WPI Spotlight

Spotlight

Dissecting "A Mediocre Farm Bill"

"A Mediocre Farm Bill," featured in the Sunday edition of The New York Times, opined on the Senate's version of the 2012 Farm Bill. Just for fun, we took a look at some of the key points made in the editorial and added some context to the issues raised.

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Macroeconomics and Market Fundamentals

It is the most basic of truisms to say that differences of opinions are required to make any market work successfully. The ups and downs of market prices reflect how those differences are weighted at any given point in time. Based on the price action of grain and soy futures markets over the past 12 months or so, there have been plenty of such differences reflected in the choppy price movements. If one could somehow remove the price impact of the South American drought -- which is impossible to do, of course -- it probably would not seem as though market price action reflected a gradually lower trend even though prices of grains and the soy complex chopped about in a rather wide price band.

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If Food Were Treated as healthcare ...

The debate in Congress last year over Obamacare and in the GOP primary this year over Romneycare as well as the Supreme Court's consideration of the federal healthcare law can provide an interesting debate for food and agricultural policy. Right now Congress is trying to draft a farm bill, which includes food and nutrition programs such as the Supplemental Nutrition Assistance Program (SNAP). When it comes to SNAP, House Budget Committee Chairman Paul Ryan (R-Wisconsin) has said that the social safety net is at risk of becoming a "hammock." And that is one of the arguments against the new federal healthcare law. Indeed, one tenet in the Supreme Court oral arguments on the healthcare law is whether healthcare so important and unique that the federal government can require the purchase of certain services and standards.

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The Battle Between Indonesia, India and Malaysia

Tax policy is causing brouhaha in the palm oil trade. India has traditionally favored its palm oil refiners by imposing a 7.5 percent tariff on refined oil imports. However, now the largest exporter of palm oil, Indonesia, has raised its export tax on crude oil while lowering it on refined oil. As a result, India's imports of refined palm oil have risen, and so too has the blood pressure of India's refiners. Closely watching this battle is Malaysia, the second-largest exporter of palm oil, and several countries which also are major palm oil importers, including China. Just to keep it more interesting, Indonesia actually has a variable export tax, presumably to ensure adequate supplies for domestic consumers.

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Is This a Different Farm Land Boom?

The Jewish Passover seder rite begins with the youngest person, the one least familiar with history, to ask the question, "Why is this night different from all the others?" And so begins the ritual explanation of the history of the Jewish people. Recently, Jason Henderson, a vice president at the Omaha branch of the Kansas City Federal Reserve, posed the economic equivalent question for agriculture: "Why is this farm land boom different from all the others?" He went on to explain the cycle of U.S. agriculture over the past 100 years. The following are some highlights.

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Will Ethanol Production Slow?

Forty percent of the U.S. annual corn production now goes directly into ethanol production. As the world is fully aware, this is a massive number that has changed the face of the world corn and feed grains balance sheets to a degree never before witnessed.

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