Keep an eye on this...

Perhaps the biggest coup for farm subsidy supporters in the last farm bill was re-establishing the "Cone of Silence" for farm subsidies.  Ever since the EWG got access to direct payment info under the Freedom of Information Act, farmers have been gritting their teeth as friends and family casually looked up how much they were getting from the government.

By shifting to insurance subsidies, the obscurity of who's getting what is back. It seems to me vulnerable to the same court challenges for the same reasons, but not getting a 1099-G will really complicate it.

Anyhoo, that's the reason I'm watching what's happening in Maryland.

Under that law, the Department of Agriculture is required to shield from public disclosure any information about a specific farm's "nutrient management" report. Lawmakers granted that confidentiality in hopes it would encourage farmers to support the legislation, said Maryland Assistant Attorney General Thomas Filbert.Because nutrient management plans are private, it is difficult to track which farms are letting the most fertilizer into the state's waterways. Though the state makes public broad information about agricultural pollution and environmental compliance, it does not single out growers.Blocked from getting current reports, environmental groups such as the Waterkeeper Alliance are suing for access to older files. The groups say the older reports will give the public a better view of how agriculture contributes to bay pollution.In addition, the lawsuit challenges the state's refusal to provide farms' state inspection records, which also monitor fertilizer use. The state says those are confidential under the same state law because they measure compliance with the nutrient management plan. [More]

 No idea on the timetable, nor on the odds of entering the federal appeal process to end up at SCOTUS. However, the overall trend seems to be toward more transparency, whether voluntary or not [see also: NSA]. It's really, really hard to keep stuff secret anymore.

We're losing...

 The public relations struggle to define commercial farms.  This Chipotle ad is getting rave reviews and could be going viral.


I don't think we have good responses to counter these images. And passing ag-gag laws is really a step in the wrong direction IMHO.

Meanwhile, the GMO battle I declared over seems very much alive.

Four of the world’s largest chemical corporations currently use some of Kauai’s best agricultural lands to test their new pesticide and GMO technologies. Kauai residents are concerned about the impacts of this industry on the island, and through “Right to Know” Bill 2491 are seeking basic information to ensure that the community is protected.Bill 2491 would also establish buffer zones between pesticide application and schools, hospitals, residential areas and waterways, mandate that a health and environmental study be conducted to better understand the impacts of the agro-chemical/GMO industry on the island, and put a temporary halt on expansion of the industry while the study is being conducted. [More]

The real difficulty is the ideological argument here. Farmers want to maximize individual rights, and that's exactly what these GMO opponents are advocating. Forcing others to accept products because "we" or the government know what's good for them would never get a favorable reaction from farmers. It's the climate change position in reverse. 

This is also part and parcel of the devolvement of government action to the local level as state and federal regulation becomes less effective. For a tiny minority like farmers, supporting federal overrides is a really bad strategy. 

We've played fast and loose with science and thus enabled this kind of resistance. Actually, if GM companies and users are successful, I would be troubled by the implications for their own consumer rights. If we can force our views on others do we really thing it won't happen to us?

Downgrading the gun debate...  

As fast as folks seem to be buying weaponry, they may be becoming lame. In an outcome I certainly didn't imagine, the macho-ness of personal firepower could become quaint, like being able to chop a tree with an ax or cultivate corn.

TrackingPoint, a startup tech company in Austin, Tex., has just started selling the most advanced long-distance rifle available on the civilian market. The weapon incorporates laser and computer technology, as well as a three-dimensional color graphics display, to allow even a novice shooter to hit moving targets at 500 yards (five football fields) or farther. Its Wi-Fi transmitter permits the user to stream live video and audio to an iPad (AAPL) and post impressive kill shots on Facebook (FB) or YouTube (GOOG).
“This is a weapon that will get the Call of Duty generation into the real shooting sports,” says TrackingPoint’s chief executive, Jason Schauble, a 38-year-old decorated special-ops officer who formerly served in the Marines. A genial, smooth-talking ballistics pro who retired from the military after being seriously wounded in Iraq, he is making the rounds in New York and elsewhere to promote TrackingPoint. Schauble readily acknowledges that to make the transition from pretend shooter games to the real-life range or hunting grounds will require serious money. TrackingPoint’s customized rifles sell for $22,000 to $27,000 apiece, depending on just how tricked-out consumers want their weapons.
The gun part of the TrackingPoint system resembles a modern military-style bolt-action rifle. The science-fiction part looks like a three-headed long-range scope. Shooter tracks targets on the graphics display. By pushing a small button near the trigger, they lock a red laser dot on their quarry—a deer or bear, for example. The red laser tag remains on the target, even if it moves. Shooters then align the red dot with a blue cross-hair, or reticle, which also appears on the screen. They depress the trigger. The gun “decides” exactly when to fire. That happens only when the cross-hair aligns perfectly with the red dot, taking into account the distance, barometric pressure, temperature, the curvature of the earth, and other variables. [More]

So as I understand it, you find the target in the scope, pull the trigger, and wave the gun until it passes the optimal firing point. Kinda takes the sportsmanship out of hunting, I would say.  It reminds me of straight rows nowadays - just not a big deal or the sign of ag prowess it used to symbolize.

Or worse still, why bother to pick up the firearm at all?

The Super aEgis 2 is an automated gun tower that can find and lock on to a human-sized target in pitch darkness at a distance of up to 1.36 miles (2.2 kilometers). It uses a 35x zoom CCD camera with 'enhancement feature' for bad weather, in conjunction with a dual FOV, autofocus Infra-Red sensor, to pick out targets.
Then it brings the pain, either with a standard 12.7mm caliber machine-gun, a 40mm automatic grenade launcher upgrade, or whatever other weapons system you want to bolt on to it, including surface-to-air missiles. A laser range finder helps to calibrate aim, and a gyroscopic stabilizer unit helps correct both the video system's aim and the direction of the guns after recoil pushes them off-target. [More]

Knowing the South Koreans, there will be  a home model available someday, and then we'll see an interesting Supreme Court case. For that matter, I wonder what the NRA will do about such advanced weapons. While they seem to be OK with laser weapons, taking the human out of the firing decisions doesn't strike me as the best membership program ever conceived.

Like so many seemingly intractable public debates, maybe this one will simply fade into irrelevance as technology advances beyond what we think are the defining parameters.  After all, think of all those knights who were good at riding down peasant while wearing tons of armor and wielding a whacking sword. Did we think guns were the last word on killing?

What I really worry about...  

I don't mean to harsh your mood this morning, but this after spending two weeks listening to enormously prosperous farmers gripe loudly about imaginary looming regulatory nightmares (which essentially amounted to cleaning up our manure and fertilizer messes), I ran across this article that captured something of what I think is a more legitimate concern for People of a Certain Age.

However ghoulish, it is a world we will all soon get to know well, argues Gross: owing to medical advancements, cancer deaths now peak at age 65 and kill off just 20 percent of older Americans, while deaths due to organ failure peak at about 75 and kill off just another 25 percent, so the norm for seniors is becoming a long, drawn-out death after 85, requiring ever-increasing assistance for such simple daily activities as eating, bathing, and moving.
This is currently the case for approximately 40 percent of Americans older than 85, the country’s fastest-growing demographic, which is projected to more than double by 2035, from about 5 million to 11.5 million. And at that point, here comes the next wave—77 million of the youngest Baby Boomers will be turning 70.
Quick back-of-the-envelope calculation, for Baby Boomers currently shepherding the Greatest Generation to their final reward? Hope your aged parents have at least half a million dollars apiece in the bank, because if they are anything like Mama Gross, their care until death will absorb every penny. To which an anxious (let’s say 49-year-old) daughter might respond: But what about long-term-care insurance? In fact, Gross’s own mother had purchased it, and while it paid for some things, the sum was a pittance compared with a final family outlay of several hundred thousand dollars. But how about what everyone says about “spending down” in order to qualify for Medicare, Medicaid, Medi-Cal, or, ahwhich exactly is it?
Unfortunately, those hoping for a kind of Eldercare for Dummies will get no easy answers from A Bittersweet Season. Chides Gross: “Medicaid is a confusing and potentially boring subject, depending on how you feel about numbers and abstruse government policy, but it’s essential for you to understand.” Duly noted—so I read the relevant section several times and … I still don’t understand. All I can tell you is that the Medicaid mess has to do with some leftover historical quirks of the Johnson administration, colliding with today’s much longer life expectancies, colliding with a host of federal and state regulations that intertwine with each other in such a calcified snarl that by contrast—in a notion I never thought I’d utter—public education looks hopeful. Think of the Hoyer lift that can be delivered but never repaired, or the feeder who will not push, or the pusher who will not feed.
But it gets worse. Like an unnaturally iridescent convalescent-home maraschino cherry atop this Sisyphean slag heap of woe, what actually appears to take the greatest toll on caregivers is the sheer emotional burden of this (formless, thankless, seemingly endless) project. For one thing, unresolved family dynamics will probably begin to play out: “Every study I have seen on the subject of adult children as caregivers finds the greatest source of stress, by far, to be not the ailing parent but sibling disagreements,” Gross writes. Further, experts concur, “the daughter track is, by a wide margin, harder than the mommy track, emotionally and practically, because it has no happy ending and such an erratic and unpredictable course.” Gross notes, I think quite rightly, that however put-upon working parents feel (and we do keeningly complain, don’t we—oh the baby-proofing! oh the breast-pumping! oh the day care!), we can at least plan employment breaks around such relative foreseeables as pregnancy, the school year, and holidays. By contrast, ailing seniors trigger crises at random—falls in the bathroom, trips to the emergency room, episodes of wandering and forgetting and getting lost. [More]

Jan and I are blessed with loving and dutiful sons and daughters-in-law, and the idea of not doing my best to avoid this scenario seems like a singular abdication of my abiding love for them. I have written about this before (pdf), as I watched my parents' and grandmother's end of life, and I have friends currently undergoing this trial.

Writer Roger Rosenblatt, an essayist for Time magazine whose work I greatly admired, once described his heart condition as similar to having someone living in your basement who would occasionally try to come upstairs and kill you. The image stuck in my mind, but more often these days, the basement-guy looks less like a villain, and more like an answer.

As we continue to skew our resources to Boomers and their old age - which is THE federal budget problem - these lingering, unnatural death runways will stretch further and further into younger people's futures. We're only beginning to grasp the true consequences of enormous accumulated wealth and medical technology and their mutual attraction.

In the end, I doubt the regulatory overreach that many imagine in agriculture will amount to even an economic footnote, especially since compared to many developed countries (notable Europe) our farmers are allowed to run relatively rampant ( and given how we have obviously squandered both Roundup and Bt traits, this can't be too far off the mark).

Indeed, as we speak, soil conservationists are deeply concerned ag organizations will throw them off - if not under - the budget bus to get a higher buy-up or some such subsidy for a crop-insurance based farm program.

Our narrow- and short-sightedness has us fixated in ag on issues we can surmount with modest effort: runoff, over-application, food safety. I doubt any of these issues will end many farming operations.

But wait until Dad and Mom hit 70 and watch the equity leak away. That is an increasingly likely scenario.

What's wrong with this sentence?...  

I read this and blinked:

The U.S. Food and Drug Administration prohibited some unapproved uses of antibiotics in livestock on Wednesday.

Farmers will no longer be able to administer a class of antibiotics called cephalosporins to cattle, pigs, chicken and turkeys in unapproved doses or frequencies, or as a means of preventing disease, the agency said. [More]

I assumed I understood what "unapproved" meant, but maybe not.

That has long been a concern of many public health experts, including the Pew Health Group. Pew said in a press release today that while "the FDA has approved cephalosporins to treat some infections in food animals, the drugs often are administered in ways not specifically approved by the agency."
This "extralabel" use of antibiotics by livestock producers is linked to the emergence of resistant bacteria, or superbugs, that have infected tens of thousands of people, according to David Wallinga, a physician at the Institute for Agriculture and Trade Policy and a member of the Keep Antibiotics Working coalition.
Today, the FDA said the drugs remain critically important for humans, so their use should be restricted only to humans.
The decision to restrict the cephalosporins comes just two weeks after the FDA announced it was trashing a 1977 proposal to remove approvals for two antibiotics, penicillins and tetracyclines, used in livestock and poultry feed.
An association of veterinarians says the new rule on cephalosporins won't have a big impact. They can still use these other antibiotics to keep animals healthy. [More]

How can off-label use not be prohibited? 

So, is this just the FDA, saying "We really mean it this time!"?

This Bud's for you...  

Not me. I can't stand the stuff. But my feelings pale in comparison to this critic:

I don’t drink Budweiser and never have. I’ve tasted it three times (a total of about 3 ounces), first while at the University of Maryland, once again in Myrtle Beach, SC, in 1984, and then again in Seattle, in 2005, at the urging of their distributor’s rep, who - correctly - observed that tasting a thing  21 years ago wasn’t giving it a fair shake. It tasted exactly the same: like a wet piece of the cardboard that comes in new dress shirts – and that’s not an original observation. I first read it on the website of the world’s foremost beer critic, Britain’s Michael Jackson. He had almost nothing positive to say about Bud. I don’t either.
Budweiser has always been far more about marketing than beer. The founder of Anheuser Busch, Adolphus Busch, refused to drink his own brew, calling it “that slop” (he was German, of course, so it came out “dot schlop”) and stuck to wine. AB first made its massive incursion into every American beer market not because Americans were clamoring for the fantastic beer but because the uber-financed new St. Louis brewery actually paid the rent for tavern owners who agreed to sell Bud and kick out all their competitors. (The source for all this – principally, along with a ton of my own research – is an article from Chicago journalist and author Edward McCleland, writing in Salon.com, which you can read here.) When AB was just  moving into its ascendance, there were over 100 small breweries making virtually the same beer as Bud, the mild, aggressively-inoffensive, watery Pilsner, a style that originated in Czechoslavakia as a ladies’ beer; a wimpy alternative for the delicate palates of proper Czech ladies who couldn’t stand the big German Alts and Lagers or the muscular Belgian ales. [More fun reading for Bud-haters]

While I do not stand with the "Over-regulation Hysterics" (more on this in my next TP column), I will grudgingly grant that beer distribution laws have to stand as one the absolute examples of bad, awful, economically perverse regulation. And it's hurting our beer choices just when things are looking up for suds-fans.

The measure is intended to limit the ability of brewers to own wholesale distributorships and restaurants. As explained by Open Market, its primary backer is MillerCoors, which claims to be trying to ward off an attempt by their main competitor, AB/InBev (Anheuser-Busch), to buy up beer distributors and squeeze out other companies’ products. But the state’s microbreweries may be the real victims of the provision.
“Wisconsin’s craft brewers are getting caught in some cross fire between MillerCoors and Anheuser Busch,” the Blue Cheddar Blog explains. If this thing goes forward, it will be much more difficult to start a new small beer brewing business with room to grow in one of the states that loves beer the most.”
“This motion was sold to the legislators by Miller/Coors and the Wisconsin Beer Distributors Association on the premise that it would protect Wisconsin from a hostile AB/InBev take over of many current Wisconsin wholesalers,” the blog continues. “This is simply a farce. Since InBev took over AB, they have had 16 opportunities to buy wholesalers and have passed 16 times. Here is the real truth….Miller/Coors and the WBDA are threatened by the growth that is happening in the craft beer industry. Craft is the only segment of beer that is growing, and it is growing by double digits.”
Wisconsin’s craft brewers, who were not consulted while the measure was being framed, account for only about 5% of sales, but their share is increasing. “Everything in this bill is designed to make it harder for small craft brewers to grow,” complained Deb Carey, a co-owner of New Glarus Brewing. “It is a slimy piece of legislation.”
“We are losing assets and we are losing control over our products,” Carey added. “This debate boils down to the fact that the wholesalers do not want a drop of beer going to market in Wisconsin without them making their 30 percent profit from it. That’s it.” [More]

You read that right - the largest chunk of profit in the lager-chain is distribution! Really makes sense, doesn't it?

We're special, Example #78...  

Farmers in IL and probably elsewhere are less than thrilled by impending motor carrier regulations that until now applied only to other folks.

A large percentage of Cornbelt farms have semi-trailer trucks to more efficiently handle high capacity harvesting equipment.  While some of those trucks have limited use other than harvest, many others become a second home for farmers who work as commercial carriers when they are not farming.  Although they have the required commercial drivers’ licenses and many of their trucks have US Department of Transportation registration, many will not be happy to learn the DOT is working its way down further into their farming operation.  Buckle your seat belt.
The US Department of transportation has an internal administrative staff to develop rules and regulations and implement those for the Federal Motor Carrier Safety Act. It is designed to enhance safety on public roadways, and part of the rules are licensing and registration for commercial vehicles used in interstate commerce.  Over the road truck and bus drivers know all about the FMCSA and its rules.  And many farmers who obtained a commercial drivers license from their state department of motor vehicles will be familiar with many of those regulations, and may already have a USDOT number on their vehicle if it has been driven across a state line. [More]

Notice the outraged comments and helpful information in the comments to the above post, but there is a big part of the issue conspicuously absent:

Why should farmers be exempt from these rules?

There may be a case for why my truck loaded with grain should be regulated differently from your truck loaded with carpet, but I don't see any compelling arguments.  Instead we have these rather familiar assertions:

1. It will cost money. 
2. It will be a hassle.
3. Farmers are different.

Since the overall goal of the regulatory effort is safety, where are the data showing we aren't part of the problem? Or conversely, why aren't we equally outraged at all the other trucks being taxed/regulated/hassled?

What makes us so special?

This is not an issue about regulatory outreach or taxation.  It's what happens when special political treatment of farmers ends.

(Yes, I will be affected, since I live 2 miles from the state line.)

More lead...

When I posted about the EPA and lead, some questioned the math/science of the correlation.  This excellent post by my favorite neuroscience blogger may help supply some reasons behind my opinion.

Stoopid EPA...

The farmer's favorite bureaucratic target (except when wangling for ethanol mandates) is the EPA.  Our current ranting about "regulation" is unfocussed. This may be on purpose because closer examination might reveal the regulations being proposed are mostly to stop us from doing stuff we agree is bad: abusing animals, eroding soil, polluting water supplies, etc.

But never mentioned in the examples of EPA ineffectiveness or overshoot - and I freely admit that, like all laws, they never fit the problem exactly - are the stunning successes despised bureaucrats can accomplish.

This one few saw coming. The drop in the US crime rate.

There may also be a medical reason for the decline in crime. For decades, doctors have known that children with lots of lead in their blood are much more likely to be aggressive, violent and delinquent. In 1974, the Environmental Protection Agency required oil companies to stop putting lead in gasoline. At the same time, lead in paint was banned for any new home (though old buildings still have lead paint, which children can absorb).Tests have shown that the amount of lead in Americans' blood fell by four-fifths between 1975 and 1991. A 2007 study by the economist Jessica Wolpaw Reyes contended that the reduction in gasoline lead produced more than half of the decline in violent crime during the 1990s in the U.S. and might bring about greater declines in the future. Another economist, Rick Nevin, has made the same argument for other nations. [More]

It seems like I remember the usual carping about switching to unleaded gas.  It was "going to hurt our engines" and "cost us more". Sounds familiar.

This is one reason I am less alarmed about the claim over regulation strangling our sector's efficiency and innovativeness - that's what we always say.

It could also be grain farmers are rattling on about regulation just to divert attention away from eye-popping profits and to retain our "victim" status. 

Update: Here is an example from China about lead and children. I think the EPA decision back in the day was a good move then and this unexpected benefit is not to be despised.

Economics above all...

I have noted that the EPA-AFBF battle seldom centers on the actual pollution numbers. Or effects from it.  It is all about farmers making money. This is apparently the winning strategy farm organizations and their allied business partners intend to use going forward.

This isn't an important story simply because of the groundwater issue, however. It's true that it would be a landmark decision if the new regulations limiting runoff were to stand. What makes it important is the nature of the two sides' arguments. On the one side, you have environmentalists detailing the hazard to the health of humans as well as wildlife. On the other, you have "more than a dozen growers of rice, hay, grain and other crops in the Sacramento Valley" declaring that they are "'adamantly opposed' to a requirement for electronic reports on their discharges. 'Being a small diversified farmer has become increasingly difficult with regulatory burdens exploding over these last few years.'"That's what they call a non-denial denial. There is clearly not a dispute over the underlying facts -- the farm groups didn't even bother denying them. This is the increasingly universal strategy of Big Ag -- reduce safety or environmental issues to an attack on the viability of agriculture, facts be damned. They suggest that we have to accept -- if we want our cheap, mass-produced food -- that there will be collateral damage, in this case to the idea of clean water. It appears to be of little concern that much of the Central Valley population is made up of low-income Latino farmworkers.Of course, this issue isn't limited to California's Central Valley. The struggle over runoff is playing out across the country, from the Chesapeake Bay to the Midwest to the Gulf states. And with anti-regulatory fervor, along with food prices, on the rise, Big Ag's desire to be free from "regulatory burdens" may be that much closer to reality. [More]

This strategy will pay off perhaps in the short run, but as the problem persists seems to ne to be untenable longer term. It follows the theme of climate change arguments as well: "It's too expensive to fix (even if it did exist)".

And it should be said, we will clearly discover which threats have been overblown, and which are not a big deal this way. Curious science, but the high stakes will make it interesting.

The other half of this strategy obviously is to enact tort reform, just in case doing nothing is a really bad idea.

Under-regulation of agriculture, Exhibit A...

Farmers are, for the most part, exempt from OSHA regs. We don't need no stinking feds telling us how to be safe.

Or do we?

Recommended precautions are outlined in grain-handling standards issued by the Occupational Health and Safety Administration. Among them: turning off machinery that helps move grain when someone enters a grain bin, and using body harnesses so workers can be pulled to safety.

At the Mount Carroll grain elevator where the two teens died last summer, crucial safety measures were ignored, according to an OSHA investigation released in late January that cited the owner, Haasbach, for 24 violations and proposed a $555,000 fine. Haasbach, of Warren, Ill., is owned by members of three large farming families.

The company didn't train the young workers, provide safety harnesses, or make sure machinery was turned off, among other forms of negligence, OSHA alleges.

Haasbach lawyer John Doak said his client is challenging OSHA's jurisdiction because it is a farmer-owned grain storage facility that has fewer than 10 employees. [More] [My emphasis]

So when we "whine" about all the regulations stifling our profits, let's not forget the many we are exempted from by our political muscle.

For the most part, we conveniently forget all the regulatory passes we get.

Exhibit B: I just attended a rather abstruse and confusing truck regulation meeting where the state employee assured us that farmers get a pass on about everything. In fact, in IN the rumor is cops steer clear of unlicensed farmers driving overloaded, unlicensed trucks simply because they can usually beat the rap in court. I've seen some of these vehicles at the elevator myself.

We are one of the most privileged sectors in the US when it comes to regulation. So now when it looks like we may have to behave like other businesses have been for decades, we are outraged.

There is a competitive advantage in this for those who will step up and comply, I think.

Not the least of which might be a safer workplace and better community.

Our lost victimhood...

One of the biggest casualties of the commodity boom has been serious degrading of our whining power in agriculture. After all, farm income is setting records for more as sub-sectors like livestock slowly adjust to feed costs, and we grain farmers are still polaxed by our good fortune.

The problem becomes how to portray ourselves as victims now?  This is the only public image we seem to be comfortable with, and it under-girds our sense of entitlement.

Enter the Great Regulation Oppression. It would appear that the evil EPA had been timing their unjust moves to help us at this moment, although oddly, like most other businesses, over-regulation wasn't very high on our list until we began making the big bucks.

[More]

Over-regulation is the fallback complaint when times are good, I would submit.

More revealing to me are the anti-regulatory screeds that totally omit any discussion of the problem being regulated. One example:

Shaffer said EPA’s over-reaching focus on agriculture is particularly troublesome because agriculture has worked successfully with the Agriculture Department to reduce its environmental impact on the Chesapeake Bay.
“Use of crop inputs is declining,” Shaffer said. “No-till farming has reduced soil erosion and resulted in more carbon being stored in the soil. Milk today is produced from far fewer cows. Nitrogen use efficiency has consistently improved. Farmers are proud that their environmental footprint is dramatically smaller today than it was 50 years ago, and we are committed to continuing this progress.”
Shaffer, a Columbia County (Pa.) green bean, corn and wheat farmer, said agriculture’s success in reducing nutrients in the Chesapeake Bay is well documented, but EPA has ignored the substantial effort and progress of recent years. A new report from USDA’s National Resource Conservation Service outlines the progress made by agriculture.
“EPA moved forward with an aggressive and unnecessarily inflexible new plan to regulate farming practices in the Chesapeake Bay watershed,” Shaffer said. “In the last two years, EPA has set in motion a significant number of new regulations that will fundamentally alter the face of agriculture, not just in the bay, but nationwide. These new regulations will determine how farmers raise crops and livestock and will increase the likelihood of expensive lawsuits filed by activist organizations.”
Shaffer warned that policies already in place or being considered by EPA will greatly extend federal control over crop farmers and livestock producers, regardless of their size or footprint. [More]

What I see missing are any stats on the health of the Chesapeake Bay. Is it getting better or worse? Did the actions touted above have the desired effect? AFBF rarely mentions environmental problems other than to state they are not farmers' fault.

The reason given is more regulation is going to raise our costs.

Well, duh. This is because, in many cases, we have been passing the environmental costs to the future or the general public as economic externalities. Having to actually pay for cleaning up our messes will impact our bottom line, but it may make  a lot of other bottom lines much better.

While I see Great Regulatory Harangue as primarily a campaign for farmers and farmer organizations to regain our victimhood, many of these regs or action may actually be ill-advised or unnecessary. But I would be more convinced by facts and arguments about the actual problem the regulations try to address, not just the farmer costs involved.

Good EPA, Bad EPA...

You can always get an applause line at a farmer meeting by bashing the EPA. But oddly, farmers fearing more regulation probably don't mean good regulation, just stuff that makes them change how they act.

Consider this overdue step in pesticide regulation pushed by the EPA.

Start counting. Glyphosate is now a Group 9 herbicide. Valor is Group 14. The new corn herbicide called Peak is a Group 2. The premix Capreno—it’s a Group 2 and Group 27. It’s all part of a new herbicide labeling system that groups products by site of action. Knowing the site of action is a key to developing a systems approach to managing weed resistance.

The Canadians know all about it. So do the Australians. Farmers in both of those countries have used a standardized numeric system to help them rotate herbicide chemistry for years. Peter Sikkema, a weed scientist at the University of Guelph, says farmers in Canada are much more likely to tell you they are struggling with Group 2 herbicide resistance than to mention ALS-resistance. “We adopted the system about 10 years ago,” says Sikkema.

 

...

 

The new herbicide labeling remains voluntary in the United States, but the Environmental Protection Agency has requested that registrants add group numbers to labels. You can expect to see the codes pop up more frequently as the push continues to delay development of resistance. After all, Group 1 is much easier than saying acetyl CoA carboxylase or ACCase Inhibitor. [More]

Pesticide companies are not thrilled about this development, I'm sure, because suddenly changing names and reshuffling mixes will be less effective in giving the appearance of new chemistry.  I note that the US is coming lately to this rather obvious decision aid, and I'll bet real money without implied EPA leverage, it would not have happened.

 

We should also keep in mind the EPA is the controlling agency when it comes to the ethanol mandate. (Remember 2008 and Gov. Perry) As we have already seen in the case of E15, corn growers have a lot riding on the rulings from the EPA. Which makes me wonder about making them the whipping boy for every perceived grievance with government rules.

Small vs. big, etc, Round 27...

The continuing friction between agrarian and industrial agriculture will be in full view today and a major food safety bill comes up for cloture.  It is laden with intricate detailed controversies, but has become another rallying cry for both sides to try to avoid the hard work of compromise. These days leaders don't get much credit for getting things done, and proponents on both sides understand the highest accomplishment is unbending confrontation.

"This is an important test to see if Democrats and Republican senators representing farm states will stand up for small farmers or cave to special interests and agribusiness," said Dave Murphy, founder and executive director of the organization.  "It could be the first lesson the food movement gets on how the new Congress will respond during the 2012 Farm Bill."

"The behind-the-scenes efforts to kill any provisions that protect family farmers from burdensome regulations has been intense, but efforts by real farm groups and sustainable ag organizations may have turned the tide," added Murphy.

As Food Safety News reported yesterday, large food and agriculture interest groups, including the American Meat Institute, the United Fresh Produce Association, and the United Egg Producers, sent a letter to committee staff Monday asking that the Tester amendment be excluded from the bill.

Popular authors and food policy gurus, Eric Schlosser and Michael Pollan, issued a joint statement Tuesday, through Tester's office, stating their support of the senator's amendment and the food safety legislation. 

"S 510 is the most important food safety legislation in a generation," they said. "The Tester amendment will make it even more effective, strengthening food safety rules while protecting small farmers and producers.  We both think this is the right thing to do." [More]

For a deeper analysis on specific points, Grist has assembled a good discussion that illuminates many aspects of this legislation. Like all laws, there is something for everyone to carp about, but the greater underlying theme I get is the ongoing grievance from the agrarian community about the excessive aid and regulatory favoritism channeled to industrial ag.

At first blush, this would not seem to be a big deal to corn/soy guys like me, but what I think is worth watching is how much support the agrarian lobby has picked up recently (or not).  If they able to add the Tester amendment exempting small farms from many rules, it would be a sign, I believe that agrarian interests will have more say in future legislation, like the 2012 Farm Bill.

Of course, that debate may be pretty small change - literally. But the effect of small/big fights can also be seen paying out more powerfully in the regulatory arena.  Consider the ongoing slugfest, that the new GIPSA rules have triggered.

These and other examples of the oddly (and unnecessarily, IMHO)  aggressive attacks between two segments of our tiny sector further illustrate the pointless harping about agriculture "speaking with one voice."  That has never happened and now is even further from reality.

We continue to fracture into specialty producers serving narrow markets. on any given economic or regulatory issue, we will reliably line up with pour own interests regardless what other "farmers" want. That's because we all think we are the real American agriculture.

In short there ain't no "us" in farming - there is only "me".  I don't think this is good, but it is good to keep in mind.

Self-promotion and self-regulation...

In an curious coincidence, the same conclusion is being reached in disparate corners of our economy.

First, in an round-robin of regret, some of my favorite econo-bloggers are admitting past mistakes and/or advice.

2)  I believed in the "Great Moderation".  That is, I believed that the Fed and prudent fiscal policy had, to a large extent, tamed the business cycle.  I did not believe that there was even a small risk of another Great Depression; I believed that the Fed could and would prevent the contagion from spreading.  Arguably they (and the Treasury) did, but I did not imagine anything close to that level of intervention being necessary.

3)  I believed regulators were smarter than they were.  In 2004, when the SEC decided to let the investment banks lever up to 30-to-1 instead of 12-to-1, because after all, the SEC had the tools to quickly identify and stop any contagion, I would have said they were probably right.  (I'm not sure I was aware of it).

4)  I believed bankers were smarter than they were.  Or rather, I believed the system was smarter than it was.  Individual bankers making idiotic mistakes?  Absolutely.  The occasional bank being brought low?  Sure--it happens pretty regularly, in fact.  But the whole banking system taking its entire balance sheet to the roulette table and laying it all down on a single bet? Ridiculous.  [More]

Here in agriculture we are looking a a small train wreck in the egg industry, and seeing one of the same failures in the system that we saw in banking: the reluctance to enforce professional standards of conduct within a profession.

Chris Clayton nails it.

These groups established by various producer organizations and allied industries to defend agriculture don't want to talk about how ag should respond to the recall and the large business at the center of the federal health probe and possible criminal investigation.

The recall focuses on two farm operations in Iowa, one of which is owned by Austin "Jack" DeCoster, 75, who has a long history of environmental and labor violations not just in Iowa, but in Maine and Ohio as well.

State and federal health officials have reported roughly 1,470 cases of salmonella illness since the spring. That suggests potentially 55,800 salmonella cases nationally because FDA officials told industry representatives in public hearings on the egg-quality rule last year that each reported salmonella case can have a multiplied factor of 38 unreported cases.

FDA officials cited earlier this week that the farms implicated in the recall, DeCoster's Wright County Farms and another farm, Hillandale Farms, showed "significant deviations" from how those farms should be operating and were clearly violating the egg-quality rule implemented by FDA in July. FDA officials cited large piles of manure and infestations of flies, maggots and rodents.

The report from the FDA on DeCoster's operation "speaks for itself," Sen. Charles Grassley, R-Iowa, a farmer as well, said Tuesday to reporters in a weekly call.

Grassley said the recall and reports about the conditions have been difficult for Iowans to accept, "particularly for people who live in Wright County." Grassley said he was at a Farmers Union meeting where producers expressed their worries about the problems.

"When consumers don't have confidence in their food supply, even if that lack of confidence comes from one product, in this case eggs, it still has an impact on all of agriculture and if consumers don't have confidence it's going to hurt the income of farm families," he said. 

While lawmakers such as Grassley are becoming more vocal, the groups created within agriculture to address perceptions about agriculture are shying away from talking about the DeCoster fiasco.[More]

(Sen. Grassley's concern for consumers who actually ate the cotmainated eggs is remarkably muted, while his pity for other producers obviously keeps him up at night. That alone says volumes about how ag and its outspoken proponents prioritize.)

Although he beat me to it, Chris admirably points out that ag cheerleaders are seem to be little more than spinmeisters trying to use distraction to avoid tackling the hard problems.

This is the "safest" food in the world we're always bragging about?  DeCoster has been a bad actor for years and our industry was OK with it, until they really screwed up. One wonders what it would take for some to admit industrial ag could use some improvement.

To be fair (or try) mistake admission is now a signal for piling on. And lawsuits.  But without the willingness to own up and redress errors - and call them out in our professional community - we are hardly more than tribes with the same occupation.

Correcting that won't happen from within.  Since the Industrial Revolution, it has been shown that banks, egg-farms, unions, lawyers, medicine, etc. just can't seem to overcome solidarity to enforce discipline.  That's why we reluctantly end up with enforcement from outside.

Ideally, I would like to see this regulation via an industry-financed independent third party (oxymoron alert), such as licensing boards or auditors.  But having learned from Enron that even those setups are susceptible to influence if not outright subversion, the task almost always fall to government. 

Plus it gives another reason to hate the bureaucracies we build. 

My guess is ag organizations' likely strategy is to depend on the news cycle to bury this and help the public move on.  It's not like Fox News will be running constant stories on it, after all.  This one is really, really hard to link to Obama - although given enough time...

Talking the talk about how great we in ag are should require some effort to make sure we are great or aspire to greatness.  That includes taking responsibility for the mistakes we make collectively.  So far in this sad story, we are professionally AWOL.

I see some parallels...

In the wake of the housing (mortgage) meltdown, some economists looking back are questioning the very basis of the "ownership society".  I think they make some sense.

The formula, however, changed dramatically at the end of the 20th century. From 1994 to 2005, the homeownership rate reached record highs, thanks largely to innovations in the mortgage-finance market that reduced down payments and minimized equity. This shifted the basic wealth-building proposition of homeownership away from savings to an almost exclusive focus on capital gains. Average down payments fell, reducing the savings required to “get in the door.” More significant was the rise of mortgages that involved no forced savings: the interest-only loan, in which no equity is built because the principal is never paid down, and the “negative amortization” loan, in which payments are so low that they do not even keep up with the interest, leaving homeowners more indebted, rather than less, each month. By 2006, more than one-third of subprime mortgages had amortization schedules longer than 30 years, nearly half of Alt-A mortgages were interest-only, and more than one-fourth were negative-amortization loans.

One effect was to reduce the social benefits of homeownership, because the benefits are a product of equity and not of the mere fact that a contract has been signed and a mortgage taken out. The relationship between homeownership and social goods had been misunderstood: The traits that enabled households to build up the savings necessary for significant down payments — hard work and the deferral of gratification — were misattributed to homeownership itself. Paying a mortgage did nothing to improve children’s educational outcomes; instead, the factors that gave rise to homeownership also led parents to raise children in a manner that led to greater educational attainment.

Without substantial down payments and conservative amortization schedules, the entire proposition of homeownership as a social good is turned on its head. Think of a homeowner with a zero-down, negative-amortization mortgage: The balance would equal at least 100 percent of the value of the house at origination and would steadily grow, putting him ever deeper in debt unless the market value of the house grew at an even faster rate. Rather than being a source of wealth, the mortgage would actually reduce the net worth of this homeowner below what it would have been had he rented.

Rather than providing a social benefit, then, homeownership without equity imposes costs. Andrew Oswald of the University of Warwick has argued that such homeownership can exacerbate unemployment by making workers less likely to move from one labor market to another. Labor mobility is badly undermined when homeowners in a depressed market can’t sell their property for anything approaching the principal balance of the mortgage they originally took out to buy it.  [More]

This may not be the minefield it first appears. Rather than saying we allowed the wrong people to borrow too much money betting on always-rising home prices, I believe the authors correctly suggest the housing policy was a gigantic subsidy to the wealthy and housing-specific businesses (construction, RE, finance, etc.) that actually harmed low-income people by diminishing the social goods associated with home ownership. 


In fact, what has been viewed as a causal relationship (home owners become better citizens, etc.) was probably a correlation.  As they illustrate, the behaviors that got a 20% downpayment and other underwriting criteria met are the same ones that cause more civic participation, education, social mobility, etc.


So far so good.  But tell me why this reasoning should not apply to the numerous farm ownership efforts or beginning farmer programs?


Back in the day when I served on the old FmHA local board, I wondered at the cases that clearly would never "graduate" to economic "adulthood".  I also began to question whether we actually helped with low interest, low downpayment, etc. tools.  It would be interesting to see the persistence of ownership from beginning farmer loan programs that subsidize first-time buyers with public funds.  How many still are farming or own the land in say 10 years?


Are there any records of the outcomes (with privacy protected, of course) for agencies such as IFDA? None that I can see from their minimal website.


Without such followup data, we could be fooling ourselves as to whether these programs are helping folks or simply employing transaction agents.

Corner on cocoa!...

This title is lost on those who have never played "Pit", but maybe you've seen "Trading Places".  Anyhoo, somebody is choking the chocolate market. It turns out to be a guy named Tony Ward.

Big action in chocolate: Somebody bought almost all of the cocoa registered in European warehouses last week.
The buyer, according to the FT and the Telegraph, was a company called Armajaro, which runs several hedge funds and sells cocoa to the chocolate industry.
The purchase — 240,000 tons, worth about $1 billoin — amounts to about 7 percent of global annual production of cocoa. So it's not like the hedge fund can immediately turn around and control the global price of cocoa.
But if this year's cocoa harvest is weak, the buyer could have significant pricing power, Laurent Pipitone of the International Cocoa Organization told me today. [More]

I thought we had left those days behind us, but perhaps the staggering amounts of loose money wandering the globe like buffalo herd will cause more market-torturing excursions of volatility as frustrated investors look for a play.

Unfortunately, for Mr. Ward, when guys like me in farm country know about it, you usually lose.

However, Mr. Ward and company made a serious mistake by allowing word to leak about the operation. Rule #1 when it comes to market manipulation is secrecy. If rumors of your operations become known, the market will start to turn against you. Hedge funds in particular will start shorting cocoa because they know that if they can force heavy losses for Anthony Ward, at a certain point, he will be forced to sell his entire position for a steep loss. This will in turn cause cocoa prices to plummet as everyone tries to get out ahead of Ward and company. We might already be seeing this happen considering today's action in the cocoa market. Cocoa prices are down 5% as the market digests this recent news. It seems the market is going against Mr. Ward.  Will this end well for Mr. Ward? We don't know yet, but if history is any guide, it probably won't. [More]

Maybe the ol' Internet is the the best regulator of all.

[Thanks, Aaron]

Oh, snap!...

(FWIW, I'm trying to litter my conversation with up-to-date conversational aphorisms)

So economists at the Universities of [Areas of] Illinois produced a report for the OECD showing speculators were not guilty in the commodity 2008 markets, and that regulation would cripple their essentially beneficent presence in the marketplace.

Professors Scott Irwin, of the University of Illinois, and Dwight Sanders, of the University of Southern Illinois found the amount of money flowing into commodity index funds increased substantially in the period from 2006 to 2008. But although this increase represents a major structural change in investor participation in agricultural commodities futures, it has not increased price volatility, according to the study.

The paper said there is “no convincing evidence that positions held by index traders or swap dealers impact market returns.

“These results tilt the weight of the evidence even further in favour of the argument that index funds did not cause a bubble in commodity futures prices.” [More]

Then an economist bar brawl breaks out.

Last week, OECD published a report co-authored by two Illinois professors, Scot Irwin and Dwight Sanders. The report, entitled Speculation and Financial Fund Activity, purports to find statistical evidence that speculation played no role in generating the damaging volatility in food and energy prices witnessed during 2008-9. In fact, it claims that speculation by long-only index investors with no understanding of underlying supply and demand conditions actually helped reduce volatility, by providing liquidity.
The study and its findings can be disregarded for three reasons:

1. The statistical methods applied are completely inappropriate for the data used.
2. The study is contradicted by the findings of other studies that apply more appropriate statistical methods to the same data
3. The overall analysis is superficial and easily refuted by looking at some basic facts. [More]

[Note: This is the economist equivalent of "Yo Mama!".]

But without trivializing further, it does strain credulity to suggest the immense wealth pouring into our relatively small markets did not distort the price-determining function.  The comment about the price of oil is telling, IMHO.

Worse by far is the idea that this study, even if flawed will be used as criticism against derivative market regulation which has widely been considered lacking.  Overall, it appears nobody know what the new regulations will mean to farmers.

The question for these farmers is whether such rules will make hedging more expensive. Some say new requirements on big players will create higher costs for small players, including the cash dealers will have to put aside to enter into private derivatives transactions. Some brokers think restrictions on big-money banks and investors will drain the amount of money available to the everyday deals farmers favor.
Others predict the opposite effect, pushing money from the private market to the exchanges and creating more competition that will benefit farmers. [More]

This account as well is open to valid criticism. 

It gets worse. For all the apparent handwringing about farmers and feedlots, the story then slips in this show-stopper:  "Faced with intense lobbying, Congress partially exempted businesses that use derivatives for commercial purposes. So, farmers and co-ops probably won't face new collateral requirements."

Say what?  Farmers and other end-users are exempt from the new rules?  Then why are we being subjected to this article?

The truth is that the only players who most certainly stand to lose are the big banks, like JP Morgan Chase and Goldman Sachs, that will have to either spin off their derivatives-trading operations or put them into separate subsidiaries that require higher capitalization.  [More]

 But here is my beef. If the criteria for good regulation is lower transaction costs for farmers, why not simply state that as the primary goal?  If it is for efficient markets, maybe it should cost more.

God knows, we've paid plenty for CDOs and other derivatives.

(I'll try to follow this contretemps and see if any light is shed)

Do we know what happened Thursday?...

The lightning drop and rebound in the DJIA still boggles the mind in retrospect.  Jeez- just look at it:

[Source]

For the most part we're getting lists of possible causes, although market watchers are starting to center in on high frequency trading (HFT).

In principle, more trading and faster trading should be a good thing, making markets more liquid, allowing them to react to new information more quickly, etc. The problem is that the way trading has gotten quicker is by relying more and more on computers, which in turn means that many (perhaps most) trades are based not on fundamentals—which is what you want investors to be looking at—but on price movements. In normal times, this doesn’t matter much—the price movements are reasonably random and therefore the computerized trading doesn’t move the market in one direction or the other. But when things go wrong, you can get immense moves up or down. That’s why, in contrast to Felix Salmon, I don’t think yesterday’s crash is evidence the market is irrational. It’s more that it’s a-rational: the computers aren’t panicking or herding. They’re just following simple rules. I think this is bad for the collective intelligence of the market, which really depends on diversity of thought and independence of action. But what happened yesterday isn’t, I think, quite the same as the crash of 1929 or the stock-market bubble of the late nineteen-nineties. It’s an example of the dangers of a-rationality (to coin a word) rather than irrationality.[More]

Another contributor could be fragmentation of the market, which is better explained by somebody who knows something about it. The best graphic I found is here.

More remarkable to me than the composite drop in the DJ Index was the performance of some individual stocks:

[Source]
So just imagine you had an order in place to buy Excelon at $1. The price briefly hit ZERO, so if your computer was fast enough, you could make the fastest 40X since Jesse James.  I don't know if this was actually possible - especially since some trades were canceled - but I wonder if these gyrations have prompted a bunch of waaaaaay-below-market orders to be entered in case another transient occurs.

Perversely much of the efficiency of the market also provides its fragility. We may be pushing the point where the benefits of having money whiz around the globe is offset by the growing risk of events that were formerly much less likely.

Exchange officials are still trying to puzzle out what exactly happened to cause the price of dozens of stocks to suddenly plummet by more than 60%. But it seems likely that it has something to do with the new infrastructure of high-frequency trading that now accounts for the bulk of stock market activity.

To function well, stock exchanges need market makers — that is, firms that are willing to keep buying and selling in a particular stock at all times. On the New York Stock Exchange these are the "specialists" (who are now kept around mainly as backdrop for CNBC reporters). On Nasdaq they are simply called market makers. They make money off the difference between what they bought and sold a stock for (the spread). Over the past decade, though, spreads have shrunk as traditional market makers have been pushed aside by high-frequency trading firms that take advantage of millisecond-by-millisecond price changes and the tiny premiums that exchanges pay to "liquidity providers" (a.k.a. market makers) to make money even at infinitesimal spreads.

At one level this is much more efficient than the old system. The spreads are smaller, so investors are getting a better deal, right? Well, not if the system also becomes much more fragile, and susceptible to sudden collapses. Over the past three decades our financial system has become vastly more complex in terms of technology and diversity of available financial products. By some measures it has become more efficient — trading commissions have certainly come down. But it has also become more prone to crisis and (maybe) collapse. Efficiency (and this is an argument borrowed from Taleb) breeds fragility. [More]

But strangely enough, the bond market hung in there - and that has some powerful reassurance for increasingly impatient inflation worriers.

You probably know the bad news already. Stocks on Thursday dropped 600 points in 15 minutes in mid-afternoon. The market went down nearly 1000 points before rebounding. That's the worst mid-day drop in the Dow Jones industrial average EVER. So really bad stuff. But here's the good news: Bond prices were up. During the hysteria, the yield on the 10-year Treasury Bond, which falls as prices rise, dropped to 3.25%. The 2-year US bond went down to as low as 0.60%. That's really good news. Here's why:

Bond yields, among other things, are a function of how likely it is that investors think you are going to default, or not pay them back. That's why a subprime borrow pays more on his home loan than someone with a high credit score. The same is true for countries. So the fact that bond prices in US fell when the stock market fell means that at least so far the global economic problems have not impacted how risky people think the overall US economic system is. Confidence, that all important economic currency, is still something we trade in. That's good. [More]

Other than curiosity, does this Wall Street hiccup merit any attention from those of us invested largely in commodities? I think so.

First, we have dealt another blow to investor confidence in the equity markets. Folks weren't jumping into bonds because they wanted to make big bucks, they were fleeing risk. The fact the cause has not been definitely identified and preventative measures outlined is not calming either. Scared money needs more risk premium. So one possible result could be higher priced derivatives, and I think that could flow over into commodity options - the current rage for farm marketing mavens.

Frankly, I think commodity options in general are too expensive now. Either contagious risk-aversion or added demand from new investors could raise the cost for producers to "protect" their crop to the point the protection captures much if not all the profit.

Second, many think this little roller-coaster ride added momentum to financial regulation.  I support most of the measures in the bill under debate, but understand clearly regulation is an economic deadweight, which will again raise the cost of marketing - even if we simply sell cash contracts by raising hedging costs for our trading partners.

Finally, this mini-debacle could see a new tax regime on trading- especially HFT - both to act as a brake, and to raise some badly needed new revenue for the government.

There’s a very sensible idea going around that a simple way to deal with nearly all of these problems, at a single stroke, would be to implement a tiny tax on financial transactions. Historically, people have complained that such a tax harms liquidity, which is true. But the fact is that it harms the bad kind of liquidity — the liquidity which dries up to zero just when you need it most. Liquidity, if it’s spread across multiple electronic exchanges and can disappear in a microsecond, does very little actual good, and in fact does harm during tail events like this. Let’s tax it, and raise some money for the public fisc at the same time as slowing down markets and making them think before doing a trade. [More]

Since I am convinced we have to raise revenues (taxes) to attack the deficit, this looks like a win-win idea to me. 

Most surprising to many of us, our commodity markets didn't overreact.  Either all those linkages to Wall Street, oil, and the dollar are suddenly weakening, or maybe there really are some fundamentals lurking in the bushes that prove more demand than we think.  It's worth considering.

So, all in all, for farmers this was a more interesting event than we may suspect.  Depending on its half-life, I think it is good news for both prices and interest rates.

Carved out...

It would appear my concerns about the Farm Credit System being impacted by the financial reform package under debate in the Senate were unwarranted.  Like several other adept political players, they have score a carve-out.

Attorneys, insurers and real-estate agents aren't the only ones exempted from the bill's consumer-protection provisions. The Farm Credit System, a government-sponsored lender that directly competes with banks, is excluded, too. Perhaps this should come as no surprise, because Fannie Mae and Freddie Mac, those crackerjack institutions at the heart of the mortgage meltdown, are also exempt. Worse yet is that Wall Street is exempted from the reach of the proposed consumer-protection agency -- its regulation will remain with the Securities and Exchange Commission, which proved itself asleep at the switch during this last period of financial shenanigans. [More]

Unless...Republicans have their say about GSE's

The Republican proposal deals with two things that the Democratic proposal does not touch. First, the Republicans take on the government-sponsored entities Fannie Mae and Freddie Mac — bailed out during the collapse of the housing bubble. Democratic staffers say that figuring out how to handle the GSEs and re-regulating the trillion-dollar market in government-backed mortgage finance requires its own bill. They have just started researching what they want to accomplish and how best to achieve it. Republicans, in fewer than 400 words, take the massive market on. They create a special regulator and indicate that no further taxpayer money should be at risk. [More, with a very helpful comparison of Rep/Dem versions]

The R-version may also exclude FCS, but it will be curious if the advantages enjoyed by the GSE's remain as ample as they have been. 

At the very least, the debate is now on, and lobbyists are scrambling for loopholes.