Legislative Action News, December 17, 2013

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Farm Bill End in Sight

Even though it might appear little progress has been made on the farm bill that is not the case.  The four principals (Chairs Stabenow and Lucas and Ranking Members Cochran and Peterson) have made great strides towards pulling a framework together and committee staff is busy closing out remaining smaller issues. If all remains on track, the farm bill conferees should meet in early January (both bodies return the week of January 6) to close out any remaining issues and report a conference agreement that could be voted on by both bodies in January.

Few details of that framework have been released publically. Necessary components include funding and policy provisions for the Supplemental Nutrition Assistance Program (SNAP) and commodity title details.  Media outlets report the commodity title will offer producers a choice between the House’s Price Loss Coverage (essentially target prices although the levels have not been reported) or the Senate’s shallow loss revenue (Agriculture Risk Coverage) program, with payments made on some version of historical base, not actual planted acres.

Before recessing for the remainder of the year the House passed a short-term extension of the 2008 farm bill until the end of January 2014.  The legislation will not be taken up by the Senate though as Senate Majority Reid has indicated he does not plan to allow it to come to a vote in the Senate, which remains in session this week before it begins its recess. The question of whether an extension is necessary hinges on the “dairy cliff” as the current dairy price support program expires on December 31. Secretary Vilsack indicated last week that implementation of permanent law would take some time and that there is no need to pass an extension assuming the farm bill is completed in January.  Not wanting to take any chances, the House passed the extension.

Budget Agreement Impacts Agriculture

Budget Chairs Ryan (R-WI) and Murray (D-WA) reached a budget agreement to avoid further government shutdowns and provide some relief from the sequestration of discretionary spending levels.  The House passed the budget agreement last week with a strong bipartisan vote (332 – 94) and the Senate is expected to do the same this week.

The agreement basically adds $63 billion in sequester relief split evenly between defense and non-defense discretionary spending while cutting or raising fees in direct spending programs to generate $85 billion in savings over 10 years for a net $23 billion deficit reduction package.  A couple of key components of the budget deal impact agriculture spending.  First the agreement provides no sequestration relief for mandatory programs and extends the sequestration two additional years so that it applies through 2023.  That means farm and conservation programs currently subject to the across the board cut will continue. Recall CRP and crop insurance are not subject to sequestration.  

Second, the budget deal includes a new “user fee” up to $150 for farmers and ranchers who are accessing Conservation Technical Assistance through USDA’s Natural Resources Conservation Service.  Exemptions to the user fee would be given to beginning, limited resource, and socially disadvantaged farmers, to farmers needing assistance to qualify for an exemption from conservation compliance, and to farmers needing conservation plans to address federal, state, or local regulatory requirements. The Congressional Budget Office estimate is $4 million in savings annually from this new fee.

Finally, once the budget deal is signed into law, the additional discretionary spending will be allocated among the 12 appropriation subcommittees.  The Agriculture spending bill will receive some portion of this increase. The amount and how it is allocated among the various departments will be determined by the appropriators prior to January 15, 2014 when the current continuing resolution expires.

Fannie Mae Addresses Appraisal Quality, UCDP Notification
By Bill Garber

Fannie Mae addressed appraisal quality, appraiser selection requirements, data quality issues and new processes to identify and monitor individual appraisers in a Dec. 10 letter to lenders. Additionally, Fannie issued a Uniform Collateral Data Portal change notification with new messaging to support its appraiser monitoring processes.

In the letter, Fannie Mae reported that its weekly review of appraisals submitted through UCDP has identified instances where lenders have delivered loans supported by appraisals that were completed by an appraiser whose license or certification had been suspended or revoked.

Fannie said it will provide information directly to appraisers whose reports exhibit a pattern of minor inconsistencies, inaccuracies or data anomalies in order to give them the opportunity to improve their work. Future appraisal reports from those appraisers will be monitored to assess improvement.

Another process being developed will identify appraisers whose reports exhibit more egregious issues. In those cases, Fannie said it will contact the appraiser and the lender that delivered the loan informing them that it will either perform a post-purchase review all loans submitted with appraisals from the identified appraiser or reject all loans with appraisals completed by the specific appraiser.

All approved sellers and servicers will receive access to the list of appraisers whose appraisals are subject to full review or whose appraisals are no longer accepted by Fannie Mae. The list will be available to approved sellers and servicers on or before Jan. 6, 2014. Details on how to access the Appraiser Quality Monitoring list, which will be protected content on Fannie Mae’s website, will be provided on Fannie’s business portal and in communications to approved sellers and servicers.

In conjunction with the new processes, Fannie said it will add new proprietary messages in UCDP to notify lenders about actions regarding appraisals from specific appraisers. The messages, effective Dec. 10, 2013, will indicate either that 100 percent of the loans submitted with appraisals from the identified appraiser will be reviewed or that Fannie Mae will no longer accept appraisals from the identified appraiser.

Read the Fannie Mae lender letter.
See the UCDP change notification.

USDA to assess changes anticipated for CRP
From Agri-Pulse

USDA says it will conduct a supplemental environmental impact study on the Conservation Reserve Program (CRP) as a means of evaluating probable changes to the program over the next several years.

Five-year farm legislation currently under negotiation by a House-Senate conference committee would drop acres enrolled in the program by up to 25 percent. The Senate plan would drop the current 32-million-acre cap to 25 million acres, while the House bill would cut the cap to 24 million acres.

The proposal to complete an environmental impact statement (EIS) was published in the Federal Register on Friday, kicking off a public comment period through Jan. 13.

USDA officials say the EIS is required by the National Environmental Policy Act (NEPA) and will provide an assessment of potential changes to CRP in 2014 that the Farm Service Agency (FSA), other agencies, tribes and the public can use to evaluate program effects in “appropriate contexts.” The EIS aims to describe the intensity of adverse as well as beneficial impacts, and address cumulative environmental effects associated with proposed changes to the CRP.

The program, first authorized in the 1985 Farm Bill, is a voluntary program designed to set aside agriculturally sensitive farmland and implement long-term conservation measures to improve soil and water quality, control soil erosion and enhance wildlife habitat. In return, USDA provides participants with rental payments and cost-share assistance under contracts that extend from 10 to 15 years.

Greg Fogel, senior policy analyst with the National Sustainable Agriculture Coalition, a farm conservation advocacy group, says to get the EIS started, FSA has already developed a set of preliminary scenarios that basically compare the status quo (a “no-action” alternative) with the expected enrollments resulting from the House and Senate bills (two “action” options).

While Fogel says the acreage reductions proposed in both bills are significant, he contends they are not significantly more than what could be expected over the next 10 years when CRP contracts expire and landowners respond to market drivers by transitioning more land back into crop production.

USDA says it will use the EIS to analyze steps that could help meet any reduction in CRP enrollment while maintaining the maximum environmental benefit realized from the program. That includes changing the enrollment cap on – and shifting CRP acres to – the Farmable Wetlands Program; reducing incentive and cost-share payments for tree-thinning activities; evaluating other forms or processes for enrollment under continuous sign-up; adding flexibility for haying and grazing, including emergency haying and grazing on otherwise ineligible CRP land; and providing transition options for lands coming out of CRP to be enrolled in other conservation programs.

Some of those measures aimed at maintaining a significant level of environmental benefits, even after the CRP acreage is reduced, are included in the House and Senate bills, Fogel says. However, the policy analyst says there is much concern within the ag conservation community that the proposals before the conference committee do not properly maintain continuous acreage enrollment. Fogel notes that it’s in little talked about, smaller, highly environmentally sensitive parcels and plots – buffers and grass waterways, for example – where CRP participation provides the greatest benefits. Continuous acreage is not necessarily subject to the regularly staged sign-up periods and can generally be enrolled at any time. And landowners are often paid higher rates for it, Fogel said.

Webinar: Managing Your Agricultural Business in 2014

Purdue Economists Chris Hurt, Mike Boehlje, Michael Langemeier and Jim Mintert will lead the webinar and address the following questions. What’s the crop and livestock outlook for 2014? What are the expected returns for corn and soybeans in 2014 and what are the implications for cash rental rates and farmland values? Are there key strategies farm and agribusiness managers should focus on in the year ahead?
If you have been asking yourself these kinds of questions, or have others for us to consider, join us on Thursday, December 19, at 2:00 p.m. Eastern.
Get more info or register for the Webinar: http://www.agecon.purdue.edu/commercialag/progevents/managing_your_business_webinar.html?inf_contact_key=41650debffff7d0d54b836da1f394b2dfe79e16830adf4d52af25210c6e37df3

U.S. farm exports will stay on a roll in ’14

Total shipments by volume are likely to outpace ’13’s, while exports by value should be roughly the same as this year, which will see sales reach $140 billion. Login to Member Resources to download the latest issue of the Kiplinger Agriculture Letter.

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