Farm Bill Negotiations Set Begin This Week - Monday, 28 October 2013

The long awaited Farm Bill will again be the topic of conversations beginning this Wednesday at 1:00p.m. when the Conference Committee reconvenes to work on a much needed piece of legislation. There are many important issues at stake within this bill, the largest fight centers on the $80 billion per year being spent on food stamps, otherwise known as SNAP or the Supplemental Nutrition Assistance Program. Many legislators agree that an agreement on this sensitive subject needs to be reached prior to the end of the year to avoid the politics that accompany an election year get in the way and also before the Diary Supports expire and milk prices skyrocket. The Farm Bill would be an opportunity for the 2 chambers to show they can work together to get a major form of legislation passed. The House and Senate will now each work on details to negotiate the 5 year $500 billion issue. Earlier this year the House passed legislation that would cut 5% or $4 billion/year and also included changes for eligibility and work requirements for SNAP. The Senate version had proposed a cut of about 1/10th of the amount presented by the House. One way that this could be carried out quickly would be to wrap it into budget negotiations that will be going on at the same time.

The Farm Bill is expected to save the government 10’s of billions of dollars through cuts to SNAP and the elimination of some farm subsidy programs. Until recently the fact that a new farm bill had not been finished was not as critical as it has now become because the Ag economy has been strong and in little need of government safety nets. The early blizzard in South Dakota reminded everyone of its urgency though. Thousands of cattle were killed as a result of this storm and producers that normally would have been protected by the Federal Disaster Program that could have assisted in covering some of the financial losses incurred has expired.

There are many important details that will be discussed and negotiated in each of the chambers.

*Currently the spending for farm and food stamps is around $97 billion/year with the lion’s share 80% going to food stamps.

*Direct Payments that have been a part of the recent Farm Bill cost the government $5 billion/annually. The Senate bill proposed the elimination of these immediately. The House version would phase them out over 2 years for cotton producers.

*Crop Insurance-the lifeline for hundreds of producers during the past couple of growing seasons, would be included in each of the chambers proposals. Both bills would include subsidies for federally subsidized crop insurance and create a new crop insurance program that would protect small revenues losses on planted crops. This particular program would be especially beneficial for Midwest corn and soybean producers and is the most liberal in the Senate version. The Senate version also included specific environmental requirements for producers to meet for eligibility, the House opposes these requirements.

*Price Protection-the House and Senate both raise the “target prices” for some crops. This particular safety-net has been part of previous farm bills but has not been utilized for many years due to robust farm prices.

The next USDA crop report will be released November 8th. Several market analysts are expecting this report to be very hard on corn prices due to the better-than-expected yields found in many areas. There is less certainty with soybean numbers though due to the vast variability of yield results across the nation.

The weather continued to assist with harvest across much of the Midwest this past week, the forecast for this week though shows that may be changing across much of this same area. The extended outlook for the first full week of November is calling for below normal temperatures and below normal rainfall, the 30 day forecast looks for the colder than temps to continue but rainfall should return to normal levels.

 

 

CROP INSURANCE

 

The 2013 harvest price for both corn and soybeans will be calculated using the average of October daily prices.

All claims will need to be turned into our office byDecember 1st.

 

CROP PROGRESS

 

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