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Field-to-Fork Implications of the 2012 Farm BillSara Wyant

& Jim Webster, Agri-PulseScott DeFife, National Restaurant AssociationSupply Chain Management Executive Study Group

August 10, 2012Slide3

DisclaimerAs part of the Association's continuing effort to educate and inform webinar participants, NRA members and the public, the Association has arranged these webinar sessions. Speakers and webinar Presenters are solely responsible for the content and accuracy of any materials they present; that the same contain no libelous or unlawful matter; and that they either own or have the right to use/distribute any materials presented at the Association webinar. Speakers and Presenters are also solely responsible for any statements and remarks they make and present. The Association does not give any opinion on or assume any responsibility for the content of any Speaker or Presenter's remarks, content or materials.Slide4

Three Key Areas to Discuss

Where we have been with 2008 Farm BillKey drivers and development of 2012 Farm

BillWhat’s likely to happen nextSlide5

2008 Farm Bill – 15 TitlesCommoditiesConservation

Agricultural Trade and Food AidNutritionFarm CreditRural DevelopmentResearch

ForestryEnergyHorticulture and Organic *Livestock *Crop Insurance and Disaster Assistance

*Commodity Futures * MiscellaneousTrade and Tax Provisions

* * = new with 2008 FB

The Food, Conservation and Energy Act of 2008 Slide6

37 Programs with No FundingEnergy 8Conservation 5Nutrition 5

Rural Development 3Research 3Trade 2Miscellaneous 2Commodity Programs 1Forestry 1

Ag Disaster Assistance 1About $10 Billion needed just to keep these programs in next 5 year farm program.Slide7

As Debate Started on 2012 Farm Bill…Budget and concerns over federal deficit

Tea Party influence Polarization between parties Build up to 2012 elections

House Ag Chairman Frank Lucas (R-OK) and Senate Ag Chairman Debbie Stabenow (D-MI)Slide8

Debt Problems Drove Farm Bill DebateThe federal debt is over $15

trillionRevenues lagging with recession, over 8% unemployment/entitlements keep growingCongress keeps kicking can down the roadSlide9

The Farm “Pie”FY 2013 Senate Agriculture Committee Baseline. CBO 1-12 UpdateSlide10

10-Year Baseline ForecastSlide11

Food Stamp GrowthSlide12

Now, Drought is Another Key DriverCorn, soybean crops, pastures dry up

About 80% of crop producers will have protection with crop insuranceBut livestock and poultry have little protection because programs allowed to expire in 2008 billDisaster drove calls for aid/one-year farm bill extension before August recessSlide13

Status?Senate passed bill on June 21, 64-35 margin

House Ag Committee passed bill on July 12 by 35-11 marginHouse passed livestock aid only bill, but provisions included in their 5-year bill

Not enough GOP votes to pass 2012 farm billin full HouseSlide14

Current Commodity ProposalsCrop insurance anchors safety net

Direct payments, ACRE and SURE eliminatedRevenue program to cover shallow losseswheat, corn, soybeans, etc. Stacked income protection for

cottonHigher target prices for rice, peanuts, sorghumSugar program untouchedSlide15

Dairy ProvisionsRepeals price supports, MILC, DEIPOffers voluntary insurance on margin between feed costs and milk

pricesRequires participants to reduce production when margins are lowestAnalysts say it will temper market volatilitySlide16

Dairy Section Controversy

‘Market stabilization’ is flash pointKicks in when margin below $4 for one month or $5 for two monthsHandlers would deduct 2-4% from milk check, send money to USDA for cheese donationsUW-Madison analyst: high feed costs would trigger, cut milk production 4% todaySlide17

Conservation ProgramsCRP cap reduced from 32M acres to 25M

7M more acres, but mostly in last 10 years6.5 M acres expire in 2012, 3.3 M in 2013

State

Acres Expiring in 2012

North Dakota

838,004

Texas

827.254

Montana

694,617

Colorado

572,049

Kansas

518,041

Missouri

377,513

Minnesota

290,248

Washington

275,356

Iowa

230,840

South Dakota

224,868Slide18

Additional Farm Bill Changes$1 billion more for specialty crops

More focus on local foods, organic Reduction in food andnutrition spending‘Fresh’ removed from school produce ruleSlide19

Next StepsCurrent farm bill expires Sept. 30

House and Senate staff level discussions over August recessPolitical pressure builds with droughtHouse in session only 8 days in Sept.

Odds favor extension and passage in lame duckSlide20

For more information or to sign up for a four-week free trial, go to :www.Agri-Pulse.com

Sign up for a four-week free trial subscription on our web siteor call 573-873-0800Slide21

Catfish Inspection2008 Farm Bill moved catfish inspection from the Food and Drug Administration to the Food Safety Inspection Service at the United States Department of Agriculture

Could lead to significant supply disruptions for catfish as well as other seafood species depending on the definition of catfish Could lead to a trade dispute with Asian countries such as VietnamSlide22

Catfish?

All Commercial SeafoodSlide23

When is a Catfish not a Catfish?

You can’t have it both ways

Prior to 2002 –

Pangasius is defined as a catfish

2002 – Farm Bill makes it a federal crime to define Pangasius as a catfish

2004 – U.S. defines

Pangasius

as a catfish for international duties

2006 – States enact laws making it a state crime to define

Pangasius

as a catfish

2008 – Farm Bill establishes the USDA Catfish Inspection Program and supporters attempt to apply the program to

Pangasius

, however it remains a federal crime to define

Pangasius

as catfish Slide24

Why

are we sacrificing these groups’ needs on the altar of special interests?

 U.S. Agriculture Coalition: “It would put U.S. trade officials in the unenviable position of having to defend a measure in an eventual and certain trade dispute settlement proceeding that is counter to arguments they have made numerous time in challenging foreign action

.” (Public Comments June 24, 2011)

U.S. Agriculture Groups Oppose the

Implementation of the USDA Catfish Inspection Program

American Soybean Association

Cargill

Hormel Foods

National Council of Farmer Cooperatives

National Meat Association

National Milk Producers Federation

National Oilseed Processors Association

National Pork Producers Council

National Turkey Federation

Seaboard Foods

Smithfield Foods

U.S. Dairy Export Council

U.S. Grains Council

U.S. Meat Export Federation

USA Poultry and Egg Export Council

Western Growers AssociationSlide25

U.S.

Ambassadors Oppose USDA Catfish Program

September 24, 2010

The Honorable Barack Obama

President of the United States

The White House

Dear Mr. President:

* * *

We helped establish the foundation for increased trade with Vietnam. As a result, American farmers now export to Vietnam more than $700 million worth of soy, corn, meats, poultry and other agricultural commodities. Vietnam merely asks for the same respect when exporting pangasius. Either the United States is a trusted trading partner who adheres to agreed upon rules or is a country that engages in linguistic gymnastics to say one thing but do another.

Mr. President, as public servants who helped forge our country’s new relationship with Vietnam, we urge you to consider carefully the strategic importance of Vietnam in Asia. Our country’s trade policy is a key tool in developing our relationships. Our actions should reflect our commitments and follow sound science rather than the narrow interests of a small minority.

Douglas "Pete" Peterson Michael W. Marine

U.S. Ambassador to Vietnam, 1997 to 2001 U.S. Ambassador to Vietnam, 2004 to 2007Slide26

Catfish Farm Bill StatusSenate unanimously included an amendment to move catfish back to USDAHouse Agriculture Committee rejected a similar amendment

Amendment will be offered again on the House floor but is already a conversation that will likely be addressed in conference report Slide27

Current U.S. Dairy PoliciesFederal Milk Marketing OrdersDates back to 1937 Ag Marketing Agreement Act

Dairy Product Price Support ProgramPart of the permanent Farm Bill, the 1949 Agricultural Adjustment ActDairy Export Incentive ProgramIntroduced in 1985 Farm Bill, first used in 1991Milk Income Loss Contract (MILC)Added by the 2002 Farm BillSlide28

Impetus for Dairy Policy Reform: pre-2009Growth in world dairy trade, especially increased U.S. dairy exports

Desire to change our domestic dairy policy to be able to take full advantage of these new markets for U.S. dairy productsIncreases in both farm milk price and dairy feed input cost volatility over timeDesire to replace outdated current dairy safety net with one more suited to this new price/cost situationSlide29

Components of Dairy Security Act[Foundation For The Future (FFTF)]

Eliminate Dairy Price Support Program, MILC program and Dairy Export Incentive ProgramReplace these with a Dairy Producer Income Protection Program (margin insurance)Add a Dairy Market Stabilization Program (DMSP)Revise Current Federal Milk Marketing Order RegulationsSlide30

Goodlatte-Scott Amendment

G-S has no farm milk supply control component: Dairy Market Stabilization Program eliminatedG-S retains the margin insurance programProvides the same level of catastrophic (base) insurance coverage at no cost (same production history) for about 90% of all U.S. dairy farm operations (those with up to about 250 dairy cows)Slide31

Goodlatte-Scott versus House/Senate Bills:Key Differences

The premiums under G-S for the first tier (margin insurance coverage for milk marketed up to 4 million pounds per year):Are the same ($4 and $6.50) or lower (all other margin levels except $7.50 and $8.00) than the House Bill, andG-S saves more Federal money ($49 million) than the House Bill ($38 million) over ten years by CBO estimate, but less than Senate Bill ($59 million)Slide32

While it is late in the game, it is far from over and dairy policy reforms are still uncertainWhile provisions of the 2008 Farm Bill expire Sept. 30th

, that has never mattered in the pastSenate Farm Bill passed June 21, 2012With a vote of 64 to 35House Farm Bill not yet doneVoted out of committee July 12, 2012, with dairy provisions similar to those in the SenateGoodlatte-Scott amendment rejected 17-29

(but 15-11 Republicans)Still requires floor action by full HouseSlide33

EthanolAccomplishments

Ended billions of dollars in subsidiesRemoved costly import tariffs Next stepsRepeal the Renewable Fuel Standard that requires billions of gallons of ethanol to be used. Temporarily repeal it given the drought impact on the US corn cropE-15 approvalSubsidies for ethanol infrastructure Slide34

Q&ASara Wyant Editor/Publisher

Agri-Pulse Communications, Inc.sara@agri-pulse.com Dan Roehl

Sr. Director Government RelationsNational Restaurant Associationdroehl@restaurant.orgSlide35

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