Washington Insider -- Friday

What's Ahead for the Farm Bill

Here’s a quick monitor of Washington farm and trade policy issues from DTN’s well-placed observer.

Commerce's Ross Wades in Soybean Trade Situation

China is “not very effectively” changing its purchases of U.S. soybeans for supplies from Brazil, U.S. Secretary of Commerce Wilbur Ross said in an interview on CNBC.

China is finding that it is “not as easy to respond to these retaliatory measures as they thought... I think the EU will find the same." Ross said the Trump administration has seen “positive developments” in trade talks with Mexico, CNBC reported.

Ross said Mexico’s new president has changed his rhetoric “quite considerably,” and likes the idea of “redoing NAFTA.” Ross said he expects “substantial progress” regarding trade within a year. President Donald Trump again floated the idea of reaching a NAFTA deal with Mexico before Canada in remarks this week and that view is being echoed by some in Congress.


Farmers Tell Congress Trump Tariffs Hitting Them Hard

Farmers and ranchers told a congressional hearing this week that some of them are very concerned that tariffs will lead to shrinking export markets, rising costs and bankers cutting off loans needed to keep farms and ranches running.

“I am hearing more from farmers as time goes along that they still trust that President Trump knows what he’s doing, and everything will be fine in the end. We understand that other countries, particularly China, have not played fairly, and we respect his desire to remedy those situations,” Scott VanderWal, a South Dakota farmer and vice president of the American Farm Bureau Federation, said at a Ways and Means Trade Subcommittee hearing.

Five farmers detailed the impacts of a tariff tit-for-tat, citing several instances of lower prices resulting from the situation.

VanderWal noted that bankers are already concerned about farmers' ability to repay loans after multiyear low crop prices and a 52 percent decline in farm income since 2013. Tariffs have introduced another element of uncertainty for bankers who lend to farmers and ranchers, he said.

Washington Insider: What’s Ahead for the Farm Bill

This week, the House voted to send the farm bill to a House-Senate conference to iron out remaining differences. Bloomberg reported that ag leaders in both chambers are confident they’ll beat the September deadline to finish a farm program reauthorization bill, but Washington’s K Street is skeptical, saying lawmakers will need to resort to an extension of current law, Bloomberg says. Similar deadlines have been missed frequently in the past.

The problem this year is that the legislative clock is winding down on the July “work window” and an August recess is looming - at least in the House – so there’s not much time left to get the measure through the conference committee, to vote in both chambers and receive the signature of the president before the end of September.

“I know many within the agriculture community believe a new farm bill will be worked out, but others see it as a 50-50 proposition that there will need to be an extension of the current farm bill,” one agriculture lobbyist told Bloomberg.

Of course, the committee leadership needs to put a positive spin on the likelihood of getting a new farm bill, the lobbyist said, but “it does not change the reality that 60 votes are needed in the Senate.”

Asked if he can meet the deadline, Chairman of the Senate Agriculture Committee Pat Roberts, R-Kan., said, “Oh yeah, we’ve got to do that” in order to provide farmers and ranchers “predictability,” especially in light of the uncertainty farmers are facing on the trade front.

Ranking Ag member Sen. Debbie Stabenow, D-Mich., echoed Roberts and said the two “are absolutely committed to giving farmers certainty and that means a five year farm bill done by Sept. 30.”

A third lobbyist said he is “very skeptical” a deal will get done before the deadline due to the lack of negotiations so far by House Ag committee chair Conaway on nutrition program work requirements. That idea was echoed by the first lobbyist, who said, “The SNAP fight may prove too difficult to reconcile,” referring to the Supplemental Nutrition Assistance Program (SNAP), formerly known as food stamps.

House Ag Committee Chairman Mike Conaway, R-Texas, said keeping the provisions to tighten the work requirements for the Supplemental Nutrition Assistance Program is “very important” going into conference.

“We’re going to work really hard to maintain as much of the safety net and the non-nutrition title parts as we can as we go to negotiations,” said Conaway.

Just last week Roberts said he wished the House had not “moved so dramatically and made the SNAP issue paramount” so that lawmakers could see how the Senate bill addresses other issues, such as waivers of work-related requirements and abuse of bonus payments.

A key sticking point for the Republican lawmakers is the fact that in “one of the best job markets in almost a half century and the second-longest economic expansion on record, enrollment in the supplemental nutrition program fell to 39.6 million in April – and that as a share of the population it’s just back to where it was as the economy emerged from the longest and deepest downturn since the Great Depression.

While robust growth is a bragging point for President Donald Trump and a campaign theme for Republicans trying to break a historical pattern by keeping control of the House and Senate in midterm elections, the rising tide isn’t lifting all boats, Bloomberg says. “Elevated” SNAP use displeases congressional Republicans, who want a shift toward more job training in the five-year farm bill that’s taking shape. Democrats say continued support is needed as the uneven rebound leaves behind millions.

Food-stamp use generally responds to economic conditions, but it’s not quite a direct link, according to Parke Wilde, a professor at Tufts University’s nutrition school in Boston. “We’re many years into an economic expansion after the Great Recession and just now we’re starting to enjoy dips in SNAP participation,” Wilde said, as lower unemployment begins to chip away at economic insecurity.

Declines aside, other factors are likely to support continued use of food stamps, Bloomberg said.

Applying for benefits has gotten easier, in part because online access has increased. That’s helped lift enrollment to 83% of those eligible for food stamps in 2015, the latest year for which data is available, up from 69% in 2006, according to the USDA.

Wilde thinks SNAP use will decline modestly, remaining elevated by historical standards until the next contraction inevitably rolls around – potentially sending enrollments to new heights.

So, the coming fight over the nutrition programs likely will be tough and bitter — and, it could be protracted – as similar fights have been in the past. This certainly will not be an easy debate and will be one producers should watch closely as it proceeds, Washington Insider believes.

Want to keep up with events in Washington and elsewhere throughout the day? See DTN Top Stories, our frequently updated summary of news developments of interest to producers. You can find DTN Top Stories in DTN Ag News, which is on the Main Menu on classic DTN products and on the News and Analysis Menu of DTN’s Professional and Producer products. DTN Top Stories is also on the home page and news home page of online.dtn.com. Subscribers of MyDTN.com should check out the US Ag Policy, US Farm Bill and DTN Ag News sections on their News Homepage.

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