D.C. Watch: Farm program cuts

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Leaders of the House and Senate Ag Committees sent a letter to the “super committee” last week suggesting that spending on agriculture and nutrition programs should not be cut by more than $23 billion over 10 years. The letter did not contain any specifics about what programs to cut or by how much, but the Committees said specific recommendations would be provided by Nov. 1.

Decisions have not been made about the structure of farm program cuts, but the rumors indicate reductions of $14 billion to $15 billion from commodity supports, a $6.5 billion cut to conservation programs and $4 billion in cuts to nutrition programs. According to Senator Pat Roberts (R-Kan.) “the agreement protects the crop insurance program by keeping its baseline whole”. EPA Administrator Lisa Jackson sent a letter to Congress last week once again saying EPA will not regulate dust from farming operations. The letter said that EPA rules on particulate matter will be left untouched.

Despite repeated reassurances that the EPA would not regulate dust, some members of Congress have proposed legislation to prevent EPA from taking such action in the future.

Reductions in funding for the National Agricultural Statistics Service will cause USDA to stop producing several survey-based reports. The list of reports that will be discontinued include the mid-year Cattle Inventory report, the annual report on farm numbers and land in farms, and in-season forecasts of fruit and vegetable crops. The frequency of several other reports will be reduced from monthly to quarterly. Further budget cuts are likely in coming years which will probably force USDA to make additional cutbacks.

Before the end of this month, the United Nations says the world population will reach the 7 billion mark. Most likely the “7 billionth person” will be born into poverty in Africa or one of the poor countries of Asia. The world’s population reached 1 billion in 1804, 2 billion in 1927, 3 billion in 1959, 4 billion in 1974, 5 billion in 1987 and 6 billion in 1998. The UN predicts the world population will hit 8 billion by 2025. Lagos, the capital of Nigeria, will soon pass Cairo as the largest city in Africa. The population is rising at 6 percent per year. Sounds reasonable, except that for Lagos, that’s a million people added per year! In contrast, population growth is very low in most developed countries and the population growth rate in China is even lower than in the U.S. But in very poor countries, population growth is still high because children are a good source of labor and parents want to have children to look after them in their old age.

The Commodity Futures Trading Commission (CFTC) approved “position limits” that will cap the number of contracts and swaps that any single speculator can hold. Michael Dunn, a member of CFTC, said “Position limits are a sideshow”, and may make hedging more difficult. The CFTC is divided on the issue and a lawsuit to stop the measure seems likely. One argument is that the position limits will just drive trade to less-regulated overseas markets. Some politicians have pushed for the position limits since 2008 when part of the run-up in commodity prices was blamed on excessive speculation.

Japan is considering easing restrictions on beef imports from the U.S. Japan banned imports of U.S. beef in December 2003 after the first case of BSE was confirmed. The ban was partially lifted in 2005 but Japan limits imports to beef from cattle 20 months old or younger. Discussions in Japan suggest that the age limit may be raised to 30 months, which would allow U.S. exports to Japan to rise. The U.S.
contends that imports of U.S. beef should not be restricted and that our product meets international safety standards.



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