Washington Insider- Friday

Special Help for Young Farmers

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

House Ag Panel Hears Calls for More Action on Foreign Ag Subsidies

U.S. ag interests called for more action against foreign subsidies, telling members of the House Ag Committee on Oct. 21 that programs and policies in other countries are having a negative impact on U.S. farmers.

"Americans are losing confidence in our trade deals," House Ag Committee Chairman Mike Conaway, R-Texas, said in opening the hearing, referencing the declining support for Trade Promotion Authority (TPA) since 1993. Building on a hearing the panel held on the topic in June, Conaway admitted there is not necessarily a lot that lawmakers can do. However, he noted, "We can maintain a strong U.S. farm policy and, when warranted, we can further strengthen that policy in order to give our farmers a fighting chance against the cheating that is going on."

House Ag Committee Ranking Member Collin Peterson, D-Minn., and others focused on developing countries and their ability under WTO rules to bolster support for agriculture given their economic status. "I don't think it's fair that developing countries, no matter how advanced, can designate themselves for special treatment," Peterson lamented. "I also think it's time for the United States to start challenging those countries that fail to meet their WTO commitments."

The U.S. found itself at the center of a WTO case successfully brought by Brazil related to U.S. cotton subsidies. The U.S. changed its cotton support and lowered the levels of help provided to cotton farmers, according to National Cotton Council President Gary Adams. But other countries have stepped up their support for cotton via market interventions and subsidies on seed and fertilizers.

Given that history and those developments, Adams called for action on those foreign subsidies, including the pattern by some like China of providing late notification of the help they provide.

With the average world sugar price running under the average cost of production over the past 25 years by a significant degree, American Sugar Alliance official Jack Roney said that underscores the need to maintain support for the U.S. sugar industry and not engage in "foolish bilateral disarmament." he said. Foreign subsidies must be reined in, said Roney.

Support provided to dairy farmers in other countries continues as an issue for the U.S. dairy industry, as an official from the National Milk Producers Federation (NMPF) pointed out that the U.S. is more active on the global market.

U.S. dairy exports in 2000 were less than $1 billion and in 2014 amounted to $7.1 billion, NMPF's Jaime Castaneda said. "Trade agreements have helped make this possible by lowering and removing barriers to our exports," he observed, "However, they have done little to constrain the use of domestic supports in the dairy sector or agriculture as a whole."

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Debt Limit Hike Bill Faces GOP, White House Issues

House Republicans are mostly unwilling or unable to pass an increase in the debt ceiling with no policy strings attached. That is why they are considering a bill from the Republican Study Committee that would increase the debt limit to $19.6 trillion, expected to be sufficient through March 2017.

In exchange, the measure would establish penalties aimed at forcing Congress to pass spending bills on time, vote on a balanced-budget pact and freeze all significant new federal regulations through July 1, 2017.

But Democrats are widely expected to block such a bill in the Senate.

House Majority Leader Kevin McCarthy, R-Calif., said there is not support in the House for passing a debt ceiling increase without any GOP policy measures. But President Barack Obama has said he won't negotiate on the issue. "I do not see 218 for any clean" bill, McCarthy said, referring to the minimum votes needed to pass a measure on the House floor.

Senate Majority Leader Mitch McConnell, R-Ky., said that his chamber would wait for the House to act first on raising the debt ceiling -- politically a difficult vote for Republicans.

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Washington Insider: Special Help for Young Farmers

It seems you can get about as many pictures of farming and agriculture as there are media folk around to observe. Many urban foodists believe that agriculture is really a public utility, to be governed mainly to protect the soil and water, and to protect foods from chemicals, and they retain to themselves something of a lock on what farms fit that bill.

Others, including many enrollees in ag programs at universities, say that technical agriculture is a demanding field that requires years of careful, advanced training in farm operations and management to achieve competitive levels of efficiency.

For example, Bob Young, chief economist for the American Farm Bureau Federation, says that farming is a management challenge and has become "such a technical venture that you really need to have that college degree to manage the software, chemicals and other tasks involved in effectively managing today's farms."

The result, according to a recent report in Market Watch, is a frequent complaint that the nation's farmers are aging; perhaps dying out, and college debts may be keeping youth out of the business. One often hears that perhaps there won't be enough farmers to take over when the current generation retires! As a result, some young-farmer advocates are suggesting support for help with their college loans.

Market Watch suggests that such threats are increasing and politicians often agree. However, demographers are highly skeptical.

They note the extremely low bar for defining a farm; $1,000 in sales. As a result, a murky image of the sector masks the fact of our perhaps 2.1 million farmers, only a few hundred thousand produce the vast bulk of food and fiber. Perhaps most important, the data are misleading since most of the many smaller "farmers" define themselves as mainly something else -- retired, members of other professions like vet medicine, grain handling or marketing, or simply rural residents.

Researchers also point out that farmers as a group have lots of resources, along with median incomes for farm families that tend to be higher than the general population. Most analysts agree that the hurdles for efficient operations are fairly high, but that the sector overall already has a complex of favorable policies that tend to make future prospects a good bit less threatening than some activists argue.

There also are questions, as Market Watch says, about the "right way" to tackle issues facing potential farmers. There are similar questions for many programs meant to encourage educated workers to enter relatively low-paying professions such as social work, early childhood education and government, and this approach may need refinement, rather than expansion.

Critics and some supporters of special benefits for young farmers say its designations are arbitrary, frequently leading to questions about whether the approach should be rethought, expanded, or even eliminated. For example, adding farming to the list of "debt forgiveness occupations" could introduce further complexity, since farmers in the U.S. work mainly for for-profit business, according to Mark Huelsman, senior policy analyst at the think tank New America.

"There are complicated questions about what is a public service," he said. "It presents a fundamental question about whether we should be forgiving student debt for a lot more people." He noted that forgiving loans given to farmers in for-profit entities might mean almost any profession could argue for inclusion, he said.

Another observer offered the example of an investment banker who helps a local government execute a bond sale to raise money for infrastructure improvements who might make such a case. And, he worries how recipients might be selected. "The last thing I want is a public subsidy to encourage hipster farmers starting small inefficient farms," he said. "If they're running a small farm because that's a passion in life but they also chose to take on a lot of debt to go to graduate school, that's not the taxpayers' problem."

So, from the point of view of potential farmers who are stymied by debt problems, another subsidy program may seem justified, in spite of the shaky data. Still, the current climate of budget skepticism and continuing criticisms of some of the relatively large subsidies now in place for the sector might be expected to make pursuit of potentially expensive support for one more competing group seem unlikely to succeed, 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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(GH/SK)