No Super Committee Resolution and the Farm Bill

If the super committee fails to reach agreement, that kills the 2012 farm bill for this year.  Presumably the Ag committees and the ag lobbies will use the holidays to consider what they put together in a rush, and early next year we'll start to see legislation drafted.  In other words, we'll be back to the regular order of things.  The 64 dollar question is what sort of funding baseline they'll work with. Will they have the dollars they propose to the super committee, more or less?

The other question of importance is what will the farm economy be doing next spring and summer?  Recently corn and wheat prices have slid (see this Des Moines Register piece for corn.) Problem is that Ukraine and other grain producers have had good years.  (Back in the day, Ukraine used to be the breadbasket of Europe.  Just maybe modern farming methods and rational organization has finally arrived there so they can resume their place?)

I don't know enough to guess what will happen if prices have retreated significantly, but I would assume that it would change the bargaining and perhaps the framework of the programs in the farm bill.

As I've written, I now realize there's a window of opportunity for FSA/RMA to install MIDAS and ACRSI before being hit with the new farm bill.  But if the super committee fails, there may be an extended period of uncertainty over the future 2013 and on, meaning the bureaucrats have a compressed lead-time to get things in place. 

So if I'm an FSA bureaucrat do I pray for the success of the super committee, knowing it might well mean program changes which eviscerate much of the agency, or do I pray for failure, guessing it might make next fall torture?

Politico on the Farm Bill

As a change of pace, I take advantage of Politico's unusual attention to farm bill issues to link to their report

Pareto and Sports: the 80/20 Thing

Ever since I learned it, I've loved the Pareto principle, the 80/20 thing.  I particularly applied it to software, most notably back in the day when we were trying to automate deficiency payments. I think I can claim credit, or blame, for splitting payments into two categories: special and regular.  The regular ones we'd try to run as a batch, the special we'd struggle with as best we could.

Now people have discovered the 80/20 rule works for sports, specifically in things like tennis the best 20 percent of the players win 80 percent of the prizes.  See this Technology Review piece

Good News for Obama

Stolen from Joshua Tucker at Monkey Cage, although reworded: While his young voters from 2008 may lose some enthusiasm as 2012 approaches, partly because they've graduated into a terrible job market, McCain's old voters from 2008 will also be losing enthusiasm for the Republican candidate, partly because they're dying off.

Bureaucrat Scores

Lifted from a comment on Ta-Nahesi Coates blog

I would like to take this opportunity to deeply thank the people on the dispute line for the Department of Labor in Maryland. There was a problem with my severance pay affecting when my unemployment started, they sent me a letter saying they'd call at 1PM. They called me exactly at 1, addressed the issue in about 30 seconds, answered a bunch of questions I had and caught and fixed a mistake on my e-file that I didn't even knew I made. All in about 5 minutes. Easily the greatest customer/client service I've ever received, public or private, and it was from a state bureaucrat at a call center.

Sex Gives Farmers Troubles

That's my takeaway from a Stu Ellis piece on waterhemp, a weed which is very difficult for farmers to control.  The reason, although I'm reading between the lines and making assumptions, is sex:

Since the waterhemp family has both male and female plants whose genes mix annually, the genetic diversity increases every year and an increasing number of plants have become resistant to a wider variety of herbicides. 

 If I recall my biology, that's the purpose of having sex, to increase diversity and therefore increase adaptability to the environment.  I'm glad to know some of my knowledge isn't obsolete.

Land on the Moon

This post at Govloop, doubting the sanity of someone selling land on the moon, brought back memories.  Sometime around 1950 in a promotion of some kind, perhaps for a breakfast cereal, an outfit sold land on the moon.  As I recall it was for a nominal sum, and a nominal area (a square foot maybe, or even a square inch).  Ah, those were the days.

ACRE Dangers and the WTO

Via Michael Rogers at Green, Green, and Grains, here's an AEI study of the ACRE program, outlining two dangers:

1. the likelihood a complaint against the program at the WTO would succeed, resulting in penalties like the Brazilian cotton case
2. the possibility that market prices will decline in future years, leading to a large increase in payments.

I'm no expert on anything but for theWTO the writers speculate on a new WTO agreement which lowers the amber box limit below its current 19.1 billion and might be impacted by ACRE payments.  More likely is a "price suppression" suit in a period of declining market prices, along the lines of the Brazilian

31 Percent Is a Bubble

See this from the Des Moines Register, reporting on the increase in farmland prices.

While I'm calling a bubble, I should note differences from the bubble of the late 70's: interest rates are much lower--when I bought a house in 1976 I thought I was doing great by getting 8 percent financing; apparently there's less leveraging among farm operators.

Thoughts About the Future of Farm Programs

I've voiced concerns over the conjunction of a new farm bill and extensive changes in FSA operations.  However, my concerns may be misplaced.  It's true, I believe, the 2012 farm programs are safe, given the impending passage of the ag appropriations for the 2012 FY.  If the sequestration provisions of the debt ceiling legislation which set up the super committee are invoked, there still won't be any effect on the major programs.

So if the 2012 farm bill is passed as part of the super committee's compromise legislation, then FSA and its contractors might have a whole year to plan for its implementation, to write the regulations, and develop the software required. That assumes the new farm bill keeps a major place for FSA-type programs, rather than shifting almost entirely to crop insurance style risk management.  That assumption seems to be safe, at least as of now, given the apparent inability of the different commodity groups to come together.  Of course, if there's separate programs for wheat and feed grains, cotton, and rice and peanuts that will increase the workload and the administrative headaches. [Update: see Larry Combest's take on the situation from yesterday, via Farm Policy]

However, there's many a slip twixt cup and lip.  It seems to me if the super committee can come up with agreed legislation which is passed, there will be a long period, say from January to next elections, during which the farm bill provisions will be reviewed and questioned.  Not the cuts, particularly, it would be hard to come back in the spring or summer of 2012 and provide more money.  But commodity groups could very well ask for changes in the provisions, which could be passed so long as the overall impact on the budget is neutral.

Another unknown, at least to me, is the degree of flexibility RMA has in implementing legislative changes in its crop insurance policies.  I assume from past experience they've less flexibility than FSA.

Interesting times.