D.C. Watch: Ag cuts loom

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The super committee assigned the task of reducing federal budget deficits by $1.5 trillion will probably not propose cuts to federal nutrition programs, according to Representative Frank Lucas (R-OK) head of the House Agriculture Committee. Thus, he’s worried there will be huge cuts to other Department of Agriculture funding if the 74% of the USDA budget that goes to nutrition programs is left unchanged. Under the debt-ceiling/deficit reduction bill Congress passed in August, food stamps (the SNAP program), social security, and most Medicare programs would be exempt from the “automatic” cuts that kick in if 1) the super committee fails to reach agreement or 2) Congress fails to approve the cuts they do agree on and propose.

One of the first officials to appear before the super committee was Doug Elmendorf, Director of the Congressional Budget Office. His message was, in part, that “Immediate spending cuts or tax hikes could result in an added drag on the weak economic expansion”. On the other side, members of Congress and the Administration are urging super committee members to “go big” and reduce the deficits by far more than the assigned task of $1.5 trillion over 10 years. (The House and Senate Agriculture Committees will need to make recommendations to the super committee on how to cut funding for farm programs by October 14.)

The Senate Agriculture Appropriations Committee topped House ag spending with a bill that would provide $19.78 billion for agriculture for fiscal 2012. This is significantly more than the $17.08 billion passed by the House of Representatives. However, it is not clear that the full Senate will vote on the bill due to the crammed schedule. The committee managed to maintain funding for food safety, the WIC program, agricultural research and rural developments by cutting money forconservation programs. The plan cuts $726 million from mandatory conservation programs, on top of cuts of about $500 million in fiscal 2011.

Controversial amendments concerning genetically modified salmon, the school lunch rule, and the Packers and Stockyards rule were discussed, but not voted on by the committee. These amendments will probably be debated on the Senate floor if the Ag Appropriations bill comes up for a vote.

The National Corn Growers Association (NCGA) has a new farm program proposal that would replace the direct and counter-cyclical program and the ACRE program now in place. The new program, called the “Agriculture Disaster Assistance Program”, would supplement the Crop Insurance program and provide producers with payments to cover what they term “shallow losses” (modest revenue losses not covered by traditional crop insurance programs). The proposed new program would cost about 30% less than current programs, according to NCGA calculations. The program proposal may help Congressional committees formulate recommendations to the super committee between now and October 14.

The World Trade Organization (WTO) needs to find “alternative pathways” forward for the stalled Doha round of trade talks, according to Deputy U.S. Trade Representative Michael Punke speaking to the Senate Finance Committee this week. Earlier this month Punke told a meeting of the Cairns group of WTO countries that the U.S. has “given up hope” that the WTO can reach an agreement by the December ministerial meeting. It wasn’t for lack of patience. The Doha round of trade talks has now been underway for nearly a decade with no significant progress!

Livestock groups fed up with ethanol mandates when feed supplies are tight. The House Agriculture Subcommittee on Livestock, Dairy, and Poultry held a hearing this week on livestock feed costs. Representatives from several livestock organizations are calling for flexibility in the Renewable Fuels Standard mandates. They would like to see the law changed to allow for mandates to be reduced when the corn stocks-touse ratio gets very low. Ethanol supporters argue that high corn prices are also caused by global weather patterns, the weak dollar and unchecked Wall Street speculation.

No changes in the RFS mandates are expected anytime soon, but complaints from the livestock industry are gaining Congressional attention.



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