derivatives trades. The Johanns/Crapo amendment is identical to a bill that overwhelmingly passed the House. In an independent move, Johanns also filed an amendment that would prohibit EPA from conducting aerial surveillance to investigate farm and ranch compliance with EPA regulations. The amendment comes on the heels of a letter Johanns and the rest of the Nebraska delegation sent to EPA asking why it was conducting aerial “inspections,” how the information was used, etc. Johanns said he was expecting EPA Administrator Lisa Jackson to respond to the letter, but instead the response came from EPA’s District 7 office, and “until they’re open and transparent, we should just stop it.” Sen. Chuck Grassley (R-IA) has also asked EPA to brief him on overflights in Iowa that is also overseen by EPA District 7, but said he hasn’t passed judgment, but has questions he wants answered. 

Banks, Insurers Promote Crop Insurance, Checkoff Change Assailed, Export Assistance Attacked – As the proposed amendments to the 2012 Farm Bill continued to pile up in the Senate, so too did the press releases, letters and other communications defending or attacking various proposals. The Independent Community Bankers (ICB), along with the American Association of Crop Insurers and the Crop Insurance & Reinsurance Bureau, took on the Environmental Working Group (EWG) and several Senators by denouncing any attempt to change federal crop insurance programs, urging the Senate to “avoid amendments that result in … lower premiums or a weaker delivery system.” ICB also urged the Senate to reject amendments aimed at restricting farmer access to the U.S. Department of Agriculture’s (USDA) guaranteed operating loan program or efforts to restrict that program. The American Soybean Association (ASA) told the Senate this week to reject an amendment by Sen. Jim DeMint (R-SC) that would effectively make all current producer-funded checkoff programs voluntary. DeMint has characterized mandatory checkoff programs as a tax; ASA said such programs allow farmers to “invest their own dollars to conduct research, build markets and create new uses” for various products. Sen. Tom Coburn (R-OK) filed an amendment against the USDA Market Access Program (MAP) seeking to cut the program by $30 million and withhold federal dollars from certain market promotion activities. He singled out industry associations receiving MAP money based on whether the group enjoys the membership of “big corporations with ‘household’ name products.” In a letter dated June 13, 2012, 80 members of the Coalition to Promote U.S. Agricultural Exports strongly opposed an amendment by Sen. Tom Coburn (R-OK) to S. 3240 (Agriculture Reform, Food, and Jobs Act of 2012) to reduce annual funding for the MAP by $40 million and prohibit the use of MAP funds for certain activities. A coalition of groups – including the American Feed Industry Association (AFIA) – that receive MAP funding or support industries which do, said in a letter this week, “Reducing funding for MAP would seriously undermine U.S. agriculture’s ability to compete in this highly competitive international marketplace. It is a very efficient, cost-effective program.” The groups also pointed out that under MAP, participants must evaluate and adjust all export market development activities every year. This analysis, in conjunction with feedback from USDA overseas officers, determines whether activities merit funding.

NGFA Offers CRP Fix as Groups Call for Holding the Line on Conservation Programs – Nearly 525 groups, companies and individuals will be calling on Congress this week to reject moves to go beyond the current Farm Bill when it comes to funding cuts or changes to the U.S. Department of Agriculture’s (USDA) conservation programs, contending the programs have already paid their fair share in deficit reduction. At the same time, the National Grain & Feed Association (NGFA) put forward a proposal to remove what it called “prime farmland” from Conservation Reserve Program (CRP) eligibility, action echoed by most of industry. The conservation groups said the USDA programs are essential to sustainability in ag and forestry, and told the Senate to “hold the line” at the committee-approved bill. NGFA said CRP needs to lose “millions of acres of ‘prime farmland,’” based on a study by Strategic Conservation Solutions LLC, a company headed by the former head of USDA’s Natural Resources & Conservation Service (NRCS). The study released this week by the National Grain & Feed Foundation shows that as recently as 2007, up to 8.7 million CRP acres was considered prime farmland by USDA itself and was idled under 10- and 15-year contracts. The study revealed that while some of this farmland was part of filter strips, grassed waterways and other highly sensitive acres eligible for continuous signup and would likely remain idled, “there is an urgent need to manage the program so that the most productive land from the reserve is returned to production.” The NGFA study, recognizing the Senate Farm Bill takes CRP from a 32-milliion acre cap to a 25-million acre cap by 2017, showed this reduction should be accelerated and pegged to expiring contracts, and by removing prime farmland and barring future farmland enrollment, the new cap should be closer to 21 million acres. The study – entitled “ReGaining Ground – A Conservation Reserve Program Right-Sized for the Times” – also carries 10 legislative and eight administrative recommendations on how to improve CRP, and can be found at http://www.ngfa.org/.

Sanders Attacks Biotech Crops on Labeling, Approvals, “Coexistence” Payments – Sen. Bernie Sanders (I-VT) filed a series of anti-biotechnology amendments to the pending Senate Farm Bill this week, ranging from mandated compensation to organic farmers who prove their crops were “contaminated” by pollen from biotech crops to an override provision that would allow states to mandate labeling of foods containing GM ingredients. Sanders’ “Farmer Protection Act” would provide that farmers couldn’t be held liable for any penalty they may face if their organic or non-GM crop is contaminated by a biotech crop, and it would allow the grower to sue a biotech company for “monetary damages for injury to the agricultural producer caused by the genetically engineered product.” It also awards fees to the plaintiff’s attorney if the farmer wins. The labeling amendment is co-authored by Sen. Barbara Boxer (D-CA), in whose state this fall voters will vote on a convoluted GM labeling ballot question, and would set aside federal preemption on food labeling to allow states to force labeling of GM foods or those foods containing GM ingredients. It would also require the U.S. Department of Agriculture (USDA) and Food and Drug Administration (FDA) to set up rules to protect the states’ labeling actions, and provide within two years a list of foods containing GM ingredients.

Could California’s GM Labeling Ballot Initiative Apply to Feed, Pet Food?

Given the definition of “food” under California law is the same as the federal government – that is, anything fed to man or animal – a ballot initiative to mandate labeling of foods that are the product of or may contain genetically modified ingredients has many asking if the labeling mandate could apply to livestock, poultry and pet feeds as well as human foods. Legal observers describe the approved ballot language as “sweeping,” and said the language could catch feed and pet food “offered for retail sale in California … if it is or may have been entirely or partially produced with the genetic engineering.” However, the language carries a proviso, however, that before July 1, 2019, the labeling requirement would not apply to a food that contains 10 or fewer genetically engineered ingredients each of which makes up 0.5 percent or less of the total weight of the “food.” The language specifically exempts meat or poultry from animals fed feeds that may have contained GM ingredients. The California Secretary of State’s opinion can be found at www.sos.ca.gov/elections/ballot-measures/qualified-ballot-measures.htm.

Senate Tax Extenders Package May Move Independent of Tax Rate/Overhaul Bill

A bill to extend nearly 1,200 expired federal tax credits and other tax-related benefits may move in the Senate this summer as Sen. Max Baucus (D-MT), chairman of the Senate Finance Committee, confirmed this week his panel is making progress in crafting a tax package. While Baucus remains publicly confident he can hammer out some form of “detailed tax reform proposal” that would include extension of the Bush tax rates, insiders say the tax extenders package being worked on in the committee could move separately before Congress recesses in October for the general election. Baucus wants to move a full package – preferably during the post-election lame duck session – but the tax extender package, which includes research and development tax breaks, incentives for biodiesel and renewable diesel, along with a number of small business tax credits, has become an increasingly front-burner issue for business interests. In the House, similar discussions are under way in the Ways & Means Committee, but some members want to cull unnecessary or parochial tax credits from the list as a cost savings move.  Similar action was necessary in late 2010, when Congress allowed the tax credits to expire at the end of 2009. In that action, Congress made the credits retroactive to January 1, 2010. 

Court Tells FDA to Take Second Try on Antibiotics; Coalition Promotes Science of Issue

A federal judge told the Food and Drug Administration (FDA) this week to go back and examine its decision to reject citizens’ petitions on restricting the use of antibiotics in agriculture, at the same time a broad coalition of national livestock, poultry, meat processing and feed interests, including the American Feed Industry Association (AFIA), sent a letter to Rep. Louise Slaughter (D-NY) pointing out the rigorous federal regulation of low-level use of antibiotics in feed, the lack of human health risk and the benefits to food production provided by the medicines. The federal judge didn’t go so far as to order specific FDA action on the rejected citizens’ petitions, but said the agency’s rationale that to re-review all antibiotics currently used in feed as too time-consuming and resource-intensive was “arbitrary and capricious.” The FDA announced June 1 that it’s appealing the judge’s decision, filing the necessary paperwork with the Second Court of Appeals. If the appeal is denied, the FDA has to begin hearings on various approved products to determine safety. The industry coalition letter was in response to a February letter Slaughter sent to food companies and restaurants demanding to know their policies on sourcing meat and poultry from animals who received antibiotics in their feed and/or water. Slaughter has been pushing the “Preservation of Antibiotics in Medical Treatment Act (PAMTA)” unsuccessfully for the last three congresses, and this legislation would effectively ban the use of “critical” antibiotics in agriculture. The coalition pointed out to Slaughter – and other members of Congress with whom the letter was shared – that ag use of antibiotics is more stringently regulated by the FDA than human use of the same products, action that’s designed to ensure the ag use doesn’t contribute to human resistance to the products. 

Larry Mitchell to Head GIPSA

Former U.S. Department of Agriculture (USDA) official and industry executive Larry Mitchell has been appointed the new administrator of the Grain Inspection, Packers & Stockyards Administration (GIPSA), replacing J. Dudley Butler who resigned the post in January. Mitchell is the former associate director of the USDA Office of Advocacy and Outreach, was previously deputy administrator for Farm Programs at the Farm Service Agency, and served as deputy vice president at the Commodity Credit Corporation. He also headed up his own research firm and was chief executive officer of the American Corn Growers Association. Before joining USDA, he was vice president of government relations at the National Farmers Union, and was director of Federal and State Relations for the American Agriculture Movement.

Bill to Enhance U.S.-Russian Trade Relations Unveiled

A bill designed to rewrite Cold War law that limits U.S. trade relations with modern-day Russia was unveiled this week, and was generally greeted with praise by agriculture interests. The bill would terminate the application of the so-called Jackson-Vanick amendment – trade sanctions imposed in the 1960s on nations blocking Jewish emigration to Israel – and would clear the way for President Obama to grant Russia permanent normal trade relations (PNTR) status just as Russia is set to join the World Trade Organization (WTO). U.S. Special Trade Representative Ron Kirk praised the bill introduced this week by Sens. Max Baucus (D-MT), John Thune (R-SD), John Kerry (D-MA) and John McCain (R-AZ). The American Farm Bureau Federation said Russian PNTR is “a critical step towards ensuring the U.S. benefits from Russia’s accession to the WTO and remains competitive in that market.” The overall Russian import market is valued at more than $300 billion a year; ag exports to Russia totaled $770 million in 2011.