Today, Rep. Rick Crawford (R-AR), Chairman of the House Agriculture Committee’s Subcommittee on General Farm Commodities and Risk Management held a public hearing to examine implementation of the 2014 Farm Bill.
The Farm Bill was signed into law on February 7, 2014. The legislation both modernized and strengthened the safety net for farmers. By next week, most farmers will have made the choices available under the Farm Bill. Chairman Crawford generally praised Risk Management Agency (RMA) Administrator Brandon Willis and Farm Service Agency Administrator Val Dolcini for their hard work while also asking for assistance in resolving a few remaining implementation issues.
“While the 2014 farm bill was drafted during a period of record-high prices, producers are now experiencing a staggering 43 percent drop in net farm income,” Crawford said. “Current conditions are going to test the Farm Bill and its ability to mitigate and respond to growing financial stress in farm country. I firmly believe that the situation calls for the Farm Bill to be implemented in the most farmer-friendly manner possible within the limits of the law.”
Chairman Crawford cited the need for action by the Department to address the collapse in cotton prices due to actions taken by the Chinese government, stating, “USDA has the authority to address an issue that is making the marketing of cotton extremely difficult for cooperatives and marketing pools at a time when the markets are already beating them down.” The Chairman called newly proposed “actively engaged” regulations "arbitrary and capricious," noting that the regulation "ignores the remarkable diversity and complexity in agriculture today." And, the Chairman called on RMA Administrator Willis to ensure that margin coverage being developed works for rice growers.
Full Committee Chairman Rep. K. Michael Conaway praised Subcommittee Chairman Crawford’s dedication to working on behalf of farmers and ranchers and echoed Crawford’s call for action by USDA.
“As you know, I chaired the subcommittee with jurisdiction over commodity programs and crop insurance for a number of years, and I cannot think of a better successor than Congressman Crawford,” Conaway said. “I know he cares deeply about the policies under the jurisdiction of this subcommittee and the farmers and ranchers these policies are designed to serve. While the farm bill was designed for our current scenario of low commodity prices, I know everyone is concerned. I will work closely with Congressman Crawford and the administration to make sure this Farm Bill serves our farmers and ranchers during these tough times.”
Mr. Brandon Willis, Administrator, USDA Risk Management Agency, Washington, D.C.
Mr. Val Dolcini, Administrator, USDA Farm Service Agency, Washington, D.C.Read More
Remarks as prepared for delivery:
Mr. Chairman, thank you for holding this important hearing.
As you know, I chaired this subcommittee for a number of years, and I cannot think of a better successor than you. I know you care deeply about the policies under the jurisdiction of this subcommittee and the farmers and ranchers that these policies are designed to serve.
I mainly want to echo the Chairman’s statement. Administrator Willis and Administrator Dolcini deserve our thanks for all of the good work that they have done so far.Former Administrator Juan Garcia, a fellow Texan and a friend, is also owed a debt of gratitude for all of his years of distinguished service and for the heavy lifting he did early on to get Farm Bill implementation off on the right track.
There are, as the Chairman said, some issues that still present serious challenges as Farm Bill implementation moves forward. Fortunately, there is still time to make sure that these little challenges do not have time to become big ones.I fully concur with the three issues the Chairman stressed in his opening remarks and I add a couple of others to the list.
First, as Chairman Emeritus Frank Lucas remarked during an earlier hearing, we need to address the cover crop issue. If you want producers to plant a cover crop as good stewards of the land, this is one of the most important ways of accomplishing that objective. It will also help deal with some of the more difficult circumstances facing producers in my part of the country. I recognize that this may involve the agency changing course from some of its past decisions. But those past decisions were based on a completely decoupled commodity title. The circumstances have changed some. The Farm Bill gave you discretion here and I would hope that you would use that discretion to make this happen. It is the right thing to do.
Second, just as encouraging the use of cover crops is a smart move if you want to promote conservation, so is not sending artificial signals to producers to plant one crop over another, especially when agronomic and market conditions would send the opposite signals. We face that possibility right now where USDA could assign yields for crops in counties that are, frankly, totally out of whack with reality. I have discussed this issue at length with USDA and believe you want to do the right thing here. I just want to offer some extra encouragement.
Thanks again to our witnesses for their good work so far. I hope you will work with us on these and other issues. With that, Mr. Chairman, I look forward to a productive hearing.Read More
Remarks as prepared for delivery:
I want to welcome our witnesses, Administrator Willis and Administrator Dolcini. Thank you for being here, gentlemen, and thank you for all of the good work that you have done so far in implementing the Farm Bill.
By Tuesday of next week, most farmers from across the country will have made the choices that we offered them under the Farm Bill. This will be the capstone on a long and challenging process that began here in 2010 before I was even elected and did not wrap up until February 7, 2014, when the farm bill was finally signed into law.
While the 2014 farm bill was drafted during a period of record-high prices, producers are now experiencing a staggering 43 percent drop in net farm income. Current conditions are going to test the Farm Bill and its ability to mitigate and respond to growing financial stress in farm country. I firmly believe that the situation calls for the Farm Bill to be implemented in the most farmer-friendly manner possible within the limits of the law.
The good news is that, despite some bumps along the way, both of you have worked overtime to ensure that the provisions of the Farm Bill are implemented in the best way possible for the farmers and ranchers it was intended to serve. And we thank you for your hard work. However, some serious issues remain that we hope can still be avoided, and we believe you have the power to head them off.
Each member around this dais probably has an example of problems his or her constituent’s face that can be averted through proper implementation. And I have three that I hope we can solve together.
First, USDA has the authority to address an issue that is impacting all cotton marketing, whether through cooperatives, private merchants, or direct farmer marketing. The situation threatens to seriously erode support for cotton farmers when that support is already threadbare and chronically low prices continue to pose an existential threat to farming cotton in the United States. In Arkansas alone, cotton acreage is expected to be down 40 percent this crop year after record low plantings in previous years. Due, in part, to communist China and other countries that are propping up their own domestic production through rich subsidies and protections, the worldwide market has become artificially depressed and this is harming American producers.
And that is why report language was added to the fiscal year 2015 appropriations bill directing USDA to fix the problem. A legislative fix was unnecessary because the cost reduction options in permanent law already provide authority to correct the problem before it becomes even more serious. An ounce of prevention is truly worth a pound of cure.
Second, is the proposed rule on actively engaged. The rulemaking required under the Farm Bill authorized USDA to consider establishing limits on the number of farm managers for various kinds of farming operations. I did not like the provision in the Farm Bill in the first place, but I took some comfort in the idea that the rule would be implemented in a flexible way, fully recognizing the variety of farming operations today. But limiting the number of managers on a farm to 1, 2, or a maximum of 3 managers is truly arbitrary and capricious and ignores the remarkable diversity and complexity in agriculture today.
Finally, I know that there is ongoing work to provide rice producers and others a margin coverage insurance policy. As you know, coverage levels and participation rates among rice producers have been very low compared to other crops because the irrigated nature of rice production prevents any yield variability. Margin coverage is meant to help address this problem. We also specifically listed rice in the crop insurance title of the Farm Bill as an underserved commodity to focus RMA’s attention on the risk management needs of rice producers. After years of low participation and recent news that basic revenue protection will not be available this year to rice producers—I hope you will do all you can to ensure that this new margin product works for rice producers, in particular.
These three concerns that I register are not meant to take away from my compliments to both of you on your overall handling of implementation. I have been impressed by your work. Rather, I bring these issues to your attention to highlight their importance to me, my constituents, and many of my colleagues. I hope we can work together to solve these problems before they become a lot worse.
I would now like to recognize my friend and ranking member for any comments he would like to make.Read More
Today, the House Agriculture Committee continued its series of hearings in advance of writing legislation to reauthorize the Commodity Futures Trading Commission (CFTC), which lapsed in September 2013. Members of the Subcommittee on Commodity Exchanges, Energy, and Credit Subcommittee, chaired by Rep. Austin Scott (R-GA), held a public hearing to examine the reauthorization of the CFTC from the perspective of market participants. The subcommittee heard from a panel of end-users yesterday.
“This week’s hearings are an important first step towards gaining a full understanding of the new regulatory challenges facing derivatives market participants,” said Chairman Austin Scott. “After hearing from representatives of the futures and swaps industries, we know there is still work to be done as these financial intermediaries and institutions adjust to new and changing rules. Derivatives markets exist for those who have risks to hedge. I look forward to a bipartisan solution that strikes a balance between market integrity and market access.”
Mr. Terrence A. Duffy, Executive Chairman & President, CME Group, Chicago, IL Mr. Benjamin Jackson, President and Chief Operating Officer, ICE Futures U.S., New York, NY Mr. Daniel J. Roth, President and CEO, National Futures Association, Chicago, IL Mr. Gerald F. Corcoran, Chairman of the Board & Chief Executive Officer, R.J. O'Brien & Associates, LLC, Chicago, IL; on behalf of the Futures Industry Association Mr. Shawn Bernardo, Chief Executive Officer, tpSEF - Tullett Prebon, Jersey City, NJ; on behalf of the Wholesale Market Brokers Association, AmericasRead More
Remarks as prepared for delivery:
Good Afternoon. Thank you for joining us for our second meeting of the Commodity Exchanges, Energy, and Credit Subcommittee of the House Committee on Agriculture.
Yesterday, we kicked off the work of this new subcommittee by hearing from several representatives from the community of derivatives end users on their thoughts regarding the CFTC reauthorization process this committee will be undertaking in the days ahead.
Today, we will continue that examination with a focus on perspectives from the futures and swaps marketplace. We are fortunate to be joined by a panel of distinguished witnesses who are here to share their perspectives as derivatives market participants. The industry is well-represented today by two of the largest derivatives exchanges, a key self-regulatory organization, and two important industry trade associations. We hope to come away with a greater understanding of the challenges that each of them face.
Derivatives markets have changed in the five years since the passage of Dodd-Frank, both because of and in response to the new rules written by the Commission. Many of the witnesses before us today have seen daunting changes in regulatory burdens and business practices. Perhaps none more so than Mr. Bernardo, who testified in front of our committee a little over four years ago, in February of 2011.
At that time, the rules governing his soon-to-be SEF had not yet been written. They wouldn’t be proposed until June of 2011, and they were not finalized until August of 2013. In the 18 months since the rules were finalized, the CFTC still has not finalized the registration of a single SEF. Mr. Bernardo has seen the entire process of creating the SEF rule structure rise and set, and yet he is still facing considerable uncertainty about the business he operates.
Likewise, the further into implementation we get, the more cross-border jurisdictional issues that seem to arise. Today, we will hear testimony from five witnesses, four of who will mention the confusion and difficulty they are facing following competing, often conflicting, rules for these international markets.
The continuing uncertainty and ambiguity in the rules, compounded by the sweeping nature of these regulatory changes, pose challenges for the witnesses before us today and their customers – the end-users who rely on access to derivatives markets.
My goal throughout this process is to ensure that we have a healthy balance between market integrity and market access. Derivative markets exist for those who have risks to hedge. Hedgers need markets that are safe, but they also need markets with affordable execution, available counterparties, and consistent liquidity. This subcommittee will continue to look for that healthy balance.
Thank you to the witnesses for appearing before us today. We look forward to hearing your perspectives on these issues and appreciate the time and effort you’ve put forward to be here.
With that, I’ll recognize our Ranking Member, Mr. Scott, for any remarks he’d like to make.Read More
Today, Rep. David Rouzer (R-NC), Chairman of the House Agriculture Committee’s Livestock and Foreign Agriculture Subcommittee, held a public hearing to examine the implications of potential retaliatory measures against the United States in response to its country-of-origin labeling (COOL) requirements for beef and pork.
In 2002, Congress initially adopted a country-of-origin labeling requirement for meat products despite serious concerns that it would not comply with trade commitments. Subsequently, the law was amended in 2008 and immediately challenged in the World Trade Organization (WTO) by Canada and Mexico, the main livestock exporters to the U.S. The WTO has since ruled three times in their favor, and members and witnesses at today’s hearing stressed the significance of the U.S. potentially losing its fourth and final appeal.
“We could be looking at substantial retaliatory sanctions against agriculture and a variety of other industries,” Chairman Rouzer said. “As we heard from our panel of witnesses, the threat of retaliation is severe, and Congress must act quickly to prevent irreparable damage to certain industries and the overall economy. After hearing from members of the agriculture and business communities, it is more apparent than ever that this committee must not only fully understand the potential consequences following the WTO decision, but be ready with a legislative solution. I remain committed to working with my colleagues in the House and Senate to avoid retaliation.”
Agriculture Committee Chairman K. Michael Conaway said, “I applaud Chairman Rouzer’s leadership on this urgent issue. I agree with my colleagues on this subcommittee that we should look into all ramifications of the WTO decision so we can find a way to maintain trade with our main livestock markets, Canada and Mexico. Meat industries knew from the start that this policy would not hold up in the WTO, but Congress didn’t listen, and we have seen major costs with no benefits. COOL has been a failed experiment from the start, and now the economic damages we could face will be felt by all Americans, not just the agriculture industry.”
Mr. John P. Weber, President Elect, National Pork Producers Council, Dysart, IA
Mr. Christopher Wenk, Executive Director of International Policy, U.S. Chamber of Commerce, Washington, D.C.
Mr. Roger Johnson, President, National Farmers Union, Washington, D.C.
Mrs. Linda Dempsey, Vice President of International Economic Affairs, National Association of Manufacturers, Washington, D.C.
Mr. Tom LaFaille, Vice President and International Trade Counsel, Wine Institute, Washington, D.C.
Ms. Alison Bodor, Executive Vice President, National Confectioners Association, Washington, D.C.
Mr. Michael T. Smith, Special Projects Manager, Harris Ranch Company, Selma, CARead More
Remarks as prepared for delivery:
Thank you, Chairman Rouzer and Ranking Member Costa, for holding this important hearing.
Thank you, also to all of our witnesses for taking your time to be here today and helping us understand the consequences we face if we fail to act and the WTO appellate body ultimately finds against the United States as the previous panels have.
The debate surrounding mandatory country-of-origin labeling for meat precedes my being a Member. In fact, as a Freshman Member of this House, one of my very first floor speeches related to agriculture was on this very topic.
Considering the discussions that took place prior to the initial passage of COOL in 2002, mainstream cattlemen and pork producers have raised concerns that this policy would likely not withstand legal challenges in the WTO. Yet we proceeded to implement a program with enormous costs and no quantifiable benefits. Our North American livestock market has been unnecessarily fractured by this policy, but I believe that the damage can be repaired.
As we examine the impacts of retaliation if we lose this appeal, I hope that all Members will recognize the failure of this experiment and work together to avoid the economic damages that could be felt by American businesses both inside and outside of agriculture.
Once again, I thank Chairman Rouzer for holding this hearing and yield back.
Remarks as prepared for delivery:
Good morning. I would like to start by quickly thanking Mr. Bryan Blinson for attending today’s hearing. Mr. Blinson serves as the Executive Director for the North Carolina Cattlemen’s Association. We are happy to have him join us today and appreciate all his hard work on behalf of North Carolina’s cattlemen.
As we have all observed, the United States is fortunate to have the safest, highest quality, most abundant, diverse and affordable food supply in the world. Like most members who represent rural districts, I understand the critical importance of trade, both for our domestic prosperity as well as the moral obligation to support global food security.
While my district has not always benefitted from the trade agreements the United States has entered into, my constituents and I understand the potential benefits that can be derived from fair trade agreements. I emphasize the concept of “fairness” because I have been critical of agreements that open our domestic markets to products produced in my district while not necessarily gaining international market access for these same products. When countries—or blocks of countries like the European Union—impose non-tariff trade barriers on U.S. agricultural products, and encourage other nations to adopt similarly protectionist policies, one can question whether such agreements are in fact fair.I also understand that to criticize other nations for imposing protectionist barriers to our products means that we must likewise be critical of our own policies that do the same.
In 2002, the Congress of the United States adopted a discriminatory country- of-origin labelling requirement for meat products. As a staff member for a Senate Ag Committee Member during the 2002 farm bill conference, I can attest to the fact that those folks who opposed this mandate warned that the policy might not comply with our trade commitments and would likely not withstand a challenge in the WTO. Those concerns have proven to be well-founded considering the United States COOL program for beef and pork was almost immediately challenged by Canada and Mexico, and has lost at every level in the WTO thus far.
In the next few weeks, we expect to hear the results of our final appeal and if we lose there, we will likely face substantial retaliatory sanctions. While we do not know for certain what the WTO appellate body will decide, observers believe that there is little likelihood that the appellate body will reverse the earlier decision.
This subcommittee has a responsibility to review the potential impacts of retaliation by Canada and Mexico if those countries are authorized to do so. As such, I have asked members of the business community to testify today on what that retaliation may look like and what this will mean for our economy.
Secretary Vilsack has stated publicly that if the United States loses the appeal, country-of-origin labelling cannot be fixed administratively. The law will need to be changed. As a subcommittee, we need to understand the ramifications of inaction and be prepared to move quickly after the WTO decision is announced to avoid retaliation. With that, I want to thank our witnesses that are here today and recognize the ranking member, Mr. Costa of California for his opening remarks.
Chairman Austin Scott has been an important voice of common sense on our Committee for the past four years and I am grateful that he has agreed to chair this subcommittee. With his previous experience in the financial services industry I know he will be an asset to this committee during reauthorization and during our oversight hearings in the coming year. I am equally pleased that David Scott is back to serve as our lead Democrat on the subcommittee. He has a deep knowledge of these issues and I know firsthand that he makes a great partner on these financial services issues.
One hundred and fifty years ago, the Chicago Mercantile Exchange introduced the first exchange traded futures contract. At the time, these new financial instruments revolutionized the business of farming. Today, derivatives have expanded into every financial market and have revolutionized modern business, as well. Yet, since the financial collapse in 2008, some have questioned the value of these financial instruments which they have derided as overly complex and being too inherently risky to be used safely. I respectfully disagree.
This Committee has spent considerable time hearing from end-users, market infrastructure managers, CFTC Commissioners, and others. Time and time again, we have heard testimony about the importance of these financial tools and the tremendous value they have to those who use them. As we’ve heard from many witnesses, derivatives allow businesses to reduce the risks they cannot control, so they can focus on serving their customers. Ensuring that our nation’s derivatives markets work for those who have risks to hedge is no small task.
But, I believe that the chairman and the ranking member are well suited to lead the Committee’s work in this area. The Agriculture Committee is unique in Congress for its bipartisan focus on outcomes over partisanship and process over politics. As we dig into CFTC reauthorization, I know that they will continue to uphold those traditions. I look forward to seeing what they can accomplish together.Read More
Today, Rep. Austin Scott (R-GA), Chairman of the House Agriculture Committee’s Subcommittee on Commodity Exchanges, Energy, and Credit Subcommittee, held a public hearing to examine the reauthorization of the Commodity Futures Trading Commission (CFTC) and the challenges end-users face as they use these markets.
Authorization for the CFTC lapsed in September 2013. During the 113th Congress, the House of Representatives passed H.R. 4413, the Customer Protection and End-User Relief Act, which would have reauthorized and made improvements to the operations of the CFTC. The Senate did not take up the bill. The House Agriculture Committee began its series of hearings relating to the oversight and reauthorization of the CFTC in February, when it heard from CFTC Chairman Timothy Massad.
“Americans all across the country, and many in my home state of Georgia, depend on these well-functioning markets to manage their businesses and mitigate risk,” said Chairman Austin Scott. “From small family farms to large manufacturers, a wide range of end-users have been subject to unintended consequences and unnecessary regulations with the implementation of Title VII. These individuals and companies must be able to easily access risk management tools as they work to feed, clothe and provide affordable fuel to consumers here and around the world. As the committee moves towards reauthorization, we will promote policies that enhance stability and confidence in the derivatives markets, as well as strike a balance between access and integrity. These markets must work efficiently for end-users and serve as a tool, rather than a hindrance, for their businesses.”
“I am pleased to have Austin Scott leading our efforts as the Agriculture Committee works towards reauthorization of the CFTC in the coming months,” said Rep. K. Michael Conaway, chairman of the full committee. “We will strive to ensure end-users are able to use futures, swaps and options as seamlessly as possible. Rather than navigating through complex rules and regulations, these individuals and businesses should be able to use that time serving their customers and focusing on their businesses.”
The subcommittee will hold a hearing to examine the views of market participants this Wednesday, March 25, at 1:30 p.m. Details can be found here.
Mr. Douglas Christie, President, Cargill Cotton Testifying on Behalf of the Commodity Markets Council
Mr. Lael E. Campbell, Director Regulatory & Government Affairs, Constellation, an Exelon Company Testifying on Behalf of the Edison Electric Institute
Ms. Lisa A. Cavallari, Director of Fixed Income Derivatives, Russell Investments Testifying on Behalf of the American Benefits Council
Mr. Mark Maurer, Chief Executive Officer, INTL FCStone Markets, LLC
Mr. Howard Peterson, Jr., President & Owner, Peterson Oil Service Testifying on Behalf of the New England Fuel InstituteRead More
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