Ag Policy Outlook

OMAHA (DTN) -- The trade agenda should be the driving force in U.S. farm policy throughout the next 11 months.

Presidential election years are notoriously heavy on rhetoric and light on substance and this year looks to raise the bar on both accounts. During his State of the Union speech last week, President Barack Obama acknowledged that "expectations for what we will achieve this year are low."

But policymakers have several issues on the agenda that Congress is going to have to address before the end of the year. That's especially true when it comes to ratifying the Trans-Pacific Partnership.

Still, TPP may have to wait until after the November elections. Senate Majority Leader Mitch McConnell, R-Ky., is leery of putting the trade agreement to a congressional vote because of grassroots opposition to trade deals. The 12-nation pact largely has the support of most major agricultural groups and Agriculture Secretary Tom Vilsack will be aggressively pushing for its passage as well. Vilsack repeatedly highlights that some major markets for U.S. meats such as Japan will phase down tariffs as much as 75% for some products.

"Virtually every agricultural product is going to benefit from this agreement," Vilsack said. "So it's an opportunity for us to showcase American agriculture and get a level playfield in a place where we are going to see expanding economies and a growing middle class."

With a stagnant farm economy, agricultural groups are looking for any opportunity to jumpstart markets, but any such benefits from TPP may be years away. Yet, Bob Stallman, now the former president of the American Farm Bureau Federation, warned earlier this month that the longer Congress waits to ratify the trade deal, the greater risk that U.S. farmers lose market opportunities to other countries.

"We will be left behind if we don't ratify the agreement if all the other countries move forward and ratify the agreement and put it in force and we are left out," Stallman said.

LABELING FIGHT

Few battles remain more contentious than the consumer debate over labeling foods containing ingredients from biotech products. Farm groups and food companies failed to get legislation passed in the Senate despite a 275-150 vote in the House last summer that would have blocked states such as Vermont from creating their own biotech labeling laws.

While still awaiting a federal court ruling, Vermont's law requiring labels for genetically engineered food is still set to go into effect in July.

In the meantime, food companies are breaking ranks with the industry in different ways. Most notably, Campbell's Soup Co. announced earlier this month that the company will begin creating labels that products may contain genetically modified organisms. The company also supports mandatory national labeling of such products as well. Campbell's stated the decision "sets a new bar for transparency."

Denise Morrison, Campbell's president and CEO, stated the company made its decision largely because of the Vermont law and failure in Congress to get a voluntary standard passed. In a letter to employees, Morrison stated Campbell's still opposes having state-by-state rules, but "GMO has evolved to be a top consumer food issue reaching a critical mass of 92% of consumers in favor of putting it on the label." (http://dld.bz/…)

There will be no clear direction for Congress moving ahead on the issue, though the Senate still has the chance to take up the bill passed by the House last July. Vilsack has said he plans to work with leaders on both sides of the labeling fight, but it will be hard to bridge the gap when most farm groups, food companies and seed providers vehemently oppose mandatory labels while other groups are demanding it.

REOPENING THE FARM BILL

Keith Coble, an economist at Mississippi State University, spoke about crop insurance last month at the DTN/The Progressive Farmer Ag Summit. He thinks crop insurance will continue to face pressure for potential cuts throughout the remainder of the farm bill.

"The bottom line is when you become the program, you become the target and that's where crop insurance is today," Coble said.

Farm groups and insurance companies thumped their chests in December when the conference report of the highway bill included language reversing a $300-million-a-year cut to crop insurance that had been part of the budget agreement just a month earlier. The insurance industry and aggies in Congress thanked congressional leaders for the swift action.

Yet, in a hotly contested presidential primary, every such vote becomes someone else's cannon fodder. And that's the case now as this special exclusion to protect crop insurance has given people a chance to target Sen. Ted Cruz, R-Texas. After a word from Senate Agriculture Committee Chairman Pat Roberts, R-Kansas, Cruz changed his vote to support the insurance industry. Sen. Marco Rubio, R-Fla., called out Cruz in a debate last week, as did FOX News host Chris Wallace in an interview. (http://dld.bz/…)

Regardless of the details, the political battle again puts an even greater political spotlight on crop insurance as the White House details its budget proposal early next month and Congress seek places to cut. Roger Johnson, president of the National Farmers Union, said farmers run the risk of seeing cuts to the safety net and conservation programs this year again in Congress.

"Obviously, there will be attempts to make changes to the farm bill," Johnson said. "That happens every presidential budget, regardless of party. I expect that's going to happen again."

Reopening the farm bill could come in different ways. Several farm organizations and members of Congress are pushing Vilsack to declare cottonseed as an eligible oilseed for farm programs such as Price Loss Coverage. Any attempt to create a new safety net, especially through executive action, will be controversial.

Other items on the political agenda:

-- RFS: Another situation not drawing much attention at this point will be the next battle with EPA over the Renewable Fuels Standard. Despite a two-year regulatory battle over the last RFS volumes, the fight will renew again early next summer when EPA will have to propose RFS volumes for 2017. EPA may also have to propose the volume for advanced biofuels over multiple years.

-- Child Nutrition: While not on the radar of most farmers, child nutrition reauthorization translates annually into billions of dollars in demand for foods going into the school lunch program and the program for Women and Infant Children, or WIC. This translates into fights over how much schools are required to use whole grains, processed foods, fresh fruits and vegetables. The Senate Ag Committee plans to start taking up legislation this week.

-- CFTC: The reauthorization bill for the Commodity Futures Trading Commission is truly in the financial weeds as a complex bill dealing with how the CFTC regulates the futures market in the coming years. It will be a chance for banks to dial back some of the Dodd-Frank regulations they oppose, but also requires heavy scrutiny to ensure farmers and others who trade on the futures market remain protected. The House has repeatedly passed legislation in recent years that ends up stalled in the Senate.

-- WOTUS: As DTN has detailed, legislation to block the EPA-Army Corps of Engineers rule on waters of the U.S. is now awaiting presidential action -- an expected veto. WOTUS will continue to draw hearings and possible congressional action, including in appropriations if the president does veto the bill.

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Editor's Note:

Each year, DTN presents an outlook series on what is expected for the year ahead in various areas of agriculture. This is the 12th story in a series DTN is running that looks at what farmers can expect as the hot topics for 2016 in areas such as farm finance, land prices, ag and the environment, agricultural policy, crop inputs, livestock, transportation and others. We welcome your feedback on what you think the year will be like at talk@dtn.com.

Chris Clayton can be reached at Chris.Clayton@dtn.com

Follow him on Twitter @ChrisClaytonDTN

(ES/CZ)

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