Dateline: Washington / February 2013

    As the nation was hanging on by its fingernails to avoid a plunge off the fiscal cliff on New Year’s Day, a nine-month farm bill extension was thrown into the package to avert a huge jump in milk prices and other unmanageable elements of the 1949 Farm Act.  The purpose was to kick the can down the road a little further until bigger spending cuts across all government programs were clarified in the first quarter of the year. 

    While the fiscal cliff debate addressed the personal tax bracket issues, it did nothing to curb spending. The spending cut debate began on January 2 and will run until late March.  It will likely be more contentious than the tax debate. 
    In late February and first of March, the debt ceiling will need to be raised, and the automatic spending cuts for domestic programs and defense will occur unless cuts are made in a more thoughtful and calculated fashion. 
    Finally, on March 27, the government will shut down unless further funding is approved to finish the rest of the fiscal year ending September 30, 2013.  Each of these events will be used as a political opportunity to cut spending.  It will be a fierce battle that will play out in the daily headlines.
    Voters in the last election said they wanted government to fix our fiscal problems — and that required leadership by both parties in both Houses in Congress and the White House.  As we watch the debate over these critical weeks by all of these players, let’s remember the basic elements that define leadership and see how well they adhere to its basic principles.
    Definition of Leadership:
    1) Establish a clear vision.
    2) Share that vision with others so that they will follow willingly.
    3) Provide the information, knowledge and methods to realize that vision.
    4) Coordinate and balance the conflicting interests of all members and stakeholders.
    5) A leader steps up in times of crisis and is able to think and act creatively in difficult situations.

    Until there is clarity of where spending cuts will be made, all congressional committees are in a holding pattern for moving legislation forward because they do not know how much they can spend.  So the agriculture committees in both chambers have to let that process play out before they make final adjustments to the farm bill that was designed last year. 
    Once the funding level is clarified, the Senate will likely go first, because it passed a bill last year and there is more confidence that with some changes to their bill, they can move it for full Senate approval and use it to pressure the House to act.
    The bigger challenges lie in the House, which refused to bring the farm bill to the floor last year once its own ag committee completed its work.  In early January, Ranking Member Collin Peterson made it very clear to House leadership that they would have to guarantee floor consideration before the Democrats on the committee would work on a bill. Again, since nothing of significance will happen before the end of March, we will witness these kinds of political battles.
   
    As for sugar policy, our customers were screaming about stronger prices during the past couple of years — but the market is now down about 50% from where it was a year ago. Markets go up and markets go down.   As we struggle with an oversupplied market, it makes it clear to policy makers that we need an adequate safety net and a policy that protects jobs, responds to unfair foreign trade practices, and is critically important to our food security and our rural economies.  Oh, by the way . . . our customers are doing just fine and enjoying much lower prices.
    The sugar market has been out of balance for a number of months now. Both the U.S. and Mexico had bumper crops in 2012, and additional imports were added to the market last April based on bad import data from Mexico. 
    I can assure you that addressing the core problems that caused of this oversupply is a high priority for your industry leaders.  Immediately after 420,000 tons of foreign sugar were added to the U.S. market last April, industry leaders from the U.S. and Mexico met with top U.S. government officials to discuss how to provide more accurate and timely data from Mexico to better manage our policy with greater accuracy and certainty.
    With low U.S. raw sugar prices near world price levels, there is less of an incentive for sugar suppliers from long distances to ship to our market.  There are multiple avenues of getting our market back in balance, but it will take time.