In an attempt to “settle the dust”, Agriculture Secretary Tom Vilsack and EPA Administrator Lisa Jackson made a trip to farm country in Iowa this week. Some farm groups have been complaining about recent EPA decisions, saying Administrator Jackson doesn’t understand agriculture. Jackson reiterated that EPA is not going to regulate dust as a pollutant, an issue that has been bantered around for the last few months. EPA will determine by July whether to change the current regulations for “fine particulate matter”, but Jackson has stressed several times over the past few months that dust will not be included if changes are made.

CBO confirms some spending cuts were “phantom” cuts. The Congressional Budget Office (CBO) analysis of the recently passed continuing resolution to fund the government for the rest of fiscal 2011 shows that the actual spending cuts for the rest of this year total $352 million, a fraction of the $38 billion legislators claimed.

Most of the cuts will affect spending in the future. However, about $15 billion of the cuts touted involve “contingency” funding that was unlikely to be spent at all over the
next decade, according to the non-partisan CBO. The next fight over spending cuts is expected to begin immediately. A vote on raising the debt ceiling will be needed sometime in the next couple of months and Congress needs to begin considering appropriations bills for fiscal 2012 which begins in October.

Discretionary spending for agriculture was cut by $3 billion compared to fiscal 2010 levels in the latest “continuing resolution” passed last week to avoid a government shutdown. Conservation program funding, which is considered to be mandatory spending, will be hard hit by the continuing resolution with funding for EQIP reduced by $350 million from the levels laid out when the 2008 Farm Bill was approved. The reduction in mandatory spending programs is especially important because those cuts reduce the budget baseline for the development of the 2012 Farm Bill.

The House-passed budget for fiscal 2012 and beyond includes a proposal to significantly reduce government spending on nutrition programs. The $65 billion food stamp program, now called the supplemental nutrition assistance program (SNAP), would be replaced with capped block grants to states. The program currently provides assistance to 44 million people, double the number of a decade ago. Funding for the SNAP and other nutrition programs is a major part of the budget for USDA.

We are getting closer to approval of the U.S. – Panama Free Trade Agreement. This week, Panama’s legislature passed a tax information exchange agreement, which was considered the last major hurdle before the agreement is submitted to Congress for approval. The administration says it is closely monitoring Colombia’s implementation of its Labor Action Plan before submitting that FTA to Congress. It is still likely that the free trade agreements with South Korea, Panama, and Colombia will all be submitted to Congress before July. (Most ag groups support all three; expecting net gains for U.S. ag trade with each country.)

Australia is imposing 40% duties on imports of U.S. biodiesel. A government study in Australia concluded that U.S. biodiesel benefits from significant government subsidies, making it less expensive than fuel from competitors. The EU has also imposed duties on imports of U.S. biodiesel. It is not clear whether the U.S. will appeal the imposition of the duties to the World Trade Organization.

The government of China is trying to limit corn consumption in non-feed sectors to help control prices. Banks are being asked to halt loans to companies that would use the funds to buy corn for industrial uses. The amount of corn available to processors will be limited to the amount used in 2009. Corn prices in China have increased by about 17% over the past six months and the Chinese government is very concerned about rising inflation.