D.C. Watch: TPP progress slow but should continue

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From trade policy to food stamp funding, here is a look at the latest news from Washington:

  • House Republicans are very unhappy that states are finding ways around the cuts to the food stamp program included in the new farm bill. The farm bill negotiators closed what some considered a loophole that allowed people to get food stamps if they were eligible for even $1 per month in heating assistance. The farm bill raised the threshold to $20 per month. Now at least 7 states have raised the heating assistance enough so that the people are able to keep their food stamps. The Congressional Budget Office concluded that the change approved in the Farm Bill would reduce food stamp spending by more than $8 billion over 10 years, but the changes in the state heating subsidies map keep those saving from materializing.

  • There is serious opposition to a plan to change the poultry inspection system. Under current rules a federal inspector is required for every 35 birds that cross the slaughter line each minute and the total number of birds per minute is capped at 140. So, four inspectors are needed for a plant operating at the cap. Under the proposed changes the number of inspectors required would fall to one and the cap would be raised to 175 per minute. Agriculture Secretary Vilsack says the current system is outdated and needs to be changed and has used the proposed new system in 25 plants as a pilot program. Sixty-eight members of Congress sent a letter asking USDA to back away from the proposed changes

  • Some members of Congress are urging USDA to provide disaster assistance to hog producers who have lost pigs to the PED virus. Some estimates put the number of pig deaths due to the virus at 4 million head or more. The livestock disaster provisions included in the new farm bill includes aid for “disease” and hog producers’ losses may be covered. Some lawmakers want USDA to declare disaster areas where the PED virus is prevalent which would allow producers to apply for payments under the Livestock Indemnity Program. The effects of the virus have driven hog prices up to record highs.

  • Food price inflation is one result of the confluence of the effects of the PED virus in the hog sector, the prolonged liquidation in the cattle cycle and strong demand for dairy products. Food prices are forecast to rise by 3.5 percent this year, the biggest increase in three years. They rose by more than 5 percent in 2008 and 3.7 percent in 2011. The increase in food prices may be even larger than currently forecast if the drought in the west significantly reduces fruit and vegetable production. Prices for coffee and orange juice are also rising due to production problems in Brazil.

  • Progress on the Trans-Pacific Partnership (TPP) trade agreement has slowed significantly in the last few months. U.S. Trade Representative Michael Froman says the U.S. is insisting on greater access for agricultural products from Japan and Canada. According to reports – Japan is seeking exemptions from the TPP reductions in tariffs for meat, dairy, sugar, wheat and rice. Canada is also reluctant to give up their supply management systems for milk, cheese, eggs and poultry. These and other difficult areas suggest that the TPP negotiations will continue for most – if not all – of this year. Unless Congress gives the administration Trade Promotion Authority there is only a slight chance an agreement would win approval anyway.

  • Spending on conservation programs was cut by $200 million in the new farm bill, but the allocation of the money will be shifted more toward programs for working lands. The EQIP and CSP programs got 40 percent of the money in 2008-2013 but will get 50 percent in the 2014-2018 period. Funding will be cut for land retirement programs, like the Conservation Reserve Program.

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