D.C. Watch: No end to shutdown in sight

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The government shutdown drags on, and there is no clear evidence that Congress will raise the debt ceiling before the country reaches the point where it can’t meet its financial obligations.

USDA offices are closed, websites are down, commodity information is unavailable and government payments of all kinds are on hold.

The shutdown is causing problems for commodity traders and the Chicago Mercantile Exchange is preparing new settlement procedures for the October lean hog contract in case cash price data is unavailable.

The effects of the shutdown are widespread and expanding – and at least at this point, the end is not even in sight.

The importance of passing the farm bill was re-emphasized by last week’s snowstorm in South Dakota. Reports indicate that between 60,000 and 100,000 head of cattle were killed by the storm and there is no program in place to provide disaster relief for the producers.

With all of the other problems in Washington the farm bill keeps getting pushed to the back burner.

 So once again, House Speaker John Boehner, R-Ohio, has promised to appoint House members to the farm bill conference committee “within the next week.”

But even if conference committee members are appointed, little actual progress on the farm bill is expected in the near term.

Crop prices have declined over the course of the spring and summer and prices this fall are expected to be down significantly from the planting price guarantees for 2013 revenue insurance policies.

Coupled with sub-par yields, this could trigger some crop insurance claims in some regions. Insurance companies have contractual obligations to pay claims but there is a lot of uncertainty in the industry. However, with the government shutdown, USDA’s Risk Management Agency offices are closed. That may slow the crop insurance claims process and delay payments.

There is a chance that a new farm bill could be a part of a deal to end the government shutdown. While the conference committee may not make much progress on working out a compromise between the House-passed and the Senate-passed bills, some farm program could be developed by House and Senate leaders and attached to some budget bill that ends the shutdown.

This may be an attractive option since a new farm bill will probably save money and spending cuts have been a standing prerequisite among GOP leaders for breaking the impasse.

Under this scenario the farm bill provisions could be drafted by House and Senate leaders without any input from the respective Agriculture Committee members. Then the farm bill would be part of the “must-pass” budget bill and would not be voted on separately!

Other news from Washington:

  • Major farm groups are appealing a September District Court ruling that upheld EPA’s method of determining the total maximum daily load (TMDL) for the Chesapeake Bay watershed. The head of the American Farm Bureau says the ruling has dangerous implications for farmers in the Chesapeake Bay area and nationwide. If the lower court ruling is upheld, farm groups worry that TMDLs in the Chesapeake Bay and possibly in other major watersheds could significantly affect the amount of fertilizers used and application methods for crop production across the country.
  • The Centers for Disease Control and Prevention have recalled several experts and data analysts who were furloughed as part of the government shutdown to help deal with an ongoing salmonella outbreak that has sickened several hundred people. The salmonella outbreak traced to contaminated chicken contains several antibiotic-resistant strains and that more than 40 percent of the people sickened have been hospitalized.
  • The President has nominated Janet Yellen to be the next Chairperson of the Federal Reserve when Ben Bernanke’s term expires in January. Yellen has been vice-chairperson of the FED for the last several years and is expected to generally continue policies designed to stimulate the economy. There is widespread support of the nomination of Yellen, but some opponents worry that the ongoing stimulus will cause inflation.


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