For agriculture, this is an important week in Washington D.C., especially on Wednesday. At 7:30, central time, the U.S. Department of Agriculture releases it July crop production report and at about 9:30, central time, the House Agriculture Committee convenes to mark up their version of the farm bill that committee leaders released last week. The question is, which event is going to get the most attention and cause the most anxiety for the industry?
In the short term the July crop report will probably cause the most immediate commotion as everyone expects the harvest prospects to be down from the June forecast, in some states and for some crops down significantly. Some of the grain traders, though, say the June forecast was a little optimistic since they didn’t think the corn crop was as good as the 166 bushels per acre the USDA was predicting. They felt the low to mid 150s was a more realistic number but now that might be a little high with the continuing dry weather farmers have dealt with throughout most of the major growing areas of the country. Some major corn growing states have seen their expected corn yield forecasts drop by 20 to 30 bushels per acre in just the last month and with no major rain events forecast for another week, yields expectations are falling by the day. In some growing areas, where irrigation water comes from streams and rivers rather than private wells, that water is being cut off to growers and the situation can only get worse as the dry weather, which some are equating to the drought year of 1988, continues and intensifies. The harvested acres report in this month’s crop report might also be interesting as they always account for the corn that goes for silage but will this report reflect lost acreage because in parts of the corn belt, southern Illinois, parts of Indiana and Missouri and even in southern Wisconsin, some farmers have already given up on their corn crop and have begun chopping it for livestock feed? With the early planting and good looking crop early this year, there was speculation that with a big crop corn prices could go below $4 a bushel. That’s not going to happen now as demand remains strong and the crop isn’t going to get any bigger. It appears lots of crop insurance payments will go out this year but any farmer will tell you that’s no way to make a living with high input costs and high land rents and land sale prices.
Having a much longer lasting effect on agriculture will be the outcome of the farm bill discussions the House Agriculture committee begins on Wednesday. While Congress wants to lower the costs of the farm bill by doing away with programs like direct disaster aid, this may be the year it’s needed to help farmers get through what may turn out to be a disastrous cropping season that will ripple through the economy in the form of higher food prices. Already the House bill looks to cut about $12 billion more than what the Senate bill calls for. The difference appears to be in the food and nutrition programs where the House wants $12 billion in cuts versus the Senate’s plan to cut about $4.5 billion out of the program. The House bill would accomplish its goal by mainly changing the eligibility requirements for those now receiving government food aid through the various programs available.
So far House leadership has been quiet about the number or type of amendments they will allow to be offered once the bill comes out of committee and on to the House floor. There is also concern that the leadership, led by House Majority leader, Eric Cantor of Virginia, wants to hit a “pause button” on the bill because the Tea Party wing of the Republican Party feels the entire bill is one big subsidy that costs the taxpayers too much money. Agriculture Secretary Tom Vilsack, responded to Mr. Cantor’s pause comments by saying Congress needs to get on with its work and pass the farm bill by September 30, when the current bill expires, so desparate farmers don’t push “the panic button.”
Amendments are likely to offered by Congressmen and women who want to sweeten the pot for their region so you can expect dairy amendments to include a call to eliminate the supply management portion of the Dairy Security Act which is part of both bills, and an amendment from former committee chair, Representative Bob Goodlatte, Republican from Virginia and supported by Wisconsin Third District Congressman Ron Kind, that would eliminate or drastically change the U.S. sugar program which now costs the U.S. over $100 million a year in payments to Brazil because our program has been ruled illegal by the World Trade Organization. Its safe to say every title will face amendments before it passes out of the House. The unknown is when will it pass out of both Houses of Congress and get to the president?