Expert Shares Beltway Outlook

Despite what would appear to be a favorable turnover in national legislators for agriculture during the most recent election cycle, 2011 will be a challenging year for industry interests says Randy Russell, agriculture policy expert and president of Russell & Barron, Inc. Russell spoke to attendees at the recent Agricultural Retailers Association conference in Palm Springs, CA.

The legislative mix will change significantly, both in total members of both branches of Congress and within key committees. Of the 28 Democrats that were on the House agriculture committee, 15 of them went down to defeat in November. The new Agriculture Committee Chair, Republican Frank Lucas of Oklahoma, is experienced and highly knowledgeable, and will bring a common sense approach to the leadership role, says Russell.

In the Senate, the defeat of Blanche Lincoln (D-AR) will necessitate a change in leadership in its Ag Committee as well. North Dakota Democrat Kent Conrad was next in line for the position but he declined it to remain chair of the Budget Committee, so Debbie Stabenow (D-MI) will take on the position. Russell says Stabenow brings experience in the dairy and specialty markets, as well as knowledge of nutrition issues.

Overall in the Senate, Stabenow is one of eight Senate Ag Committee members that will be up for reelection in 2012, and Sen. Richard Lugar (R-IN) is the only Republican among them.

Russell laid out several key issues to watch going into 2011 that will impact agriculture:

Presidential Politics: The presidential campaign will start in earnest early in 2011, and Russell expects several key factors to weigh in. Beyond the economy and unemployment and barring more significant events that can’t be foreseen, the state of affairs in Iraq and Afghanistan and the continuing sagas in Iran and North Korea will be the most significant issues to watch as the campaign progresses.

One of the biggest mysteries now is who will emerge as the Republican candidates for president, but Russell believes it won’t be anyone who’s currently in the spotlight. “I honestly could not tell you who will be the Republican nominee, but if I had to put money on it I would say we’ll see emerging candidates from the governor ranks,” said Russell. “Someone with executive office experience.”

Tightening Electoral College: As is typical in mid-term elections, the sitting party in the White House came out on the short end in governor’s races. While Democrats unseated Republicans in 5 states – California, Connecticut, Hawaii, Minnesota and Vermont – Republicans won 11 governorships from the Democrats (Iowa, Kansas, Ohio, Oklahoma, Maine, Michigan, New Mexico, Pennsylvania, Tennessee, Wisconsin and Wyoming). As the country enters another redistricting cycle, Republicans should gain some measure of electoral advantage by holding the majority of the country’s governor positions for the first time since 2006.

Budget Realities: Russell emphasized what’s been discussed in the media about the real challenge of cutting the federal deficit in meaningful ways, noting that 71% of the federal budget is spent on Social Security, defense, Medicare and Medicaid. “Talk of eliminating earmarks and freezing spending is all well and good, and might be exactly the right thing to do,” noted Russell. “But it is hardly going to make a dent on our total debt and it is hardly going to make a bit impact on the annual deficit.” 

USDA Budget Realities: The above being said, every department will be called upon to cut spending, including USDA. Only 30% of the program directly involves agriculture in the form of program payments, conservation programs and other farmer services – the remaining 70% is nutrition, including SNAP (formerly the food stamp program) and school meal programs.

Given the condition of the economy, Russell said it will be politically difficult to pull back on nutrition programs in a big way, so cutbacks should be expected in farmer-based programs. “Definitely, nothing will be off the table. I don’t think ag will be asked to give back disproportionately, but we will be asked to do our share,” he said.

Farm Bill Slowdown: With so much budget work to do, and the impending Republican takeover of the House, Russell believes that mark-ups for the 2012 Farm Bill won’t see the light of day until later this summer.

Back Door Regulations: Now that onerous environmental legislation has virtually no chance of moving through the House with a divided Congress, Russell says that agriculture will need to closely monitor and engage with EPA. “What they cannot get done through legislation they will try to do by fiat through regulation,” said Russell.

And in the White House, EPA clearly has the upper hand over USDA. “It’s clear that EPA is running the show,” said Russell. “I recommend watching the Federal Register carefully.”

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