Posted by: Phillip Fraas
January 04, 2007

Congress just begins its new session today so it is too early to look for developments on Capitol Hill regarding the new Farm Bill Congress will draft this year. It is not, however, too early to note and pass on reports of developments elsewhere that could influence the development of the Farm Bill.

 CORN AND SOYBEAN PRICES: Yesterday in the futures markets, even after sharp declines, March corn was trading at $3.70 a bushel, and January soybeans were going for $6.69 a bushel. If these bullish prices hold up (and it is hard to imagine a drastic decline as long as demand factors like ethanol production don't flag), the effect on the development of the Farm Bill might be considerable.

Both commodities have been responsible for a good portion of farm bill outlays in the past; but with market prices higher, the need for the outlays lessens. The result: less budget pressure to change current programs substantially. Also, the high prices for corn have to scare the heck out of livestock and poultry producers; and consumer groups will be concerned about possible increases in food prices as the higher input costs are passed along. Thus, also, look for the agriculture committees to think about ways to ensure that the demands of ethanol producers don't result in a permanently short market for corn.

MORE FROM THE WASHINGTON POST: I first mentioned last October the series of articles The Washington Post was doing on farm policy. The Post is still at it, publishing two additional parts of its series last month: December 21, 2006 "The myth of the small farmer (federal subsidies turn farms into big business)"; December 22, 2006 "The fight over the farm bill (powerful interests ally to restructure agriculture subsidies)".   

Given that the thrust of the Post series is to question the worth and cost of the current Farm Bill programs, it will be interesting to see how the defenders of agricultural programs in Congress respond to these implicit attacks on the Farm Bill, and whether the series will become part of the fabric of the 2007 Farm Bill drafting process. As to the latter, I think it is too early to tell; but if the Post series starts being circulated and quoted, look for tougher sledding for Farm Bill partisans during the congressional floor debate on the legislation later this year (especially in the House where there are many congressmen whose districts have no rural components and thus have no constituent pressure to vote for farm programs).

 FARM BILL FOOD FIGHT?: There was another e coli outbreak associated with green vegetables in December, this time involving iceberg lettuce or green onions in the Northeast; and this development got a lot of press. Thus, I suspect the safety of our food supply has become an issue on many people's minds right now.

The Administration and the food industry are working hard to deal with the problem, with recent reports that new handling and processing standards for vegetables will be promulgated in March. If those standards don't mollify the concerns of food safety advocacy groups in Washington and if the worst happens and there is yet another food poisoning outbreak, look to the possibility that the fight over strengthening Federal food safety rules laps over into and perhaps reshapes the Farm Bill debate. There are a lot of ifs for such a scenario to occur, and traditionally food safety issues have not been part of the Farm Bill debate; so it is not something that needs focusing on now, just kept an eye on.

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