Avoiding the Fiscal Cliff: How the Farm Bill Extension Affects Oklahomans 

This article from the OSU Agricultural Policy News was written by Jody Campiche, Assistant Professor and Extension Economist.

In an effort to avoid the 'fiscal cliff', a deal was reached on a tax package that includes a nine-month extension of the 2008 farm bill through the end of September. While many are upset by the partial extension, the farm safety net has been extended to another crop year and permanent farm law will not go into effect. Producers will continue to be eligible for direct payments, counter-cyclical payments, ACRE payments, and marketing loans for the 2013 crop year. Without this extension, these programs would not be in place for the 2013 crop year and producers would have much less certainty about the status of the farm safety net. The milk provisions in the 2008 farm bill were also continued and the extension preserves baseline funding. In an interview with Ron Hays (Radio Oklahoma Network), Frank Lucas, Chairman of the House Ag Committee, said that the extension was 'the best possible scenario in a terrible situation." A 5-year farm bill was the preferred option, but Lucas said that 'in the environment we are working in, it is absolutely a miracle that we got it done."

The House and Senate Agriculture committees agreed to a one-year extension of the farm bill that included additional dairy provisions and mandatory funding for Supplemental Agricultural Disaster Assistance, which includes the Livestock Forage program, Livestock Indemnity Program, Tree Assistance Program, and the Emergency Livestock Assistance Program. However, the extension was modified by the Senate resulting in the removal of mandatory funding for these disaster programs. Instead, the extension includes an authorization of appropriations for the disaster programs which means that the funding could be discussed in the appropriations cycle. Funding for the disaster programs could also be included as part of other disaster discussions (such as the Hurricane Sandy Relief Bill) or could be part of the five-year farm bill.

You can read the full story and find a link to our interview with Frank Lucas by clicking here.
 

AFR and Dairy Group Disappointed with 'Fiscal Cliff' Patch Job 

To address the so-called "fiscal cliff," Congress passed the American Taxpayer Relief Act January 1, 2013. Included in the package was a short-term extension of most programs in the recently-expired 2008 Farm Bill. 

American Farmers and Ranchers President Terry Detrick said, "There is a lot lacking in the last-minute legislation, but some good did come from it. The one-year extension of the 2008 Farm Bill (which should really be called the National Food Security Bill) at least preserves the budget base line, which will serve as a base as we begin work on a full five-year bill."

He said one of the bill's major flaws is that it authorized most of the 37 programs that expired Sept. 30, including the livestock drought disaster provision, but it provided no funding for them.  You can read more of Detrick's comments by clicking here. 

The legislation was also a major disappointment to dairy farmers.  A news release from the Dairy Famers of America stated:

Careful Management Can Reduce Pasture and Range Drought Impact

Writing in the January issue of Samuel Noble Roberts Foundation Ag News and Views newsletter, James Rogers finds some reasons for optimism despite the continuing drought across Oklahoma:

The U.S. Drought Monitor released on Nov. 20, 2012, shows the majority of Oklahoma and Texas in severe to extreme drought with northern Oklahoma and the Panhandle in exceptional drought. The drought impact type in these regions ranges from short- (less than six months) to long-term (greater than six months). Areas currently in short-term impact are feeling the effects on seasonal agricultural production. For example, most of the wheat crop is being hurt and grassland production has suffered. Areas in long-term drought are facing severe impacts on grasslands, and surface and subsurface water supplies. To add to this, National Oceanic and Atmospheric Administration (NOAA) models indicate that 9 to 15 inches of precipitation are required to end current drought conditions by the end of February 2013. However, the seasonal drought outlook is calling for drought persistence through February, and, from February through June, the forecast models are giving equal chances for above, below or normal precipitation.

It is hard to find encouragement when facing current conditions and the outlook. However, there are reasons for optimism.  Among them are: 

• Remaining aware of current conditions, accepting them and looking at the forecast predictions gives you better opportunities for long-range forage planning. 

• Cool-season annual grass production was excellent in spring 2012. These grasses are again present and with above normal temperatures expected, only need timely rainfall for spring 2013 production.

• Light insect damage in fall 2012 means greater opportunity to grow more forage with less cost. Expectations for fall armyworm damage were high, but never occurred. Remain on the lookout for armyworms in early 2013, about the time spring forage flush begins.

Texas Grain Farmers Reject Statewide Grain Indemnity Fund

Texas grain farmers voted against the establishment of a statewide grain indemnity fund in the referendum held by the Texas Grain Producers Indemnity Board, according to the results released after the canvassing of the ballots.

Farmers across the state voted in the referendum, which was held Nov. 19, 2012, until Dec. 7, 2012, on the statewide establishment of a grain indemnity fund. According to the Texas Department of Agriculture, who canvassed the ballots, there were 1,678 ballots submitted during the referendum with 1,171 farmers voting in opposition and 507 farmers voting in favor - preventing it from obtaining the required two-thirds majority to pass.

"Over the years, many producers across Texas have been forced to deal with the financial pain that comes when a grain buyer fails. Unfortunately, Texas grain producers will continue to face this risk for at least another crop year," TGPIB Chairman Dee Vaughan said. "The TGPIB will be meeting soon with stakeholder groups to determine the best course of action for the future."

You can read more of this story on our website.  Click here to go there.  

Thad Cochran Takes Ranking Minority Slot in 2013-14 for Senate Ag Committee

Word came yesterday as the new Congress was being sworn in that a change that we talked about with Mary Kay Thatcher back in November could happen- has indeed come to pass. Senator Thad Cochran- former Chair of the Senate Ag Committee- has used his seniority to claim the ranking member position on the Senate Ag Committee. David Rogers of Politico wrote about this possible game changer when it comes to the Commodity Title as we try to write a 2013 Farm Bill.  

"Mississippi Sen. Thad Cochran on Thursday reclaimed the post of top Republican on the Senate Agriculture Committee, restoring a Southern influence that could alter the course of writing a new farm bill in the coming months.  

"Kansas Sen. Pat Roberts had said he intended to stay as ranking member and was prepared to force a vote challenging Cochran, who outranks him in seniority. But at a brief caucus of the committee Republicans Thursday afternoon, Roberts moved a motion in favor of Cochran rather than 'roiling the waters' any further."

Mr. Rogers pointed out that, "Roberts's voice has made him a frequent thorn in the side of the South since he has been one of the leading opponents of target price supports important to rice, peanut and wheat producers from the region.

"Southern producers complained bitterly last summer when the Senate adopted a five-year farm bill that bore Roberts's stamp and leaned heavily toward revenue insurance options to replace the current system of direct cash payments to growers."

In the Face of Drought and a Likely Smaller 2013 Hard Red Winter Wheat Crop- Prices Have Dropped- Kim Anderson Explains All 

Extension Grain Marketing Economist Dr. Kim Anderson is talking this week on SUNUP with Lyndall Stout about the recent drop in wheat prices.  Much of the fall, the wheat market was stuck in a trading range- and in the final weeks of 2012- when it finally broke out of that trading range- it broke to the down side.


Dr. Anderson believes a lot of the breakout came because of commodity funds reducing their exposure to wheat and other ag commodities.  In the case of wheat- it seems like market players perceived we have "enough wheat" and and sold- causing the fall in the market even as the southern great plains has tremendous concerns about the 2013 crop.  


Support levels currently for wheat are $8.00 for Kansas City March contracts- and about $8.20 for Kansas City July- in both cases- Dr. Anderson points out we are holding just above those levels. If we break below those supports in the near term- there is likely another fifty cents down in the wheat market before new support would kick in. Eventually, the market will be paying attention to new crop woes- if they remain- but that is not likely until time for the crop to break dormancy.


You can watch Kim and Lyndall on Saturday morning on SUNUP- or you can take an early listen to Kim's comments as we trade wheat ahead of the weekend by clicking here.  Of course, there's more than just Lyndall and Kim on this Saturday's Show- we have the complete lineup for SUNUP at the link above.  Check it out!

This N That- More TV Viewing This Weekend- the Latest Drought Monitor Offers No Change and Maybe Some Rain Next Tuesday

A couple of other TV reminders for your viewing pleasure this weekend.  Our regular In the Field segment will feature a conversation with the President of the Oklahoma Farm Bureau, Mike Spradling, as we get his reaction on the Farm Bill Extension, the Death Tax and a preview of Oklahoma's involvement in the AFBF convention just a week away in Nashville, Tn.  You can see yours truly and Mike Saturday morning around 6:40 am on KWTV News9.

Also this weekend- we will be a guest with Max Armstrong on his show This Week in Agribusiness- seen on RFD TV Saturday and Sunday.  We talk about the Farm Bill Extension as we share some of the comments offered to us by House Ag Committee Chair Frank Lucas New Year's Day- and we talk drought woes as well with Max- click here for the RFD schedule to see when This Week in Agribusiness airs.

Latest Drought Monitor is our- and there is no change this week versus a week ago- 95% of the state of Oklahoma remains in extreme to exceptional drought. Click here to take a look at the latest graphic.

We leave you with a bit of optimism- well at least a little bit.  Chances of rain are in the forecast for next week- Tuesday through Thursday- and it appears best chances are in southern and eastern counties.  Click here for the weather map that shows precip chances out into the Wednesday time frame for next week.