For Congress: Ag appropriations, marketing certificates

For Congress: Ag appropriations, marketing certificates

Most likely path for ag appropriations this fall? Cotton industry leaders push for marketing certificates.

When Congress returns to Washington, D.C., in September, a rather extensive to-do list will be waiting. First up: appropriations bills.

“They’ll be there for three or four months depending on when they decide to get out of town for the holidays,” said Reece Langley, National Cotton Council vice president, Washington Operations, at the mid-August ACP-Cotton Foundation joint meeting in New Orleans.

“In both the House and Senate, most of the appropriations bills — there are 12 — move through the committee process and then to the House and Senate floors. Most of those have moved through committees, but very few have made it to the floor and none have been finalized.”

That means when Congress returns, the leadership must determine how they’ll come to a resolution on funding for the new fiscal year, which begins the first of October. Most likely, said Langley, Congress will “pass a short-term continuing resolution to keep things funded at last year’s levels. That will give them time to figure out a longer-term funding package for the rest of the fiscal year.”

At this time, Senate Majority Leader Mitch McConnell “seems very focused on working with the White House to come up with some broad budget agreement. On the House side, given some of the Republicans in that conference, they’re a little less willing at this point to work with (President Obama) and the White House on anything, including the budget agreement. That complicates what the end of the year spending package will look like.

“One thing is for sure: McConnell in the Senate and (House Speaker John) Boehner have said there will not be another government shutdown, that there won’t be a repeat of that. So, there’ll have to be some type of agreement sometime this year on a final funding bill.”

As for the highway bill, the House and Senate have passed very different pieces of legislation to reauthorize transportation programs. “They’ll go to conference in September and try to work out those differences and pass a final transportation bill later this year.”

Langley predicts the agreement with Iran on nuclear sites “will take up a lot of oxygen in Congress. That will eat up a lot of the clock where they need to do other things that must be done before the end of the year.

“The Country Of Origin Labeling repeal is the result of a WTO case that the United States lost regarding labeling for meat products. The House has passed a repeal of that and the Senate has yet to take action.”

The same is true of the Commodity Futures Trading Commission reauthorization. “The House has passed its bill, but the Senate hasn’t acted.”

There are also tax extenders awaiting action. “That will probably develop as it has for the last several years where it gets kicked to the end of the year. It’s unlikely to help you with planning for tax purposes because it’ll be retroactive for 2015. That may not come until the end of December.”

Earlier this year, a bill passed the House that would make permanent Section 179 expensing. It would set that level at $500,000 indexed for inflation.

Earlier this summer, the Senate Finance Committee passed a bill that would provide a two-year provision on Section 179. “So, it would be retroactive for 2015 and go through 2016. It also has a $500,000 limit indexed for inflation and includes an extension of the 50 percent bonus depreciation provision.

“At this point, we believe this will be addressed late in December just as it has for the last two years. It will probably be a one-year retroactive extension for 2015. Best-case scenario is it will be a two-year extension through 2016.”

Ag appropriations

Specific to the agriculture appropriations bill on the House side, “we were able to work with (Alabama Rep. Robert) Aderholt, who chairs the ag appropriations subcommittee, and Mike Conaway, who chairs the House Agriculture Committee. Those two worked closely with us to get the language included that would require USDA to utilize marketing certificates for purposes of the Marketing Loan Program.

“This is to address our issues with the $125,000 payment limit and the fact that cotton is the only commodity, given where prices are, that loan benefits are attributing towards that limit.”

There was a hiccup when the bill went from the subcommittee to the full committee. Nebraska Rep. Jeff Fortenberry “introduced an amendment to strike, or modify, the language. We worked with Chairman Aderholt and a number of other Cotton Belt members on the full committee and were able to win with a voice vote.”

On the Senate side, the agriculture appropriations bill doesn’t have the same language, said Langley. There are several reasons.

“There were different circumstances that the Senate subcommittee faced. One dealt with the budget and how to pay for the provision. Second was trying to avoid doing anything that could be viewed as reopening the farm bill.

“Because of that — and because they knew the language was already in the House bill and is something that could be worked out in conference — the Senate decided not to include it in its version. But we know at the subcommittee level with Chairman Jerry Moran (of Kansas) and the full committee level with Chairman Thad Cochran of Mississippi, they’re very supportive of the House language.

So, when will that happen?

“It’s tied into the overall end-of-year funding process. Most likely, when the continuing resolution is done for the first month or two, this provision and other policy riders won’t be included. These types of issues will be added in the long-term omnibus package done later this year. The timing could be from late October into December.”

Langley and colleagues “feel we’re in a really good place to have the marketing loan language, the certificate language, included in whatever final ag appropriations bill moves through Congress.”

Other priorities

Other cotton industry priorities are included in the agriculture appropriations bills. Among them:

  • Some $11.5 million for boll weevil and pink bollworm eradication programs.
  • Full funding for the Market Access and Foreign Market Development programs. “They’re very important for Cotton Council International (CCI) and their activities overseas.”
  • Level funding for the three ARS gin labs across the Cotton Belt.

“We’ve also been able during the appropriations process to avoid any amendments that would have impacted, or harmed, crop insurance or other farm bill provisions.”

Langley warned that because cotton producers don’t yet have certificates and marketing loan benefits apply towards the $125,000 limit, “the FSA will be required to do reconciliation on where every producer stands. Where are you regarding the $125,000 limit and what have you received to date in either marketing loan gains or LDPs? They want to do this reconciliation before October when any ARC or PLC payments will be made for the 2014 crop.”

The week of Aug. 10, “the FSA sent out a notice to all the CMAs and LSAs that do loan servicing and laid out the process for the start of the reconciliation. So, by mid-September the CMAs and LSAs are supposed to make sure their marketing loan data, the benefits paid, is being reported to FSA so they can generate a report and know where every producer stands relative to the payment limit. … They’re trying to make sure if an adjustment must be made so that no producer is overpaid, it’s done on the front end and not have to come back and ask for a refund or repayment later.

“All of this is the reason we need marketing certificates back.”

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