More of the same?

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Back in July, Kansas State University economist and ag-policy expert Barry Flinchbaugh delivered the keynote address to the Cattle Feeders Business Summit, sponsored by Merck Animal Health in Denver. The organizers asked him to outline political trends and project changes livestock producers could expect following the 2012 elections.

Flinchbaugh began by warning the audience not to expect much change. President Obama, he predicted, would win re-election. Democrats would retain a majority in the Senate, and Republicans would retain their control of the House of Representatives. Flinchbaugh’s predictions astounded the audience, many of whom preferred a different outcome. But as we now know, he was right. So the question remains: What can farmers and ranchers expect in terms of legislation and agricultural policy over the next few years?

Generally speaking, we can expect a whole lot more of the same, says Colin Woodall, NCBA’s vice president for government affairs. Some faces have changed, but the same balance of power likely will mean much of the same partisan pressure and gridlock that has characterized the past two years.

But it’s not all bad, Woodall says. NCBA and industry lobbyists have experience with the Obama administration and congressional leaders. They’re familiar with the philosophies and personalities of key decision makers.

Woodall also notes that the Senate and House agricultural committees have demonstrated willingness and ability to work in a bipartisan manner. The Senate Agriculture Committee, under the leadership of Sen. Debbie Stabenow (D-Mich.), introduced a bipartisan farm bill that passed a Senate floor vote. The House Agricultural Committee, under the leadership of Rep. Frank Lucas (R-Okla.), also passed its version of a farm bill, but as of late November it had not succeeded in bringing it to the floor for a vote.

Farm Foundation president and economist Neil Conklin, PhD, says the current polarization and partisanship regarding farm policy, and agriculture in general, are not unique to our time. In the years following World War II, proponents of mandatory supply control fought a highly ideological farm-policy battle against those who wanted to get the government out of agriculture by eliminating the New Deal farm programs. At the same time, critics of mechanization in agriculture fought against the “tractorization” of agriculture, much as today’s anti-technology factions attack biotechnology, antibiotics, hormones and “factory farming.”

Eventually, Conklin says, the opposing forces reached consensus around a middle ground of “safety-net” commodity programs, combined with conservation and nutrition programs that have endured for nearly 50 years.

Farm Bill

So what about that farm bill which, as of late November, remained unaddressed by the lame-duck 112th Congress? Woodall says that prior to the elections, House Republicans expected the GOP would secure a majority in the Senate. Hoping for a more favorable climate for negotiating a final bill, they delayed a floor vote until after the election. Congressional leadership now should be motivated to pass a bill before the end of the year, as both versions include savings that could help avoid the “fiscal cliff.”

The House version would save $35.1 billion from the federal budget over 10 years, while the Senate version would cut $23.6 billion. The biggest gap between the two bills is a $12 billion difference in proposed funding for the Supplemental Nutrition Assistance Program, or food stamps, with the House bill favoring deeper cuts.

Conklin believes the coming years could bring pressure to separate SNAP from commodity programs in the farm bill. But he says unless the programs remain linked, agriculture could have difficulty maintaining the broad coalition of constituencies interested in nutrition and conservation programs to retain support among lawmakers and the public for safetynet programs for farmers and ranchers.

Immigration reform

Looking at the potential impact of the election on individual issues, immigration rises to the top, Conklin says. He recalls a stakeholders’ meeting on immigration and labor issues Farm Foundation helped organize in July. Among participants, there was general consensus that current guestworker programs such as H-2A visas for seasonal workers do not work for either workers or employers. At that time though, participants saw little chance for comprehensive immigration reform in the near future.

The presidential election, however, with Obama taking over 70 percent of the Hispanic vote, changed that outlook. Since then, Republican leaders have openly acknowledged a need to reconnect with minority voters, meaning they are more likely to participate in, rather than resist, reform initiatives. The time is right for comprehensive reform that will help ensure a legal and stable workforce, but Conklin says agriculture will need to demand a voice in the discussions.

Technology versus idealism

It is important for commercial agriculture to recognize the resistance to technology among some of the public, Conklin says. He notes that in the 2012 election, California voters defeated Proposition 37, which would have required labeling foods with ingredients from genetically modified crops. He adds though, the proposition had considerable support and failed by a vote of 53 percent to 47 percent only after food and technology companies pumped $47 million into a campaign to stop it. The “food movement” is alive and well, he says, and commercial agriculture will need to engage with legislators and consumers to build trust and support for technologies that enhance productivity.

Woodall agrees, adding that he expects a battle over a little-known law, the Animal Drug User Fee Act, which is up for a five-year renewal in 2013. This law defines the process through which pharmaceutical companies fund FDA studies to gain approval for their products. Use of antibiotics in animal agriculture has become a hot-button issue for consumer groups and lawmakers, and Woodall expects these groups to use the ADUFA renewal process as a forum through which to further regulate antibiotic use.

Death tax

NCBA and other agricultural groups have pushed hard for repeal or reform of the estate tax, but Woodall believes a complete repeal is off the table for the next four years. The best hope for farmers and ranchers is an extension of the Bush-era reforms to the tax, which are scheduled to expire at the end of this year. Under current legislation, the first $5 million of an individual estate, or $10 million for a couple, is exempt from taxes, and the maximum tax rate on the value above the exemption is 35 percent. Without legislative changes to the law, the individual exemption will fall to $1 million with a maximum tax rate of 55 percent in 2013. Woodall says securing an extension is a top priority for NCBA.

Regulatory activism

Woodall also expects an ongoing battle over regulatory action from federal agencies over the next two years, and particularly the EPA. In the year preceding the election, EPA was generally silent, but Woodall says the shackles are now off, and he expects a flurry of proposals relating to air and water quality that could impact the ability of farmers and ranchers to operate their businesses.

Beef demand

Woodall says international trade is one area where agricultural interests have seen progress under the Obama administration, and NCBA sees continued opportunities to market more U.S. beef overseas. He expects continued negotiations toward further access for U.S. beef in Japan, discussions with China, where U.S. beef currently has no access, and progress toward passage of the Trans Pacific Partnership.

The domestic economy, naturally, is a concern for NCBA and all beef producers. Woodall notes the 2012 drought, coupled with skyrocketing input prices, have pushed the U.S. beef cow herd to its lowest numbers since the 1950s. Shorter supplies are driving beef prices higher just as consumers tighten their spending in a shaky economy. The situation could become much worse if Congress fails to avoid the fiscal cliff, resulting in automatic tax increases, less money in consumers’ pockets and declining beef demand.

So the question remains whether the Congress and the Obama administration can reach the necessary compromises to reduce spending, increase revenues and stimulate economic growth. Recent history does not provide reassurance. At a November Farm Foundation Forum addressing the election’s implications for agriculture, the leadoff speaker was Craig Jagger of Legis Consulting, who spent 11 years as chief economist for the U.S. House Agriculture Committee under both Republican and Democratic majorities. Jagger noted that the 112th Congress, through August, had passed 173 public laws, compared with 906 for the assembly during 1947 and 1948 that President Harry Truman described as the “do-nothing Congress.” We’ll soon know whether it improves that record during its final lame-duck session.


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