The House approved 228-191 the so-called Ryan FY13 budget blueprint (H. Con. Res. 112). The vote came after the House rejected a number of alternative budget plans proposed by various congressional groups. Ten Republicans voted against the Ryan budget plan and all voting Democrats voted against it.
Earlier, the House, also in a surprisingly lopsided vote, rejected (38-382) a bipartisan plan modelled on the Simpson-Bowles fiscal commission report. The margin was somewhat surprising because many members previously expressed support for the comprehensive plan's approach.
Because the Senate is not expected to take up a budget, Congress will have to find a way to address the gap between the House budget's discretionary spending cap of $1.028 trillion for FY13 and the Senate's limit of $1.047 trillion. If the House and Senate's respective appropriations committees are unable to reach agreement on a uniform spending cap for discretionary programs by the beginning of the new fiscal year on Oct. 1, Congress will be unable to approve individual spending bills and a temporary stopgap spending bill would be needed to keep the government operating through the Nov. 6 general election.
Under current law, the '01 and '03 tax cuts are set to expire at '12's end, and $1.2 trillion in 10-year automatic across-the-board spending cuts are scheduled to begin in '13. This will create significant challenges for Congress prior to the election. Action to reinstate the tax cuts and suspend sequestration likely will have to be addressed in a lame duck session. Even if the tax cuts are allowed to expire and sequestration takes effect -- which leaders of both parties have said should not happen -- the deficit for FY13-22 would total $2.887 trillion.
The Ryan budget also includes instructions to six committees to develop plans by April 27 to reduce spending by specific amounts by recommending changes to programs in their jurisdiction. The deficit reduction targets are: Agriculture, $33.2 billion; Energy and Commerce, $96.8 billion; Financial Services, $29.8 billion; Judiciary, $39.7 billion; Oversight and Government Reform, $78.9 billion; and Ways and Means, $53 billion.
The specific policy adjustments necessary to meet the assigned deficit reductions would be left to the committees. The agriculture committee will have to identify $33 billion in reductions based on current programs. Chairman Lucas (R-OK) has expressed confidence that the reconciliation process will not disrupt the development of new farm legislation as this process is unlikely to be followed by the Senate, thus having little effect on the farm bill process. However, Ranking Member Peterson (D-MN) has expressed concern that reconciliation could make the farm bill process more complicated and partisan.
Ag Committee Conducts Farm Bill Hearing
The House Agriculture Committee conducted the third of four '12 farm bill field hearings in Jonesboro, AR, to enable its members to hear first-hand how farm policy is affecting farmers before the next farm bill is developed. The hearing was hosted by Committee Chairman Lucas (R-OK) and Committee Member Crawford (R-AR).They were joined by Committee members Neugebauer (R-TX) and Stutzman (R-IN).
Eight of the ten witnesses were multi-row crop producers, and included cotton producers: Dow Brantley, England, AR, and Randy Veach, Manila, AR; Walt Corcoran, Eufaula, AL; Tim Burch, Newton, GA; Bowen Flowers, Clarksdale, MS; Paul Combs, Kennett, MO; and John Owen, Rayville, LA.
With cotton as their primary focus, the testimonies of Corcoran and Flowers emphasized the need for completion of a farm bill this year as those involved in production agriculture make long-term investment decisions based on federal farm policy. It was noted that the combination of the marketing loan, Direct Payments and Counter-cyclical Payments has provided a good safety net, and in recent years, has required minimal federal spending. The need for sound crop insurance and risk management tools in new farm legislation was conveyed along with support of the NCC's innovative Stacked Income Protection Plan. Known as STAX, that revenue-based crop insurance product would replace the direct and counter-cyclical payments for cotton, thus directly addressing one of the programs found to be at fault in the World Trade Organization dispute with Brazil.
Corcoran testified that, "In the opinion of the U.S. cotton industry, this structure (STAX) will best utilize reduced budget resources, respond to public criticism by directing benefits to growers who suffer losses resulting from factors beyond their control, and build on the existing crop insurance program, thus ensuring no duplication of coverage and allowing for program simplification. I strongly urge that crop insurance not be weakened during this farm bill. In today's environment of volatile prices and high input costs, effective risk management has never been more important."
Flowers implored the Committee not to impose any further restrictions on payment eligibility including lower limits or income means tests in the '12 farm bill saying "effective farm policy must maximize participation without regard to size or farm income." He reminded the Committee that the '08 farm law contained significant changes with respect to payment limitations and payment eligibility – and included the most comprehensive and far-reaching reform to payment limitations in 20 years.
Flowers also noted that while he was a diversified producer, "it is important to note that cotton production is the most significant economic driver in my area. It means jobs on the farm, in gins, warehouses and on through the production and processing cotton cycle. The spin-off impact on rural communities in the Delta and other regions for input suppliers, equipment dealers and others is also significant. Even a moderately–sized city such as Clarksdale is very dependent upon agriculture.Therefore, a viable cotton farm policy is especially critical to our rural economy."
Both producers also called for continued assistance for US textile mills (introduced in the '08 farm bill) along with adequately funded export promotion programs, including the Market Access Program (MAP) and Foreign Market Development (FMD) Program, which are important in an export-dependent agricultural economy.
Chairman Lucas stated, "As we visit with producers from different regions of the country, the overriding message we're hearing is just how important it is to provide a choice of policy options in the next Farm Bill. In order for our farmers to be successful and continue to provide the quality food and fiber that we all expect and enjoy, we need to give them the necessary tools to manage risk no matter what type of crop they're growing."
Lucas saidhe recognized that even within commodities, different programs work better for different regions.
"That's why it is vitally important that the Commodity Title give producers options so that they can choose the program that works best for them," he said. "I also am committed to providing a strong crop insurance program. Now, I know that crop insurance—while a valuable tool for many producers—doesn't work as well for producers down here. That's why offering an array of programs is important and why we must work with the Risk Management Agency to improve crop insurance products for rice, peanuts and other crops that do not have higher buy-up levels."
The Committee's next farm bill hearing is scheduled for Friday, April 20, at 9 am CDT in the Magouirk Conference Center in Dodge City, KS.
USDA Sees 13.16 Million US Cotton Acres in '12
USDA's March Prospective Plantings Report indicates US producers intend to plant 13.16 million acres of cotton in '12/13, down 10.7% from the previous year. Upland area is projected to be 12.89 million acres, down 10.7% from '11/12 while extra-long staple (ELS) area is projected at 270,000 acres, an 11.9% decrease.
The NCC's planting intentions survey released in early February indicated US farmers intend to plant 13.34 million acres of upland cotton and 287,000 acres of ELS.
In USDA's report, projected upland area in the Southeast of 3.05 million acres represents a decrease of 10.6% from the previous year. Almost all the region's states intend to decrease cotton acreage in '12/13. Only South Carolina intends to increase acreage when compared to the previous year. South Carolina intends to plant 340,000 acres in '12/13, an increase of 12.2%. The largest percentage decrease is expected in Virginia (-18.1%). The largest declines in actual acres will be seen in Georgia (-200,000 acres) and North Carolina (-105,000 acres).
In the Mid-South, projected plantings of 2.24 million acres represent a decrease of 9.7%. Missouri is the region's only state not planning a decrease, with its acreage estimated to remain unchanged at 375,000 acres. The largest percentage acreage decreases in the Mid-South are expected in Tennessee and Arkansas, with estimated reductions of 15.2% and 13.2%, respectively. The greatest declines in actual acres will be in Arkansas, down 90,000 acres.
The largest acreage decrease is expected in the Southwest in Texas where producers intend to plant 6.80 million acres (-750,000 acres). Kansas and Oklahoma also are expected to decrease their upland acres with plantings estimated at 55,000 acres and 350,000 acres, respectively.
In the West, California producers intend to plant 150,000 acres of upland cotton, down 17.6% from last year. Arizona and New Mexico plantings also are down when compared to '11/12, with plantings estimated at 200,000 and 50,000 acres, respectively.
ELS plantings are projected to decrease 11.9% to 270,000 acres. The largest decline in actual ELS acres will be seen in California (-23,000 acres).
Prospective '12 U.S. Cotton Plantings
2011 Actual (Thou.) 1/
2012 USDA - NASS (Thou.) 2/
2012 NCC Intended (Thou.) 3/
USDA Percent Change
NCC Percent Change
UPLAND
SOUTHEAST
3,406
3,045
2,969
-10.6%
-12.8%
Alabama
460
400
379
-13.0%
-17.6%
Florida
122
110
110
-9.8%
-10.0%
Georgia
1,600
1,400
1,397
-12.5%
-12.7%
North Carolina
805
700
714
-13.0%
-11.3%
South Carolina
303
340
273
12.2%
-10.0%
Virginia
116
95
97
-18.1%
-16.0%
MID-SOUTH
2,475
2,235
2,304
-9.7%
-6.9%
Arkansas
680
590
619
-13.2%
-9.0%
Louisiana
295
270
243
-8.5%
-17.7%
Mississippi
630
580
589
-7.9%
-6.5%
Missouri
375
375
384
0.0%
2.3%
Tennessee
495
420
470
-15.2%
-5.0%
SOUTHWEST
8,045
7,205
7,620
-10.4%
-5.3%
Kansas
80
55
80
-31.3%
-0.3%
Oklahoma
415
350
374
-15.7%
-10.0%
Texas
7,550
6,800
7,166
-9.9%
-5.1%
WEST
500
400
448
-20.0%
-10.4%
Arizona
250
200
222
-20.0%
-11.3%
California
182
150
169
-17.6%
-7.4%
New Mexico
68
50
58
-26.5%
-15.0%
TOTAL UPLAND
14,426
12,885
13,341
-10.7%
-7.5%
TOTAL ELS
306
270
287
-11.9%
-6.4%
Arizona
10
4
9
-60.0%
-6.7%
California
273
250
257
-8.4%
-5.8%
New Mexico
3
3
4
-11.8%
9.8%
Texas
20
13
17
-35.0%
-16.7%
ALL COTTON
14,732
13,155
13,628
-10.7%
-7.5%
1/ USDA-NASS.
2/ USDA-NASS Prospective Plantings Report.
3/ NCC Planting Intentions Survey.
'12 Cotton Loan Rate Differentials Announced
USDA's Farm Service Agency announced the '12 crop loan rate differentials for upland and extra-long staple (ELS) cotton. The tables of these loan rate differentials are available at http://go.usa.gov/2Vp. The '12 loan schedule also will be in the Economics area of the NCC website, www.cotton.org.
The differentials, also referred to as premiums and discounts, have been calculated based upon market valuations of various cotton quality factors for the prior three years. This calculation procedure is the one sought by the NCC in the '08 farm bill and is identical to that used in past years; however, the differentials for '12 reflect changes to the upland cotton staple lengths for which distinct color and leaf differentials are provided, and to the ranges and base-quality ranges for upland cotton strength and length uniformity.
The Commodity Credit Corp. adjusts cotton loan rates by these differentials so that cotton loan values reflect the differences in market prices for color, staple length, leaf, extraneous matter, micronaire, length uniformity and strength.
The '12-crop differential schedules are applied to loan rates of 52.00 cents per pound for the base grade of upland cotton and 79.77 cents per pound for ELS cotton. The loan rate provided to an individual cotton bale is based on the quality of each individual bale as determined by USDA's Agricultural Marketing Service classing measurements.
Ag Research Support Bill Introduced
Senate Ag Committee Chairwoman Stabenow (D-MI) and Ranking Member Roberts (R-KS) have introduced legislation, The Foundation for Food and Agriculture Research, to authorize the establishment of a non-profit foundation to solicit donations from the private sector for enhancing agriculture research.
This model will serve as a useful tool to foster new public-private partnerships among the agricultural research community, including USDA research agencies, academia, private corporations and non-profit organizations.
There are precedents for congressionally mandated foundations across the federal government, including entities devoted to medical research, public health and safety, and natural resource conservation. Some examples include: Foundation for the National Institutes of Health, Foundation for the Centers for Disease Control and Prevention, National Fish and Wildlife Foundation, and the National Forest Foundation.
"Because of research, agriculture is a bright spot in our economy and supports more than 16 million American jobs," Chairwoman Stabenow said. "Creating this foundation will leverage private capital to spur new research ventures, creating jobs and growing the economy."
Roberts said, "This foundation model has a proven track record of success and will complement and maximize the use of tax dollars in agricultural research while establishing a consistent and growing resource for researchers that will benefit the agriculture industry as a whole. I look forward to the committee's debate on the farm bill and the research title in particular. This legislation should be a part of those discussions."
Sales Steady, Shipments Strong
Net export sales for the week ending March 22 were 162,200 bales (480-lb). This brings total '11-12 sales to approximately 12.0 million bales. Total sales at the same point in the '10-11 marketing year were approximately 15.9 million bales. Total new crop ('12-13) sales are 844,400 bales.
Shipments for the week were 362,700 bales, bringing total exports to date to 6.8 million bales, compared with the 9.5 million bales at the comparable point in the '10-11 marketing year.
