Odds that Congress will avoid the end-of-year “fiscal cliff” are declining. House Speaker John Boehner, R-Ohio, who would play a critical role in any such deal, said this week that “cobbling together a large-scale deal during the lame-duck session of Congress would not only be hard, but also the wrong thing for the country."
If Congress does not take action, taxes on essentially everyone go up on January 1 and automatic spending cuts kick in. Most economists say this combination would cause the economy to slip into recession next year.
Presidential candidates sparred over farm policy this week. Presidential candidate Mitt Romney visited a farm in Iowa and talked about ag-related issues. Romney said he would like to see an end to the estate tax altogether, would work to expand agricultural trade, and would work to get a farm bill passed.
The Obama camp countered that under the president, farm exports and farm income have reached all-time highs, that Vice Presidential candidate Paul Ryan’s budget would require farmers to pay more for crop insurance, and that Ryan has helped to block the passage of the farm bill. Regarding the estate tax, the president has proposed a $7 million per-couple estate tax exemption and a top rate of 45 percent.
House Majority Leader Eric Cantor, R-Va., who controls the House schedule in Congress, says he expects the House will vote on the farm bill in the lame-duck session after the election. However, he says the bill that was passed by the House Agriculture Committee will have to be changed before it will pass. (He didn’t say what changes will be needed, but Cantor has been in favor of bigger cuts in spending on food and nutrition programs.)
Waiving the RFS ethanol mandate would have only a modest impact on corn prices or use according to a new study. The Food and Agriculture Policy Research Institute (FAPRI) found that a full waiver of the Renewable Fuels Standard would reduce corn prices by only about 4 cents per bushel in 2012-2013 and ethanol production would be reduced by only 1.3 percent.
The Renewable Fuels Association says the only real impacts of a waiver would be to discourage farmers from planting corn next spring and to interrupt or delay investments in new feedstocks and advanced biofuels technologies. Nearly 870 million people worldwide still suffer from chronic undernourishment according to a new report from the United Nations. Nearly 98 percent of these people live in developing countries. The number of undernourished people has declined over the past 20 years in all regions of the world except Africa.
In Africa, about a quarter of the population is undernourished. In contrast, there has been a lot of improvement in the hunger situation in Asia. The number of people undernourished in Asia has fallen from 739 million to 563 million over the last 20 years.
Crop prices in October will have big implications for crop insurance payments for many producers. Prices used for calculating payments for farmers with policies that have harvest price options are based on futures prices settlement prices in October.
So far in October the corn price has averaged $7.52 per bushel, far above the $5.68 per bushel projected price established before the season started. The soybean harvest price is running near $15.50 per bushel. Crop insurance payments so far total about $2 billion, but payments won’t be made on policies with the harvest price option until after October.
The Renewable Fuels Association says there are only eight fuel stations in the country selling E-15. Concerns about storing the fuel and burning it in older vehicles have stalled adoption. Many underground storage tanks aren’t certified to hold E-15, so station owners would have to make significant investments to add the product.
Also, the EPA may require E-10 buyers to purchase at least 4 gallons of fuel at a time to “clear the hoses” if E-15 and E-10 are sold using the same blender pump. Adoption of E-15 will be very slow.