US Farm Bill returns | My Machinery
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US Farm Bill returns

The mammoth US Farm Bill has been extended once again as part of the decision-making process that helped the United States government avoid the so-called “fiscal cliff” at the start of this year. It means the $A276.4 billion cluster of agricultural policies will remain in 2013. And while Australian farm lobby groups’ default setting when it comes to the bill, which provides whopping subsidies to US farmers, is to call for an end to the policy, there is some evidence that the bill’s support of biofuels is benefitting Australian grain producers by providing underlying demand for feed grain. Grain Producers Australia acting chairman Andrew Weidemann said the subsidies were distorting markets, but said initiatives such as biofuel schemes, which provided additional demand for grain, were worth considering. “The straight subsidies have been very bad for us, but at least with the mandate they were trying to fix problems, such as demand for corn, along with fuel security, so it was proactive policy,” Mr Weidemann said. “Having that solid demand for corn has been good for grain producers across the world in that it puts a certain floor in the market.” A new Farm Bill has not been passed and instead it is an extension of the current 2008 Farm Bill. The US government usually puts up a new bill every five years or so. US farm lobbyists are pushing hard for a new bill to be introduced to provide certainty for their farmers. Australian Farm Institute executive director Mick Keogh said the Farm Bill was evolving away from straight subsidies. “We in Australia talk about the US being provided with subsidies, but while there is a lot of government support for their farmers, the focus has changed from subsidies to crop insurance,” Mr Keogh said. He said the subsidies hurt competing Australian producers more, because the subsidies encouraged over-production, which was then sold onto the world market at discounted rates, under-cutting other countries’ prices. However, he said now there was a focus on less market-distorting insurance products. “The strength of the scheme is such that many growers, even allowing for the record-breaking 2012 season, still managed to be profitable because of the multi-peril crop insurance they can get,” he said. Mr Keogh said providing crop insurance was a seriously costly business for the US government. “Up to 70pc of premiums are subsidised by the government, when people ask why multi-crop insurance does not work here, the matter of government intervention is massive,” he said. While the US farm lobby is immensely powerful compared to in Australia, Mr Keogh said divisions were there, especially in terms of what was covered in the Farm Bill. “There’s a lot of opposition to the biofuel mandate in livestock producing states such as Texas or Oklahoma,” he said. “Combined with the fact these states are big shale oil producers, and shale oil is in competition with biofuel, and you can see some serious opposition mounting to the biofuel mandate.” Nevertheless, the powerful corn lobby has its core support in bellwether Mid-Western states – including Illinois, which President Obama represented in the Senate – and the mandate is in once again. “All the farming states in the Mid-West contribute just as many Senators as a state like California, which has more people than Australia, so they have probably got a disproportionate amount of influence.” The news came as a relief to the biofuel sector, with jobs being lost in late 2012 as producers faced an uncertain wait to see whether the mandates needed to keep them viable would be reinstated. “The Land” http://www.theland.com.au/news/nationalrural/agribusiness/general-news/us-farm-bill-returns/2644826.aspx?storypage=2

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