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Mike's Blog

Insights from the President of ProAg

Q&A Update for the 4th of July

by Mike Connealy on 07.03.2013

Q. In your opinion, when, if at all, will the House take up the next steps in passing a Farm Bill?

A. My guess is that it will be during July of 2013. This will probably include a very limited rule and amendment process. They need to get something to “conference” with the Senate in order to avoid an extension or the chaos of the 1949 bill kicking in if nothing happens. The chances of this occurring during July are better than 50/50. 

Q. In your opinion, will the House split SNAP (food stamps) and the actual farming part of the Farm Bill?

A. My guess is that they will continue to talk about it, but in the end since they have to match up in some fashion to the Senate passed version, they will move a conventional Farm Bill forward that includes the nutrition title with the rest. This is likely a good thing, as those promoting the separation include the right wing Heritage Foundation, which is certainly opposed to expansion in SNAP, but equally opposed to a strong crop insurance title. Chairman Lucas (R. Oklahoma) opposes the separation idea, so my guess is that his inside knowledge far exceeds mine – let’s go with the Chairman on this topic. 

Q. In your opinion, what is the largest obstacle to overcome in ultimately passing a Farm Bill in 2013?

A. Partisan politics in the House makes this an iffy proposition. With questionable leadership coming from Speaker Boehner (R. Ohio) and Majority Leader Cantor (R. Virginia) whom could not deliver enough Republican votes on what most considered a tough Farm Bill where SNAP cuts were concerned. How can they pass something that comes back from the Senate with most of those cuts (considered not aggressive enough by the far right) restored ? 

The Heritage Foundation is running ads opposing key Republican members in rural areas for supporting the recently failed Farm Bill (including Chairman Lucas and Mike Conaway of Texas). The Farm Bill fiasco indicates that House Republican leadership is in danger of being brought down by “friendly fire”. 

This was illustrated in remarks by House Minority Leader Nancy Pelosi (D. California) when she referred the Farm Bill vote as “amateur hour leadership” due to the fact that 62 Republicans opposed the Speaker and Majority Leader whom asked for their support in passing the Farm Bill on the House floor and were publicly embarrassed by the resounding defeat. Included in the 62 opposition votes were several Chairman of various and important House Committees. 

Q. Why did MC refer to the Kind (D. Wisconsin) amendment (AFFIRM) as a “poison pill”? 

A. The term “poison pill” surfaced in the USA in the business world as a method to counter hostile takeovers between publicly held companies.  The idea being that if a hostile enterprise attempted to take over another, certain legal provisions would kick in which would make the purchase financially unattractive to the buyer.  Obviously, knowing that a “poison pill” exists would prevent an acquirer from even attempting the takeover.  Another similar term for these provisions is “shark repellent”. These definitions can be looked up using any of several resources including Investopedia

In the legislative world, the original term developed in England, was “wrecking amendment” which has become “poison pill” in my vernacular. Defined by Wikipedia, the “wrecking amendment” is an amendment made by a legislator who disagrees with the principles of a bill and who seeks to make it useless by moving an amendment or amendments that make the bill malformed or nonsensical. Representative Kind and his co-sponsors obviously disagree with the House Ag Committee and their efforts to maintain a strong private sector delivered crop insurance program in the USA. Instead of publicly admitting this, they write up an amendment that makes private sector delivery impossible from a financial perspective in an attempt to “wreck” the entire Farm Bill with their amendment. The terms of his failed amendment can be found here. Note that his (and co-sponsors) animosity towards the private sector includes taking back $$ for the 2013 crop year despite the fact that RMA has a contract with the companies containing specific and legal terms. If this does not qualify as “nonsense”, then what does?     
 
Q. How goes the 2013 season? Is the excess rain less of a problem than the 2012 drought?

A. The 2013 season is going along somewhat better than the 2012 finish. We do have excess rainfall and related claims for replants and prevented planting across a wide area of North Dakota, Minnesota, Iowa and Illinois. A few of the usual spot losses for hail and the like across the USA. The drought is still having significant impacts in New Mexico, Colorado, Texas, Oklahoma and Kansas, but less severe than last year.  At this point, we would call for “average” underwriting results for MPCI with a long way to go. Last year was looking pretty good around the first of July, but a lot worse by the end of July 2012. Falling market price issues for corn and soybeans are a concern as well for revenue policies in 2013, again it is too early to tell what the final outcome will be.    

In closing, questions and comments are welcome and everyone please enjoy a safe 4th of July holiday! 

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