2012 agricultural issues on the table

Jan 6, 2012

New farm bill—Since the super committee could not reach an agreement on cutting $1.2 trillion in federal spending, the House and Senate Agriculture committees will begin the new year working on the new farm bill. It is estimated that at least $15 billion could be cut over 10 years. The committees are expected to begin holding hearings in February and the Senate Agriculture Committee plans to have a bill passed by the committee in the spring. Key issues in the farm bill debate will be commodity programs, crop insurance, conservation and nutrition.

Supply and demand— Supplying the growing global demand for food, based on developing economies and world population growth, will likely be a key topic in 2012. With 7 billion people on Earth currently, and an expected 9 billion by 2050, supply and demand will continue to weigh on producers’ minds. Food policy, waste, and trade barriers play into the supply and demand issue.

Trade—The 2012 forecast for agricultural exports were at $137 billion, with imports at $105 billion, according to USDA’s Economic Research Service Outlook for U.S. Agricultural Trade report. The trade balance for 2012 is a surplus of $32 billion, which would be the third highest ever. The impact of global trade will continue to be a hot topic this year. For example, the World Trade Organization just recently accepted Russia, and Congress is expected, in 2012, to approve trade with the country so the U.S. can benefit from the agreement.

Animal welfare—No surprise here; the animal welfare topic will continue to be a Top 10 in ag issues in 2012. Animal welfare amendments may be included in the farm bill discussions. On the table for negotiation are topics such as the Humane Society of the United States’ agreement with the egg industry, horse slaughter, and processing regulations.

Biodiesel—A number of tax provisions expired on Dec. 31, including the biodiesel tax credit, and Congress is expected to address the tax extender provisions this spring. The blender’s tax credit for ethanol also ended on Dec. 31 and will not be reauthorized. In Iowa alone, producers more than tripled their biodiesel output in 2011, producing a total of 169 million gallons. Farmers producing crops for biodiesel hope demand will remain steady under the renewable fuels standard, while producers are hoping for a break in high feed costs.

Food safety—President Obama’s Food Safety Working Group issued a progress report highlighting the accomplishments and strategies of 2011, but most are sure to be hot topics in 2012. USDA’s Food Safety and Inspection Service (FSIS) declared six additional sero groups of pathogenic E. coli as adulterants in non-intact raw beef/raw ground beef, its components and tenderized steaks, creating new challenges for the new year.

FSIS’ new test-and-hold policy was designed to help prevent recalls. Meat and poultry products will not be allowed to enter commerce until test results for harmful substances are received. According to USDA, if this policy had been in place between 2007 and 2009, it would have prevented 44 Class 1 recalls.

New government mandates and regulations—With heavy emphasis on the Environmental Protection Agency (EPA), government regulations will continue to plague the industry. In early 2011, the National Corn Growers Association joined with the American Farm Bureau Federation (AFBF) and other agricultural organizations to challenge EPA’s Total Maximum Daily Load (TMDG) for nitrogen, phosphorus and sediment in the Chesapeake Bay. The farm groups stated the Chesapeake Bay TMDL goes beyond the scope of Clean Water Act authority, that the science used by the agency is flawed, and that the regulatory process lacked transparency. The outcome of this lawsuit could establish significant precedent for future water quality regulations throughout the country. This is just one of many EPA lawsuits we will be following throughout 2012.

Estate tax—Estate tax relief would have expired last year, but Congress passed a bill to set the exemption at $5 million and the top tax rate at 35 percent for two years. Unless Congress extends the exemption and rates, or even better, eliminates the estate tax, a $1 million exemption and a top tax rate of 55 percent will kick in on Jan. 1, 2013, according to Lynne Finnerty with AFBF. — Traci Eatherton, WLJ Editor