Farm bill blink

It's a game of chicken, or rather corn, wheat, cotton, soybeans, food stamps, conservation programs and specialty crop priorities. But who will blink? Here is the latest from the Administration about where farm bill negotiations stand, followed by an earlier statement about a new offer from Sens. Harkin and Chambliss.

Statement by Secretary Ed Schafer and Deputy Secretary Chuck Conner Regarding the Senate's Farm Bill Proposal
February 15, 2008
The Senate's most recent farm bill proposal recommends increases in taxes and significantly grows the size and scope of government while failing to implement much needed reform in our current farm bill programs. We are disappointed that the Senate has not joined the House in proposing a package that seeks fiscal discipline and real reform while providing a true safety net.
The President has said time and time again that he will not support a bill that raises taxes and uses taxpayer dollars to increase the size of government, and tof hat is exactly what this proposal does.
We believe that, working together, the House, Senate and the Administration can move forward with a true reform minded farm bill that remains at around $6 billion over baseline. The Senate offer looks to increase spending by at least $16.5 billion.
Although we remain encouraged with the efforts of the House and the amount of dialogue put forward in this process, this Senate proposal is a step away from passing a farm bill.
We continue to encourage the House and Senate to work together to quickly agree on a farm bill that the President can sign. This proposal does not reach this goal


From Sens. Harkin and Chambliss:

Senators Tom Harkin (D-IA) and Saxby Chambliss (R-GA), the Chairman and Ranking Member respectively of the Senate Committee on Agriculture, Nutrition and Forestry today issued the following statement after the Senate submitted a farm bill proposal to the House. The farm bill is currently being negotiated between the Senate and House. Harkin is chair of the conference committee.

“This afternoon, Senate farm bill negotiators submitted a spending proposal to the House that meets the needs of this farm bill without having to cut back on the critical investments made by the Senate-passed bill in renewable energy, conservation, nutrition, rural development and better diets and health for all Americans. Support for these investments was strong in the Senate, where our measure passed by one of the largest farm bill votes in history. Support for this effort was also strong in rural America, where spending on agriculture is a small part of the overall federal budget. “The Senate proposal provides an outline of spending that is $12.3 billion above baseline – spending that is not only critical for farmers and rural America, but also our nation as a whole. The goal now is to reach agreement with House negotiators and the White House so we can identify funding mechanisms to support these investments that the White House, Senate and House can agree upon. I remain optimistic that all negotiators will see the benefits of swift action and agreement so that we can bring the farm bill to fruition.”

UK remedies

It seems the UK has been wringing its hands over what to do about the dominance of a few retail chains for some time. Here is a press release with today's date that describes the UK Competition Commission's latest provisional proposals "designed to remedy its competition findings in UK groceries retailing." Prominent among the remedies: an ombudsman to oversee and enforce a stronger "supply code of practice."
From the press release:

The Competition Commission (CC) has today published for consultation its proposals designed to remedy its competition findings in UK groceries retailing. These include a recommendation for the inclusion of a ‘competition test’ in planning decisions on large grocery stores and measures to prevent exclusivity arrangements and restrictive covenants being used by retailers to restrict entry by competitors; the creation of a new strengthened and extended Groceries Supply Code of Practice (GSCOP), and a recommendation to establish an independent ombudsman to oversee and enforce the Code.
In its provisional findings report published last October, the CC concluded that, whilst UK grocery retailers are in general delivering a good deal for consumers, action was needed to improve competition in local markets and to address relationships between retailers and their suppliers.
Along with the report, the CC outlined a number of possible remedies to address its competition findings. Since then the CC has been discussing those possible remedies with retailers, suppliers, trade associations, the Office of Fair Trading (OFT), other government departments and interested parties.
Following these discussions, the CC is now proposing a package of measures which it considers will be practical and effective in addressing its competition findings to the benefit of customers. These are set out in more detail in the four Proposed Remedies documents which are available on the CC’s website at www.competition-commission.org.uk.
The proposed remedies have been published so that interested parties have a further opportunity to comment before the CC publishes its final report (currently planned for the end of April). This report will include the decision on the remedy measures to be introduced.
The proposed package of remedies comprises:
• A recommendation to the relevant government departments that a ‘competition test’ should be introduced when local planning authorities are assessing planning applications for new large grocery stores. The OFT would act as a statutory consultee to the local planning authority to carry out the test.
• A requirement for grocery retailers to release existing restrictive land covenants, which have the effect of preventing that land being used for competing stores, in areas of high concentration.
• A ban on the imposition of future restrictive covenants which have as their object or effect a restriction on grocery retail use.
• A requirement on grocery retailers to lift existing exclusivity arrangements that have been in place for more than five years, where these have been identified as a barrier to entry by a competing retailer in areas of high concentration.
• A requirement on grocery retailers (and a recommendation to local authorities) not to enter into or enforce any exclusivity arrangements of this kind in the future for longer than five years.
• A recommendation to the Department for Business, Enterprise and Regulatory Reform (BERR) that the Land Agreements Exclusion Order be amended so that agreements which restrict grocery retailing should no longer benefit from exclusion from the Competition Act.
• The creation of a new Groceries Supply Code of Practice (GSCOP) to replace the existing Supermarkets Code of Practice (SCOP), which will be extended to include all grocery retailers with a UK turnover greater than £1 billion.
• The new Code, whilst including much of the existing SCOP, will prohibit retrospective changes to agreed terms of supply and also require retailers to make further improvements to their dealings with suppliers through the appointment of an in-house code compliance officer, keeping better records of contracts with suppliers and automatic notification to suppliers of contractual terms and their right to complain and seek arbitration of disputes.
• A recommendation to establish an ombudsman to arbitrate on disputes under the GSCOP, with the power to gather information following complaints from suppliers and primary producers and proactively investigate breaches of the GSCOP.
Bearing in mind that the relevant government departments are already intending to make changes to planning affecting grocery retailing, the CC is not itself intending to make any recommendations for other changes to the planning system such as to the ‘need’ test or ‘town centre first’ policy. It is also not requiring any divestments of stores or land holdings. It believes that the measures proposed will be sufficient and proportionate in addressing its concerns about existing and future competition in local markets.
In its provisional findings report the CC stated that a lack of competition in certain local markets not only disadvantages consumers in those areas but also allows retailers to weaken their offer to consumers nationally. Further, some retailer land holdings and other practices, such as restrictive covenants, mean that competition is not as effective as it could be in a number of areas.
The CC was also concerned about the ability of grocery retailers to transfer excessive risk and uncertain costs to suppliers through various purchasing practices, such as retrospective changes to supply agreements. The CC considers that these practices could damage investment and innovation in the supply chain to the ultimate detriment of consumers.
The CC has carried out an exhaustive inquiry into all aspects of groceries retailing, having received over 550 submissions; held 75 hearings with main and third parties; undertaken 2
three separate surveys as well as analysing existing data and research covering the whole industry; collected a dataset of 14,000 grocery stores and published 26 working papers.
The CC would like to hear from all interested parties about the provisional decision on remedies by Friday March 7 2008. To submit evidence, please email: Groceries @cc.gsi.gov.uk or write to:
The Inquiry Secretary
(Groceries Market Investigation)
Competition Commission
Victoria House
Southampton Row
LONDON
WC1B 4AD

Where the money is

Will Russia continue to be a growing market for imported fruits (and vegetables)? One USDA official here in Moscow told me that the country currently derives some 70% of its income from oil and gas. As long as oil and gas are trading at high levels - and that scenario doesn't look like it will go away anytime soon - Russia's economy and consumer spending figures to trend higher. The long term question is whether Russia can use oil earnings to diversify its economy and fend off a rocky landing if markets reverse.
What about domestic production of fruits and vegetables? Again, it may take Russia many years to develop its fruit production capabilities; growers are seeing huge profits on grains and oilseeds and putting "long money" - money that won't give a return on investment for 7 or 8 years, as in capital to develop orchards - just isn't overwhelmingly attractive.
However, one reality that still rears its ugly head is corruption among government officials. The average number of signatures on an official document is an astounding 27, and officials can and do extract bribes from that leverage. That is frustrating to both exporters and Russian importers, I've been told this week.
I won't get into all my observations, but suffice it to say that it has been a good week of interviews (thank you Ksenia), and The Packer will publish a few special focus articles on Russia in the next few weeks.

Poll closed

I note the Fresh Talk poll has closed this week, with results that surprised me a little. Here is the question and the final numbers:

Where should the USDA find the funds to implement and oversee mandatory country of origin labeling on fresh produce and other commodities?

Grower-shippers	4 (18%)
Retailers	7 (31%)
General budget appropriations	11 (50%)

Votes so far: 22
Poll closed

TK: I would have predicted overwhelming sentiment for "general budget appropriations as the answer to this question. The fact that some 50% of those surveyed would pin the costs of USDA oversight of country of origin labeling on either grower-shippers or retailers perhaps reveals the lingering divisiveness of the issue. Perhaps cost share is the best outcome anyway: 50% paid by the government, and the balance split between the industry....