The House passed (223-197) legislation (H.R. 6233) that would provide disaster assistance to livestock producers by reinstating a livestock and forage indemnity program that compensates for losses related to adverse weather that expired in Sept. ’11.
The estimated cost of extending the provisions is $383 million which is offset by cutting $289 million from the Conservation Stewardship Program and $350 million from the Environmental Quality Incentives Program over 10 years, providing a net $256 million in savings. The additional savings above the amount necessary to offset the cost of reinstating the programs is designated to deficit reduction and was determined to be necessary to attract support from conservative Republicans.
Prior to bringing the legislation to the floor, Republican leaders dropped a provision that would have extended current law for one year after being roundly criticized by members of both parties. The measure also was considered under a closed rule to prohibit amendments and under regular order rather than an expedited procedure that would have required a two-thirds majority vote.
During the debate, Agriculture Committee Chairman Lucas (R-OK) insisted he intends to work for enactment of a five- year comprehensive bill and that the reinstatement of the expired programs was necessary to provide immediate assistance to ranchers.
Others argued that the five-year legislation approved by the Committee would have provided broader relief because the programs reauthorized are very narrow in scope.
Senate Agriculture, Nutrition & Forestry Committee Chairwoman Stabenow (D-MI) told reporters that she would work on a bipartisan disaster relief bill if leaders cannot make progress on the farm bill by September. She said leaders need to “give it our best” during August to come closer to a farm bill. She also indicated that if the Senate decides to take up separate disaster legislation, she will attempt to include assistance for specialty crops and other losses not covered by the House bill.
Following the House action, there were reports that House and Senate agricultural leaders met to discuss ways to move a five-year bill in the fall and that there would be informal discussions throughout August to continue to resolve differences between the commodity and nutrition provisions in the Senate-passed and House Agriculture Committee bill. Chairman Lucas also has indicated that he will continue to press House leaders for time for floor consideration of the legislation his committee favorably reported on a strong, bipartisan vote.
The House and Senate approved legislation (H.R. 5986, S. 3326) extending the third-country fabric provisions of the Africa Growth and Opportunity Act (AGOA) and sanctions on Burma. The legislation also includes technical modifications to the US-Central America-Dominican Republic Free Trade Agreement (CAFTA-DR).
The bill will extend the third-country fabric provision in AGOA through Sept. ’15. It also adds the “Republic of South Sudan (South Sudan)” to the list of AGOA-eligible beneficiary countries.
AGOA establishes trade and investment preferences for sub-Saharan African countries and has been amended several times. In ’06, the provisions concerning textile and apparel imports were extended to ’12. One of the provisions allows preferential access to the United States for apparel assembled in 27 eligible sub-Saharan African countries using yarns and fabrics sourced from countries other than sub Saharan Africa or the United States (the yarns and fabrics may come from any country), subject to a limit. That provision would have expired on Sept. 30, ’12.
Sen. Isakson (R-GA) stressed the “critical” importance of adding the new country of South Sudan to the list of AGOA-eligible countries.
Senate Finance Committee Chairman Baucus (D-MT) and ranking member Orrin Hatch (R-UT) noted in a statement after the vote that because almost 95% of apparel imported from AGOA nations is made with third-country fabric, allowing the provision to expire would have seriously undermined AGOA's development goals.
The bill also makes technical corrections and modifications to the rules of origin for certain textile and apparel products under CAFTA-DR that were agreed to by trade ministers in Feb. ’11.
The Senate Finance Committee leaders said that the legislation improves the agreement's textile rules of origin, and these changes encourage greater use of US inputs in the CAFTA-DR countries.
Acting US Commerce Secretary Rebecca Blank said the technical changes to the textile and apparel provisions of CAFTA-DR will support the US textile industry in North Carolina and South Carolina, and is expected to save 2,000 US jobs.
House Bill Would Hasten US Tax Code Overhaul
The House, voting largely along party-lines, approved legislation (H.R. 6169) to set up a fast-track process for overhauling the US tax code in ’13. All Democrats and three Republicans voted against the bill.
The Republican plan that passed, 232-189, would remove some procedural hurdles and set parameters for the tax law. The bill would reduce the top individual and corporate tax rates to 25% from 35% and eliminate many tax breaks. It would reduce six individual tax brackets to two, abolish the alternative minimum tax and reduce taxes on income earned by US companies outside the United States.
The House also approved, 256-171, a Republican plan (H.R. 8) to extend the ’01 and ’03 tax cuts through ’13 for all taxpayers. During the debate, the House rejected (170-257) a Democratic proposal — identical to a Senate-passed bill (S. 3412) — that would extend the tax cuts for individuals earning up to $200,000 and married couples earning up to $250,000. Tax rates on ordinary income, capital gains and dividends would rise for those earning income greater than $200,000 and $250,000. That vote was mostly along party lines.
A resolution of the expiring tax cuts issue unlikely is to be resolved until after the November elections.
Senate Panel Approves Tax Measure
The Senate Finance Committee voted 19-5 to approve the Family and Business Tax Cut Certainty Act, a $205 billion package that would extend provisions such as the “patch” for the alternative minimum tax (AMT), the research and development tax credit, and the deduction for state sales taxes through ’13.
The legislation is expected to be considered by the Senate in September.
The House Ways and Means Committee is not expected to act on its version of the tax extenders package until after the November elections.
At a cost of $132 billion, Senate Finance Committee Chairman Baucus (D-MT) modified his original proposal to add a second year of AMT relief. He also modified the Section 179 expensing maximum amount and phase-out thresholds to $500,000 and $2 million respectively -- the levels in effect in ’10 and ’11.
Another change extended the 2.2-cent per kilowatt hour wind electricity production tax credit for a 10-year period for facilities operating by the end of ’13. The wind production tax credit also would be expanded to allow renewable energy facilities that begin construction before the end of ’13 to claim the 10-year credit.
Senators from both parties said their efforts to get a tax extenders bill done are “a dress rehearsal,” “a prelude,” and “a first step” toward broader tax reform.
Congress Makes Efforts to Curb Farm Regulations
In the past week, Congress has taken several steps to reduce the regulatory burden of the Clean Water Act (CWA) on farming operations.
The House passed H.R. 3158, the FUELS Act, sponsored by Rep. Crawford (R-AR). The bill would modify the EPA’s Oil Spill Prevention, Control and Countermeasure (SPCC) rule. The SPCC rule requires that oil storage facilities with a capacity of more than 1,320 gallons, including farms, to construct a containment facility, like a dike or a basin, which can retain 110% of the fuel in the container. Producers also may have to procure the services of Professional Engineers to certify compliance.
The FUELS Act would modify the rules by raising the exemption levels to better reflect a producer's spill risk and financial resources. The exemption level for a single container would be adjusted upward to 10,000 gallons while the aggregate level on a production facility would move to 42,000 gallons. The proposal also would place a greater degree of responsibility on the farmer or rancher to self-certify compliance if it exceeds the exemption level. Rep. Crawford cited data from the U. of Arkansas that this proposal would save Arkansas producers alone up to $252 million and up to $3.36 billion nationwide.
In another more complex matter, the Preserving Rural Resources Act of 2012 (H.R. 4278) was introduced by Rep. Hurt (R-VA) to curtail the reach of the EPA and the US Army Corps of Engineers in their regulation of farming activities that can have an impact on streams and wetlands under the CWA. Section 404(f) of the CWA was written to protect the normal activities of farmers, ranchers and forestry operations from the requirements to obtain dredge-and-fill permits so long as their activities did not impair navigable waters or reduce their extent. These activities include construction or maintenance of farm roads, plowing, seeding, cultivating, minor drainage, harvesting and construction/maintenance of farm or stock ponds or irrigation ditches.
Rep. Hurt and others believe that the agencies have been misinterpreting this section and requiring permits for protected activities. H.R. 4278 would assure these protections. The House Transportation and Infrastructure (T&I) Committee approved H.R. 4278 on a vote of 30-19. It now goes to the full House for consideration.
The House T&I Committee also approved legislation by voice vote that would limit the EPA's authority to conduct aerial surveillance of agricultural operations. Sponsored by Rep. Capito (R-WV), the Farmer's Privacy Act of 2012 (H.R. 5961) would require EPA to obtain consent from the landowner, provide prior public notice or obtain a court warrant before conducting aerial surveillance of agricultural lands or facilities.The agency uses aerial surveillance mostly for confined animal feeding operations.
Sen. Johanns (R-NE) has introduced a similar bill, S. 3467, but would only place a one-year moratorium on aerial surveillance.
States Intervene in Mississippi Basin Lawsuit
Kansas is the latest to join Louisiana’s intervention in a pending lawsuit filed in March by a number of environmental groups in the federal district court in Louisiana. The suit, Gulf Restoration Network v. Jackson, seeks to require EPA to set numeric nutrient criteria (NNC) for nitrogen and phosphorous, along with total maximum daily loads (TMDLs) for the Mississippi River, its tributaries and portions of the Gulf of Mexico. (see 7/13/12 Cotton’s Week).
If environmentalists are successful in this suit, the results could be significant for farmers, municipalities and others throughout the 31-state basin.
As the result of a similar lawsuit in Florida, EPA finalized NNC in Nov. ’10. Florida producers most likely will have to implement best management practices (BMPs) in addition to on-farm storm water treatment and retention practices, and still may not be able to meet the EPA’s proposed numeric nutrient criteria. The total initial costs for implementing both typical BMPs and on-farm storm water treatment and retention practices for all agricultural sectors in Florida is estimated to be $3.069 billion. Approximately 10% of agricultural land will need to be taken out of production to construct the facilities, with a total annual revenue loss of $631 million. Florida-wide implementation is estimated at $298 million to $4.7 billion per year. Another study calculated that Florida sewer utility bills would have to increase $570 to $990 per year to fund the substantial capital projects required to achieve EPA’s nutrient water quality criteria.
The proposed replacement of state standards with federal standards for nutrients has drawn sharp criticism. Critics point to the highly localized and technically complicated factors that are implicated when establishing nutrient criteria. Setting federal standards, they argue, would undermine partnerships that have been forged between regulated parties and local, state, and federal officials to address nutrient levels in the Mississippi River Basin and the Gulf of Mexico.
Other states that have joined in the Louisiana litigation are: Alabama, Arkansas, Iowa, Kentucky, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota.
Far West Producers Visiting North Carolina
Ten Arizona and California cotton producers will see cotton operations in North Carolina on Aug. 6-9 as part of the NCC’s ’12 Producer Information Exchange program (PIE).
Sponsored by Bayer CropScience via a grant to The Cotton Foundation, the PIE program is now in its 24th year of helping its US cotton producer participants improve yields and fiber quality. Specifically, the program helps producers improve their overall farming operation efficiency by: 1) gaining new perspectives in such fundamental practices as land preparation, planting, fertilization, pest control, irrigation and harvesting and 2) observing firsthand the unique ways in which their peers are using current technology.
Following an orientation on Aug. 5, the Far West region producers will begin their tour the next day with a visit to Bayer CropScience headquarters in Morrisville and then view the company’s new variety farm trials in Scotland Neck before touring Nucor Steel in Cofield and Lassiter Farms in Conway. The next day, they will tour Baker’s Southern Tradition Peanuts facility in Roxobel before visiting the Roanoke Tar Cotton Gin in Everetts for a presentation on eastern North Carolina cotton production. Later, they will visit Flatland Farms and Associates in Pantego for a look at cotton production in the state’s Blacklands area before getting a presentation on seed production and cleaning for commercial use at the J.P. Davenport facility in Greenville.
On Aug. 8, the group will tour the PCS Phosphate Mine in Aurora; see tobacco and cotton production on Heath Farms in Dover; tour the Mount Olive Pickle facility in Mount Olive; and observe tobacco, cotton, sweet potato and swine production at the Warren Brothers Farms in Littleton. The tour concludes on Aug. 9 with a presentation on southern North Carolina cotton production at the Hoke Robeson Gin in Red Springs and a tour of Frontier Spinning Mills in Sanford.
The Far West cotton producer participants include: Arizona – Nick Bagnall, Coolidge; Hal Heiden and Robyn Ollerton, both from Buckeye; Marvin Marlatt, Tacna; and Jennifer Wakimoto, Bullhead City; California – John Bennett, Firebaugh; Jim Bertao, Dos Palos; Ryan Seiler, Blythe; Jake Sheely, Lemoore; and Zack Stoller, Exeter.
The remaining ’12 PIE tour will have Mid-South producers traveling to Texas on Aug. 19-24.
Sales Lag, Shipments Strong
Net export sales for the week ending July 26 were 46,100 bales (480-lb). This brings total '11-12 sales to approximately 13.1 million bales. Total sales at the same point in the '10-11 marketing year were approximately 15.1 million bales. Total new crop ('12-13) sales are 3.0 million bales.
Shipments for the week were 319,800 bales, bringing total exports to date to 11.6 million bales, compared with the 14.2 million bales at the comparable point in the '10-11 marketing year.
Total exports are approximately 23,600 bales above the USDA projection of 11.6 million bales.
Effective Aug. 3-9, ’12
Adjusted World Price, SLM 11/16
61.38 cents
*
Fine Count Adjustment ('11 Crop)
0.10 cents
Fine Count Adjustment ('12 Crop)
0.30 cents
Coarse Count Adjustment
0.00 cents
Marketing Loan Gain Value
0.00 cents
Import Quotas Open
13
Special Import Quota (480-lb bales)
846,173
ELS Payment Rate
0.00 cents
*No Adjustment Made Under Step I
Five-Day Average
Current 5 Lowest 3135 CFR Far East
81.63 cents
Forward 5 Lowest 3135 CFR Far East
NA
Coarse Count CFR Far East
NA
Current US CFR Far East
84.05 cents
Forward US CFR Far East
NA
'11-12 Weighted Marketing-Year Average Farm Price
Year-to-Date (Aug.-June)
89.72 cents
**
**Aug.-July average price used in determination of counter-cyclical payment
