Washington Insider -- Friday

By DTN's Washington Insider

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

Senators Worried About Potential Fuel Shortages

Federal officials must implement a recently passed home heating law quickly to ensure state governors and federal agencies are prepared to address potential energy shortages this winter, Sens. John Thune, R-S.D., and Amy Klobuchar, D-Minn., say in a letter this week to the heads of the Federal Motor Carrier Safety Administration and the Energy Information Administration.

The two want details on how the agencies plan to implement provisions of the Reliable Home Heating Act -- signed into law June 30 -- that help coordinate state and federal efforts to anticipate potential shortages of fuel such as propane and address energy shortages similar to those that occurred last year.

As we noted Thursday, the Energy Information Administration already has issued a winter heating report that indicates adequate supplies of heating fuels should be on hand this winter, barring another season as harsh as was last year's. But forecasts can be wildly inaccurate, so the senators' call for the appropriate agencies to be prepared for all eventualities is needed and timely.

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Vilsack Preparing for WTO Report on U.S. Country of Origin Labeling Requirements

Agriculture Secretary Tom Vilsack has confirmed to a group of House members that he has received a final confidential report from the World Trade Organization outlining its finding on a challenge to the U.S. country of origin labeling law. However, he did not disclose what those findings are.

Most observers believe the WTO report will be released publicly before the end of the month.

In a letter to the lawmakers, Vilsack said officials from USDA and the Office of the U.S. Trade Representative have been discussing "our next steps in this dispute." And, the secretary adds, "It is imperative that the United States continue to show that we will honor our trade obligations and that we will support America's farmers, ranchers and processors."

Doing all that will be a tall order indeed, especially if the WTO concludes that U.S. COOL requirements fail to conform to international trade requirements.

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Washington Insider: Economists' Laundry

Politico calls itself a real-time policy news service with detailed coverage of many specific areas including the usual watch on defense and campaign spending. The publication has the reputation of being media-savvy and providing cutting-edge stuff. Now, it has focused on the typically quiet nook of agriculture economics. A link to the Politico article is here: http://www.politico.com/…

It will be interesting to see how this recent report is received. It focuses heavily on insider links among individuals and groups of agricultural economists and their efforts on the farm-bill go-round. Politico says the ag economist culture has corners, at least, where things are wild and wooly and perhaps somewhat less than objective.

Politico hyperventilates over a 2012 paper by Barry Goodwin and Bruce Babcock, "Field of Schemes," which was critical of then-proposed shallow-loss farm program benefits. Politico's complaint was the paper only identified Goodwin and Babcock by their respective universities -- North Carolina State and Iowa State -- and nowhere in the publication was mentioned the potential conflicts hidden in the economists' deep links to crop insurance programs -- Goodwin's work for Sumaria Systems Inc., a Massachusetts-based firm and contractor for the Risk Management Agency, which manages the crop insurance program, is not mentioned, they say.

In Babcock's case, state and federal records show that from 2000 to 2010, he had his own company, Iowa Agricultural Insurance Innovations LLC, which received hundreds of thousands of dollars from RMA for helping to devise new insurance plans for the dairy and livestock industries.

Politico did not criticize the research but did say that there were a lot of links, some pretty deep. It spent quite a bit of time on broader university consortia and their key members and links. It especially focused on Watts and Associates Inc., a private firm with ties to Montana State University and the National Corn Growers Association. Other questionable ties were discussed, as well.

Much of the competitive tension during the farm bill debate, Politico says, occurred because the economists involved took sides with some regional advocates. And, the group blames much of that political warfare on increasingly active Washington groups like the American Enterprise Institute and the Environmental Working Group who funded "a barrage of advocacy papers critical of farm programs." That would seem to be something of a stretch, since there was so little discussion of those themes.

The group also thinks the academic fights over policy reflect divisions date back to the 1930s and were "aggravated by the ethanol-driven boom in Midwest corn and soybean prices that had left Southern crops further and further behind." They describe a battle of regions and ideas with different academic camps lining up on opposite sides, it says — and then highlight examples of partisan language by "objective" economists.

It is tempting to argue that Politico misunderstands what it has seen in the farm bill debate. It actually began with the industry's really tough problem of trying to convince policy makers that in spite of farming's then-financial strength, with median incomes well above those in the rest of the economy, it should continue to receive large transfers from sectors barely out of recession -- as well as from reductions in a main food program.

That fight ended with congressional leaders claiming that the proposed huge spending bill was necessary to achieve important budget savings. That was a fight ag economists could have joined, but mostly did not.

Then, following a budget sleight of hand, Congress began to consider ways to divvy up the resulting large federal funds pie among commodities and groups. The committees, especially, were hard pressed to find criteria to define those shares and many ag economists got pretty deeply involved in one approach or another. The committees did not place much emphasis on good public policy criteria, and, for the most part, the economists did not either.

So, Politico did not detail at least some of the longer-term problems with the role of the economists who both help shape and may later benefit from farm program policies, but did note the extremely complex policies supported in the act.

Politico seemed to avoid discussing future implications of the farm bill and its links to the earlier debate. This is especially true of the potential difficulty of the new programs in passing muster among those who mainly demand "equity" among commodities, especially as federal costs have grown to the point that they could exceed costs of the direct payments that were too embarrassing to even consider extending.

There are those who say this may well have been the last omnibus farm bill. Politico may be right in an indirect way about the dangers of economist-program links.

In addition, this kind of linkage tends to cause a general suspicion of frequent smoke-filled-room horse-trading and, possibly, favoritism for specific regions and groups that sharply undercuts the credibility of the new programs, Washington Insider believes.

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(GH/CZ)

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