Washington Insider-- Wednesday

By DTN's Washington Insider

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

Highway Bill Compromise Reached

House and Senate negotiators reached agreement on a long-term U.S. highway funding plan, said Rep. Reid Ribble, R-Wis., adding that lingering questions have been raised regarding how it would be funded.

The highway measure also would revive the US Export-Import Bank, whose charter expired June 30, said Ribble.

Lawmakers have until Dec. 4 to enact a highway plan or pass another temporary funding extension, and House Speaker Paul Ryan, R-Wis., said his chamber will vote on the bill this week. “We expect to have very good majority support” for the measure, Ryan said during a news conference.

Republicans were told that the measure would provide funds for roads, bridges and mass transit projects for five years. The plan would total $305 billion, according to Rep. Steve Cohen, D-Tenn.

The highway plan would be financed in part by a one-time use of Federal Reserve surplus funds and by a reduction in the dividend national banks receive from the Fed. If so, that would be a compromise between the bills passed earlier by the House and Senate. The House favored using the Fed’s surplus capital, which totaled $29.3 billion as of Oct. 29, while the Senate had voted to reduce the annual 6% dividend received by national banks to 1.5%. Banks vehemently opposed the dividend reduction.

The financial industry would reportedly have to share a portion of the dividend with the government, and it would be a floating payout tied to 10-year U.S. Treasuries, which currently yield about 2.2%, sources detail. If Treasury yields rose higher than 6%, the Fed wouldn’t have to pay the banks more. Banks with $10 billion or less in assets would be exempt from the reduction, contacts added.

The Fed’s surplus capital comes from the 12 reserve banks.

The highway bill would allow for a one-time draw of $19 billion from the surplus funds, which totaled $29.3 billion as of Nov. 25. If the surplus account goes above $10 billion, that capital would be swept to the government, according to the people.

The apparent agreement avoids any increase in the 18.4 cents per gallon gasoline tax that finances the Highway Trust Fund (HTF) and has been unchanged since 1993. The trust fund has been running deficits of $10 billion a year or more as gas tax revenue has fallen short, partly because of greater auto fuel efficiency.

Meanwhile, House GOP leadership also included language in the final conference report to do away with $3 billion in crop insurance spending over ten years.

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CRP General Signup Underway

A general signup period for the Conservation Reserve Program (CRP) started on Dec. 1 and runs through Feb. 26, 2016, and USDA is noting that enrollment in the program when commodity prices are low can be attractive for sensitive lands.

Producers may seek to enroll new acres in the CRP during this general signup and those with current CRP contracts that mature Sept. 30, 2016, can also submit offers. Under this general signup, contracts are effective Oct. 1, 2016.

While pointing out the “long-term goal of the program is to re-establish native plant species on marginal agricultural lands for the primary purpose of preventing soil erosion and improving water quality and related benefits of reducing loss of wildlife habitat,” USDA also said, “At times when commodity prices are low, enrolling sensitive lands in CRP can be especially attractive to farmers and ranchers, as it softens the economic hardship for landowners at the same time that it provides ecological benefits.”

There are currently 1.65 million acres of CRP ground to mature as of Sept. 30, 2016, including 1.14 million acres enrolled via the general signup process and 510,000 acres via continuous signups.

USDA will use the environmental benefits index (EBI) to rank offers for selection. Further, USDA noted that the Tool for Environmental Resource Results Assessment (TERRA) and the Conservation Online System (COLS) must be used for general signup 49.

As of Oct. 2015, there were 23.361 million acres in the CRP, including 16.942 million enrolled via prior general signups and 6.420 million acres enrolled via continuous signups. Compared to September, enrollment in the program declined 820,000 acres as contracts on 1.40 million acres expired Sept. 30 and 580,000 acres of contracts began Oct. 1.

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Washington Insider: Diabetes on the Decline

It would seem reasonable to expect a considerable jump in the per capita consumption of crow among the urban foodies in the near future, after their systematic bad-mouthing of government and other “healthy food programs.” For example, we have seen fancy urban chefs criticizing consumption of most everything from sugar to meat, as well as farm commodity policies, all apparently on the grounds that anything they don’t recommend is responsible for obesity and diabetes.

Now, however, something has changed. The New York Times reported on Monday that after decades of relentless rises, the number of new cases of diabetes in the United States has started to decline.

First, the numbers. The Times says the rate of new cases fell by about a fifth from 2008 to 2014, according to the Centers for Disease Control and Prevention. This is seen as the first sustained decline “since the disease started to explode in this country about 25 years ago.”

The Times elaborated on the trends, noting that the drop has been gradual and for a number of years was not statistically meaningful. But, now it is and can be seen clearly in new data for 2014. NYT calls this report “a robust confirmation that the decline is real.” There were 1.4 million new cases of diabetes in 2014, down from 1.7 million in 2008.

In fact, “it seems pretty clear that incidence rates have now actually started to drop,” according to Edward Gregg, one of the CDC’s top diabetes researchers. “Initially it was a little surprising because I had become so used to seeing increases everywhere we looked.”

However, there is bad news as well, the Times reports. Experts apparently do not know whether efforts to prevent diabetes have finally started to work or if the disease has simply peaked in the population, whatever that might mean.

Still, the Times cites examples and notes what it calls growing evidence that eating habits, after decades of deterioration, have finally begun to improve. As it often does, it cites the trend for soda consumption, which has declined by about a quarter since the late 1990s. More compelling seems to be the fact that the average number of calories children and adults consume daily also has fallen as physical activity has started to rise. The once-surging rates of obesity, a major driver of Type 2 diabetes, the most common form of the disease, have flattened.

Nutrition experts, always cautious, noted that the portion of Americans with diabetes is still more than double what it was in the early 1990s and that improvements in nutrition have been uneven. Educated Americans have seen improvements, for example, while the rates for the less educated have flattened but not declined. The number of new cases is dropping for whites, the 2014 data show, but the change has not been statistically significant for blacks or Hispanics, though both show a downward trend.

Finally, the Times says these trends “represent a profound change in one of the most vexing health problems in the United States.” Diabetes afflicts one in every 10 American adults and is the country’s leading cause of blindness, limb amputations and kidney dialysis.

Nevertheless, experts still see the evidence of the causes of the new trends as skimpy, so “It’s not yet time to have a parade,” said Dr. David M. Nathan, the director of the Diabetes Center and Clinical Research Center at Massachusetts General Hospital. However, even he thinks that it “…has finally entered into the consciousness of our population that the sedentary lifestyle is a real problem, that increased body weight is a real problem.”

Looking forward, it is not clear how the urban foodies themselves will react to the new data. Even the NYT sample interviews seem not to suggest that the more healthful trends are the result of expensive, exotic diets, but seem to be primarily the result of common sense nutrition and moderate consumption, as well as avoidance of sedentary lifestyles.

So, we will see. The urban chefs who want to reform everything from farm policy to institutional meals to the food distribution system, at significantly higher costs, likely will be upset that their advice may be somewhat harder to peddle in the future. Whether they can bring themselves to concentrate more effectively on the still high levels of obesity and diabetes remains to be seen, given their record to date, Washington Insider believes.

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