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March 12

Trade; Climate Issues; Ag Competition Issues; and Animal Agriculture

Editor’s Note: The third section of the March 10, 2010, FarmPolicy.com Report entitled “Disaster Payments, SURE, and Crop Insurance Issues” includes a quotation from an outside report that contains an inaccurate statement. The relevant quotation reads, in part, as follows:

“A major reason, according to USDA and academic studies, is that the private crop insurance companies set southern premiums relatively high…”

It is commonly known by individuals who are familiar with Federal crop insurance that crop insurance companies do not set premiums for any of the program’s policies. USDA determines all Federal crop insurance program premiums. This important program characteristic is a plain, simple and historical fact. However, for program clarification purposes, it would be helpful to report this fact.

Trade: Agriculture and Cuba- House Ag Committee Hearing

Derek Wallbank reported yesterday at the MinnPost.com that, “The latest effort to bridge the 90-mile gap from Key West to Cuba is being led here by a pair of Minnesota lawmakers who contend that easing restrictions on the island nation could mean millions for Minnesota’s agriculture industry.

“‘America’s current policies have failed to achieve their stated goal and instead they have hand-delivered an export market in our own backyard to the Brazilians, the Europeans and our other competitors around the world,’ said Rep. Collin Peterson. ‘It’s time we ask ourselves why we have in place policies that simply do not work and that only harm U.S. interests.’

“Peterson’s remarks came at the start of a House Agriculture Committee hearing he called to discuss his own legislation to lift the travel ban to Cuba and ease rules on agricultural exports to the island nation. Earlier today, Sen. Amy Klobuchar introduced a companion measure in the Senate. Both the House and Senate bills have Republican co-sponsors.

“‘The bill we have introduced would eliminate the requirement that our farmers have to go through a third country bank to do business in Cuba and would place agricultural exports to Cuba on the same terms for cash payment as other countries, requiring payment when the shipment changes hands,’ Peterson said. ‘It would also make it easier for U.S. citizens to travel to Cuba, allowing American agricultural producers to more easily conduct business with Cuba and boosting demand for U.S. products in Cuba.’”

At yesterday’s hearing, Rep. Jerry Moran (R-Kansas), a co-sponsor of the bill, provided an interesting historic and analytical background with respect to the issue of U.S. agricultural exports to Cuba. To listen to a portion of his comments from yesterday’s hearing, just click here (MP3-7:42).

Philip Brasher reported yesterday at the Green Fields Blog (The Des Moines Register) that, “An effort is underway in Congress again to ease restrictions on trade with Cuba to boost U.S. farm exports, but farm-state lawmakers are split over whether it’s a good idea to allow Americans to more freely travel there. Farm groups argue that easing the embargo and promoting U.S. tourism in Cuba will improve America’s image there and undermine the Castro regime.

“Rep. Steve King, R-Ia., doesn’t buy it. He said at a House Agriculture Committee hearing Thursday that the United States should wait for the ‘biological solution,’ referring to the demise of the Castros.

“‘I want to wait out this biological solution,’ he said.”

Mr. Brasher added that, “The chairman of the committee, Rep. Collin Peterson, D-Minn., has introduced a bill, H.R. 4645, that would lift transaction restrictions on Cuban purchases of U.S. food and end limits on American travel there. The embargo means U.S. farmers are losing sales to competitors in Brazil and elsewhere, he said. He released letters from Human Rights Watch and the U.S. Conference of Catholic Bishops supporting the legislation. Having ‘more, rather than less, contact’ with Cubans will improve their lives, the bishops said.

“‘We’re just spiting ourselves not to take advantage of this market,’ said Iowa Democrat Leonard Boswell, who is co-sponsoring the bill.”

Yesterday’s update noted that, “Farm groups say that U.S. food exports to Cuba could double, given Cuban demand for pork, chicken, beans, rice and other commodities. Easing restrictions on transactions would boost Cuban purchases of dried distillers grains, a source of livestock feed that is a byproduct of ethanol production, the National Corn Growers Association said. Last year, Cuba bought $528 million in U.S. agricultural products.

“Previous efforts to ease the embargo have met strong resistance, and Republicans on the House committee are split over whether the restrictions on travel should be changed.”

In other trade developments, a news release issued yesterday by Sen. Ag Committee Chairman Blanche Lincoln (D-Ark.) stated that, “Senators Blanche Lincoln, D-Ark., and Mike Johanns, R-Neb., today introduced a resolution pressing Japan to lift its partial ban on U.S. beef. Lincoln, Chairman of the Senate Agriculture Committee, and Johanns, a former Secretary of Agriculture, were joined by 17 bipartisan cosponsors. The resolution states Japan should immediately expand market access for U.S. beef products, and urges the Obama Administration to insist on increased market access from Japan.”

Meanwhile, Bloomberg writer Adriana Brasileiro reported earlier this week that, “Brazilian President Luiz Inacio Lula da Silva asked U.S. President Barack Obama to ‘quickly’ negotiate the end to a trade dispute over cotton subsidies that led him to raise tariffs on over 100 U.S. goods this week.

“Lula, during a speech in Cubatao, Sao Paulo, said that Brazil would not have taken retaliatory measures worth $829 million had the U.S. in 2008 signed an accord during the Doha round of global trade talks.

“‘If the US had been together with Brazil in the Doha round in 2008 we wouldn’t be fighting today,’ Lula said.”

And Reuters writer Doug Palmer reported on Wednesday that, “A Republican senator who held up action earlier this month on a bill to renew jobless benefits faced more criticism on Wednesday for blocking approval of President Barack Obama’s nominee to be U.S. ambassador to the World Trade Organization.

“Senator Jim Bunning, a Kentucky Republican, has delayed the Senate from approving Michael Punke to be ambassador to the WTO in Geneva. This has fueled criticism that the United States is not fully engaged in the Doha round of world trade talks, which have already dragged on for eight years.”

Trade- President Obama Sets Out Export Plan

Howard Schneider reported in today’s Washington Post that, “President Obama unveiled plans Thursday to double U.S. exports over the next five years in hopes of spurring job growth, an ambitious goal that may rekindle the battle over free-trade policy [transcript of remarks, video replay].

“The president acknowledged the formidable barriers to his goal: doubts in Congress over new free-trade agreements, misaligned currencies that make Chinese products cheaper on global markets, and continued weakness in global demand, all problems that could dwarf efforts to promote U.S. products and services abroad.”

Today’s Post article indicated that, “Obama also promised a fresh push on an issue that could prove divisive in the Democratic Party — pending free-trade agreements with South Korea, Panama, Colombia and a group of Pacific countries — as well as on the broader round of world trade talks in Doha, Qatar. The migration of U.S. manufacturing jobs overseas has stoked opposition to free-trade agreements, which some say have given developing economies access to U.S. consumers without offsetting benefits for American workers.

“‘Moving forward with leftover Bush-negotiated free trade agreements is a nonstarter with many members of Congress,’ Rep. Michael H. Michaud (D-Maine), chairman of the House Trade Working Group, said in a written statement.

“U.S. Trade Representative Ron Kirk, who met with Michaud and other members of Congress on Wednesday, said the administration was approaching the trade deals intent on seeing that they also create jobs.

“‘We don’t pick up everything as it was but will take a real strategic look at trade policy,’ Kirk said. The pending agreements with South Korea, Colombia and Panama, in particular, ‘have value, and when we are fighting for every job on the table, we need to get these right so we can reap the benefit.’”

Henry J. Pulizzi reported yesterday at The Wall Street Journal Online that, “Critics have complained that the White House hasn’t backed up its trade agenda with strong action, pointing to still-outstanding trade deals with South Korea, Colombia and Panama. Trade groups say finalizing those deals is a sure-fire way to create jobs and remain competitive globally. The U.S. Chamber of Commerce estimates that nearly 400,000 jobs could be lost of the Korea and Colombia deals aren’t implemented.

“The White House said Thursday that it is working to resolve outstanding issues on the agreements and will move them forward ‘at an appropriate time.’

“Many Democrats and labor groups oppose the deals, and the Korea or Colombia agreements aren’t expected to see Congressional action before the mid-term elections.”

In a statement yesterday regarding Pres. Obama’s speech, Iowa GOP Sen. Chuck Grassley indicated that, “I appreciate the President’s recent attention to trade. The United States has had trade agreements with Colombia, Panama, and South Korea pending for almost three years. The White House says it’ll bring those agreements forward ‘at an appropriate time.’ It would be hard to think of a more appropriate time than right now. Without exports, which support jobs, the economy would be in even worse shape than it is. The President’s new efforts might make some difference in helping U.S. businesses increase their exports, but nothing compares to opening new markets through reciprocal trade agreements.”

On a different trade issue, Reuters writer Doug Palmer reported yesterday that, “President Barack Obama, facing a revolt among Democrats to past trade agreements, aims to reshape the rules for international trade and shore up the U.S economic position in Asia with talks starting on Monday on a Pacific trade pact [the Trans-Pacific Partnership (TPP)]”

Mr. Palmer explained that, “Saddled with three unpopular trade agreements the Bush administration negotiated with Colombia, Panama and South Korea, Obama says the TPP will be a high-standard ‘21st century’ trade agreement with stronger protections for workers and the environment than previous pacts.

“That’s important to many Democrats in the House of Representative who think trade deals are to blame for millions of lost U.S. manufacturing jobs.”

Climate Change Issues

Yesterday’s Commodity News for Tomorrow newsletter, a complimentary daily commodity publication provided by the CME Group, reported that, “Alaska Republican Sen. Lisa Murkowski said Thursday she thinks it unlikely the U.S. Senate will pass a comprehensive climate bill this year.”

The update added that, “The Alaska senator was one of a half dozen Republicans the administration invited to its summit Tuesday to feel out the potential for creating consensus on a climate bill. The meeting included the President’s top energy and environment cabinet officials, the chairman of the Senate committees of jurisdiction on climate and the trio of lawmakers trying to draft a tri-partisan bill.

“Capitol Hill pundits say getting agreement on a highly controversial climate bill is already a very tough play, outside of consideration of the legislative calendar. One proposal that passed out of the environment committee and mirrored the House legislation has already been discarded. Sens. John Kerry (D., Mass.), Joe Lieberman (I., Conn.) and Lindsey Graham (R., S.C.) have so far failed to gather support from both sides of the aisle on a shifting set of proposals they’ve offered to colleagues, much less produce a summary on paper.

“The senators indicated that such text wasn’t likely until mid April, after the Easter break.”

Meanwhile, Ben Geman reported on Wednesday at The Hill’s Energy and Environment Blog that, “A mostly Republican group of 20 state and territorial governors is urging Congress to block EPA’s ability to regulate greenhouse gas emissions.

“A letter Wednesday from the governors – 18 Republicans and two Democrats – to House and Senate leaders alleges that planned EPA rules to limit heat-trapping emissions would harm their state economies.”

And a news release issued yesterday by the American Farm Bureau Federation noted that, “The American Farm Bureau Federation’s successful, six-month campaign to oppose cap-and-trade climate change legislation, ‘Don’t CAP Our Future,’ culminated Wednesday when farmer and rancher members from across the country presented key lawmakers some of the 100,000 grassroots calls-to-action gathered in opposition to the issue.

“‘Cap-and-trade provisions would create an energy shortage and ultimately reduce food production. That was the driving force behind the ‘Don’t CAP Our Future’ campaign,’ AFBF President Bob Stallman said at an event on Capitol Hill.

“Stallman, members of the AFBF Board and additional state Farm Bureau presidents and members, warmly thanked senators attending the event who have shown outstanding leadership in the battle against cap-and-trade legislation.”

The release stated that, “Sen. Jim Inhofe (R-Okla.) was recognized by Stallman for “leading the charge” against cap-and-trade legislation in the Senate. Stallman and other Farm Bureau leaders also expressed appreciation to other strong supporters of the effort, including Sen. Saxby Chambliss (R-Ga.), ranking member of the Senate Agriculture Committee, and Sen. John Thune (R-S.D.), Sen. Kit Bond (R-Mo.), Sen. Sam Brownback (R-Kan.), Sen. Tom Coburn (R-Okla.) and Sen. Robert Bennett (R-Utah).”

“Earlier this week, AFBF and several dozen other organizations sent a letter to the full Senate urging support for S.J. Res. 26, a resolution to disapprove the Environmental Protection Agency’s proposal to regulate greenhouse gas emissions under the Clean Air Act. Senators from ‘both sides of the aisle’ have said throughout the climate change debate that this issue should be decided by Congress rather than EPA, the letter noted. Last week, AFBF sent a letter of support for a companion House measure.”

And, a letter signed by multiple agricultural organizations that was sent to Rep. Ike Skelton (D-Missouri) and Rep. Joe Barton (R-Texas) earlier this week, stated in part that, “The agricultural organizations listed below support your introduction of resolutions of disapproval under the Congressional Review Act regarding the decision of the U.S. Environmental Protection Agency (EPA) to move forward on regulating carbon dioxide and other greenhouse gases under the Clean Air Act (CAA). Such regulatory actions will carry severe consequences for the U.S. economy, including America’s farmers and ranchers, through increased input costs and international market disparities.”

Ben Geman reported yesterday at The Hill’s Energy and Environment Blog that, “White House press secretary Robert Gibbs on Thursday predicted that there will be ‘clamoring’ for energy legislation when the typical summer rise in gasoline prices gets underway.

“But Gibbs also signaled that energy legislation is not a top priority for the White House this year even though President Obama remains supportive of action.

“Gibbs said the biggest priorities after the health care debate wraps up are financial regulatory reform and addressing a recent Supreme Court ruling that knocked down restrictions on corporate political spending. He also noted tax credits for small business hiring and other jobs measures.”

The Hill update noted that, “Asked if Obama wants action on energy and immigration this year, Gibbs replied ‘absolutely,’ but then added:

“‘It’s got to be more than the President wants to get something done. The President is going to ask, as he did in the energy meeting and as he will when he meets with Schumer and Graham, to see what progress they’ve made in aligning their colleagues for the type of reform that all three support. That’s what’s going to be key to moving any of these issues forward.’”

Ag Competition Issues

DTN Ag Policy Editor Chris Clayton reported yesterday that, “Ray Gaesser will be one of the few lucky farmers who knows he will be able to share his thoughts on agricultural competition.

“Gaesser, a soybean and corn farmer from Corning, Iowa, will have a literal seat at the table Friday at a community college campus in Ankeny, Iowa. He’s attending the first of five national meetings between now and December that are being held by the U.S. Department of Agriculture and Department of Justice to examine the state of competition for farmers.

“To prepare for the workshops, DOJ and USDA asked for public comments and got more than 15,000 responses, so many that the Department of Justice has been unable to process and post all of them. In a statement describing the meeting, the DOJ said the workshops ‘will examine whether changes in the marketplace, including increased consolidation and vertical integration, have generated efficiencies, or whether they have led to increases in monopoly or monopsony power.’”

Mr. Clayton noted that, “Some of the biggest agribusinesses in the country are actually farmer owned, whether it entails cooperatives that provide inputs to farmers or buy their grain or dairy products. The cooperatives worry about the tone these meetings will take throughout the year.

“Chuck Conner, president and CEO of the National Council of Farmer Cooperatives, wants to ensure the integrity of farmer-cooperative systems, especially after hearing concerns raised about cooperatives by Department of Justice Antitrust Chief Christine Varney at a Senate Judiciary Committee field hearing last fall. Varney, who will speak on Friday, said at the time that cooperatives may have outlived their usefulness.

“‘The paraphrased version of that is we interpret that to mean, in some cases, the co-ops have grown so large they are not serving their members’ interests, that sort of thing,’ Conner said. ‘Clearly, some negative comments against co-ops.’”

P.J. Huffstutter reported yesterday at the Los Angeles Times Online that, “The meetings are intended to allow producers, competitors and activists to air their concerns about the grain, poultry, dairy and livestock industries. The government is also trying to ferret out reasons for the sometimes vast gaps between what farmers are paid for producing food and the prices shoppers pay at the grocery store.

“Justice Department officials, who spoke on background because they said it was too early to comment about concerns raised at the meetings, said the workshops were a chance for the government to examine the changes the food sector had undergone in recent years.

“The push to hold such events, the officials said, was driven in part by President Obama’s concerns over how consolidation has affected industry competition.”

The article indicated that, “In recent years, the companies that develop seeds for farmers to sow in their fields have consolidated. Complaints about unfair competitive practices by the few giant firms left have soared. As a result, critics say, the effects of more costly seeds have rippled out to the nation’s dining tables.

“The farm community — which produces more than $80 billion annually in soybeans and corn — has been pressuring lawmakers to investigate why it’s costing them so much more to grow their crops. U.S. farmers spent about $17 billion on seeds last year, up 56% from 2006, the USDA said.

“Yet over the last decade, the number of independent seed companies in the U.S. has shrunk to fewer than 100 from more than 300, said Bill Wenzel, national director of the nonprofit Farmer to Farmer Campaign on Genetic Engineering, a network of 34 farm groups.”

Dan Looker provided additional background on today’s meeting in Iowa in an article posted yesterday at Agriculture Online, “All-star cast set to tackle ag competition in Iowa meeting.”

Animal Agriculture

Philip Brasher reported on Wednesday at the Green Fields Blog (The Des Moines Register) that, “The head of the Food and Drug Administration says the agency is continuing to look at possible restrictions on the use of antibiotics in livestock but pledged to consult with producers. Margaret Hamburg told a House subcommittee today that antibiotic resistance is one of the nation’s ‘foremost public health concerns’ and there are clear linkages between the problem and the use of the drugs in farm animals.

“‘We are working closely with industry, listening to their concerns,’ Hamburg said in response to a question from Rep. Tom Latham, R-Ia. ‘We are not going to move forward and institute a policy that we have not been able to base on sound science and evidence.’

“She said the agency was looking at ‘regulatory pathways’ to restrict animal antibiotic use but did not elaborate.”

Keith Good

March 10

FAPRI Baseline; Biofuels; Disaster Payment Issues; Climate Change; the Farm Bill; and Trade

FAPRI Baseline Update

A University of Missouri news release from yesterday stated that, “The livestock sector can lead the agricultural economy to higher net farm income, assuming the farm economy benefits from a recovering general U.S. economy.

“That analysis tops a 2010 baseline report prepared by the University of Missouri Food and Agricultural Policy Research Institute (FAPRI). The 66-page report will be delivered to the U.S. Congress, Tuesday (Mar. 9). The 10-year baseline shows economic possibilities for livestock, crop and biofuels under certain assumptions.

“‘If jobs–and consumers–return, the agricultural sector will benefit,’ said Pat Westhoff, co-director of MU FAPRI. ‘Higher incomes increase the demand for food, feed, fiber and fuel, supporting farm commodity prices.’”

The release added that, “Projected net farm income increases the next two years largely because of stronger livestock prices. ‘The recovery would mark a major change in direction for the farm economy after a dismal 2009, but 2010 farm income recovers only a third of the ground lost in 2009,’ Westhoff said. Net farm income fell by more than $30 billion in 2009, as sharp declines in cash receipts were not offset by modest drops in production costs.”

Yesterday’s update noted that, “Although corn prices are far below the 2008 peak they are supported by continued growth in corn demand. ‘If the economy recovers it will boost domestic and foreign demand for corn in feed rations and ethanol uses an increasing share of the U.S. corn crop,’ Westhoff said. ‘Mandates encourage more ethanol use of corn until 2015. Additional growth depends on cornbased ethanol being competitive as a fuel, which depends in part on oil prices.’”

With respect to government payments, the FAPRI baseline update indicated that, “Projected direct payments far exceed marketing loan benefits, countercyclical payments and Average Crop Revenue Election (ACRE) program payments. Projected prices are too high to result in marketing loan benefits or countercyclical payments for most crops in most years [related graph].”

And on crop insurance, the FAPRI baseline stated that, “Net government outlays on the crop insurance program reached almost $8 billion in FY 2009. Crop insurance expenditures dip in FY 2010 because of higher 2009 crop yields and again in FY 2012 because of shifts in the timing of premium payments and provider reimbursements. After FY 2015, net outlays on the crop insurance program are almost as great as net Commodity Credit Corporation (CCC) outlays on other farm programs [related graph].”

Biofuels

DTN Ag Policy Editor Chris Clayton reported yesterday (link requires subscription) that, “A $150 billion bill that extends several tax credits and provides job benefits cleared a key procedural vote in the U.S. Senate Tuesday afternoon, clearing a path for senators to pass some key provisions for agriculture, including a disaster aid package and a renewal of the $1-per-gallon biodiesel tax credit.

“The overall bill renews more than 70 tax credits and other job-benefit provisions. Among the tax-credit extenders, the bill provides a retroactive one-year extension of the $1-per-gallon biodiesel excise tax credit. The credit expired at the end of 2009, causing biodiesel facilities across the country to lay off employees or idle plants. The bill would retroactively re-establish the credit, but it would expire again at the end of December.”

Mr. Clayton added that, “‘Expiration of the biodiesel tax incentive has essentially caused the production and use of biodiesel in the U.S. to cease and has placed thousands of jobs currently supported by the domestic biodiesel industry in immediate jeopardy,’ ASA President Rob Joslin, a soybean producer from Sidney, Ohio, stated in a news release on Tuesday. ‘Companies have already started laying-off employees, and this situation is certain to worsen the longer the tax incentive is allowed to lapse.’

“Also added to the bill is a $1.5 billion disaster aid package for the 2009 crop year being pushed by Senate Agriculture Committee Chairman Blanche Lincoln, D-Ark. Farmers would be eligible if they suffered a crop disaster or are located in counties declared disaster areas that had at least one crop suffer a 5 percent yield or quality loss due to the disaster, the bill states. Payments would equal up to 90 percent of the farmers’ direct payments for 2009.”

In related news, Reuters writer Charles Abbott reported yesterday that, “U.S. fuel ethanol and biodiesel production would be cut by 10 percent if Congress allows biofuel tax credits to expire this year, a University of Missouri think tank said on Tuesday.

“Corn and soybean prices would fall by 15 cents a bushel, estimated the Food and Agricultural Policy Research Institute (FAPRI). One-third of the corn crop is used to make fuel ethanol and about 11 percent of U.S. soybean oil is used for biodiesel.”

Mr. Abbott explained that, “The ethanol tax credit of 45 cents a gallon and a tariff of 54 cents a gallon on ethanol imports are scheduled to expire at the end of this year. The $1-a-gallon biodiesel tax credit died at the start of the year but would be revived for 2010 in a bill pending in the Senate.

“Without the tax breaks, said FAPRI, ethanol and biodiesel production will track the usage levels mandated by a 2007 energy law. It guarantees annual use of 15 billion gallons of corn-based ethanol beginning in 2015 and 1 billion gallons of biodiesel starting in 2012.”

Disaster Payments, SURE, and Crop Insurance Issues

Dan Morgan reported this week at The Fiscal Times Online that, “Less than two years ago, Congress seemingly ended a decades-old practice of rushing to the rescue of farmers any time they suffered weather damage to their crops. The costly old system of ‘emergency aid’ was a regular drain on the budget, and there were so many loopholes that some farmers with no appreciable losses were able to cash in.

“But some habits are hard to break. The Senate this week is on the verge of bypassing new procedures set up by the 2008 U.S. Farm Bill in order to bestow $1.1 billion of emergency aid on farmers as part of a huge package of renewed tax provisions and a one-year extension of unemployment insurance. Also tucked into the legislation is nearly $350 million to help ranchers, fruit and vegetable producers, catfish farmers hit with high feed costs, and poultry raisers left high and dry by the closing of southern chicken processing plants.

“For the legislation’s main champion, Senate Agriculture Committee Chairman Blanche Lincoln, D-Ark., obtaining the farm aid for Mississippi Delta cotton and soybean growers hurt by last fall’s heavy rains is a crucial step in an uphill battle to retain her seat in November.”

The Fiscal Times article noted that, “But how Congress handles the farm aid issue will be a test of both parties’ commitment to control spending.

“That’s because the 2008 farm bill was supposed to end such ad hoc payouts and replace them with a permanent — and less politically driven — system.

“The farm bill set up a $3.8 billion trust fund, financed out of customs duties rather than appropriated funds. Last December, the Department of Agriculture followed up by announcing stringent eligibility standards that required farms to demonstrate substantial losses not just on one crop but across their entire farming operation. The new Supplemental Revenue Assistance Payment Program (SURE) closed significant loopholes that had been part of emergency farm aid spending measures enacted by Congress. And it requires farmers to have purchased their own private crop insurance — providing incentives to growers not to rely on government alone to manage risks.”

Mr. Morgan indicated that, “Lincoln’s farm aid proposal would channel disaster payments to farmers with losses amounting to no more than 5 percent of a single crop, too generous even for some key farm state lawmakers.

“‘That doesn’t fly,’ House Agriculture Committee Chairman Collin Peterson, D-Minn., said of the Lincoln proposal at a rice industry conference last week. ‘That’s asking for trouble.’

“‘The farm safety net has been improved over the last several years so the proposal for ad hoc assistance seems to me to be a difficult proposition,’ said Keith Collins, a former chief USDA economist who now consults for the crop insurance industry.”

Yesterday’s article noted that, “Lincoln has said the payments will ‘bridge the gap’ until USDA begins distributing SURE money later this year. But underlying her effort is the fact that most southern farmers won’t be eligible for much help under the new program.”

“That is because southern farmers have tended to rely on government programs and emergency aid passed by Congress, rather than the private crop insurance to which SURE benefits are pegged. SURE adds 15 percent to all the crop insurance guarantees a farmer purchases. For farmers with little coverage, SURE falls far short of the direct aid that Lincoln has proposed.”

The article concluded by saying, “[I]n the South, most farmers take out only the minimum coverage that protects 27.5 percent of their potential losses on a crop.

“A major reason, according to USDA and academic studies, is that the private crop insurance companies set southern premiums relatively high due to concerns about fraud and losses from such southern hazards as the boll weevil. The largest and most successful farmers tend to insure themselves or rely on ad hoc aid and traditional farm programs. At the same time, the insurance industry has had difficulty designing policies for southern crops such as rice, which is less subject to weather losses since it grows in flooded fields and is protected against drought by irrigation.

“‘It’s an historical and cultural thing,’ said Michael R. McLeod, executive director of the American Association of Crop Insurers.”

For more background and information on this issue, see “Crop Insurance in the Midsouth,” by Mississippi State University Economists Barry J. Barnett, Keith H. Coble and Stan R. Spurlock.

Climate Change Developments: Pres. Obama Meets with Senators

An update posted yesterday at CQPolitics reported that, “Even as President Obama and congressional Democrats struggle to finish a health care overhaul, they are ramping up efforts to rally support for a comprehensive energy and climate change bill.

“Tuesday afternoon, a bipartisan trio of senators writing a climate bill — John Kerry, D-Mass., Joseph I. Lieberman, I-Conn., and Lindsey Graham, R-S.C. — will meet with the heads of trade groups whose industries would be affected profoundly by any new law regulating carbon emissions.”

The CQ update explained that, “Expected to attend the meeting are leaders of the American Petroleum Institute and the Edison Electric Institute, and a representative of the Portland Cement Association, among others.

“Later in the afternoon, the president will meet at the White House with Kerry, Lieberman and Graham, as well as a bipartisan group of 11 other senators viewed as crucial swing votes on a Senate climate bill. Also attending the White House meeting will be Energy Secretary Steven Chu, Interior Secretary Ken Salazar, Agriculture Secretary Tom Vilsack and EPA Administrator Lisa P. Jackson.”

However, Amy Harder reported yesterday at the National Journal Online that, “Senate Agriculture Chairwoman Blanche Lincoln, D-Ark., is not expected to be at today’s meeting with President Obama on climate and energy legislation. Thirteen senators are expected to attend, mostly moderates from both parties, as well as four top administration officials, including Agriculture Secretary Tom Vilsack.

“Over the past several weeks, Lincoln has taken bold steps away from the Democratic Party, most recently launching a re-election ad campaign last week that explicitly says she is against cap-and-trade, as well as other key Democratic priorities. She is also a co-sponsor of the disapproval resolution by Sen. Lisa Murkowski, R-Alaska, that would strip EPA’s regulatory authority over greenhouse gas emissions. The League of Conservation Voters and the Sierra Club have taken notice and launched attacks against her.”

Reuters writers Jeff Mason and Richard Cowan reported yesterday that, “White House spokesman Robert Gibbs said Obama wanted to get an update on the Senate’s energy initiatives at the meeting.

“‘The president believes … strongly that we need to get something done,’ Gibbs said.”

Bloomberg writer Simon Lomax reported yesterday that, “President Barack Obama should give up on legislation that sets greenhouse gas limits and support a bill that boosts renewable electricity generation and U.S. oil and gas production, Senator Lisa Murkowski said.

“‘I’d put a plug in for energy-only,’ Murkowski, an Alaska Republican, told reporters in Washington ahead of a meeting with Obama today to discuss energy and climate-change legislation. ‘We’re ready to go with an energy-only bill.’”

David A. Fahrenthold reported yesterday at The Washington Post Carbon Blog that, “President Obama met with Cabinet members and 14 senators Tuesday afternoon to talk about climate change and energy. One senator in attendance said the president emphasized his desire for a climate bill but provided few specifics about what it should contain.

“Sen. Sherrod Brown (D-Ohio), said that the senators sitting around the table seemed to agree that they want to pass climate legislation — though they still disagree about what the legislation should look like.   

“He said that Obama did not make detailed demands.”

With respect to the legislative calendar, National Journal writer Amy Harder reported yesterday that, “The Senate trio crafting climate and energy legislation may not have a draft bill by the Easter recess, Sen. Lindsey Graham, R-S.C., said today at the Capitol before meeting with other senators at the White House to discuss the issue.

“When asked if the trio, which also includes Sens. John Kerry, D-Mass., and Joe Lieberman, I/D-Conn., would have a draft bill or outline by Easter break, which goes for two weeks beginning March 29, Graham replied: ‘Sooner rather than later. I don’t know if we can get it done that soon. But hopefully by the end of the month.’ If a draft isn’t announced by the break, then it could be delayed until mid-April.”

Bloomberg writer Catherine Dodge reported yesterday that, “Senator Joseph Lieberman said lawmakers plan to complete a draft of climate-change legislation this month before taking an Easter break, as Republicans insisted the measure should be narrower than a House-passed bill…’We’re still negotiating with a lot of people,’ Lieberman told reporters. ‘The aim is to put a draft out,’ by March 26.”

Ms. Dodge added that, “Republican Senator Richard Lugar, who is also among more than a dozen lawmakers going to the meeting, said he is drafting a ‘practical’ energy plan with a national mandate for clean energy.

“‘I am proposing practical steps that save money and that everyone can support,’ Lugar of Indiana said in a statement.”

With respect to political variables and climate legislation, Reuters reported yesterday that, “Like a savvy Madison Avenue advertising team, senators pushing climate-control legislation have decided to scrap the name ‘cap and trade’ and rebrand their product as ‘pollution reduction targets.’”

Meanwhile, Ben Geman reported yesterday at The Hill’s Energy and Environment Blog that, “White House officials have been reaching out to lawmakers.

“Sen. Susan Collins (R-Maine) – who is attending the [the White House climate] meeting and has offered an alternative climate bill with Sen. Maria Cantwell (D-Wash.) – said she met Monday with White House climate czar Carol Browner at Browner’s request.”

And a Daily Radio News item from USDA yesterday noted that, “The head of the White House Energy Office [Carol Browner] says the country needs an new energy bill.” The one-minute audio summary included public comments made yesterday by Ms. Browner, to listen just click here.

Darren Samuelsohn of ClimateWire reported yesterday at The New York Times Online that, “The fate of comprehensive energy and climate legislation rests in the hands of about 30 senators.

“The list includes coal and Rust Belt Democrats, Westerners and moderate Republicans. They bring several high-profile issues to the forefront that, if satisfied, offers several potential paths to the bill’s lead authors looking for the magic 60 votes.”

The article noted that, “E&E’s latest assessment of the Senate climate debate counts 41 ‘yes’ or ‘probably yes’ votes on a comprehensive bill that includes a first-ever price on domestic greenhouse gases. Another 29 fall in the ‘no’ and ‘probably no’ camp.

“That leaves the 30 ‘fence sitters,’ 19 Democrats and 11 Republicans, who have expressed varying degrees of interest in the overall energy and climate issue during the Obama administration.

“To get any of them to leave the fence and support a bill will require significant dealmaking on a range of key issues. Some of them overlap, meaning a ‘yes’ vote may require more than one concession.”

Farm Bill

DTN Political Correspondent Jerry Hagstrom reported yesteray (link requires subscription) that, “Farm leaders are unlikely to propose cuts to farm programs during House Agriculture Committee Chairman Collin Peterson’s upcoming hearings on the next farm bill unless there is a real threat of reconciliation, key lobbyists said here during the 2010 Commodity Classic, a meeting of corn, soybean, wheat and sorghum producers.

“‘The vast majority of farm groups will say we like this farm bill. Don’t change it,’ Mary Kay Thatcher, director of agricultural policy at the American Farm Bureau Federation, said during a panel discussion on Saturday. But Thatcher also said that if there is a real threat of a 10 percent cut, as Peterson, D-Minn., has suggested, ‘there may be ideas.’ But she added, ‘We are hoping we don’t get a reconciliation bill.’”

Mr. Hagstrom added that, “Both Thatcher and [Chandler Goule, vice president for government relations at the National Farmers Union] said crop insurance is likely to be the focus of farm policy debate. Crop insurance now costs about $8 billion per year in premium subsidies and payments to companies and insurance agents for delivering the programs, while other subsidies for the same crops total $7 billion.

“In the ongoing negotiations between USDA’s Risk Management Agency and the insurance industry over the cost of delivering the programs, Thatcher said she thinks the Obama administration may force a $5 billion cut over 10 years.”

“Goule said that if the Doha round of world trade talks are ever completed, crop insurance is likely to be an even more important part of the farm safety net because the Doha round agreement would likely require a reduction in U.S. target prices that trigger payments when prices are low.”

Trade

Dow Jones writer Gerald Jeffris reported yesterday that, “Brazil is open to modifying retaliatory measures against the U.S. in a dispute over cotton subsidies but won’t change its proposed tariff increases unless bilateral talks advance significantly, a top trade official said Tuesday.

“Brazilian Trade and Development Minister Miguel Jorge said meetings with U.S. trade officials Tuesday yielded ‘no new U.S. proposals.’ He said Brazil needs to maintain its tough position on tariffs in order to reinforce its negotiating position until it sees signs of flexibility.”

Keith Good

March 9

Climate Change; Trade- Cotton Case; and Animal Agriculture

Climate Change- Administrator Jackson’s Perspective

Reuters writer Timothy Gardner reported yesterday that, “The Environmental Protection Agency chief fought back on Monday against Senate attempts to challenge the agency’s authority to regulate greenhouse gas emissions, saying delaying action would be bad for the economy.

“President Barack Obama has long said the EPA would take steps to regulate greenhouse gases if Congress failed to pass climate legislation. The bill faces an uncertain future in the Senate amid opposition from fossil fuel-rich states.

“Senator Lisa Murkowski, a Republican from oil-producing Alaska, has introduced legislation to stop EPA from taking steps under the Clean Air Act on climate pollution from tailpipes and smokestacks.”

The article added that, “‘Supposedly these efforts have been put forward to protect jobs,’ Lisa Jackson told a meeting at the National Press Club. ‘In reality, they will have serious negative economic effects.’

“Jackson said industry needs clear signals from the U.S. government on greenhouse gas regulations. Otherwise investors would have ‘little incentive’ to put money into clean energy jobs. The country would fall further behind other countries in the race for clean energy, which would hurt the economy, she added.”

A transcript of Administrator Jackson’s comments from yesterday can be viewed here, while a video replay of her remarks is available here.

Lisa Lerer reported yesterday at Politico that, “The EPA is under fierce fire from more than a dozen lawmakers trying to block the new regulations, which would use the Clean Air Act to impose new emissions curbs on business.

“Last week, Sen. John Rockefeller (D-W.Va.) introduced legislation that would delay the new rules by two years. The regulations, he said, would ‘safeguard jobs, the coal industry and the entire economy.’”

Ms. Lerer added that, “Jackson said Congress should focus on drafting a climate bill, instead of suspending the rules.

“‘I really think the energy of the Senate on this issue would be wonderful if it would be put towards new legislation to do something,’ she said.

“The EPA has yet to see the climate proposal being drafted by Sens. John Kerry (D-Mass.), Lindsey Graham (R-S.C.) and Joe Lieberman (I-Conn.), Jackson said. The three senators are trying to craft a bill that would impose industry-specific regulations, rather than the economywide cap preferred by the Obama administration.”

Ben Geman reported yesterday at The Hill Energy and Environment Blog that, “EPA had a cautious response (or non-response) last week when Sen. Jay Rockefeller (D-W.Va.) introduced his bill that would block regulation of greenhouse gases from power plants and other industrial facilities for two years.  

“But EPA Administrator Lisa Jackson reacted more boldly on Monday to the bill, which has also been introduced in the House.

“‘I am not in a position where I am going to stand here and support the idea of EPA not being able to use the Clean Air Act,’ Jackson told reporters after a speech at the National Press Club.”

Some of the more interesting comments from Administrator Jackson came in the Q and A portion of yesterday’s National Press Club appearance.

Admin. Jackson answered more specific questions about climate change issues in these two audio clips: clip one (MP3-2:17), clip two (MP3-3:20).

And with respect to agricultural issues, Admin. Jackson addressed the waiver request to increase the ethanol blend in gasoline from 10% to 15% in this clip (MP3-1:19).

She spoke about the recent Sixth Circuit opinion regarding pesticide applications and permitting issues in this audio clip (MP3-1:12). (Recall that last month, the U.S. Supreme Court refused to review this Sixth Circuit case.)

Meanwhile, Amy Harder reported yesterday at the National Journal Online that, “EPA Administrator Lisa Jackson deflected questions today about when — or if — she would respond to a letter that Sen. Lisa Murkowski, R-Alaska, sent her Friday asking more questions about her agency’s plans to regulate greenhouse gas emissions.

“‘I don’t have a date yet,’ Jackson told reporters after speaking at a National Press Club luncheon. ‘I haven’t had a chance to review it yet.’”

Ms. Harder added that, “Murkowski, the top Republican on the Energy and Natural Resources Committee, was following up on the questions Sen. Jay Rockefeller, D-W.Va., and several other coal-state Democrats asked EPA in a letter last month. Specifically, Murkowski asked about the ‘tailoring’ rule: what types and sizes of stationary sources will be required to get Clean Air Act permits, and when the regulations would be rolled out.

“Rockefeller sent his letter on a Friday afternoon and got a response the following Monday evening. The discrepancy has not gone unnoticed by Murkowski’s office. ‘Senator Rockefeller was able to get a response in three days; I think Senator Murkowski would like the same treatment,’ Murkowski spokesman Robert Dillon said today.”

Robin Bravender of Greenwire reported yesterday at The New York Times Online that, “U.S. EPA has submitted the first piece of its suite of greenhouse gas rules to the White House for review, a signal that the agency is on schedule to finalize its first regulations to curb the heat-trapping emissions.

“EPA sent to the White House Office of Management and Budget last Thursday its final reconsideration of the George W. Bush administration’s ‘Johnson memo,’ a determination from former EPA Administrator Stephen Johnson about when the government must begin to regulate industrial facilities’ greenhouse gas emissions. That decision is seen as a critical policy to have in place before the agency issues its final greenhouse gas rule for tailpipe emissions.

“The agency is expected to finalize the auto standards — slated to come in tandem with the Transportation Department’s corporate average fuel efficiency (CAFE) standards — by March 31. Once greenhouse gases are ‘subject to regulation’ under the Clean Air Act, the agency will also be required to regulate stationary sources of the emissions.”

Jim Snyder reported yesterday at The Hill Online that, “The three senators writing compromise climate legislation are lobbying business groups in hopes of winning their support for the effort. One obstacle: the absence of an actual bill.

“Sen. John Kerry (D-Mass.) briefed a group of electric utility executives this week on a broad outline of the plan. Kerry and his cohorts, Sens. Joe Lieberman (I-Conn.) and Lindsey Graham (R-S.C.), have also reached out to Tom Donohue, the president and CEO of the U.S. Chamber of Commerce, who has been among the harshest critics of a climate bill stalled in the Senate.”

Yesterday’s article added that, “Kerry, Graham and Lieberman appear to have revived climate discussions in the Senate by shifting focus from an ‘economy-wide’ cap-and-trade approach that has been the focus up to this point.

“But energy lobbyists said they had yet to see any details of the legislation, raising skepticism the three are near a solution.”

Trade- Cotton Case

Reuters writer Raymond Colitt reported yesterday that, “Brazil detailed on Monday its planned retaliation against the United States over U.S. cotton subsidies but said Washington still had a chance to settle the trade dispute through negotiations.

“The Brazilian government published on Monday a list of U.S. goods subject to import tariffs that will go into effect in 30 days, unless the governments can reach a last-minute accord.”

The article noted that, “U.S. Commerce Secretary Gary Locke may address the matter when he visits Brazil on Tuesday, although key U.S. lawmakers said they’d been assured Locke was not carrying a proposal to resolve the long-running trade spat.

“‘We cannot negotiate with a partner that is unwilling to voice what it wants,’ Senators Blanche Linclon and Saxby Chambliss, the top Democrat and Republican on the Senate Agriculture Committee, said in a statement.

“The U.S. government is willing to strike a deal, but is ‘waiting for Brazil to start the process,’ the lawmakers said.”

The Reuters article indicated that, “The U.S. National Cotton Council said the move imposed unwarranted harm on Brazilian and American interests in times of economic hardship and added the cost of U.S. cotton price-related programs were down sharply.

“The estimated annual impact of the retaliation is $591 million, Brazil’s foreign ministry said in a statement.

“Brazil is expected to publish by March 23 a separate list worth an additional $238 million in annual cross-retaliation penalties. That list would be subject to public hearings for 20 days and focus on intellectual property rights and services, ministry officials said.”

A statement on this development yesterday from the U.S. Trade Representative’s Office indicated that, “‘We are disappointed to learn that Brazil’s authorities have decided to proceed with countermeasures against U.S. trade in the WTO Cotton dispute,’ said spokeswoman Nefeterius McPherson. ‘USTR is working to reach a solution to the issues in this dispute without Brazil resorting to countermeasures and we continue to prefer a negotiated solution.’”

Dow Jones writer Gerald Jeffris reported yesterday that, “‘The Brazilian government doesn’t believe that trade retaliation is the most appropriate means to achieve fairer international commerce,’ said Brazilian Foreign Trade Secretary Lytha Spindola. ‘But after eight years of litigation, and in the absence of more concrete options for resolving the dispute, all that’s left for Brazil is to make good on its rights as authorized by the WTO, if even only to safeguard the credibility of the system of conflict resolution.’

“The list included mostly nonessential consumer products such as cosmetics and electronic devices. It also included some pharmaceuticals, hospital products, and food items, as well as some bigger ticket imports such as automobiles.”

Bloomberg writers Iuri Dantas and Mark Drajem reported yesterday that, “Brazil will raise tariffs on 102 U.S. exports, including wheat, cars, boats and chewing gum, and break patents worth $238 million in a bid to force the U.S. to end subsidies to cotton producers.

“Acting on a World Trade Organization ruling, Brazil will impose levies of 14 percent to 100 percent, according to a list published in the government’s Official Gazette. The sanctions, which take effect in 30 days, represent $591 million in trade with wheat goods the largest target, Carlos Marcio Cosendey, head of Foreign Ministry’s economic department told reporters.”

In other trade news, Ian Swanson reported yesterday at The Hill Online that, “Rep. Sandy Levin is known as a trade critic, but his record on the issue is more complicated.

“Levin (D-Mich.), who was named interim chairman of the Ways and Means Committee after Rep. Charlie Rangel (D-N.Y.) stepped down under an ethics investigation, has been a leader in the Democratic Caucus on trade for years.

“He’s expressed skepticism of pending agreements with Colombia, Panama and South Korea that were negotiated by the Bush administration, leading some to think those deals are unlikely to be dislodged.”

The article noted that, “But in 2000, Levin voted for granting China more favorable trade terms, which ushered that country into the global trading system and the World Trade Organization.”

Mr. Swanson pointed out that, “More recently, Levin helped negotiate changes to a trade deal with Peru that allowed it to win congressional approval in 2007.

“Some business lobbyists who’ve been hoping for action on the Bush administration’s leftover trade agenda suggest things aren’t likely to worsen for them with Levin at the helm of the committee instead of Rangel.

“Others are hopeful that Levin could deliver for them.”

And David M. Dickson reported in today’s Washington Times that, “It’s the trade war that wasn’t.

“Fears that the deep global recession would fuel protectionist measures have not been borne out, a major survey found.

“Commissioned by the Group of 20 leading industrial powers, the study found that the United States and its major trading partners have cut back sharply on trade-killing restrictions since September, despite strong political pressures at home.”

Today’s article explained that, “The survey could mean good news for a global economy that is gathering new steam, with fewer new trade barriers and tariffs to dismantle as the major trading powers struggle to complete the stalled Doha trade round — a global negotiation now in its ninth year.

“The report was released Monday by the World Trade Organization (WTO), which coordinated with analysts from the Organization of Economic Cooperation and Development and the United Nations.”

Animal Agriculture

In his opinion item from Sunday, New York Times Columnist Nicholas D. Kristof stated that, “Until three months ago, Thomas M. Dukes was a vigorous, healthy executive at a California plastics company. Then, over the course of a few days in December as he was planning his Christmas shopping, E. coli bacteria ravaged his body and tore his life apart.

“Mr. Dukes is a reminder that as long as we’re examining our health care system, we need to scrutinize more than insurance companies. We also need to curb the way modern agribusiness madly overuses antibiotics, leaving them ineffective for sick humans.”

Mr. Kristof added that, “Routine use of antibiotics to raise livestock is widely seen as a major reason for the rise of superbugs. But Congress and the Obama administration have refused to curb agriculture’s addiction to antibiotics, apparently because of the power of the agribusiness lobby.”

Rod Smith reported recently at FeedStuffs Online that, “Resistance, [Dr. W. Ron DeHaven, executive vice president and chief executive officer of the American Veterinary Medical Assn. (AVMA)] said in remarks to the delegates to the board of directors of the National Pork Producers Council (NPPC), occurs when a microorganism develops a survival rate to antimicrobials. That is not occurring in U.S. animal agriculture, he stated.

“DeHaven noted that the Food & Drug Administration (FDA) has approved the use of antibiotics in animals to achieve growth promotion and to prevent, control and treat disease.”

The article added that, “He then laid out several facts:

(1) There is no evidence that antibiotic use in animals causes antibiotic resistance or infections in humans;

(2) There is no evidence that eliminating the use of antibiotics in animals will prevent antibiotic resistance;

(3) The advantages of antibiotics include animal welfare — disease prevention, control and treatment — food safety — healthier animals mean safer food — and efficiency and growth, and

(4) The disadvantage is that ‘at some level’ resistance may occur.”

Mr. Smith explained that, “There are choices, DeHaven said. One is to use lower antibiotic doses in more animals to prevent or higher doses in fewer animals to treat, the latter of which ‘may be the stronger driver’ in creating resistance.

“Another is to discontinue use until it can be determined if use leads to resistance or to continue use until it can be determined that mitigating measures are needed to reduce resistance risk. This is more preferable for animal welfare and food safety purposes.

“DeHaven said AVMA supports the judicious use of antibiotics in animals and greater veterinarian involvement in the use of antibiotics in animals and subscribes to a position that limitations in use be based on scientific research and risk assessment.”

Meanwhile, Ken Anderson reported on Friday at Brownfield that, “It looks like the issue of animal rights has reached the U.S. Congress.

“According to meatingplace.com, a bill backed by the Humane Society of the United States [H.R. 4733] has been introduced by two House members from California [U.S. Reps. Diane Watson, D-Calif., and Elton Gallegly, R-Calif.] It would set rules around confinement of animals used to produce food purchased by the federal government.

“HSUS praised the proposal and urged Congress to act swiftly to pass the bill. In a news release, HSUS said the bill ‘simply requires that any food purchased for federal programs comes from animals raised with enough room to stand up, lie down, turn around and stretch their limbs.’”

And Deborah Ball reported in yesterday’s Wall Street Journal that, “Swiss voters overwhelmingly rejected a referendum that would have compelled all cantons to hire lawyers to defend the rights of animals, a setback to animal-rights organizations.

“According to preliminary results, 71% of Swiss voters rejected the proposal on Sunday, with the rest voting in favor of the measure.

“The referendum was hotly debated in a country that has some of the toughest animal-welfare laws in the world. If it had passed, each of the country’s 26 cantons would have had to hire official animal lawyers—a sort of public defender—to represent pets, farm animals and wildlife in court.”

Keith Good

March 8

Sec. Vilsack- Trade; Climate Issues; and Crop Insurance

Sec. Vilsack- USDA Perceptions

DTN editor-in-chief Urban C. Lehner noted on Friday that, “Our agriculture secretary has been taking verbal abuse from all directions. When he defended transgenic seeds before a crowd of local-food activists last October, they booed him. When he included organic and local-food speakers at USDA’s annual Outlook meeting in late February, the traditional production-ag types acted as if USDA had been taken over by aliens.”

“Unlike his critics in the alternative-ag community, he understands that feeding a growing world population will require increases in agricultural productivity that going local and going organic won’t provide. Unlike his traditional-ag critics, he realizes that agriculture has a role to play in preserving the environment, and to play it well will require adopting the best ideas from a variety of agricultural approaches, including the local and organic movements.

“‘I have two sons, and I love them both,’ Vilsack has said of the competing schools of how agriculture should be practiced.”

Mr. Lehner noted that, “And so Vilsack’s USDA fights for biofuels, which most traditional corn and soybean farmers love, while it enthuses about Michele Obama’s organic White House garden and holds ‘Know Your Farmer, Know Your Food’ sessions that small-holder, ‘local’ farmers love. Today’s USDA funds research on genetically-engineered seeds while tightening the criteria to consider a crop organic. It fights to expand exports of U.S. meat while pushing fruits and vegetables in school lunches.

“Split personality? Perhaps. But you could also put it the way Vilsack does: ‘Everyday, every way, USDA.’ Or the way China’s Mao Zedong did: ‘Let a hundred flowers blossom.’ Or, simply, you could say Vilsack, like any good agriculture secretary, supports farms — big commercial farms, organic farms, all farms.”

The DTN update added that, “Loving two sons makes political sense for a Democratic ag secretary these days. Much of the party’s activist base believes that corn is bad, meat is bad, alternative agriculture is good. Many of the party’s elected officials, on the other hand, support traditional commercial agriculture, including most of the members of the agriculture and agriculture appropriations committees. The Democratic president and his wife are politically correct devotees of ‘healthy’ food. The only safe political course for Vilsack is the middle ground.”

In an article with somewhat similar themes, Philip Brasher reported in yesterday’s Des Moines Register that, “Angela Jackson is not a typical Iowa farmer and certainly isn’t the typical recipient of farm subsidies.

“She grows vegetables for local supermarkets, not grain for biofuels or livestock feed.

“But she’s the kind of farmer the Obama administration wants more of, and that raises alarms among some colleagues in conventional agriculture. They worry they’ll be harmed by the Agriculture Department’s new focus on small farms and encouragement local production of fruits and vegetables.”

Mr. Brasher noted that, “‘USDA shifted on me,’ said Tim Burrack, a farmer near Arlington in northeast Iowa who is chairman of the Iowa Corn Promotion Board. He said the Obama administration’s local-foods initiative, dubbed ‘Know Your Farmer, Know Your Food,’ to promote small-scale agriculture, will drive up food costs because large farms are more efficient.”

Yesterday’s Register article added that, “Agriculture Secretary Tom Vilsack, a former Iowa governor, said that helping farmers like Jackson will keep people on the land, generate income for rural economies and improve Americans’ health by eating more fresh produce. But he said conventional growers, known collectively in agribusiness circles as ‘production agriculture,’ stand to benefit, too, because the administration’s campaign will improve the image that urban dwellers have of farmers and farm programs.

“‘The shrinking number of farmers and shrinking number of rural legislators mean we need to create alliances and create partnerships to make sure people understand what production agriculture does and make sure it has continuing support,’ Vilsack said.”

Sec. Vilsack Speaks on Trade

A news release from the USDA on Friday stated that, “Agriculture Secretary Tom Vilsack today discussed USDA’s work to strengthen the American agriculture economy and revitalize rural communities in the keynote speech at the 2010 Commodity Classic in Anaheim, Calif. Vilsack focused on the USDA’s efforts to increase exports of agricultural products to help American farmers, ranchers, and workers.

“‘USDA’s continued work to expand trade opportunities for America’s hard-working farmers and ranchers will play an important role in our effort to rebuild rural communities across the country,’ said Vilsack. ‘Increased trade will not only create important income opportunities for producers, but also the off-farm jobs that are so critical for revitalizing rural America.’” (See related graph).

To listen to a brief audio clip from Friday’s presentation by Sec. Vilsack, just click here (MP3- 4: 24). A complete audio replay of the entire speech is available here.

Friday’s Commodity News for Tomorrow report, a complimentary daily commodities newsletter provided by the CME Group, indicated that, “U.S. Agriculture Secretary Tom Vilsack on Friday said the government would overhaul its strategy for promoting agricultural products abroad and work to increase the acceptance of biotechnology in foreign countries in a bid to improve the economy.

“Vilsack, speaking at the annual Commodity Classic conference, said the U.S. Department of Agriculture would drop its ‘one-size fits all’ approach to promoting agricultural exports in favor of tailored marketing programs for different countries. The effort is part of President Barack Obama’s goal of doubling all U.S. exports within the next five years.”

Jeff Caldwell and Dan Looker reported on Friday at Agriculture Online that, “Agriculture Secretary Tom Vilsack got a round of applause Friday when he told crop producers at the Commodity Classic in Anaheim, California Friday that Russia has agreed to reopen its market to U.S. pork exports.

“Vilsack said that the agreement which followed days of high-level negotiations is an example of USDA taking a new approach to trade promotion.”

Friday’s USDA announcement regarding pork exports and Russia was welcomed by Sen. Ag Committee Chairman Blanche Lincoln (news release), Iowa GOP Senator Charles Grassley (news release), and the National Pork Producers Council (news release).

In a separate development on agricultural trade, Nebraska GOP Sen. Mike Johanns indicated on Friday that, “In a meeting today with Japanese Ambassador Ichiro Fujisaki, Sen. Mike Johanns continued to push for Japan to lift its partial ban on U.S. beef. Johanns highlighted the inconsistency between Japan’s continued ban on safe U.S. beef and beef products compared to America’s fair treatment of Japan after reports of faulty Toyota vehicles and parts.

“‘The Japanese ban on U.S. beef has devastated our beef industry and many producers throughout Nebraska for almost seven years,’ Johanns said. ‘Japan’s position, for which there is absolutely no scientific justification, has cost American producers billions of dollars and created a double standard that defies rationalization. I am not suggesting any sort of ban on Japanese products; I am asserting that the Japanese ban on American beef is entirely unfair, without merit, and should be lifted immediately.’”

In a related news item, Agri-Pulse Senior Editor Stewart Doan filed a brief audio report today titled, “Vilsack and Johanns spar over which administration dropped the ball on beef exports to Japan.” This very interesting recap is available here (MP3- 2:00).

In other trade news, James Politi and Jonathan Wheatley reported yesterday at The Financial Times Online that, “Brazil takes another step towards a final showdown with the US in its long-running battle over cotton subsidies when it releases on Monday a list of about 50 American products it will punish with higher tariffs.”

The article explained that, “Brazil has already published a preliminary list of more than 200 US products on which it may raise tariffs as a result of the WTO victory, from sardines and cherries to shampoo and sunglasses to medical equipment, as well as cotton itself.

“On Monday, Brazil will announce a final, narrower list of 50 products – worth about $560m (€411m, £370bn) in total – that are slated for punishment. Those retaliatory measures will take effect in April.”

Politi and Wheatley added that, “When Hillary Clinton, US secretary of state, visited Brazil last week, much of the attention was focused on the disagreement between the two countries over imposing sanctions against Iran.

“But in a sign that a deal over the cotton dispute was becoming urgent, Mrs Clinton said she would dispatch two high-level officials to Brazil to discuss what further concessions the US could make in order to avoid retaliation. ‘There is time for us to resolve this in a peaceful and productive way without any further action,’ Mrs Clinton said.”

“Meanwhile, media reports in Brazil suggested an agreement might involve technology transfer from the US to Brazilian cotton farmers. The office of the US trade representative and the US department of agriculture declined to comment,” yesterday’s FT article said.

Climate Issues

Emily Pierce reported this morning at Roll Call Online that, “In an already challenging election year for the majority, Sen. John Kerry’s (D-Mass.) rush to pass a climate change bill has many Democrats scratching their heads and charging that their 2004 presidential nominee could further imperil vulnerable Members this fall.

“Climate change had been considered all but dead this year, and Senate Democrats have little appetite to take up the controversial issue after the beating that they have endured over their as-yet-unfinished health care reform efforts.

“‘The United States Senate is not going to transition from doing health care to a [global warming] bill,’ one Democratic Senator said. ‘It’s not going to happen.’”

Today’s article explained that, “The divide in the Democratic caucus reared its head last Wednesday when Kerry — who chairs the Foreign Relations Committee — gave a presentation to his fellow chairmen on his progress in drafting a new bill with Sens. Joe Lieberman (ID-Conn.) and Lindsey Graham (R-S.C.).

“Sources familiar with the meeting said Senate Democratic Policy Committee Chairman Byron Dorgan (N.D.) and Energy and Natural Resources Chairman Jeff Bingaman (D-N.M.) challenged Kerry, who asserted that his new bill should be done this year because it would be bipartisan and would allow Democrats to get around having to tackle the controversial cap-and-trade issue.

“Dorgan was upset that the so-far failed efforts of Kerry and Environment and Public Works Chairman Barbara Boxer (D-Calif.) to craft a bipartisan global warming bill were needlessly delaying action on a separate, bipartisan measure that includes many ‘green energy’ initiatives that Kerry and Boxer want to attach to a climate bill. Bingaman, who wants to move on climate change, was more concerned that a failure to do a broader global warming bill would prevent the Senate from passing the targeted energy bill separately. The committee approved that narrower measure last year.”

In addition, the Roll Call article added that, “Though Kerry has argued he has new momentum for a global warming bill given his collaboration with Lieberman and Graham — Kerry previously co-authored the bill that passed Boxer’s committee last fall — Democrats of all stripes said the political risks of taking up such an explosive issue are too great.

“‘It is laughable if Kerry and Boxer think Senate Republicans are going to pass a major environmental bill and have [President Barack] Obama sign it right before the midterm elections,’ one Senate Democratic source said. ‘They make Don Quixote look like a realist.’

“Indeed, National Republican Senatorial Committee Chairman John Cornyn (Texas) said doing climate change would ‘absolutely’ be a gift to the GOP in an election year in which they already feel they are riding a tide of angry voter sentiment against Democrats.”

An update posted on Friday at CQPolitics.com reported that, “At first glance, a pair of bills introduced this week by two West Virginia Democrats — Sen. John D. Rockefeller IV and Rep. Nick J. Rahall II — look like fresh attempts to rebuff a White House plan to regulate greenhouse gas emissions.

“But the bills, which would delay regulation for two years, give Democrats a vehicle to vent unhappiness at the EPA without endorsing Republican-led resolutions that would roll back the agency’s regulatory authority.”

The CQ item stated that, “The legislation also would buy Congress time to address global warming through legislation — without removing the ultimate threat of EPA regulation.

“‘The Rockefeller bill is a middle ground that allows Democrats to express concern about EPA regulations without seeking to tie the administration’s hands,’ said Paul Bledsoe, director of communications and strategy at the National Commission on Energy Policy, which advises Congress on energy matters.”

However, Washington Post writer Steven Mufson reported on Friday at the Post Carbon Blog that, “Sen. Robert C. Byrd (D-W.Va.), coal state colleague of Sen. Jay Rockefeller (D-W.Va.), said he won’t back Rockefeller’s legislative efforts to limit the power of the Environmental Protection Agency to regulate carbon dioxide emissions from coal-fired plants.

“Byrd’s statement is a setback for Rockefeller’s effort to limit EPA’s power under the Clean Air Act.”

Meanwhile, Dow Jones reported on Friday (article posted at DTN, link requires subscription) that, “U.S. Energy Secretary Steven Chu said Friday the Obama administration wants to establish federal climate-change policy this year and is talking with lawmakers about a wide range of options for rules that would limit greenhouse-gas emissions.

“‘We’ve got to get it done this year,’ Chu said, speaking at a Wall Street Journal conference in Santa Barbara, Calif.

“While climate change legislation is a top priority for President Barack Obama, the administration ‘is not wedded’ to a particular recipe for how greenhouse gas emission-reduction rules should be crafted, Chu said.”

And Dan Looker reported yesterday at Agriculture Online that, “At the Commodity Classic in Anaheim, California, Friday, a Washington expert who works with farmers on carbon policies tried to shatter some myths about cap and trade legislation still being considered in Congress.

“Laura Sands of the Clark Group, LLC, acknowledged the widespread fear of potential costs for farmers from a cap and trade law that would put limits on carbon emissions from major industries.”

Mr. Looker noted that, “Yet neither Washington nor the marketplace are going to drop efforts to control greenhouse gas emissions, [Sands] said…In about 4 or 5 years, Wal-Mart customers will be able to choose products based on the store’s sustainability rating.”

The article added that, “Even though Washington seems paralyzed, Sands doesn’t expect climate change legislation to die there.

“‘Nobody really believes this is a one administration issue,’ she said. In the past, Republicans had supported climate change legislation.”

Crop Insurance

In a recent column, “Inside Washington Today” author Jim Wiesemeyer included an “Open Letter to USDA and Members of Congress.” Mr. Wiesemeyer explained that, “This dispatch is an open letter from several crop insurance industry groups to USDA and Members of Congress regarding USDA’s proposed Standard Reinsurance Agreement (SRA) and other crop insurance issues. I’m giving these respected organizations space to get their viewpoints and perspective as wide as coverage as possible for several reasons — the most important being this topic is frequently raised during my many speeches throughout this country. I’m willing to run constructively written and signed responses to the following.”

In part, the letter that Mr. Wiesemeyer included stated that, “In 2008, a renegotiation of the Standard Reinsurance Agreement (SRA) was authorized in the Farm Bill because Members of Congress reasonably assumed that a renegotiation could achieve efficiencies in the delivery of federal crop insurance without doing the violence that Members feared would result from House and Senate floor amendments.

“Specifically, the Senate rejected an amendment to the Farm Bill proposing $2.3 billion in cuts to federal crop insurance by a vote of 63-32 (Record Vote Number: 428) and the House rejected an amendment proposing $2 billion in cuts by a vote of 250-175 (Roll no. 754).

“A review of the debate on the amendments, contained in the Congressional Record, reflects bicameral, bipartisan objections because the amendments, Members warned, involved damaging cuts that would harm federal crop insurance and the farmers and ranchers who depend on crop insurance to manage risk, cover losses, and obtain credit. (See H8771-8774, S15404-15412, S15418-15420).”

The letter explained that, “Now, fast forward to the U.S. Department of Agriculture’s (USDA) first and second SRA drafts that entail $8.4 billion and $6.9 billion in cuts to crop insurance, respectively.

“These cuts would come in addition to the $6 billion in cuts to crop insurance sustained in the 2008 Farm Bill, some of which are yet to be implemented, including the looming problems of delayed compensation to companies and early payment of premiums by producers.”

The update noted that, “Yet, the magnitude of the SRA cuts – three and four times deeper than the cuts rejected by the House and Senate as too deep – cannot be passed off as deficit reduction.

“As evidenced in the Administration’s FY2011 USDA Budget, mused about in media reports, and articulated by the Ranking Member of the Senate Committee on Agriculture, Nutrition, and Forestry, USDA simply plans to use the savings from the cuts to fund government programs and further shift the focus of the Department away from production agriculture.

“The level of cuts proposed by the first two drafts, the damaging policy underpinning the cuts, the appetite for increased spending on policies outside of agriculture, and USDA’s supplanting of any semblance of a contract negotiation with an unprecedented PR blitz all at least imply a process driven by extraneous demands for money with little regard to the policy consequences.”

After additional detailed analysis, the letter noted that, “Relative to risk sharing between companies and the government, the draft SRA does not simply require companies to take on greater risk but actually seeks to sharply reduce opportunity for potential profits, resulting in a 25% cut in expected underwriting gains and raising at least the question of whether the Department may be eying the nationalization of private sector crop insurance delivery with all its adverse implications for producers and taxpayers.

“In a private-public partnership, it is one thing to increase risk sharing but it is quite another to deny the potential for profit. As one news publication recently reported, the results of the SRA are ‘startling’ with average year profits for at least one company turning to losses and actual return on equity going into the red.

“Ironically, even as USDA focuses on reining in concentration in agricultural markets, its first and second draft SRAs may well result in the kind of massive consolidation it seeks to avoid.”

In conclusion, the letter included in Mr. Mr. Wiesemeyer’s column stated that, “Nevertheless, the Department at least appears determined to erase the advances made since 2000 under ARPA [Agricultural Risk Protection Act], devote the dollars elsewhere, and mark the biggest retreat in the progress of federal crop insurance in more than a half century.

“Given the ever-shrinking commodity title funding and repeated attacks on federal crop insurance, it is reasonable to ask: are we still committed to providing farmers and ranchers with a stable, long-term farm policy anymore or are we merely managing attrition?

“Given the economic condition of our country, the number of jobless Americans, and the overwhelming competitive edge that countries such as China already have, we sincerely hope that American food and fiber production capacity is not to be exported as our manufacturing jobs were a little more than a decade ago.

“In looking for answers to the question above, for rural Americans, the handling of federal crop insurance under the first and second drafts of the SRA is not at all reassuring.”

Keith Good

March 5

Climate Change Issues; Trade; Biofuels; Crop Insurance; Food Safety; and Animal Agriculture

Climate Change- EPA Regulation

John M. Broder reported yesterday at The New York Times Online that, “Coal-country lawmakers moved Thursday to impose a two-year moratorium on potential federal regulation of carbon dioxide and other climate-altering gases.

“Senator John D. Rockefeller IV, Democrat of West Virginia, said the Environmental Protection Agency should refrain from issuing any new rules on greenhouse gas emissions from power plants and other major stationary sources for two years to allow Congress to pass comprehensive legislation on energy and climate change” [related news release].

“Representatives Alan B. Mollohan and Nick J. Rahall II of West Virginia [news release] and Rick Boucher of Virginia [news release], also Democrats, introduced a similar bill in the House.”

Mr. Broder explained that, “Lisa P. Jackson, the agency’s administrator, wrote Mr. Rockefeller and seven other Democratic senators last week outlining her timetable for such regulation. She said that limits on carbon dioxide pollution from vehicles would be issued this year under an agreement negotiated last year with major automakers.

“Limits for large coal-burning power plants and industrial facilities would be phased in beginning in 2011, with no restrictions on smaller sources until 2016.

“But that timetable is apparently too fast for Mr. Rockefeller and other representatives of coal-producing regions.”

The Times article pointed out that, “The E.P.A. said it was studying the Rockefeller proposal but that it was not as dismaying as the measure introduced by Senator Lisa Murkowski, Republican of Alaska, and several others that would ban any regulation of carbon dioxide, including emissions from vehicles.

“‘It is important to note that Senator Rockefeller’s bill, unlike Senator Murkowski’s resolution, does not attempt to overturn or deny the scientific fact that unchecked greenhouse gas pollution threatens the well-being of the American people,’ said Adora Andy, an E.P.A. spokeswoman, ‘nor would it threaten the historic clean cars program announced by the Obama administration last year.’”

Juliet Eilperin and David A. Fahrenthold reported in today’s Washington Post that, “As climate change legislation stalled in the Senate, the Obama administration noted that it had a workable — although admittedly unwieldy — Plan B. If Congress wouldn’t cap U.S. emissions, officials said, the Environmental Protection Agency would do it instead.

“Now, even Plan B may be in trouble.

“On Thursday, Sen. John D. Rockefeller IV (D-W.Va.) introduced a bill that would put a two-year freeze on the EPA’s ability to regulate greenhouse gases from power plants. His was the latest of various congressional proposals — from both chambers and both parties — designed to delay or overturn the EPA’s regulations.”

The Post article indicated that, “And, in a broader sense, activists are concerned about a loss of momentum for action on climate change.”

The Post article reminded readers that, “Several other Democrats have already signaled their unease about the administration’s tackling climate change without explicit congressional approval.

“Sens. Blanche Lincoln (D-Ark.), Mary Landrieu (D-La.) and Ben Nelson (D-Neb.) are co-sponsoring a ‘resolution of disapproval’ introduced by Sen. Lisa Murkowski (R-Alaska). It calls for Congress to overturn the EPA’s finding that greenhouse gases are a danger to public health and welfare, the trigger for the agency’s efforts to regulate them.

“In the House, Agriculture Committee Chairman Collin C. Peterson (D-Minn.) and Armed Services Committee Chairman Ike Skelton (D-Mo.) have introduced a measure similar to Murkowski’s. Rep. Earl Pomeroy (D-N.D.) proposes to strip the EPA of its authority to regulate pollution linked to global warming. And House Natural Resources Committee Chairman Nick J. Rahall II (D-W.Va.) and Reps. Alan B. Mollohan (W.Va.) and Rick Boucher (D-Va.) have said they will introduce a companion bill to Rockefeller’s.”

Also in the House, GOP Leader John Boehner (R-Ohio), Mike Pence (R-Ind.), Darrel Issa (R-Calif.), Joe Barton (R-Texas) and Marsha Blackburn (R-Tenn.) introduced a resolution this week that would block EPA’s regulation of greenhouse gases.

Reuters writer Richard Cowan reported yesterday on the introduction of Sen. Rockefeller’s bill and noted that, “Rockefeller’s bill, if passed by Congress, would impose a two-year time-out on EPA regulations on stationary sources of pollution from the date of enactment, so at least through March, 2012.

“But some environmentalists saw longer delays.

“Joe Mendelson, director of global warming policy at the National Wildlife Federation, said the legislation would stop EPA from doing any more preparatory work on regulating smokestack carbon emissions.

“‘It’d be two years plus another 18 months to two years’ lost in laying the groundwork, Mendelson said. ‘We don’t have four years to wait.’”

Sen. Murkowski indicated in a news release from yesterday that, “Senator Rockefeller’s legislation is further evidence of the growing, bipartisan, and bicameral resistance to EPA’s back-door climate regulations. Given the overwhelming opposition to these actions, I’m hopeful that this bill will draw additional support and advance quickly. If that does not occur, the disapproval resolution is guaranteed consideration in the Senate. It’s imperative that senators have an opportunity to vote on whether or not they support EPA’s costly, unilateral and unprecedented attempt to impose these command-and-control regulations.”

And Sen. John Thune (R-SD) stated yesterday that, “The Obama administration and its allies in Congress have failed to advance cap-and-trade legislation, so the EPA is moving forward with a backdoor energy tax. Senator Rockefeller’s legislation is another example of the growing, bipartisan opposition to creating a new energy tax. Americans realize that these harmful EPA regulations would destroy jobs, raise energy prices, expand the government, and unfairly impact the Midwest, Mountain West, and the South. Sadly, these regulations would do little environmental good because China, India and other nations are continuing to increase their emissions.”

And the American Farm Bureau Federation noted yesterday that, “The Environmental Protection Agency’s proposed scheme to regulate greenhouse gases under the Clean Air Act is ‘economically harmful, legally suspect and environmentally indefensible,’ according to the American Farm Bureau Federation.

“AFBF is urging House members to support a bipartisan resolution to disapprove EPA’s greenhouse gas proposal, H.J. Res. 76, introduced by Reps. Ike Skelton (D-Mo.), Jo Ann Emerson (R-Mo.), and House Agriculture Committee Chairman Collin Peterson (D-Minn.). The resolution would nullify EPA’s proposal, which is built around the agency’s flawed finding in December 2009 that greenhouse gases indirectly threaten human health and therefore could be regulated under the Clean Air Act.”

Meanwhile, Ben Geman reported yesterday at The Hill’s Energy and Environment Blog that, “Sen. John Kerry (D-Mass.) raised the rhetorical stakes in the Senate climate and energy fight Thursday.

“Kerry, downplaying the climate angle, said the broad package he’s crafting with Sens. Lindsey Graham (R-S.C.) and Joe Lieberman (I-Conn.) will meet several U.S. goals – and present colleagues with a stark choice.

“‘What we are talking about is a jobs bill. It is not a climate bill. It is a jobs bill, and it is a clean air bill. It is a national security, energy independence bill,’ he told reporters in the Capitol. ‘It is going to have very attractive, significant components in it to strengthen each of those pieces.’ 

“‘And people are going to have to decide whether they are going to vote for America or against it,’ he concluded.”

In a different angle on the debate of climate policy, Kimberley Strassel noted in today’s Wall Street Journal that, “Since the beginning of the climate debate, environmental lobbies such as Ceres (a coalition of activists and investors that pressures companies to go green) have expressed particular interest in insurers. Rather than nitpick every company to adopt climate-change policies, these organizations realized it would be more efficient to target a gatekeeper. Everybody needs insurance. If insurers could be bludgeoned into requiring policyholders adopt carbon-mitigation practices as a requirement for insurance, the activists would have imposed their will widely and quickly.”

And Stephen Dinan reported in today’s Washington Times that, “Undaunted by a rash of scandals over the science underpinning climate change, top climate researchers are plotting to respond with what one scientist involved said needs to be ‘an outlandishly aggressively partisan approach’ to gut the credibility of skeptics.

“In private e-mails obtained by The Washington Times, climate scientists at the National Academy of Sciences say they are tired of ‘being treated like political pawns’ and need to fight back in kind. Their strategy includes forming a nonprofit group to organize researchers and use their donations to challenge critics by running a back-page ad in the New York Times.”

Trade

A couple of interesting agricultural trade issues were discussed on Wednesday when U.S. Trade Representative Ron Kirk appeared before the Senate Finance Committee to discuss executive branch perspective on the U.S. trade agenda.

Sen. Maria Cantwell (D-Washington) asked Amb. Kirk for an update on the U.S. – Mexican trade dispute regarding the safety of Mexican trucks that has resulted in tariffs being imposed on several agricultural products from her state.

To listen to the exchange between Sen. Cantwell and Amb. Kirk on this issue, just click here (MP3-1:24).

And Sen. Tom Carper (D-Delaware) noted the importance of the poultry industry in his state, and asked Amb. Kirk for more specific details regarding the ability of U.S. poultry exports to move freely into some markets.

This discussion is available here (MP3-3:40).

In related news on poultry trade, a Dow Jones news article from yesterday (via DTN, link requires subscription) reported that, “The second round of bilateral negotiations in Moscow on Russia’s ban on U.S. chicken has ended without producing a resolution, but some progress was made and discussions will continue, U.S. government and industry officials said Thursday.

“U.S. Department of Agriculture Undersecretary Jim Miller, who led the U.S. delegation to Moscow for the talks this week, is on his way back to the U.S., a USDA spokesman said. Miller had been in Moscow since Monday for this latest round of talks that U.S. chicken producers had hoped would result in Russia lifting its ban.”

Biofuels

Washington Post writer Steven Mufson reported yesterday at the Post Carbon Blog that, “‘What is a ‘subsidy’ to an industry that truly needs and deserves it? An ‘incentive.’

“That’s what would-be makers of cellulosic ethanol are seeking in a letter sent Wednesday to the chairmen and ranking Republicans of the Senate Finance and House Ways and Means committees. As it happens, the letter – signed by 37 companies and trade groups — will need to be resubmitted because Ways and Means is under new management, with its chairman Rep. Charles B. Rangel (D-N.Y.) temporarily stepping aside.

“In any case, the letter is noteworthy for two reasons. One, the companies say that because of the weak economy, they need ‘additional incentives,’ and they ask for a 30 percent investment tax credit similar to one given to renewable energy electricity projects. The companies currently are entitled to a 30 percent production tax credit – but there’s no production. Two, the companies attach some pricey cost numbers to cellulosic ethanol plants, approvingly quoting a number from the National Renewable Energy Lab.”

Mr. Mufson added that, “Here’s what the group has to say about costs:

“‘To be clear, cellulosic technology deployment is currently an expensive proposition. The total project investment for a 50 million gallon per year advanced cellulosic biofuel refinery is estimated by the National Renewable Energy Lab to be $250 million, compared with a total project investment of only $76 million for the same sized corn starch ethanol plant. The conversion technology in an advanced or cellulosic biofuel refinery is pre-commercial, which makes commercial financing virtually impossible in the current economy, even though the projected improvement over the long-term results in robust economics.’

“Just a little while ago, in 2007, Congress was so confident in American know-how that it set ambitious production targets for cellulosic ethanol – 21 billion gallons of advanced and cellulosic biofuels by 2022 with interim targets. The companies now say that won’t be possible without additional help.”

Yesterday’s update added that, “Here’s what the companies have to say about those mandates.

“‘Although the law requires the use of these fuels beginning in 2010, no commercial cellulosic biorefineries are anticipated to be commissioned before 2011 at the earliest. The principal cause of this delay in commercialization is lack of funding caused by the severe downturn in the U.S. economy. Just as Congress responded to the impact of this downturn on the renewable electricity industry by allowing a 30% investment tax credit in new facilities that can be monetized through a federal Treasury grant program, we believe additional tax incentives are needed for advanced biofuel refineries.’”

Crop Insurance

A news release issued yesterday by USDA’s Risk Management Agency (RMA) stated that, “[RMA] today said Occidental Fire and Casualty Company of North Carolina, headquartered in Raleigh, NC, will become the 16th crop insurance company approved to operate under USDA’s Standard Reinsurance Agreement. Occidental’s Crop Division located in Overland Park, KS, will manage its crop insurance business.”

The release added that, “As authorized by the 2008 Farm Bill, RMA is in the process of renegotiating a Standard Reinsurance Agreement with the crop insurance companies who are already participating. Working with the companies, RMA is confident that the groups will come to an agreement that is prudent and sustainable for producers, companies and the taxpayer.”

With respect to the Standard Reinsurance Agreement, an update from National Crop Insurance Services noted recently that, “The crop insurance industry was disappointed with the USDA’s Risk Management Agency’s (RMA) second draft of the Standard Reinsurance Agreement (SRA), which failed to reflect any serious treatment of the crop insurance industry’s comments and recommendations offered in response to RMA’s first draft. A document released by the RMA on the same day that second draft was issued (RMA ‘Myth versus Fact’) further fails to respond seriously to our concerns and comments. Several of the so‐called ‘myths’ do not capture the substance of our concern, and the facts rebutting them simply reiterate RMA’s position. The following is our attempt to address the factual issues we are raising, relative to some of RMA’s characterizations, in the hope that in our ongoing conversations with RMA we can find a way together to discuss and work on our substantive concerns.”

Food Safety

Lyndsey Layton reported in today’s Washington Post that, “Thousands of types of processed foods — including many varieties of soups, chips, frozen dinners, hot dogs and salad dressings — may pose a health threat because they contain a flavor enhancer that could be contaminated with salmonella, the Food and Drug Administration said Thursday.

“Officials believe the public health risk is low, and no one is known to have fallen ill as a result of the contamination. But manufacturers voluntarily recalled 56 products Thursday, and that number is expected to balloon in the coming weeks into what could be one of the largest food recalls in U.S. history.”

Reuters writer Christopher Doering reported yesterday that, “Foodborne illnesses cost the United States $152 billion in health-related expenses each year, far more than prior estimates, according to a study released by consumer and public health groups on Wednesday.”

Animal Agriculture

Reuters writer Jasmin Melvin reported yesterday that, “U.S. Agriculture Department inspectors need better training on what action to take when they see livestock being abused, the investigative arm of Congress said in a report on Thursday.

“The U.S. food industry and its regulators have been subject to more scrutiny from activist groups and the public since a livestock abuse case forced the biggest-ever meat recall in U.S. history. A California packing plant was closed in 2008 because animals too sick or injured to walk were processed for meat.”

The Government Accountability Office released a report, titled, “Humane Methods of Slaughter Act, Actions Are Needed to Strengthen Enforcement,” while Lisa Shames, the GAO Director of Natural Resources and Environment, appeared yesterday before the House Oversight and Government Reform Domestic Policy Subcommittee to discuss the report in greater detail.

In part, Ms. Shames stated that, “I am pleased to be here today to discuss our work on the U.S. Department of Agriculture’s (USDA) actions to enforce the Humane Methods of Slaughter Act of 1978 (HMSA), as amended, which prohibits the inhumane treatment of livestock in slaughter plants and generally requires that animals be rendered insensible—that is, unable to feel pain—before being slaughtered. USDA’s Food Safety and Inspection Service (FSIS) is responsible for enforcing HMSA. Concerns about the humane handling and slaughter of livestock have increased in recent years, particularly after possible HMSA violations were revealed at a slaughter plant in California in 2008 and one in Vermont in 2009.

“This statement summarizes our report being released today that (1) evaluates USDA’s efforts to enforce HMSA, (2) identifies the extent to which FSIS tracks recent trends in FSIS inspection resources for enforcing HMSA, and (3) evaluates FSIS’s efforts to develop a strategy to guide HMSA enforcement.”

March 4

House Ag Committee Activity; Senate Appropriations Hearing (EPA-Climate Issues); and Trade Issues

House Ag Committee- Budget

Reuters writer Charles Abbott reported yesterday that, “The House Agriculture Committee on Wednesday rejected President Barack Obama’s proposals to reduce crop subsidies to higher-income farmers and federal support for crop insurance.

“There was little discussion as the committee refused farm cuts requested by the president for the second year in a row. With elections in November, the committee approved a letter saying benefits ‘should be maintained’ at current levels.

“‘We are united and I think we have over-whelming support in the House not to open up the farm bill’ enacted in 2008, said Agriculture chairman Collin Peterson, a Democrat.”

The Reuters article explained that, “The 2008 farm law is the first to deny benefits to the wealthiest Americans. It says crop subsidies will go to people with no more than than $500,000 a year in adjusted gross income (AGI) from off-farm sources or $750,000 on-farm AGI.

“The administration wanted to lower the income cut-off over three years to $250,000 off-farm AGI and $500,000 on-farm AGI. Some 30,000 people would be affected. The White House also proposed a $30,000 cap on the annual direct-payment subsidy, down from the current $40,000, and cuts in federal subsidies to the privately run crop insurance system.”

A news release issued yesterday by the House Ag Committee indicated that, “The budget views and estimates letter approved today reflects the House Agriculture Committee’s position that the nutrition, farm, conservation, energy and rural development programs under the Committee’s jurisdiction are providing an essential safety net during a time of continuing economic difficulty.”

In part, the views and estimates letter stated that, “USDA forecasts of net farm income and asset values for 2010 demonstrate the need to maintain the farm income safety net. In real terms (adjusted for inflation), 2010 net farm income is estimated to be the third lowest since 1999. While press reports have indicated a rise in net farm income from 2009, those reports often neglect to mention that 2009 net farm income was not only at the lowest nominal dollar level since 2002 but also was down from 2008’s near record for net farm income of $87.0 billion” [related graph].

In recent news regarding the agricultural economy, the Federal Reserve Bank of Chicago recently released its AgLetter publication, which noted that, “The annual change in farmland values was positive at 2 percent in 2009 for the Seventh Federal Reserve District, though 2009’s first three quarters had negative year-over-year comparisons. The quarterly increase in the value of ‘good’ agricultural land was 2 percent as well, based on 214 surveys from agricultural bankers. Over 80 percent of respondents expected farmland values to stay unchanged from January through March of 2010 in their respective areas” [see related graph].

“The Seventh District’s agricultural credit conditions were mixed in the fourth quarter of 2009 because of greater financial stress relative to a year ago. Non-real-estate loan demand was almost the same in October through December of 2009 compared with the same period of the previous year. Funds availability also improved again in the fourth quarter of 2009. However, farm loan repayment rates in the final quarter of 2009 were below the level of a year ago, and rates of loan renewals and extensions were higher than a year earlier.”

The AgLetter added that, “The value of crop production in the U.S. declined 9.1 percent in 2009, to $166 billion, from its 2008 level, according to USDA data. The USDA predicted that the value of crop production would slip again to $162 billion in 2010.”

In addition, the Federal Reserve Board released its March “Beige Book” report yesterday, which included the following agricultural highlights:

-Seventh District- Chicago- “Hog and cattle prices moved up during the reporting period, although dairy prices flattened out. Feed costs declined with corn and soybean prices, and financial pressures on livestock producers lessened from those experienced during a challenging 2009. Still, contacts reported that refinancing agricultural loans was more difficult than in recent years.”

-Ninth District- Minneapolis-“The Minneapolis Fed’s fourth-quarter (January) survey of agricultural credit conditions indicated that lenders expect overall agricultural income and spending to decrease in the first quarter.”

-Tenth District- Kansas City-“[C]ropland values strengthened following the bumper fall harvest. Ranchland values, however, remained below year-ago levels amid weak demand for pasture ground. Stronger farm incomes led to a rise in loan repayment rates and fewer reports of loan renewals and extensions. District contacts reported ample funds were available for farm loans at historically low interest rates.”

-Eleventh District- Dallas- “Heavy rains and snowfall have boosted crop and pasture conditions. There is excellent subsoil moisture going into the spring planting season, which has improved the crop outlook for 2010. Though heavy precipitation has been beneficial, it has resulted in some crop losses and could delay spring planting if fields do not dry out in time.”

And Conor Dougherty reported earlier this week at the Real Time Economics Blog (The Wall Street Journal) that, “The Midwestern economy is emerging from the recession, diminishing the chances of a return to recession but increasing the likelihood that inflation in the region may soon pick up, according to the February Business Conditions Index for the Mid-America region released by Creighton University.

“The survey of supply managers across a nine-state region that includes Minnesota and Oklahoma rose to 61.0 in February from 54.7 in January and 50.3 in December. Like the Institute for Supply Management and J.P. Morgan surveys of purchasing managers (written about in the Journal), the Mid-America index is a diffusion index where readings above 50.0 indicate growth and anything below is contraction.”

The Journal update added that, “[Creighton University Economics Professor Ernie Goss] said he worried that despite the region’s improving outlook he had some concerns about future growth: ‘I am concerned that the economic problems in Europe, which are pushing the value of the dollar higher, will negatively influence regional growth. This part of the nation depends heavily on agriculture, which likewise suffers from a ‘too strong’ dollar. However, the likelihood of the regional economy dipping back into recessionary territory has diminished significantly according to our surveys of supply managers. While I expect the overall regional economy to expand in the months ahead, I continue to expect job growth to be subdued, especially for rural areas of the nine-state region.’”

On Tuesday, the Farm Foundation held a forum in Washington, D.C. titled, “Finance and Credit Issues in Agriculture and Food Industries: What’s Ahead for 2010.”

Presenters at the event included, Paul Ellinger of the University of Illinois [related slides from presentation],  Joe Brasher of First State Bank, Sharon, Tenn., Bob Frazee of Mid-Atlantic Farm Credit, Cornelius Gallagher, Bank of America Merrill Lynch [related slides from presentation], and  Jeff Conrad, Hancock Agricultural Investment Group.  

An audio replay of the Farm Foundation event is available here.

House Ag Committee- CFTC Hearing

Reuters writers Charles Abbott and Roberta Rampton reported yesterday that, “A central Congressional player in financial reform legislation on Wednesday said he is willing to close a potential loophole that might allow big derivatives traders to avoid public scrutiny of their deals.

“‘I don’t want to let the financial guys off the hook,’ House Agriculture Committee Chairman Collin Peterson told reporters, acknowledging that the House version of the reform bill passed in December may be too lax.”

The article noted that, “It brought his position closer to that of Commodity Futures Trading Commission Chairman Gary Gensler, who has pushed lawmakers to weave a tighter regulatory net around the unregulated over-the-counter U.S. derivatives market that he has estimated at $300 trillion.

“Gensler, testifying before a House agriculture subcommittee on Wednesday, said the House financial reform bill is strong, but might still let some large institutional traders escape a requirement to trade standardized derivatives on exchanges and clear those trades.”

EPA Administrator Lisa Jackson Testifies at Senate Appropriations Subcommittee Hearing

Jim Snyder reported yesterday at The Hill Online that, “The head of the Environmental Protection Agency (EPA) said Wednesday that an effort in Congress to stop the agency from regulating pollution linked to climate change would be an ‘enormous step backward for science’ if successful.

“Testifying before a Senate Appropriations panel, Lisa Jackson defended EPA’s finding that carbon dioxide and other so-called greenhouse gases endanger human health and welfare by contributing to global warming.

“That ‘endangerment’ finding requires EPA to regulate emissions under the U.S. Supreme Court decision in Massachusetts v. EPA, Jackson said.”

The article noted that, “Some members in Congress believe EPA erred in its endangerment finding, and are moving to either stall the greenhouse gas rule or stop it altogether.”

Mr. Snyder explained that, “All the efforts rely on the Congressional Review Act to nullify the EPA’s endangerment finding. The act allows Congress to block agency regulatory efforts, but has been used successfully only once, in the 1990s when lawmakers stopped an ergonomics standard proposed by the Occupational Safety and Health Administration.

“The hearing on Wednesday gave [Sen. Lisa Murkowski (R-Alaska)], a member of the spending panel, the chance to ask Jackson directly about the effects of the EPA rulemaking.”

To listen a portion of the discussion between Sen. Murkowski and Administrator Jackson from yesterday’s hearing, just click here (MP3-7:27)- the clip includes additional detail and analysis regarding the potential regulation of greenhouse gases by EPA.

Recall that the EPA “endangerment finding” is based on an April 2, 2007 U.S. Supreme Court case, Massachusetts v. EPA, 549 U.S. 497 (2007).

In her opening remarks at yesterday’s hearing, Subcommittee Chairman Dianne Feinstein (D-California) expressed her opinion regarding the Supreme Court case and EPA regulatory authority, which differed somewhat from Sen. Murkowski’s.

To listen to Sen. Feinstein’s analysis of the case and EPA regulatory authority, just click here (MP3-5:20).

Reuters writer Timothy Gardner reported yesterday that, “The Obama administration will give small businesses a break on coming carbon dioxide emissions rules but big emitters like coal-fired power plants will face a crack-down, U.S. Environmental Protection Agency Administrator Lisa Jackson said on Wednesday.”

Yesterday’s article explained that, “The EPA said late last year it would require polluters that emit more than 25,000 tons a year of greenhouse gases to obtain permits demonstrating they were using the best available technology to reduce emissions.

“Jackson raised that threshold on Wednesday, saying the regulations would exempt factories emitting under 75,000 tons of carbon annually in 2011 and 2012.

“‘If you’re smaller than 75,000 tons, you will not need a permit for the next two years,’ Jackson told reporters after a Senate hearing.”

Mr. Gardner added that, “EPA’s Jackson said the agency is still weighing the threshold for regulating long-term carbon emissions from smaller factories.

“In February, Jackson wrote a letter to Democratic senators from coal-producing states, saying the EPA would not put regulations on smaller plants before 2016.

“The definition of ‘smaller’ plants had been ambiguous, leaving even tiny businesses wondering if their emissions would eventually be regulated. But on Wednesday Jackson said such a long-term threshold would be higher than 25,000 tons per year.”

Philip Brasher, writing yesterday at the Green Fields Blog (The Des Moines Register), reported that, “The Environmental Protection Agency is on track to say by late this summer whether high rates of ethanol can be blended into gasoline, according to Administrator Lisa Jackson. The current ethanol limit for conventional cars is 10 percent. The ethanol industry asked the EPA to raise that to 15 percent. The agency has been considering allowing the higher limit for newer cars and trucks.”

“‘As of December only two of 19 tests were completed. That didn’t seem to be enough information on which to make’ the decision, [Administrator Jackson] said in response to a question from Sen. Ben Nelson, D-Neb.”

To listen to the exchange on the E15 issue between Sen. Nelson and Administrator Jackson, just click here (MP3-3:19).

In other climate related developments, Reuters writer Richard Cowan reported yesterday that, “Senate Republicans could withhold support of key legislation such as a climate-change bill if Democrats ram a healthcare reform bill through the Senate using fast-track procedures, Senator Joseph Lieberman said on Wednesday.

“‘What worries me,’ Lieberman said, ‘is Republican colleagues I’ve talked to, some of them usually trying to work with Democrats on individual pieces of legislation, have said to me if healthcare reform is forced through by reconciliation, nothing bipartisan is going to happen this year.’

“Lieberman, a Connecticut independent, is working with Democratic Senator John Kerry and Republican Senator Lindsey Graham to forge a compromise, bipartisan climate-change bill forcing U.S. reductions in greenhouse gas emissions blamed for global warming.”

Trade Issues

David M. Dickson reported in today’s Washington Times that, “While saying organized labor will not wield veto power over pending George W. Bush-era free-trade agreements, U.S. Trade Representative Ron Kirk would hold out only a heavily conditional hope that Congress might consider the trade pacts by the end of the year.

“When testifying about U.S. trade policy before the Senate Finance Committee on Wednesday, Mr. Kirk received bipartisan pressure to speed up the deals with Panama, Colombia and South Korea from the panel’s two top members – Chairman Max Baucus [related news release] and ranking member Charles E. Grassley [opening statement at hearing].”

The Washington Times article added that, “The two senators reminded Mr. Kirk that South Korea already had inked a trade deal with the European Union, while Colombia had signed agreements with Canada and the European Union.”

A news release issued yesterday by Senate Ag Committee Chairman Blanche Lincoln (D-Arkansas) indicated that, “U.S. Senator Blanche Lincoln, D-Ark., today said opening more markets for agricultural producers will help Arkansas farmers and rural communities who have felt the devastating effects of the current economic climate. Lincoln’s comments came during a Senate Finance Committee hearing with U.S. Trade Representative Ron Kirk who outlined the administration’s 2010 trade policy agenda.

“‘Agriculture is one of the only domestic industries where we enjoy a trade surplus,’ Lincoln said. ‘Production of a safe and affordable food supply creates American jobs and is something we should not take for granted. Our producers have a quality product to offer the rest of the world. It is our job to give them the open markets to do so.’”

In other trade news, Reuters writer Raymond Colitt reported yesterday that, “Brazil will retaliate against U.S. cotton subsidies in April unless both sides reach a negotiated solution to the long-standing trade dispute, Brazil’s foreign minister said on Wednesday.

“The South American agricultural giant will present a list next week of U.S. products on which tariffs would be imposed, Foreign Minister Celso Amorim told a news conference after meeting with U.S. Secretary of State Hillary Clinton.”

March 3

Senate Ag Appropriations Hearing; Disaster Payments- Biodiesel Tax Credit; Climate Issues; Livestock Issues; and Trade

Senate Ag Appropriations Hearing

Philip Brasher reported yesterday at the Green Fields Blog (The Des Moines Register) that, “The Obama administration doesn’t want to spend as much money on land conservation as the 2008 farm bill calls for, but the programs would still grow under the president’s budget, says Agriculture Secretary Tom Vilsack.

“That was his pushback when fellow Iowan, Sen. Tom Harkin, argued at a Senate appropriations hearing today that the budget would result in a 4-million acre cut to federal conservation programs.

“It’s a cut because the administration is asking for less money than Congress authorized, but the total spending and acreage would actually increase from this year to next, which is Vilsack’s point.”

Yesterday’s update noted that, “Vilsack allowed that the USDA probably won’t enroll the full amount of acreage, 12.8 million, allowed for the Harkin-authored Conservation Stewardship Program. The enrollment will be closer to 12 million acres, he said. The president’s budget had proposed reductions in authorized acreage for several programs, including CSP.”

(Note: To listen to the entire exchange yesterday between Sen. Harkin and Sec. Vilsack regarding conservation issues, just click here, (MP3-6:58)).

Mr. Brasher noted that, “Vilsack also had to defend, as he did in the House last week, the administration’s efforts to slash payments to crop insurance companies and the independent agents who sell the federally subsidized policies. Iowa Republican Sen. Charles Grassley has been strongly critical of the proposed cuts, saying he was particularly concerned about the impact on agents. Harkin, by contrast, has largely been silent on the issue and responded, ‘You make a strong point,’ when Vilsack summarized his case for the cuts.

“Agent commissions skyrocketed in recent years because they are tied to the value of the policies, which are in turn linked to the prices of the covered commodities. Vilsack said agent earnings should be based on the number of policies that agents handle instead. ‘It’s not all that difficult to sell this product,’ Vilsack said.”

To listen to part of yesterday’s exchange on crop insurance issues between Sen. Harkin and Sec. Vilsack, just click here (MP3- 3:11).

Also at yesterday’s hearing, Sen. Sam Brownback (R-Kansas) asked Sec. Vilsack about the status of getting an increase in the ethanol blend in gasoline from 10% to 15%, to listen to this exchange, just click here (MP3-3:42).

And Sen. Herbert Kohl (D-Wis.) asked Sec. Vilsack about dairy prices and sought an update on the status and implementation of some USDA programs relating to dairy; this discussion from yesterday is available here (MP3-2:05).

Disaster Payments- Biodiesel Tax Credit

DTN Ag Policy Editor Chris Clayton reported yesterday that, “A $1.5 billion disaster package advocated by Southern farmers and a renewal of the $1 biodiesel tax credit are part of the latest tax-extenders and jobs bill released Monday by the Senate Finance Committee [text of package].”

The DTN article explained that, “Mixed into the tax bill is a $1.5 billion disaster package for the 2009 crop year being pushed by Senate Agriculture Committee Chairman Blanche Lincoln, D-Ark. Farmers would be eligible if they suffered a crop disaster or are located in counties declared disaster areas that had at least one crop suffer a 5 percent yield or quality loss due to the disaster, the bill states. Payments would equal up to 90 percent of the farmers’ direct payments for 2009.

“Producers who did not have crop insurance would still be eligible for the disaster aid, but would be required to buy crop insurance in 2010.

“Lincoln, who is facing the toughest political battle of her career for re-election, has argued the disaster payment is needed because the new permanent disaster program, the Supplemental Revenue Assistance Payments program, SURE, would take too long to get aid to farmers. Still, House Agriculture Committee Chairman Collin Peterson, D-Minn., has questioned the validity of making payments to farmers who suffer just a 5-percent crop loss. Peterson said the disaster package would open farm programs up to even more public challenges due to demands to cut federal spending.”

Chairman Lincoln issued a news release yesterday on this development, which included more background and information on the disaster provision.

Climate Issues

Marin Cogan reported yesterday at Politico that, “House Republicans are pushing a resolution that would block the EPA’s regulation of greenhouse gases, throwing a wrench in the Obama administration’s attempts to bypass Congress and regulate carbon emissions.”

The article stated that, “[Minority Leader John Boehner (R-Ohio)] joined House Conference Chairman Mike Pence (R-Ind.) [Pence news release], Darrel Issa (R-Calif.), Joe Barton (R-Texas) [Barton news release] and Marsha Blackburn (R-Tenn.) in introducing a resolution, which is similar to a resolution recently proposed by Democrats Collin Peterson (Minn) and Ike Skelton (Miss). Senator Lisa Murkowski (R-Alaska) will push the same proposal in the Senate.

“Blackburn argued that the GOP resolution reflects growing frustration with the EPA among her constituents.”

A related news release issued yesterday by Rep. Jerry Moran (R-Kansas) indicated that, “Congressman Jerry Moran sponsored legislation this week to overturn an Environmental Protection Agency (EPA) rule, that would make carbon dioxide and other greenhouse gases a danger to public health.

“Moran was the first member of the House of Representatives to introduce legislation to prevent EPA regulations on greenhouse gas emissions back in December 2009. Today, Moran joins more than 80 House Members to re-introduce the disapproval resolution, as required by the Congressional Review Act.

“‘Allowing the EPA to move forward with this rule would have a devastating effect on the economy and job creation – especially in the agricultural and energy sectors…’”

Molly Hopper reported yesterday at The Hill’s Energy and Environment Blog that, “The resolution is thought to face a high hurdle in the House, however. Speaker Nancy Pelosi (D-Calif.) is a strong proponent of greenhouse gas curbs and EPA’s efforts.”

Bloomberg writers Simon Lomax and Kim Chipman reported today that, “President Barack Obama’s top environmental regulator will testify before Congress today amid growing opposition to her agency’s proposed limits on the pollution linked to climate change.

“Lisa Jackson, head of the Environmental Protection Agency, will face lawmakers a day after Democratic Senator Jay Rockefeller of West Virginia called for a two-year delay on greenhouse-gas regulations and top House Republicans demanded they be stopped altogether.”

“Jackson is scheduled to appear at a hearing of a Senate Appropriations Committee panel on the environment,” the Bloomberg article said.

Meanwhile, Reuters writers Richard Cowan and Thomas Ferraro reported yesterday that, “The idea of imposing a broad cap-and-trade system to cut America’s greenhouse gas emissions is dead and will be replaced with a new approach, an influential Republican senator said Tuesday.

“Lindsey Graham, one of three senators working against daunting odds to produce a compromise climate bill, has recently turned against imposing the kind of cap-and-trade system used in Europe, which involves companies buying and selling pollution permits.

“Graham did not specify whether another mechanism or some sort of cap-and-trade would be used more narrowly, such as to control emissions in the power utility sector.”

Yesterday’s article noted that, “U.S. Energy Secretary Steven Chu said there was still a chance the Senate would pass a climate bill this year with a cap-and-trade program.

“‘It is not dead,’ Chu told Bloomberg TV, referring to the cap-and-trade approach. ‘We need a comprehensive bill. We would very much want and need it this year.’”

The Reuters article explained that, “Democratic Senator John Kerry told reporters he hoped a compromise climate control bill could be put together this month, although many meetings still must be held. Graham told reporters it will be ‘weeks’ before a bill is ready.

“But Senator Joseph Lieberman, an independent working with Graham and Kerry, said a detailed outline of a bill could come within days and that it will have to include a ceiling on greenhouse gas emissions that drops in future years.”

Ben Geman reported yesterday at The Hill’s Energy and Environment Blog that, “The Senate trio trying to salvage climate legislation this year plans to begin circulating details of their long-awaited proposal very soon, said Sen. Joe Lieberman (I-Conn.), one of the architects of the measure.

“‘Hopefully within a week or so we will have at least a detailed narrative to share,’ Lieberman told reporters in the Capitol Tuesday afternoon.  

“Lieberman and Sens. John Kerry (D-Mass.) and Lindsey Graham (R-S.C.) discussed their plan for over an hour with a group of colleagues in the Capitol Tuesday.”

Yesterday’s update added that, “The three senators are planning a climate and energy measure that scraps the ‘economy-wide’ cap-and-trade plan that the House approved last year, but has not gained traction in the Senate.

“It remains unclear if their approach – which might include a cap-and-trade program for power plants and a carbon tax or fee on motor fuels – can fare any better and win a spot on the election-year floor agenda.”

Washington Post writer Juliet Eilperin reported yesterday at the Post Carbon Blog that, “Senators John Kerry (D-Mass.), Lindsey O. Graham (R-S.C.) and Joseph I. Lieberman (I-Conn.) had a closed-door meeting with some moderate senators to drum up support for their bipartisan climate package Tuesday afternoon–but the session failed to produce a breakthrough.

“The only Republicans who showed were George Voinovich (Ohio) and Judd Gregg (N.H.), though Gregg didn’t stay for long, due to a conflict. The Democratic attendees included Debbie Stabenow (Mich.), Carl Levin (Mich.), Sherrod Brown (Ohio), Jeff Bingaman (N.M.), Mark Warner (Va.), Thomas R. Carper (Del.), and Max Baucus (Mont.).

“The three senators did not distribute paper on their plan, according to sources familiar with the meeting, promising they would deliver a detailed outline on Friday. As one Senate aide noted, time is running out.”

Amy Harder reported yesterday at the National Journal Online that, “After meeting today with roughly a dozen senators — mostly moderate Democrats and two Republicans — Sen. John Kerry, D-Mass., signaled cautious optimism about attracting support for the climate and energy bill he and Sens. Lindsey Graham, R-S.C., and Joe Lieberman, I/D-Conn., are drafting.

“‘They have concerns, they expressed them, but they weren’t concerns that… we can’t address,’ Kerry said. Graham said earlier today that it would be ‘weeks’ before they release a bill.”

Also on the climate issue, Ben Geman reported yesterday at The Hill’s Energy and Environment Blog that, “Sen. Byron Dorgan (D-N.D.) on Tuesday continued his push for Senate action on a package of energy measures that omits greenhouse gas limits, appearing unmoved by plans to overhaul climate legislation.

“Sens. John Kerry (D-Mass.), Lindsey Graham (R-S.C.) and Joe Lieberman (I-Conn.) — who are trying to draft a compromise climate bill — are moving away from the sweeping cap-and-trade plan that has failed to gain traction in the Senate.

“But Dorgan, who opposes cap-and-trade, isn’t biting, at least not for the moment. He wants the Senate to take up a package of energy measures that the Energy and Natural Resources Committee approved in June.”

The Hill update indicated that, “‘I want to bring the energy bill to the floor of the Senate,’ he told reporters in the Capitol Tuesday. ‘The way to lower emissions is actually to change the policies as we’ve done in the energy bill itself.’

“‘We are not going to do cap-and-trade or a first cousin of cap-and-trade this year, in my judgment, but it would be unfortunate if we ended the year by not doing the things in energy policy that actually reduce the rate of carbon emissions. We have the capability of doing that and we ought to do it,’ added Dorgan, a senior member of the Energy committee who is retiring from the Senate at the end of this year.”

Interestingly, Stephen Power reported in today’s Wall Street Journal that, “The Environmental Protection Agency is riling many businesses with proposals to regulate greenhouse gases for the first time, but data suggest it has been slow out of the gate under President Barack Obama in enforcing existing regulations on traditional pollutants.

“In fiscal 2009, the EPA’s enforcement office required polluters to spend more than $5 billion on cleanup and emission controls—down from $11.8 billion the previous year, according to a report recently published by the agency. The report, which examines the EPA’s performance in enforcing limits on pollutants like sulfur oxides, nitrogen oxides and soot, covers the fiscal year ended Sept. 30, a period that covers the last 3½ months of President George W. Bush’s watch and the first 8½ months of Mr. Obama’s.

“Defendants in agency enforcement cases committed to cut pollution by about 580 million pounds in fiscal 2009, down from 3.9 billion pounds in fiscal 2008, according to the report.”

And in other climate news, David Adam reported on Monday at the Guardian Online that, “The scientist at the centre of a media storm over global warming research admitted today he had sent ‘awful emails‘ but said he expected to be cleared of accusations that he tried to pervert the scientific process.”

Livestock Issues

Lauren Etter reported in today’s Wall Street Journal that, “As livestock operations have grown more industrialized, residents across rural America have banded together to try to keep them out. They say the bigger farms are wreaking havoc on their communities, polluting waterways with manure that can kill fish and sicken people. A popular tool has been county-level ‘local control’ ordinances that govern where a large farm can locate.

“While many states have retained authority over the siting of livestock farms, Missouri has a staunch local-control movement that took root in the early 1990s as corporate-controlled hog processors moved in. In 1999, the Missouri Court of Appeals held that a county can implement an ordinance governing livestock farms, including where they are located, if it is rooted in concerns over public health. Today, more than a dozen of Missouri’s 114 counties have the ordinances.”

Trade

Reuters news reported yesterday that, “Top U.S. and Russian officials are looking at poultry processing alternatives to chlorine in the hopes of finding a solution to a trade spat that has shut U.S. chicken out of its top export market, U.S. Agriculture Secretary Tom Vilsack said on Tuesday.

“After two days of talks, Jim Miller, the USDA’s undersecretary charged with trade matters, will remain in Moscow, Vilsack said.

“‘Hopefully, we get something done in the next couple of days,’ he told reporters on the sidelines of a hearing on Capitol Hill.”

Reuters writer Doug Palmer reported yesterday that, “President Barack Obama’s plan to negotiate an Asia Pacific free trade pact could have a devastating impact on the dairy, sugar and textile sectors in the United States, U.S. industry groups warned on Tuesday.

“Negotiators from the United States, New Zealand, Australia, Peru, Vietnam, Chile, Singapore and Brunei will meet in Melbourne, Australia on March 15 for the first round of talks on the proposed Trans-Pacific Partnership (TPP) pact.

“It is Obama’s first big trade initiative since taking office.”

The article explained that, “Although most major U.S. farm and business groups support the proposed agreement, domestic dairy, sugar and textile groups and their supporters in Congress worry about possibly having to open the U.S. market to foreign competitors.

“‘Any expansion of dairy trade between the U.S. and New Zealand would impose considerable economic harm on U.S. dairy producers, as well as on many in the U.S. dairy processing sector,’ the National Milk Producers Federation said in remarks prepared for a U.S. International Trade Commission hearing on the proposed pact.”

Xinhua News reported today that, “U.S. Secretary of State Hillary Clinton arrived in Brazil Tuesday on a whirlwind visit to meet President Luiz Inacio Lula da Silva and Foreign Minister Celso Amorim to discuss controversial issues.”

The article noted that, “Brazil’s decision to apply sanctions, authorized by the World Trade Organization, against the United States in a dispute over U.S. cotton subsidies is also expected to be discussed between Clinton and Miguel Jorge, Brazil’s development, industry and trade minister.

“On March 8, the Brazilian government will officially disclose a list of goods that will suffer increases in export tariffs to compensate for losses due to those subsidies.”

March 2

Bill O’Conner Joins McLeod, Watkinson & Miller; Climate Issues; Trade; Disaster Payments; Biotechnology; CFTC; and Herbicide Study

Bill O’Conner Joins McLeod, Watkinson & Miller

Long time GOP staff leader of the House Agriculture Committee, Bill O’Conner, retired on March 1, after nearly 30 years of service in a variety of policy roles on both Capitol Hill and at USDA.

O’Conner, who joins the Washington law firm of McLeod, Watkinson & Miller on March 2, began working on the staff of the House Agriculture Committee in 1983 after Rep. Ed Madigan of Illinois became the Ranking Member of the Committee. Prior to joining the Agriculture Committee, O’Conner had worked as the Executive Director of the House Republican Research Committee under the chairmanship of Rep. Madigan.

During his seven years on the Agriculture Committee, O’Conner provided policy analysis and managed legislative operations for Ranking Member Madigan as the Committee developed the 1985 and 1990 Farm Bills, several disaster assistance and crop insurance bills, Farm Credit System reform bills and Commodity Exchange Act reauthorizations. He worked aggressively to enhance the bipartisan nature of the legislative process to attain greater minority influence on legislation.

In March 1991 Ed Madigan became Secretary of Agriculture and appointed O’Conner as his chief of staff, where he served through the balance of the first Bush Administration. During this executive branch service, O’Conner oversaw the multi-billion dollar administrative budget of the Department and worked intensively in negotiating the agricultural portions of the Uruguay Round of trade talks.

On February 1, 1993 O’Conner returned to the Republican House Agriculture as Policy Director under Congressman Pat Roberts of Kansas, and continued in that position under Chairman Bob Smith of Oregon. In January 1999, Chairman Larry Combest of Texas appointed him Staff Director. He continued to serve in that capacity under Chairman and then Ranking Member Bob Goodlatte of Virginia. During the development of the 2008 Farm Bill, O’Conner was responsible for managing minority participation in the Farm Bill conference with the Senate.

Since January of 2009, O’Conner has served under Ranking Member Frank Lucas (R-Oklahoma) as the Agriculture Policy Director on issues such as the cap and trade climate bill, food safety bill and financial regulatory reform.

Firm partner Mike McLeod said, “When Bill told me he was retiring from the Committee, I tried to change his mind, because I could not imagine the House Agriculture Committee without him. However, when I could not convince him to stay, I was very happy that he would join McLeod, Watkinson & Miller.” Firm partner Wayne Watkinson said, “There is no one on any Congressional staff that is more respected for his intellect and integrity than Bill. I believe his talents will be of great benefit to our clients.”

O’Conner is a native of Kansas. He received his undergraduate training at Wichita State University. After a tour with the Marines, he earned a master’s degree at Wichita State and went on to do doctoral work at Ohio State University.

A press release from Monday on this development from McLeod, Watkinson & Miller is available here.

Climate Issues

Reuters writer Richard Cowan reported yesterday that, “A new U.S. climate change bill could make its debut in the Senate soon in what likely would be the last big effort by Democrats to enact major environmental reforms this year.

“The House of Representatives narrowly passed a ‘cap and trade’ bill in June to bring down U.S. emissions of carbon dioxide and other greenhouse gases blamed for global warming.

“But that bill, and a similar one approved in November by the Senate Environment and Public Works Committee, did not gain broad enough support to win passage in the Senate.”

Mr. Cowan indicated that, “As a result, Democratic Senator John Kerry has been trying to come up with a compromise that could pass in this congressional election year. He’s been working with Republican Senator Lindsey Graham and Independent Senator Joseph Lieberman.

“The legislation will include national targets for reducing carbon emissions and a mechanism for pricing carbon, according to a Senate aide familiar with the talks. But public details are ‘weeks away,’ the aide said, adding, ‘a number of different ways to price carbon are on the table.’”

Yesterday’s article went on to outline “[P]ossible scenarios for how they might force significant reductions in carbon pollution and increase the use of cleaner alternative fuels. If they can attract at least 60 votes, a bill could be on the Senate floor by June,” the Reuters article said.

Ben Geman reported yesterday at the Hill’s Energy and Environment Blog that, “While the Senate trio’s plan will differ radically from the sweeping ‘economy-wide’ House cap-and-trade bill approved last year, it likely won’t abandon cap-and-trade entirely.

“The senators’ retreat – rhetorically complete, substantively partial – follows months of attacks on cap-and-trade by Republicans, who have labeled it ‘cap and tax’ and said other unfriendly things.

“‘It’s possible,’ notes one activist, ‘that ‘cap and trade is dead’ means the phrase will not be uttered again.’”

The Hill article added that, “The senators have also been talking with Sens. Maria Cantwell (D-Wash.) and Susan Collins (R-Maine) about their alternative approach called ‘cap and dividend,’ under which emissions allowances would be auctioned off and the bulk of the proceeds returned to consumers.”

Darren Samuelsohn of ClimateWire reported yesterday at The New York Times Online that, “Kerry this week is scheduled to have at least eight climate-related meetings with senators and other interest groups. Graham and Lieberman have talks lined up with critical voices from both parties in the debate, including Sens. Sherrod Brown (D-Ohio), Scott Brown (R-Mass.), Mary Landrieu (D-La.), Carl Levin (D-Mich.) and Judd Gregg (R-N.H.).

“The overall goal, Kerry’s spokeswoman Jodi Seth said, is to jump-start talks that can help pave the way toward 60 votes.

“‘Dozens of meetings and scores of decisions and negotiations still have to happen before anyone knows what a bill would look like, but every day we are making progress,’ Seth said.”

Meanwhile, in a separate update, Ben Geman reported yesterday at The Hill’s Energy and Environment Blog that, “Senior House Republicans including Minority Leader John Boehner (R-Ohio) plan to roll out a resolution Tuesday that would nullify EPA’s authority to regulate greenhouse gas emissions.

“Their plan mirrors a Senate effort led by Sen. Lisa Murkowski (R-Alaska) – which may come to the floor this month – to overturn EPA’s ‘endangerment finding’ that greenhouse gases are a threat to humans.”

Mr. Geman added that, “The resolution currently has 79 cosponsors, according to Boehner’s office. It will be a so-called resolution of disapproval under the Congressional Review Act, a mid-1990s law that allows Congress to overturn federal rules but has been used successfully just once.

“The House GOP plan follows a resolution to block EPA filed last week by two senior House Democrats from conservative states – Ike Skelton (D-Mo.) and Collin Peterson (D-Minn.).”

“Sen. Jay Rockefeller (D-W.Va.) is planning legislation that would temporarily block EPA’s stationary source rules without nullifying EPA’s power entirely. An industry lobbyist tracking the plan said Rockefeller’s bill is expected to call a two-year timeout on the planned EPA rules, which the agency recently said it would implement more slowly than had originally been expected,” yesterday’s update said.

A related opinion item from The Wall Street Journal editorial board was published in today’s paper, “More Carbon Dissidents.”

And, in an appearance yesterday on the AgriTalk Radio Program with Mike Adams, Rep. Jerry Moran (R-Kansas) provided more specific analysis of recent actions taken by the EPA, and elaborated on the potential impact that executive branch activity could have on the agricultural sector.

To listen to a portion of the discussion regarding EPA and agriculture between Mike Adams and Rep. Moran, just click here (MP3-2:54).

Trade

An update posted yesterday at CQPolitics.com reported that, “The Obama administration’s newly released 2010 trade agenda gives little indication that the White House will quickly advance long-stalled pacts with Panama, Colombia or South Korea, despite President Obama’s increasing focus on international commerce.

“After having U.S. Trade Representative Ron Kirk review the Bush-era agreements throughout 2009 and drawing criticism from business groups eager for a more aggressive trade liberalization policy, Obama lately has been talking up the importance of exports.”

The CQ article noted that, “The agenda released by Kirk’s office Monday morning stressed the new export focus, and says the administration is engaged in ‘unprecedented’ consultations with Congress over the shape of impending negotiations on a Trans-Pacific Partnership, an Asia-Pacific free trade group.

“But the agenda — which Kirk will discuss at a Senate Finance Committee hearing Wednesday — is cautious when it comes to the Panama, Colombia and South Korea deals that were inked by the George W. Bush administration.”

A news release from Monday that was posted at the National Pork Producers Council Online stated that, “Pointing out that exports generate 8,000 U.S. jobs for every $1 billion of agricultural goods exported, an ad hoc coalition of food, feed and agricultural entities today urged Congress to promptly pass several pending free trade agreements.

“Trade deals with Colombia, Panama and South Korea are awaiting congressional approval. Under each pact, many U.S. food and agricultural products would become eligible for duty-free treatment once the agreement is implemented and nearly all would receive duty-free treatment over specified phase-in periods.”

Also with respect to the USTR trade outline, Reuters news reported today that, “The United States on Monday defended its position in the eight-year-old Doha round of world trade talks, saying it could not agree to a weak deal because that would damage the World Trade Organization.

“‘We remain convinced that a Doha success can be achieved if all major economies are willing to come to the negotiating table,’ the U.S. Trade Representative’s office said in annual report outlining President Barack Obama’s trade agenda.”

In more specific ag trade developments, Reuters news reported yesterday (article posted at DTN, link requires subscription) that, “Russia and the United States could resolve their trade dispute over U.S. poultry exports on Tuesday, Russian consumer protection watchdog head Gennady Onishchenko told Interfax news agency.

“‘Our positions are getting closer together,’ the official told the agency on Monday, adding that if progress continues ‘concrete decisions’ will be reached at a meeting on Tuesday.”

Disaster Payments

Ken Anderson reported yesterday at Brownfield that, “The chair of the National Cotton Council says disaster assistance for farmers will be included in the new jobs creation bill in Congress.

“Eddie Smith says little is known about the proposal, but speculates it could look much like earlier offerings—most likely tied to a disaster declaration by the Secretary of Agriculture, with producers receiving a payment similar to a direct payment. They would have to prove an economic loss of five percent for at least one crop of economic significance.”

Agri-Pulse Senior Editor Stewart Doan filed a brief audio report yesterday that included remarks from Senate Agriculture Committee Chairman Blanche Lincoln (D-Ark.); the audio report indicated that Sen. Lincoln “[t]ells Agri-Pulse she’s been assured her $1.5 billion disaster relief plan for farmers will ride on the next jobs bill.” To listen to this Agri-Pulse audio report, just click here (MP3- 1:20).

(Side Note: Chris Cillizza reported in today’s Washington Post that, “Arkansas Lt. Gov. Bill Halter announced Monday that he will challenge Sen. Blanche Lincoln in the state’s May primary, a decision touted by liberal Democrats as a watershed moment in attempts to demonstrate their displeasure with the way the party has conducted itself over the past year.”)

Biotechnology

Reuters writer Carey Gillam reported yesterday that, “Environmentalists filed a federal lawsuit against the U.S. Fish & Wildlife Service on Monday accusing the service of illegally allowing farmers to grow genetically modified crops in a national wildlife refuge.

“The groups said up to 80 other national wildlife refuges across the United States are now growing genetically engineered crops and could be vulnerable to similar legal action.”

The article noted that, “The groups want the court to force the Fish & Wildlife Service to remove genetically engineered crops from the National Wildlife Refuge at Bombay Hook in Delaware, alleging the crops are a result of illegal cooperative farming agreements.

“The groups said the service has allowed hundreds of acres to be plowed over without the environmental review required by the National Environmental Policy Act.”

A news release Monday from the UN’s Food and Agriculture Organization stated that, “The focus of modern and conventional biotechnologies should be redirected so as to benefit poor farmers in poor countries and not only rich farmers in rich countries, FAO said today.”

“According to FAO, biotechnological innovations can be of significant assistance in doubling food production by the year 2050 and in addressing the uncertainties of climate change. ‘In the past few decades, the field of biotechnologies has advanced at a formidable speed and generated numerous innovations particularly in the field of pharmaceuticals and some in the field of agriculture,’ [Modibo Traore, FAO Assistant Director-General] said.

Commodity Futures Trading Commission Issues

Reuters writer Christopher Doering reported yesterday that, “Congress should give U.S. securities and futures regulators the authority to ensure clearinghouses are protected against conflicts of interest, the chairman of the Commodity Futures Trading Commission said on Monday.

“Gary Gensler outlined his vision for clearinghouses as two U.S. Senate committees work to finalize financial regulatory reform bills that will include new oversight for over-the-counter derivatives.

“‘Open governance would ensure that clearinghouses are not governed by parties that might have a conflict of interest or financial stake in particular transactions,’ Gensler said in remarks prepared for the Institute of International Bankers.”

Bloomberg writer Matthew Leising reported yesterday that, “Congressional leaders are vowing to eliminate a provision in legislation passed by the House in December that would allow banks to keep the private derivatives market opaque, protecting billions in profits on swap trades.

“Barney Frank and Collin Peterson, chairmen of the Financial Services and Agriculture Committees respectively, indicated they’ll remove a section of the bill that allows trades to be routed through systems that keep prices private, even though the legislation was touted as a way to make the transactions transparent.”

Herbicide Study

David A. Fahrenthold reported in today’s Washington Post that, “A new study has found that male frogs exposed to the herbicide atrazine — one of the most common man-made chemicals found in U.S. waters — can make a startling developmental U-turn, becoming so completely female that they can mate and lay viable eggs.

“The study, published online Monday in the Proceedings of the National Academy of Sciences, seems likely to add to the attention focused on a weedkiller that is widely used on cornfields. The Environmental Protection Agency, which re-approved the use of atrazine in 2006, has already begun a new evaluation of its potential health effects.

“Its manufacturer, Swiss agri-business giant Syngenta, says research has proven that the chemical is safe for animals and for people, who could be exposed to trace amounts in drinking water.”

Keith Good

February 26

Legislative Issues- Ag Economy; EPA Pesticide Issue; Climate Issues; Biofuels; and CFTC

Legislative Issues: Jobs Bill- Tax Credit, Ag Disaster Aid

Reuters news reported yesterday that, “Revival of the $1 a gallon biodiesel tax credit would be part of a jobs and tax bill in the U.S. Senate, according to a draft that circulated on Capitol Hill on Thursday.

“According to the draft, the $1 a gallon biodiesel tax credit, which expired at the end of 2009, would be extended through 2010.”

Yesterday’s article indicated that, “The draft also included a $1.5 billion in disaster aid for farmers and would allow a five-year depreciation schedule for agricultural equipment.

“Senate Majority Leader Harry Reid said on Wednesday that he was preparing a package of jobless benefits, state aid and tax breaks that the Senate could take up next week.”

The Reuters item added that, “Agriculture Committee chairman Blanche Lincoln said this week that she was working to keep disaster aid in the jobs bill. Heavy fall rains in the U.S. South damaged rice and cotton crops last fall and drove up harvest costs. Some rice growers say they cannot afford to plant a new crop without disaster relief.

“The draft calls for payments to cotton, grains and soybean growers if they lost at least 5 percent of a crop and are in counties that were declared as disaster areas by the Agriculture Department.”

In a related article, the “Washington Insider” section of DTN reported yesterday (link requires subscription) that, “In an interesting bit of congressional insider byplay, House Ag Committee Chairman Collin Peterson, D-Minn., openly disagreed with Senate Ag Chairman Blanche Lincoln, D-Ark., regarding the agriculture disaster aid program she is sponsoring. His concern focuses on the program’s triggers for payment eligibility.

“Under Lincoln’s proposal, whenever they lose more than 5 percent of their crop to natural disasters cotton, grain and soybean growers would be eligible for a payment equal to 90 percent of their annual ‘direct payment’ subsidy — a program that would cost about $1.1 billion annually. Aid also would go to cottonseed handlers and to livestock, fish, fruit and vegetable producers.

“Peterson thinks that such a program would be far too generous, and he would incorporate a much higher eligibility threshold. ‘That doesn’t fly. That’s asking for trouble,’ Peterson told a rice industry conference where he followed Lincoln on the program.”

Yesterday’s DTN update noted that, “He said he has been ‘working hard about disaster assistance’ and pointed out that ‘stop-gap’ disaster bills in the past commonly required a one-third loss before producers could be paid. He said, ‘I think there’s going to have to be a higher loss’ trigger this time and that lawmakers will work on the issue.

“The Lincoln proposal has a way to go. She tried without success to convince Senate Majority Leader Harry Reid, D-Nev., to include the aid language in the Senate jobs measure that was approved Wednesday. And the House has not yet even considered the proposal. Being able to deliver additional producer support appears to be very important to Lincoln, who faces a tough race (she is considered by Republicans as one of the most vulnerable Senators facing voters this fall).

“At the same time, Peterson’s comments suggest congressional support for her proposal is not that strong, a fact that could weaken the odds of it being added to any Senate jobs bill, observers suggest.”

Nonetheless, the DTN item did note that, “[I]t is not impossible that support for Lincoln’s proposal will get a second look for reasons not directly related to Arkansas politics. Some agricultural supporters have been worried for some time that recent commodity prices — even though they are considered low by many producers, especially relative to 2008 — are reducing safety net payments, and thereby reducing the baseline that will be used to define the starting point for the 2012 debate.”

Legislative Issues: Farm Bill- Hearings

A news release issued yesterday by Rep. Lynn Jenkins (R- Kansas) stated that, “Congresswoman Lynn Jenkins sent a letter to Chairman of the House Agriculture Committee Collin Peterson (D-Minn.) and Ranking Member Frank Lucas (R-Ok.) inviting them to hold a farm bill field hearing in her district in Kansas.

“‘The agriculture industry is vital to the economy in my district, and a strong, predictable farm bill is critical to my constituents,’ Jenkins said. ‘After learning that Chairman Peterson intends to start discussions for the next farm bill this year, I invited him and Ranking Member Lucas to hold a field hearing in Eastern Kansas.’”

In other developments regarding some conservation aspects of the Farm Bill, Philip Brasher reported yesterday at the Green Fields Blog (The Des Moines Register) that, “Landowners with acreage idled under the Conservation Reserve Program could be hearing soon from a wildlife group’s biologists. They’ll be urging the landowners to keep at least some of their property enrolled in the program.

“A memorandum of understanding that Agriculture Secretary Tom Vilsack will sign with Pheasants Forever in Des Moines Saturday allows PF’s biologists access to landowner data in USDA offices. The MOU is an updated, expanded version of separate agreements the group has had with USDA’s Farm Service Agency and Natural Resources Conservation Services. The group is required to keep the information private.

“‘It allows us to target potential people that we should be talking to,’ said Dave Nomsen, the group’s vice president of government relations.”

Interestingly, a daily radio news item from USDA yesterday rhetorically asked, “Will land that came out of the Conservation Reserve last fall end up as planted cropland this spring?” The brief audio report was titled, “Expired CRP Land Unlikely to End up as Crop Acres This Year.”

Recall that last week, USDA Chief Economist Joe Glauber noted that, “Less land is expected to be planted to the major field crops in 2010 as prices continue to ease from their record levels in 2008…Total planted area for the 8 major crops (wheat, corn, barley, oats, sorghum, soybeans, upland cotton, and rice) is expected to decline to 247.3 million acres, down 1.6 million from 2009” [related graph].

Agricultural Economy

A summary of fourth quarter credit conditions from 2009 was posted recently at the Federal Reserve Bank of Minneapolis Online; in part, the summary noted that, “A wet fall increased crop drying costs and delayed harvests. Profits and capital spending fell slightly for ag customers, according to lenders responding to the Minneapolis Fed’s fourth-quarter (January) agricultural credit conditions survey. More farmers and ranchers delayed repayment and extended loans. Lenders have bountiful funds, but loan demand was flat and collateral requirements increased. Land prices and cash rents were relatively stable during the quarter. Interest rates on loans did not change much from the third quarter. The outlook for the first quarter of 2010 is subdued. Farm income, capital expenditures and household spending are expected to fall.”

Meanwhile, USDA’s National Agricultural Statistics Service released its Chickens and Eggs 2009 Summary yesterday; the report indicated that, “The total value of all chickens on December 1, 2009 was $1.50 billion, down 1 percent from December 1, 2008. The average value decreased from $3.39 per bird on December 1, 2008, to $3.34 per bird on December 1, 2009…Layer numbers during 2009 averaged 337 million, down 1 percent from the year earlier. The annual average production per layer on hand in 2009 was 268 eggs, up 1 percent from 2008.”

In a related article, Reuters news reported yesterday that, “Russian and U.S. officials are set to meet next week in Moscow to talk about how to resolve a trade spat that has shut U.S. poultry out of its top export market, the U.S. Agriculture Department said on Thursday.

“Top USDA trade official Jim Miller and Assistant U.S. Trade Representative Jim Murphy will travel to Moscow next week to ‘work to reopen access for U.S. poultry,’ a USDA spokeswoman said.”

EPA Pesticide Issue

Gabriel Nelson of Greenwire reported earlier this week at The New York Times Online that, “In its first set of orders since returning from a monthlong recess, the Supreme Court declined yesterday to consider three separate industry challenges to federal environmental regulations.

“Environmentalists hailed the court’s decision not to review a year-old ruling requiring farmers to secure Clean Water Act approval for the use of pesticides already permitted under the Federal Insecticide, Fungicide and Rodenticide Act. U.S. EPA is now reviewing the National Pollutant Discharge Elimination System to devise a permitting system that complies with the ruling.

“While the agency had claimed that FIFRA approval incorporated compliance with the Clean Water Act, the 6th U.S. Circuit Court of Appeals ruled last year that the government was obligated to ensure that farmers using pesticides were subject to both regulations. The appeals court agreed to stay the decision for two years, until April 2011, while EPA revises its permitting process.”

The article noted that, “But agriculture groups and conservatives criticized the Supreme Court’s decision not to review the circuit court decision in National Cotton Council v. EPA, saying it would create redundant bureaucracy and hamper agricultural production by forcing farmers to decide between not applying pesticides and risking legal and enforcement actions for discharging without a permit.”

This development was discussed on Tuesday on the AgriTalk Radio Program with Mike Adams. After a brief explanation of the judicial development, Mike Adams discussed the issue with Nebraska GOP Senator Mike Johanns. Sen. Johanns indicated that this development, and executive branch action associated with the case, has served to further increase producer concerns with EPA actions and the Agency’s impact on production agriculture.

To listen to a portion of Tuesday’s AgriTalk program, which included some comments from Sen. Johanns, just click here (MP3-4:13). For more background on this case, see this FarmPolicy update from last April.

Climate Issues

Reuters writers Tom Doggett and Richard Cowan reported yesterday that, “The U.S. Senate is unlikely to pass a comprehensive climate change bill to reduce greenhouse gas emissions this year, according to a Reuters survey of 12 key Democrat and Republican Senators who could hold the swing votes.

“While the Obama administration and a bipartisan core of senators still hope there is life for a climate change bill that would put a price on carbon emissions and help reinvigorate ailing international talks, the senators interviewed by Reuters this week were much more pessimistic.

“The survey underscores that global warming — a scientific finding still hotly disputed by many Americans — could end up being set aside by politicians focusing on issues that hold more appeal to voters ahead of congressional elections in November.”

However, Washington Post writers Juliet Eilperin and Steven Mufson reported on Wednesday at the Post Carbon Blog that, “Senate Majority Harry Reid (D-Nev.) has instructed Sen. John Kerry (D-Mass.) to produce a revamped climate bill as soon as possible, according to sources, a task Kerry intends to accomplish within two weeks.

“The marching orders could represent the best chance advocates will get to pass a climate and energy bill before the November elections. Kerry has been working with Sens. Lindsey Graham (R-S.C.) and Joseph I. Lieberman (I-Conn.) on drafting a measure that could attract bipartisan support, but it remains unclear what combination of policies would draw enough votes to win passage.”

And a ClimateWire article from yesterday indicated that the executive branch was not providing clear legislative direction with respect to a climate bill: “A speech by President Obama to top CEOs yesterday left some climate experts and energy industry lobbyists searching for stronger clues about White House policy preferences as members of the Senate struggle to come up with a fresh proposal for cutting greenhouse gas emissions.

“‘If we decide now that we’re putting a price on this pollution in a few years, it will give businesses the certainty of knowing they have time to plan and transition,’ Obama told corporate executives at a Business Roundtable meeting in Washington.

“The president has repeated this argument for putting a price on heat-trapping carbon emissions in recent public speeches. Still, many are reading the tea leaves carefully for specific White House policy and political prescriptions that would set Congress on a path to secure passage of legislation this year.”

Meanwhile, Robin Bravender of Greenwire reported yesterday at The New York Times Online that, “U.S. EPA will need increased funding for climate programs in future years as the agency moves forward on efforts to curb greenhouse gas emissions, Administrator Lisa Jackson said [Wednesday].

“‘I would expect that the needs would continue to grow as we move into a world — either through legislation, hopefully through legislation, but possibly also with regulation — of increasing activity on climate change,’ Jackson told the House Interior and Environment Appropriations Subcommittee.”

And with respect to possible EPA regulation, Amy Harder reported yesterday at the National Journal Online that, “EPA is expected to announce in April its finalized ‘tailoring rule’ regulating greenhouse gas emissions of stationary sources. The forthcoming regulations have prompted two separate efforts by Sens. John (Jay) Rockefeller, D-W.Va., and Lisa Murkowski, R-Alaska, to rein in the agency’s regulatory power. Rockefeller’s plan would temporarily delay EPA’s regulations over stationary sources, while Murkowski’s would effectively veto EPA’s ‘endangerment finding’ that gives the agency authority to regulate emissions.

“While on the Hill this week to testify about the agency’s budget, EPA Administrator Lisa Jackson has spent much of her time seeking to allay concerns about the regulations.”

In related news, Juliet Eilperin reported yesterday at the Post Carbon Blog that, “Administration officials are pointing out some of the consequences if Sen. Lisa Murkowski (R-Alaska) is successful in blocking the Environmental Protection Agency from regulating greenhouse gases under the Clean Air Act.

“The National Highway Traffic Safety Administration has sent a letter to Sen. Dianne Feinstein’s (D-Calif.) office suggesting Murkowski’s resolution aimed at the EPA could complicate its efforts to impose stricter fuel-economy standards on cars and light trucks. In the Feb. 19 letter, the agency’s chief counsel O. Kevin Vincent explains that because NHTSA’s Corporate Average Fuel Economy (CAFE) standard is tied to the EPA’s greenhouse-gas rule for motor vehicles, it would be problematic if Murkowski’s resolution stopped EPA from moving ahead.”

And from an international perspective, at a Foreign Relations Committee hearing on Wednesday regarding the FY 2011 international affairs budget, Sen. John Kerry (D-Mass.) noted that, “‘I am pleased to see that this budget includes a 38% increase in funding to address international climate change, especially in the wake of Copenhagen,’ said Chairman Kerry. ‘While much has been said about what wasn’t accomplished at Copenhagen, far too little has been said about what was.’”

The AP reported yesterday that, “Industrialized and developing countries are not likely to reach a treaty this year on cutting greenhouse gas emissions, which have sparked fears of weather-related disasters, the U.N. climate chief said Thursday.”

And Jeffrey Ball and Keith Johnson reported in today’s Wall Street Journal that, “In the next few days, the world’s leading authority on global warming plans to roll out a strategy to tackle a tough problem: restoring its own bruised reputation.

“A months-long crisis at the Intergovernmental Panel on Climate Change has upended the world’s perception of global warming, after hacked emails and other disclosures revealed deep divisions among scientists working with the United Nation-sponsored group. That has raised questions about the panel’s objectivity in assessing one of today’s most hotly debated scientific fields.”

Biofuels

A news release Wednesday from Rep. Leonard Boswell (D-Iowa) stated that, “Today, Congressman Leonard Boswell reintroduced the Renewable Fuel Pipeline Act of 2010 to boost our homegrown energy industry by improving the infrastructure for moving ethanol from the Midwest to the rest of the country.

“H.R. 4674 amends the loan guarantee program under the Energy Policy Act of 2005 to specifically qualify a renewable fuel pipeline as an eligible project, along with increasing the loan guarantee rate to 80 percent. The reintroduced legislation has been streamlined to help it more easily pass through committee and reach consideration on the House floor.

“‘The Renewable Fuel Pipeline Act is an important piece of legislation to Iowa’s local communities and economies that have come to rely on the biofuels industry,’ Boswell said. ‘The construction of a pipeline to move ethanol out of the Midwest and to the coasts will create nearly 80,000 jobs while contributing $6.6 billion to the U.S. economy.’”

A related news release from Growth Energy yesterday noted in part that, “‘Growth Energy recognizes that U.S. renewable fuels is still an emerging industry, and we need to invest in the national infrastructure necessary to deliver ethanol and other biofuels to markets,’ Tom Buis, CEO of Growth Energy, said. ‘An ethanol pipeline — built privately with federal loan guarantees — will help assure that U.S. consumers will have choices at the pump that include domestic, renewable ethanol.’”

CFTC

Reuters writer Christopher Doering reported yesterday that, “The U.S. Congress is likely to pass a regulatory reform bill in 2010 that would include giving the top U.S. futures watchdog greater authority to regulate over-the-counter swaps, a commissioner at the Commodity Futures Trading Commission said on Thursday.

“More transparency and rules for the unregulated U.S. over-the-counter derivatives markets — valued at some $300 trillion — are vital to creating a more stable financial system, said Scott O’Malia, who was confirmed as a CFTC commissioner last October.”

Keith Good

February 25

House Appropriations Hearing; Crop Insurance; Climate Issues; Trade; and Biofuels

House Appropriations Subcommittee for Agriculture

DTN Ag Policy Editor Chris Clayton reported yesterday (link requires subscription) that, “Congressmen questioned Agriculture Secretary Tom Vilsack on a broad array of budget proposals Wednesday as USDA officials appeared before the House Appropriations Subcommittee for Agriculture to make their case about budget priorities for the next fiscal year.

“Vilsack explained USDA’s proposed budget, which could boost spending on child nutrition programs by $1 billion a year while effectively freezing the department’s discretionary spending, which accounts for about $21 billion a year. With a boost in mandatory spending tied to nutrition programs, the Obama administration actually proposes increasing USDA’s overall budget by $10.3 billion in fiscal 2011 to $129.6 billion.”

Mr. Clayton explained that, “In his testimony, Vilsack said the 2011 budget request ‘supports the administration’s vision for a strong rural America through achievement of four strategic goals.’

“Those goals include improving and expanding child nutrition programs such as school lunches and breakfasts; improving the rural economy through expanded broadband and a continued push for green energy; strengthening agricultural production and profitability through the promotion of exports with a specific emphasis on biotechnology while responding to the challenge of global food security; and ensuring the nation’s forests and private lands are protected ‘and made more resilient to climate change’ while protecting water resources.”

More specifically, yesterday’s DTN article pointed out that, “Rep. Tom Latham, R-Iowa, wanted to know more about the proposed cuts to crop insurance, which are being negotiated now in a new five-year contract between the insurance industry and USDA. The latest draft of the contract would cut about $6.9 billion out of crop insurance over 10 years.

“Vilsack defended the proposal, saying ‘rebalancing’ was necessary in the industry, given the rise in profits since 2000.

“‘You are seeing dramatic increases in the amount of profits for the companies and the agents,’ Vilsack said.

“Vilsack added that crop insurers have had strong profits in 13 out of the last 15 years. USDA proposes to cut the industry’s average underwriting gains from 16 percent a year to 12 percent a year. ‘We think that is fair,’ Vilsack said.”

(Note: To listen to the exchange between Rep. Latham and Sec. Vilsack from yesterday’s hearing, just click here (MP3-6:40)).

The DTN article indicated that, “Rep. Sanford Bishop, D-Ga.] also said he was worried about a proposal to cut direct payments. Vilsack said the proposal to cut direct payments ‘is focused on a very small percentage of farmers’ and would affect about 30,000 out of 1.4 million farmers who collect direct payments.

“‘If we are going to be serious about deficits, we have to look someplace,’ Vilsack said.”

(Note: To listen to comments from yesterday’s hearing by Sec. Vilsack regarding direct payments, just click here (MP3-1:30)).

Philip Brasher reported yesterday at the Green Fields Blog (The Des Moines Register) that, “The Agriculture Department’s plan to let states run livestock identification systems won’t work, [says] a key lawmaker who oversees the USDA’s budget.

“Connecticut Democrat Rosa DeLauro, who chairs the House agricultural appropriations subcommittee, told Agriculture Secretary Tom Vilsack today that she doesn’t plan to agree to his request for $14 million to fund the ID plan for 2011.”

Mr. Brasher stated that, “She expressed frustration that the department has little to show for the $147 million that’s already been spent designing a national tracking program that the Bush administration initiated six years ago. The idea of the system is to speed the detection of diseased animals.

“‘I must be honest with you. I don’t understand how we’re going to have a system’ run by individual states, she said. ‘How it is going to work? I don’t believe it is going to work.’”

Crop Insurance

In more detailed reporting regarding crop insurance, Chris Clayton noted yesterday at DTN’s Ag Policy Blog that, “In a news release Wednesday, the National Crop Insurance Services rejected USDA’s second offer for a Standard Reinsurance Agreement.

“The news release came just hours after Secretary of Agriculture Tom Vilsack told a House Appropriations Subcommittee that the agreement was a fair deal. Vilsack said ‘rebalancing’ was necessary in the industry given the rise in profits since 2000.”

In part, the crop insurance industry stated that, “Although modestly less severe than initially proposed, the funding reductions for the crop insurance program offered yesterday by USDA/RMA in the latest round of negotiations to revise the Standard Reinsurance Agreement (SRA) remain excessive and unrealistic. In addition, the RMA’s latest proposal fails to reflect available reforms to the program’s business processes, oversight and quality control measures which would increase their effectiveness and reduce costs for both RMA and the industry.

“‘We are disappointed that RMA didn’t give much credence to our suggestions about ways to streamline and improve the important tasks that we must undertake to implement the program and protect its integrity in compliance with the provisions of the SRA. In fact, RMA went the other way, making these tasks more cumbersome and expensive, while simultaneously calling for huge funding cuts,’ said Bob Parkerson, President of National Crop Insurance Services.”

“‘It appears that RMA, while giving a little bit back on the financial side, has increased the requirements on the operational side of the business causing the companies’ expenses to continue to rise. They claim to be listening to us, but it’s apparent that they didn’t take the time to read the comments we submitted to their first draft. We still have a long way to go,’ said Parkerson.”

Meanwhile, Dan Looker reported yesterday at Agriculture Online that, “At least one input will cost less for farmers growing corn and soybeans in 2010 — the premiums you pay for crop insurance.

“That may be one reason for considering higher levels of coverage this year, especially if you are switching your crop revenue coverage from smaller units to an enterprise unit, which insures all of your crop in a county. The odds of collecting insurance fall as you cover a larger area, so higher coverage levels partly offset that by increasing the percentage of revenue that you chose to insure. The maximum is 85% for CRC (crop revenue coverage).

“‘Last year there was a big increase in subsidies for enterprise units,’ University of Illinois ag economist Gary Schnitkey said in a webinar on crop insurance held Wednesday morning. (The webinar will be repeated Monday, March 1 at 11 a.m. Click here for more details.).”

Mr. Looker added that, “With less than three weeks to the March 15 deadline for insurance signup in the Midwest, Schnitkey urged farmers to consider several changes.”

Yesterday’s article noted that, “[C]rop insurance choices can affect two new 2008 farm bill programs, ACRE (average crop revenue election) and SURE (supplemental revenue assistance payments.)

“‘In my opinion, you shouldn’t be using the ACRE program or SURE as a substitute for crop insurance,’ Schnitkey said. They don’t offer the same level of protection. But your level of crop insurance does affect how the programs work.

“ACRE makes payments if state-level revenue drops and if your farm has a drop in revenue. Your crop insurance affects your revenue guarantee.”

DTN Executive Editor Marcia Zarley Taylor indicated on Monday at the Minding Ag’s Business Blog that, “You’ll get more for your money when buying revenue based crop insurance in 2010, if current corn and soybean price trends hold.

“With only a week left in the spring pricing period, the Risk Management Agency (RMA) estimates that the spring guarantee for revenue-based plans will run $3.95 per bu. for corn and $9.19 for soybeans. Compare these prices to $4.04 for corn and $8.80 for soybeans last year, so you won’t notice much change in your protection levels. (At $5.43 per bu., spring wheat’s estimated price can’t make that same claim. It is off nearly $1 per bu. from 2009 levels.)

“‘However, RMA is presently indicating that because the market is less volatile now than it was last year at this time, the cost of crop insurance could be anywhere from 10 to 30 percent less than it was last year,’ notes Kurt Koester, a marketing and crop insurance consultant with AgriSource in West Des Moines, Iowa.”

Climate Issues

Bloomberg writer Simon Lomax reported yesterday that, “Legislation to set up a U.S. cap- and-trade market for carbon dioxide that scientists have linked to climate change may still pass Congress this year, Senator Tom Carper, a Delaware Democrat, said today.

“‘We actually have a shot at doing an economy-wide climate bill,’ Carper said in Washington at an event hosted by the International Emissions Trading Association.

“President Barack Obama’s ‘embrace’ of electricity produced by nuclear reactors, his support for technology that captures and stores carbon dioxide from coal-fired power plants and his ‘willingness to work with Republicans’ on expanding offshore oil and gas drilling has ‘changed the dynamic’ of the debate over climate change in Congress, Carper said.

“‘I don’t think it’s likely but it’s possible now,’ Carper told reporters afterward.”

Darren Samuelsohn of Climatwire reported yesterday at The New York Times Online that, “Senate advocates of comprehensive global warming and energy legislation are stuck on a fundamental question: How should they structure the first-ever price on greenhouse gas emissions?

“‘What’s the mechanism for pricing carbon is the real key here,’ Sen. John Kerry (D-Mass.), a lead author of the nascent bill, said yesterday. ‘That’s what we’re trying to figure out, is how we do that in the most effective way.’”

The article noted that, “The search includes a cap-and-trade system like the one in the House-passed climate bill, which divided up valuable emission credits among constituents representing more than three-quarters of the U.S. economy. They are also looking at how to mesh other popular approaches, including a cap-and-dividend system that auctions off pollution permits with the revenue sent back to the public to compensate for higher costs on energy bills and consumer goods.

“Kerry and Sens. Lindsey Graham (R-S.C.) and Joe Lieberman (I-Conn.) are also weighing a plan to phase in emission limits for different industrial sectors, beginning with power plants and large stationary sources, and placing the nation’s transportation fuels under a carbon tax that rises based on the compliance costs faced by the other major emitters.”

Yesterday’s article explained that, “One of the biggest questions facing the Senate trio involves whether to auction off most of the allowances or give them away to industry constituents.

“Sen. Maria Cantwell (D-Wash.) said this week she is not sure what Kerry and company have in mind when they describe their ‘hybrid’ approach. She would rather start with her ‘cap and dividend’ idea, written with Sen. Susan Collins (R-Maine), and build out from there.

“‘I don’t know what they’re talking about,’ Cantwell said. ‘I’m just saying, this is such a simple idea. There’s great simplicity in this.’

“Under the Cantwell-Collins bill, energy producers would bid in monthly auctions for ‘carbon shares.’ Consumers would get 75 percent of the resulting revenue as a refund to help compensate for increased energy costs; the remaining 25 percent would go toward clean energy research and development.”

Meanwhile, Margaret Kriz Hobson reported yesterday at the National Journal Online that, “President Obama today recommended imposing a price on carbon dioxide emissions to help U.S. companies transition to a clean-energy economy. Without specifying how the fee should be imposed, Obama vowed to work with ‘companies that face significant transition costs’ as the nation addresses climate change.

“‘I want to work with organizations like this to help with those costs and get our policies right,’ he said in a speech to the Business Roundtable. Warning that oil prices will remain volatile into the future, Obama argued that ‘if we decide now that we’re putting a price on this pollution in a few years, it will give businesses the certainty of knowing they have time to plan and transition.’

“Left unsaid in the speech was what policies the White House will support to curb U.S. greenhouse gas emissions. In the past Obama has supported an economy-wide cap-and-trade program similar to the climate change legislation that was passed last year by the House. But in recent months, administration officials have backed away from the cap-and-trade approach and said only that they support a fee on carbon dioxide emissions.”

More specifically with respect to agriculture, Marcia Zarley Taylor reported yesterday at DTN that, “Irrigated grain farmer Don Anthony knows only one thing for certain about the climate bill pending in Congress: His energy costs would spike. The Lexington, Neb., farmer thinks input prices would erupt much like they did in 2008, when $140 crude oil pushed up the price of everything from fertilizer to rail surcharges.

“Whether the Nebraskan could offset some of those expenses by selling carbon credits for environmentally friendly farming practices like no-till, cover crops or nitrogen stabilizers remains a major unknown. Climate legislation may stall in the Senate this year, but the EPA will implement regulatory measures reducing greenhouse gases if Congress can’t pass a bill.”

Yesterday’s article noted that, “At one time, cap and trade supporters had hoped farm landowners could capture enough revenue from carbon trading to displace alfalfa as the nation’s fourth largest crop. And some farmers and farm groups agree with USDA’s analysis that farmers could profit overall from cap and trade legislation.

“But as a national director of CHS Inc., the nation’s top farm supply and grain cooperative, Anthony worries that carbon ‘caps’ put on oil refiners would impose a whole new set of direct and indirect costs on agricultural producers.

“Three U.S. refineries owned by CHS and several other co-ops supply 60 percent of the fuel used by American farmers. CHS is the 16th largest convenience store retailer in the country, with 1,586 fueling stations scattered across the upper Midwest. But Anthony and other company officials believe refiners would bear an undue burden under cap and trade plans. Like their brothers in Big Oil, the co-op refineries would eventually pass higher costs on to their customers. Some of the smaller, independent operators concentrated west of the Mississippi would likely fold.”

And in international developments on the climate change debate, Jeffrey Ball reported yesterday at The Wall Street Journal Online that, “The world’s leading organization on climate change says it is working on a strategy to better police the experts who produce its high-profile reports, to try to ensure they adhere to rigorous scientific standards.

“The Intergovernmental Panel on Climate Change needs to ‘leave no stone unturned to come up with a set of measures so this can be ensured,’ Rajendra Pachauri, chairman of the United Nations-sponsored organization, said.”

Trade

Daniella Markheim and Scott Lincicome indicated in an update posted yesterday at the Heritage Foundation Online that, “On March 1, Brazil will announce a list of retaliatory tariffs against U.S. goods–a response to the American government’s unwillingness to eliminate subsidies to domestic cotton producers. The World Trade Organization (WTO), in 2004 and again in 2005, deemed facets of America’s cotton program inconsistent with multilateral trade rules and U.S. commitments. The 2005 decision authorized Brazil to retaliate against U.S. goods and services, but Brazil opted instead to allow America time to reform its cotton program in line with international trade rules.

“That reform has yet to occur. As a result, Brazil brought its case back to the WTO in 2009, and the trade body subsequently determined that Brazil could impose almost $300 million in trade sanctions against U.S. goods and services. The WTO also opened the door for other retaliatory measures against American patent and other intellectual property rights–a novel approach to raising the cost of noncompliance. Recognizing that by raising the price of U.S. imports such trade measures would impose a cost on its own consumers and business, the Brazilian government has been carefully crafting a list of targeted products that will mitigate the tariffs’ impact on the Brazilian economy while still penalizing its trade partner to the north.”

The authors went on to argue that, “With the Administration’s intent to bolster U.S. exports as a means for economic recovery, the trade-distorting programs and unfair trade practices that invite such retaliation must be eliminated–after all, tariffs against U.S. goods and services impugn their competitiveness in foreign markets. Moreover, America’s refusal to comply with adverse WTO rulings erodes U.S. credibility and influence in the debate shaping globalization and undermines the multilateral trading system. America can afford neither trade retaliation nor the loss of its leadership position in international economic issues, and the WTO is already weakened by nations’ inability to conclude Doha Round trade negotiations. The U.S. should not only change its cotton program this year, but it should also take a hard look at other needed reforms if its national export initiative is to be part of a legitimate trade policy.”

Biofuels

A news release issued yesterday by Growth Energy stated that, “In response to a paper published by two Cornell University professors – a paper that is critical of the Environmental Protection Agency’s calculations that grain ethanol emits far fewer greenhouse gas emissions than conventional gasoline – Growth Energy released the following statement:

“‘What it appears these two professors at Cornell would have us do is maintain the status quo – keep our addiction to oil, no matter what the cost to our economy in lost jobs and money we send overseas, no matter what the cost to our environment, no matter what the cost to our national security,’ said Tom Buis, Growth Energy CEO.

“‘The Cornell paper is pretzel logic at its worst. The truth is that when we fuel up with domestic ethanol in the U.S., we need less gasoline refined from carbon-heavy oil. And the science on this is clear: a peer-reviewed study published by Yale University found that grain ethanol is 59 percent cleaner than gasoline – with cellulosic ethanol 86 percent cleaner than gasoline. Academic studies, government agencies and independent papers have concluded that innovation and new technology in the ethanol industry is bringing us ever closer to a high-tech domestic fuel that can contribute significantly to cleaning our skies, while creating jobs and strengthening our national security.’”

Keith Good

February 24

Climate Issues

Jim Snyder reported yesterday at The Hill Online that, “Senate Republicans on Tuesday seized on errors in a United Nations climate change report and the recent ‘Climategate’ e-mail controversy to press the administration to drop its push to regulate greenhouse gas emissions.

“Democrats, meanwhile, countered that the overwhelming evidence suggested human activity was causing global warming and compared climate change skeptics to people in the 1930s who refused to believe Nazism was a threat.” (Note: To listen to an audio clip from Sen. Bernie Sanders (I-Vermont), who made the 1930s reference, just click here (MP3-1:38)).

“The debate, which took place at a Senate Environment and Public Works (EPW) Committee hearing that was scheduled to review the Environmental Protection Agency’s 2011 budget, will likely do little to build consensus around climate change legislation or an effort at the Environmental Protection Agency (EPA) to regulate heat-trapping gases.”

The Hill article indicated that, “Committee Republicans focused on three areas to combat the push to regulate greenhouse gases: a series of what they called ‘gaffes’ in the Intergovernmental Panel on Climate Change (IPCC) report that they contend undermine the panel’s credibility; ‘Climategate’ e-mails hacked from a leading British research institution that seem to suggest climate scientists sought to suppress dissenting views; and a statement by a leading climate scientist that there had been no ‘statistically significant’ warming in the last 15 years.

“Sen. James Inhofe (R-Okla.), who seven years ago famously called global warming the ‘greatest hoax ever perpetrated on the American people,’ declared that the recent record proves he was right. Climate scientists have ‘cooked the books,’ Inhofe said.”

(Note: A related news release from yesterday stated that, “The Minority Staff of the Senate Committee on Environment and Public Works released a report today titled, ‘Consensus’ Exposed: The CRU Controversy.’ The report covers the controversy surrounding emails and documents released from the University of East Anglia’s Climatic Research Unit (CRU). It examines the extent to which those emails and documents affect the scientific work of the UN’s IPCC, and how revelations of the IPCC’s flawed science impacts the EPA’s endangerment finding for greenhouse gases.” And Keith Johnson reported yesterday at The Wall Street Journal Online that, “The Nobel-prize-winning Intergovernmental Panel on Climate Change faces new challenges following a call for an investigation of its conduct and for its chairman to resign amid continuing criticism of the scientific basis of its reports. Republican Sen. John Barrasso of Wyoming called on Thursday for the independent investigation and for Dr. Rajendra Pachauri, head of the Geneva-based panel, to resign.”)

Mr. Snyder stated in his article from yesterday that, “Inhofe also repeatedly referred to a statement from Phil Jones, director of the East Anglia Climate Research Unit, the research institution that was hacked. Jones told the BBC that there had been no statistically significant warming over the past 15 years.” (To listen to an extended exchange between Sen. Inhofe and Administrator Lisa Jackson from yesterday’s hearing, which includes this reference, as well as other comments about the EPA’s authority to regulate greenhouse gas emissions, just click here (MP3-7:12)).

Yesterday’s Hill article also indicated that, “The fight over EPA is important because climate legislation is uncertain in the Senate, including a bill passed by a deeply divided EPW Committee last fall.

“Inhofe insisted a cap-and-trade bill could not pass the full Senate. He said there were only 20 votes of support, far from the 60 necessary to end a filibuster.

“That would leave the EPA to act on its own — which Sen. Kit Bond (R-Mo.) referred to as a ‘backdoor’ effort to ‘circumvent’ the stalled Senate climate bill.” (To listen to this and additional remarks, which are noted below, by Sen. Bond from yesterday’s hearing, just click here (MP3-3:12)).

Bloomberg writer Daniel Whitten and Simon Lomax reported yesterday that, “A plan by Lisa Jackson, head of the U.S. Environmental Protection Agency, to push back the effective date of rules to limit greenhouse gas emissions to next year merely delays ‘job killing’ until after elections, a Senate Republican said.

“The criticism by Senator Kit Bond of Missouri echoed views of several Senate Republicans one day after Jackson wrote a letter to eight Senate Democrats saying the rules won’t take effect this year. Bond and others told Jackson at an Environment and Public Works Committee hearing today that the agency shouldn’t be able to use the Clean Air Act to limit greenhouse gases.

“The delay in regulating greenhouse gases from industrial sources ‘might be seen as a cynical ploy to delay the job killing until after the fall elections,’ Bond said at the hearing. He said Congress, not the EPA, should develop any climate policy.”

The Bloomberg article added that, “Senator Lisa Murkowski, an Alaska Republican, had promised to bring legislation to the floor aimed at stopping the agency from regulating greenhouse gases.

“Jackson’s latest announcement doesn’t address Murkowski’s ‘underlying concerns,’ Robert Dillon, a spokesman for the Alaska lawmaker, said in a telephone interview.

“Republicans at the hearing, including James Inhofe of Oklahoma and John Barrasso of Wyoming, also rejected Jackson’s approach. Democrats on the committee including Tom Udall of New Mexico and Barbara Boxer of California, who chairs the committee, supported Jackson.”

Dow Jones reported yesterday (article posted at DTN, link requires subscription) that, “The EPA chief portrayed her decision to delay the start of rules to 2011 as responding to lawmakers ‘of my own party’ who fear that EPA rules will damage their local economies. The biggest threat is from Sen. Jay Rockefeller (D., W.Va.), who last week lobbed a hardball at the EPA when he led a group of Democrats in urging the agency to suspend planed regulations of greenhouse-gas emissions from power plants and other stationary sources. Many of those facilities use coal, a big source of revenue for West Virginia.

“The Obama administration’s outreach appeared to pay off on Tuesday, when Rockefeller told reporters that he would not support an amendment from Sen. Lisa Murkowski (R., Alaska) who is seeking to block the EPA from regulating greenhouse-gas emissions. The Republican lawmaker has lined up her own supporters for the amendment, which could force Senators to cast an uncomfortable vote on a controversial issue in an election year.

“Rockefeller said that he couldn’t support the amendment because it ‘obliterates all EPA’s functions,’ especially the agency’s plans to regulate greenhouse-gas emissions from motor vehicles. The amendment would overturn an EPA finding that greenhouse gases pose a danger to public health and welfare. That could undercut a carefully crafted deal on motor vehicle emissions, since ‘the actual rules are predicated on the finding of endangerment,’ the EPA’s Jackson warned the Senate Environment and Public Works Committee on Tuesday. The motor vehicle rules are to be finalized next month and will take effect beginning with cars made for the 2011 model year.”

Meanwhile, Reuters writers Richard Cowan and Timothy Gardner reported yesterday that, “Senator John Kerry said a bipartisan climate change bill would emerge soon in the U.S. Senate, contradicting what he called the ‘conventional wisdom’ that the legislation was dead this election year.”

The Reuters article added that, “On Monday, Senator Max Baucus, who chairs the Senate Finance Committee with oversight over parts of the climate bill, told Reuters he did not sense any momentum for passage of legislation this year and gave no hint his panel would work on it any time soon.”

From an international perspective, the AP reported yesterday that, “The United Nations says formal negotiations on an international treaty to control global warming will resume in Bonn in April, four months after the failed climate change summit in Copenhagen.

“U.N. climate chief Yvo de Boer said Tuesday the negotiating schedule is being intensified in order to secure a global climate deal at the end of the year. After the Bonn meeting April 9-11, more talks are scheduled there for May 31-June 11.”

However, Reuters news reported yesterday that, “Emission cuts pledges made by 60 countries will not be enough to keep the average global temperature rise at 2 degrees Celsius or less, modeling released on Tuesday by the United Nations says.”

Biofuels

A news release issued by Cornell University earlier this month stated that, “A recent EPA announcement that corn-based ethanol achieves a 21 percent greenhouse gas reduction compared to gasoline is based on false accounting assumptions and could actually lead to more fossil fuel consumption, according to Cornell University economists whose research will be released in March in the journal Applied Economics Perspectives and Policy.” (See complete article here, “The Social Costs and Benefits of Biofuels: The Intersection of Environmental, Energy, and Agricultural Policy.”)

“Harry de Gorter and David R. Just, professors of Applied Economics and Management at Cornell, note that the EPA’s calculations assume, for example, that every gallon of ethanol produced will result in a gallon of gasoline that will not be burned.

“‘It’s just a flawed concept. It makes no sense,’ Just said. ‘Most of that ‘saved’ gasoline will likely be burned somewhere else with potentially dirtier technology, such as China.’”

The news release added that, “The pair also criticizes the subsidy and mandate program. ‘By having both an ethanol subsidy and a mandate for its consumption, the government will increase global fuel supply, and the subsidy will actually subsidize oil consumption,’ de Gorter explained. ‘A more effective policy would have a mandate alone and get rid of taxpayer funded subsidies.’”

Chris Clayton reported yesterday at DTN that, “President Barack Obama will continue championing biofuels as a job creator, said Secretary of Agriculture Tom Vilsack when he spoke to members of the Governors’ Biofuels Coalition on Monday. Vilsack is hopeful for a positive decision on higher ethanol blends soon.

“Vilsack said he spent part of Monday afternoon at a meeting with the president talking about the effects of the recession on rural America. Coupled with expansions in broadband access, Vilsack said biofuels can provide more opportunities in rural parts of the country.”

Mr. Clayton added that, “Vilsack said criticism of corn-based ethanol is misplaced. Increases in production of corn are not slowing down. There is more corn being exported and enough to meet the demands of feed and fuel, he said. ‘There is more than enough to do everything we need to do.’”

Food Security- Biotechnology

Philip Brasher reported yesterday at The Des Moines Register Online that, “Biotech crops are hot in Brazil, but the real action in coming years could be in China, according to a group that tracks the technology.

“Brazilian farmers quadrupled their plantings of genetically modified corn last year to move into second place behind the United States in biotech plantings, according to an annual survey by the International Service for the Acquisition of Agri-Biotech Applications.

“But the group said China, now ranked No. 6, is poised to increase its production of the crops significantly after the government late in 2009 approved the use of genetically engineered varieties of rice and corn, known in most of the world as maize.”

Mr. Brasher stated that, “China’s action will likely spur other developing countries to approve the commercial production of similar crops, the report said.”

Clive Cookson reported yesterday at The Financial Times Online that, “Genetically modified crops continued to spread across the world last year, according to the most comprehensive annual survey of GM planting.

“In 2009 the area of biotech crops increased by 7 per cent to 134m hectares (330m acres) in 25 countries, the International Service for the Acquisition of Agri-biotech Applications said on Tuesday. Fourteen million farmers worldwide grew at least some GM crops.”

Meanwhile, Geeta Anand reported on Monday at The Wall Street Journal Online that, “India has been providing farmers with heavily subsidized fertilizer for more than three decades. The overuse of one type—urea—is so degrading the soil that yields on some crops are falling and import levels are rising. So are food prices, which jumped 19% last year. The country now produces less rice per hectare than its far poorer neighbors: Pakistan, Sri Lanka and Bangladesh.

“Agriculture’s decline is emerging as one of the hottest political issues in the world’s biggest democracy.

“On Thursday, Prime Minister Manmohan Singh’s cabinet announced that India would adopt a new subsidy program in April, hoping to replenish the soil by giving farmers incentives to use a better mix of nutrients. But in a major compromise, the government left in place the old subsidy on urea—meaning farmers will still have a big incentive to use too much of it.”

Farm Bill

Chris Clayton reported yesterday at the DTN Ag Policy Blog that, “House Agriculture Committee Chairman Collin Peterson, D-Minn., spoke to the USA Rice Federation Tuesday morning and began by explaining why he is beginning to talk about the 2012 farm bill so early. It’s pretty simple: the threat of budget reconciliation and the looming threat of the federal deficit will come back to bite farm programs. A plan for 2012 and defining reforms on their own terms may help reduce the cuts to agriculture.

“‘I’m worried about what is going to happen next year after the elections, no matter who wins the election,’ Peterson said.

“In trying to cut the $1.3 trillion budget deficit, everything will be on the table, Peterson told rice growers. That ranges from Social Security to Medicare and Medicaid, on down to farm-program spending. There’s no way Congress will deal with the three big entitlement programs and leave USDA’s budget harmless.

“‘I just don’t see how we can keep running along and running these deficits up,’ he said.”

Crop Insurance

The “Washington Insider” section of DTN noted in part yesterday (link requires subscription) that, “One of USDA’s most important programs provides a broad range of insurance coverage for farmers. The program is carried out by USDA with on-ground operations by private firms through a massive agreement with the crop insurance industry, the Standard Reinsurance Agreement.”

“A first draft of the proposed agreement was released last December, and a new draft reflecting changes discussed earlier by RMA and the participating crop insurance companies came earlier this month. USDA says the second draft continues to provide companies with relatively stable administrative and operating (A&O) subsidies per policy for seven major commodities and that is intended to facilitate insurance company planning.”

Yesterday’s DTN item stated that, “USDA is proposing cuts in the program of $800 million a year over ten years and is receiving criticism as a result. ‘We all realize the cost has to come down some, the question is how much?’ Murphy asked and pointed out that, as a result of the current reinsurance agreement, ‘… competition in this program has come down to who can pay the best agent commissions, when it should be focused on the basis of service.’

“Murphy admitted negotiations might last longer than originally planned, but welcomed ‘continued discussions and ideas to make the program better.’

“In the current highly political pre-election atmosphere surrounding all budget issues, Agriculture Secretary Tom Vilsack appears to be finding precious little support for USDA’s proposals. In spite of the 2008 Act’s authorization of the renegotiations, Agriculture Committee Chairman Collin Peterson, D-Minn., told the press he has personally spoken to the secretary about the proposed funding cuts in the first draft of the SRA and believes USDA has ‘gone way overboard and need to back off.’ And, Peterson added ominously, ‘This is not what I intended.’

“One of Peterson’s main reasons for opposing the cuts is that, ‘… if this happens, it comes out of the baseline (funding) and that will have an impact on the next farm bill.’”

Animal Agriculture

Philip Brasher reported yesterday at the Green Fields Blog (The Des Moines Register) that, “With the help of two Iowa Democrats, congressional aides on both side of Capitol Hill got briefings from livestock groups and the meatpacking industry on farms’ use of antibiotics. Sen. Tom Harkin and Rep. Leonard Boswell cosponsored the briefings. About 40 to 50 staff members attended each of the sessions, according to Dave Warner of the National Pork Producers Council.

“An Iowa producer and veterinarian, Craig Rowles of Carroll, was among the briefers. ‘We use antibiotics judiciously and responsibly to protect the health of our herds and to produce safe pork,’ he said in a press release put out by the organizations. ‘We know that a ban on antibiotics, like the one in Denmark, will have adverse affects on our pigs, will raise the cost of production and will not provide a benefit to public health.’”

A news release issued yesterday by Rep. Boswell stated that, “‘I understand that there are some in Congress who have concerns about how the use of antibiotics in livestock to produce safe, healthy food products can impact antibiotic resistance in humans,’ said Boswell, who recently traveled to Denmark to speak with farmers about how a ban on the use of therapeutic antibiotics has impacted their livestock industry. ‘However, I know farmers and trust that when they spend money to treat and grow their pigs and cattle they are doing so responsibly and with the interests of the consumers in mind.’

“Boswell testified in front of the House Rules Committee against the Preservation of Antibiotics for Medical Treatment Act last year and in favor of slowing down to make sure that before Congress passes an outright ban on the use of non-therapeutic antibiotics that they do some research first.”

Trade

Reuters news reported on Monday that, “The U.S. Agriculture Department continues to review sugar supply and demand forecasts to evaluate food industry requests to boost sugar imports, a top official said Monday.

“Sugar supplies in the United States are currently adequate, but there is much uncertainty in forecasts for the rest of the year, said Jim Miller, undersecretary charged with trade policy, in remarks prepared for the International Sweeteners Colloquium in Miami.

“‘We are carefully watching the global market for sugar due to the significant tightening of supplies throughout the world,’ Miller said.”

A news release issued yesterday by the House Ag Committee stated that, “Today, House Agriculture Committee Chairman Collin C. Peterson of Minnesota introduced legislation to expand U.S. agriculture exports to Cuba. This bipartisan bill, H.R. 4645, the Travel Restriction Reform and Export Enhancement Act, is co-sponsored by 30 other Members of Congress, including Representatives Jerry Moran of Kansas, Rosa L. DeLauro of Connecticut, and Jo Ann Emerson of Missouri.

“‘Helping feed Cuba is good for the U.S. economy and for the Cuban people. This bill increases the ability of our farmers to sell their products to Cuba just like they do with our other trading partners,’ Chairman Peterson said.”

A related news release from the National Farmers Union yesterday indicated that, “Today National Farmers Union (NFU) President Roger Johnson expressed his support of the Travel Restriction Reform and Export Enhancement Act (H.R. 4645), sponsored by House Agriculture Committee Chairman Collin Peterson and co-sponsored by 30 other Members of Congress, including Representatives Jerry Moran of Kansas, Rosa L. DeLauro of Connecticut, and Jo Ann Emerson of Missouri.

“‘NFU commends Chairman Peterson’s leadership on this bill,’ said Johnson. ‘NFU has always been supportive of legislation allowing U.S. agricultural exports to Cuba.’”

CFTC Issues

Reuters news reported yesterday that, “The Senate Agriculture Committee will unveil a draft bill to increase oversight of over-the-counter derivatives in the next couple of weeks, said its chairman Blanche Lincoln on Tuesday.

“Lincoln’s committee has oversight over the Commodity Futures Trading Commission, regulator of U.S. futures markets. She said her committee is working closely with the Senate Banking committee, which is working on a broad package of financial regulatory reforms in the wake of the global economic crisis.”

The article stated that, “The Senate Banking Committee is expected to release a new draft of its bipartisan bill this week.

“Analysts expect a regulatory reform bill could move to the Senate floor for a vote in late March or April. Lawmakers would then need to iron out differences between the Senate and House version, approved in December, before sending it to the White House.”

And, the Reuters writers noted that, “Democrats are pushing for results on financial regulatory reform ahead of November midterm congressional elections to capitalize on voter anger against Wall Street.

“‘If we don’t get this done, then I have lost all faith in Congress,’ said House Agriculture Committee Chairman Collin Peterson, on the sidelines of the rice conference.

“‘We should have done this before everything else,’ Peterson told reporters, mentioning health care and climate change initiatives that have been divisive.”

Keith Good

February 23

Climate Issues; EPA Pesticide Issue; Biofuels; and Trade

Climate Issues- EPA Regulation: Executive and Legislative Branch Dialogue in Letters

Recall that on Friday, Washington Post writer Juliet Eilperin reported at the Post Carbon Blog that, “Sen. John D. Rockefeller (D-W.Va.) and several other coal-state Democrats sent a bluntly worded letter to Environment Protection Agency administrator Lisa P. Jackson Friday night challenging the agency’s authority to regulate greenhouse gases from power plants and other industrial sources.

“The Rockefeller letter–which was also signed by Democratic senators Mark Begich (Alaska), Robert C. Byrd (W.Va.), Sherrod Brown (Ohio), Pat Casey (Pa.), Claire McCaskill (Mo.), Carl Levin (Mich.), and Max Baucus (Mont.)–poses a serious challenge for the Obama administration. While the administration is still pushing for Congress to pass a climate bill this year, it has not ruled out controlling greenhouse gases through regulation.

“In their letter, the Democratic senators do not object to the EPA regulating greenhouse gas emissions from cars and light-trucks, but they do question the agency’s power to do anything else under the Clean Air Act. The letter asks Jackson clarify the EPA’s timetable and suspend any regulations for coal-fired utilities and other industrial facilities until Congress acts on climate and energy legislation.”

Friday’s Post Carbon update added that, “Rockefeller announced Friday he is drafting legislation that would block the EPA from moving ahead, but he’ll have to wait in line–Sen. Lisa Murkowski (R-Alaska) has already introduced a resolution that would do just that. Murkowski and the U.S. Chamber of Commerce will be discussing that initiative in a conference call scheduled for Thursday.”

In a news release issued yesterday regarding Friday’s letter from Senate Democrats to the EPA, GOP Sen. Lisa Murkowski noted that, “I welcome my colleagues’ attention to this issue, and am encouraged that they share the concerns of the 41 Democratic and Republican senators who have introduced a disapproval resolution (S.J.Res.26) to halt EPA’s actions. This bipartisan measure was made necessary by the agency’s decision to finalize the endangerment finding without addressing a number of problems related to it…I commend my colleagues for becoming more engaged in this important issue and hope they will show their commitment by signing on as co-sponsors of the disapproval resolution. It’s time to take the threat of EPA’s command-and-control regulations off the table.”

John M. Broder reported in today’s New York Times that, “Facing wide criticism over their recent finding that greenhouse gases endanger the public welfare, top Environmental Protection Agency officials said Monday that any regulation of such gases would be phased in gradually and would not impose expensive new rules on most American businesses.

“The E.P.A.’s administrator, Lisa P. Jackson, wrote in a letter to eight coal-state Democrats [letter, related news release] who have sought a moratorium on regulation that only the biggest sources of greenhouse gases would be subjected to limits before 2013. Smaller ones would not be regulated before 2016, she said.

“‘I share your goals of ensuring economic recovery at this critical time and of addressing greenhouse gas emissions in sensible ways that are consistent with the call for comprehensive energy and climate legislation,’ Ms. Jackson wrote.”

Lisa Lerer reported yesterday at Politico that, “Environmental Protection Agency Administrator Lisa Jackson reassured Democrats that the agency would take a cautious approach to regulating greenhouse gases, in a letter sent to coal state representatives on Monday.”

The article added that, “Jackson’s quick response is an attempt to keep Democrats from voting to veto the agency plan.

“In her letter, Jackson said that no industrial facilities will be required to curb greenhouse gas emissions in this year. The agency would phase-in permit requirements starting in 2011. The smallest sources would not be subjected to permitting for emissions until 2016, she wrote.”

Ms. Lerer noted that, “But Jackson’s statement didn’t go far enough for some critics.

“‘While the delay in implementation is a small forced step in the right direction, the Clean Air Act continues to be the wrong tool for the job,’ Alaska Republican Lisa Murkowski said. ‘And [the] EPA’s timeline continues to create significant and ongoing uncertainty for a business community.’”

Ian Talley and Stephen Power reported in today’s Wall Street Journal that, “The head of the U.S. Environmental Protection Agency said Monday the agency would delay subjecting large greenhouse-gas emitters such as power plants and crude-oil refiners to new regulations until 2011, and would raise the threshold for using the Clean Air Act to regulate carbon dioxide emissions.

“After an outcry from state regulators and members of Congress, EPA Administrator Lisa Jackson said the agency would also limit regulations for the first half of 2011 to emitters already required to apply for new construction and modification permits under the Clean Air Act.

“Between 2011 and 2013, ‘I expect the threshold for permitting will be substantially higher than the 25,000-ton limit that EPA originally proposed,’ Ms. Jackson told lawmakers in a letter.”

Meanwhile, Sen. Jay Rockefeller responded to Administrator Jackson’s EPA letter yesterday, noting in a news release that, “I am glad to see that the EPA is showing some willingness to set their timetable for regulation in to the future – this is good progress but I am concerned it may not go far enough.

“I believe we need to set in stone through legislation enough time for Congress to consider a comprehensive energy bill.”

Sen. Rockefeller added that, “As I evaluate the EPA’s letter, I remain committed to presenting legislation that would provide Congress the space it needs to craft a workable policy that will protect jobs and stimulate the economy.”

Climate Issues- EPA Regulation: Executive and Legislative Branch Dialogue in Hearings

Amy Harder reported yesterday at the National Journal Online that, “Republican lawmakers will likely grill EPA Administrator Lisa Jackson on her plans to regulate greenhouse gas emissions when she testifies about the agency’s FY2011 budget proposal at two hearings this week. And lawmakers will have their first chance to ask questions about the administration’s commitment to the Copenhagen Accord when Secretary of State Hillary Rodham Clinton testifies about her department’s budget, which includes hundreds of millions of dollars for global climate and energy policy.”

Robin Bravender of Greenwire reported yesterday at The New York Times Online that, “U.S. EPA Administrator Lisa Jackson will defend the White House’s request to increase funds for climate regulations when she testifies before House and Senate panels this week.

“Jackson will testify [today] before the Senate Environment and Public Works Committee and will appear Wednesday at the House Interior Appropriations Subcommittee to discuss President Obama’s $10 billion budget request for EPA.

“The fiscal 2011 request would cut the agency’s total funding by about $300 million from 2010 levels while allotting $56 million — including $43 million in new funding — for regulatory programs to curb greenhouse gas emissions.”

Yesterday’s article noted that, “GOP lawmakers — some of whom have been vocal critics of the Obama administration’s climate policies — are likely to use this week’s budget hearings to blast the proposed spending levels.

“‘When the president released his EPA budget proposal, he proved that jobs aren’t really his top priority,’ Sen. John Barrasso (R-Wyo.) said Friday in a statement. Barrasso, ranking member of the EPW Oversight Subcommittee, has been one of the Senate’s leading critics of EPA climate rules.”

The Greenwire article indicated that, “Last year, a host of lawmakers sought to use the EPA budget as a vehicle to handcuff the agency’s ability to implement new climate rules. And as EPA prepares to roll out its first climate rules next month, lawmakers are expected to pursue similar tactics.

“Rep. Earl Pomeroy (D-N.D.) — who has introduced a bill to strip EPA of its authority to regulate greenhouse gas emissions — said earlier this month that he will fight during the appropriations process to remove any funding that would go toward curbing the heat-trapping emissions.

“But Jackson and Democratic lawmakers are expected to staunchly defend the draft budget.”

Climate Issues- EPA Regulation: Judicial Perspectives

The “Washington Insider” section of DTN stated yesterday (link requires subscription) that, “To nobody’s surprise, a large number of associations and state groups have joined to oppose the Environmental Protection Agency’s finding that greenhouse gas emissions endanger public health — the basis for its proposed GHG regulations. The groups are filing petitions for federal court reviews.

“EPA’s opponents include the states of Alabama, Texas and Virginia, the American Iron and Steel Institute, and the National Association of Manufacturers and the U.S. Chamber of Commerce, among others who filed in the U.S. Court of Appeals for the District of Columbia Circuit. A coalition of coal-mining companies and beef producers also challenged the finding in a petition to the D.C. Circuit last December. Sixteen states moved to intervene in support of EPA in that case.”

With respect to the action by Texas, an update posted yesterday at the Dallas Blog stated that, “Even Gov. Rick Perry‘s chief opponent for reelection agreed in principle with the challenge that Perry, Atty. Gen. Greg Abbott, and Agriculture Commissioner Todd Staples mounted this week against the Environmental Protection Agency’s newly launched campaign against greenhouse gases.

“Actually it turns out that a lot of people besides Sen. Kay Bailey Hutchison, plus Perry, Abbott, and Staples, worry about EPA’s foray into branches of regulation not originally contemplated by Congress in the Clean Air Act of 1970.”

The Texas Ag Commissioner was also a guest on yesterday’s AgriTalk Radio Program with Mike Adams, where the court challenge to EPA regulation was discussed in greater detail. To listen to a portion of this conversation with Todd Staples and Mike Adams, just click here (MP3-5:00).

Climate Issues- EPA Regulation: Executive Branch Perspectives

Joel Kirkland of ClimateWire reported yesterday at The New York Times Online that, “The White House is mounting a last-ditch effort to piece together an energy and climate change bill that has enough incentives for nuclear power, natural gas and the coal industry to muster the votes needed to pass it this year.

“As Democrats enter a turbulent and high-stakes political season, President Obama is striving for consensus on a path forward that can deliver substantial greenhouse gas emissions reductions and satisfy concerns in the Senate about energy security. In an address to the nation’s top CEOs at a Business Roundtable meeting scheduled for Wednesday, Obama is expected to discuss his energy plans and, according to sources, roll out a proposal meant to incentivize coal-burning power plants to switch to cleaner-burning natural gas.”

Meanwhile, Bloomberg writer Alex Morales reported yesterday that, “The U.S. said it wants to reach a legally binding climate-change agreement at a summit in Mexico in December, a sign President Barack Obama hasn’t given up the fight for a global accord to limit greenhouse gases.

“The pact should cover ‘all major economies,’ and include elements from the non-binding Copenhagen Accord made in December, the State Department said in a letter released today by the UN Framework Convention on Climate Change, or UNFCCC.

“With China and India resisting mandatory curbs on their emissions and legislation in the U.S. outlining domestic commitments stalled in the Senate, Obama is attempting to keep the talks alive. A two-year push for a treaty ended in December with a voluntary deal that wasn’t accepted by all of the 193 nations present.”

EPA Pesticide Issue

A statement by American Farm Bureau president Bob Stallman yesterday noted that, “Farmers’ abilities to protect our food supply from pests took a big hit today because the United States Supreme Court refused to review an important case.

“The U.S. Circuit Court of Appeals misfired in its ruling in the case National Cotton Council v. EPA. The Supreme Court compounded that mistake by not reviewing the case.

“All farmers know they must use chemicals properly. They also know the label on each chemical they use is the law of the land. Going through redundant bureaucratic red tape for a duplicate permit to apply a safe product is preposterous. That kind of regulatory overkill will not improve food safety or the environment.”

For additional background on the National Cotton Council v. EPA case, see this FarmPolicy.com update from April 13, 2009.

Biofuels

David Benoit reported yesterday at The Wall Street Journal Online that, “Shares of ethanol producers rose sharply after one of the larger producers, Green Plains Renewable Energy Inc., reported a bullish fourth quarter and said industry trends looked positive for 2010… Competitors Pacific Ethanol Inc. and BioFuel Energy Corp. rose on higher-than-average volume as well. Pacific Ethanol gained 11% to $2.12, while BioFuel gained 5% to $2.92. Smaller New Generation Biofuels Holdings Inc. rose 12% to 74 cents.”

The Journal article noted that, “Earlier this month, the U.S. Department of Agriculture said it expected the industry to buy more corn than expected to match the rising levels of production by the end of August. That came after the Environmental Protection Agency appeared to soften concerns about the harmful effects of the biofuel’s production and will allow ethanol into its mandate for increasing renewable fuels.”

Separately, Ben Pershing reported in today’s Washington Post that, “Aided by a handful of Republicans, Senate Democratic leaders on Monday kept alive a $15 billion job-creation measure and are poised to pass the measure later this week.”

A related news release issued yesterday by GOP Sen. Charles Grassley (Iowa) regarding the jobs bill noted in part that, “The Senate is about to engage in a cloture vote on the Senate Democratic Leadership’s third stimulus bill. What I find surprising is that what we are about to vote on indisputably and absolutely belongs to the majority leader. That is to say we are not going to vote on a bipartisan package that I put together with Finance Committee Chairman Baucus. I was under the impression that the Senate Democratic Leadership was genuine in its desire to work on a bipartisan basis, but clearly I was mistaken. Although the Senate Democratic Leader was highly involved in the development of a bipartisan bill, he arbitrarily decided to replace it with a bill he hopes to jam through the Senate.”

Sen. Grassley added that, “Either the Democratic leaders are playing partisan politics with tax extenders, or they don’t understand the worth of the provisions to the economy, including job retention and creation. The biodiesel industry alone says 23,000 jobs are at risk due to the biodiesel tax credit being allowed to expire. Those workers are not fat cats.

“And in case anyone thinks biodiesel is something only Iowans worry about, these green jobs are in forty-four of the fifty states. There are 24 facilities in Texas. There are 15 facilities in Iowa. There are 6 facilities in Illinois and 6 in Missouri. There are 4 facilities in Washington. Ohio has 11 facilities. There are 5 facilities in Indiana. There are 3 facilities each in Mississippi and South Carolina. There are 7 facilities in Pennsylvania and 4 in Arkansas. New Jersey has 2 facilities.

“There is one facility in North Dakota. Only 6 of the 50 states do not have some biodiesel production. They are Alaska, Delaware, Maine, New Hampshire, Vermont, and Wyoming. The other forty-four states have some biodiesel presence. I ask unanimous consent to put in the record an article from the Erie, Pennsylvania, newspaper, describing the struggles of a local biodiesel plant.”

Meanwhile, a news release issued yesterday by POET noted in part that, “POET Senior Vice President of Science and Technology Mark Stowers has been appointed to the California Air Resources Board (CARB) expert workgroup to help better assess the true carbon footprint of all fuel sources under the state’s Low Carbon Fuel Standard.

“Stowers is one of 30 experts from around the world appointed to the group, which will ‘assist the Board in refining and improving the land use and indirect effect analysis of transportation fuels,’ according to the CARB resolution. The group will come up with recommendations to present to CARB by Jan. 1, 2011.”

Trade

Reuters writer Jonathan Lynn reported yesterday that, “Too many gaps remain in long-running talks on a new global trade pact to bring ministers in to give a political push to the deal in the coming weeks, the head of the World Trade Organization said on Monday.

“WTO Director-General Pascal Lamy told the body’s general council its 153 members would take stock at the end of March on progress in the eight-year-old Doha round.

“But Lamy said a decision on whether a deal to open world trade could be completed this year, as called for repeatedly by leaders in the G20 summit and other forums, was a political question and would have to be taken by ministers.”

Keith Good

February 22

Ag Economy; Regulation and the Farm Bill; Climate Issues; Biofuels; Water; and Animal Agriculture

Agricultural Economy

Angie Pointer reported on Saturday at The Wall Street Journal Online that, “The gradual economic recovery is strengthening the 2010 outlook for U.S. agriculture.

“Commodities from corn to beef spent much of last year trying to recover from the commodity-price collapse that accompanied the global credit crisis. The expectation for the agricultural sector’s continued slow and steady recovery was evident in crop and trade forecasts issued this week by the U.S. Agriculture Department at its annual Outlook Forum.

“Earlier in the month, the USDA estimated farm income to rise nearly 12% to $63 billion in 2010. On Friday, the USDA forecast a 9% increase in U.S. beef exports to 2.04 billion pounds this year. Pork exports are also projected to rise 9%, to 4.5 billion pounds, USDA livestock analyst Joel Greene wrote in an outlook report also released Friday.”

The Journal article added that, “Cotton is expected to benefit from a continued economic uptick, too. Land planted to cotton is expected to jump 15% to 10.5 million acres, ending three consecutive years of declines. U.S. cotton exports are expected to rise 5% to 12.6 million bales, and global cotton consumption will expand 2.6% this year, the USDA said.”

Nonetheless, Steve Jordon reported on Friday at the Omaha World Herald Online that, “An index of rural economic activity moved in the wrong direction this month as bankers in the survey tempered their view that things will improve in the next six months. It was the first decline in the index since last August.

“The Rural Mainstreet Index for a 10-state Midwestern region was 36.6 in February, down from 41 in January but still much ahead of the 16.9 index of February 2009, Creighton University economist Ernie Goss said.”

“‘The softer farm economy for 2009 continues to weigh on rural mainstreet businesses in the region. Agriculture producers have been taking a conservative approach to their buying and this is showing up in our survey,’ [Goss] said.”

DTN Executive Editor Marcia Zarley Taylor noted on Thursday at The Minding Ag’s Business Blog that, “Livestock losses were top of mind with farm lenders attending the USDA Outlook conference this week. Expect provisions for loan losses to soar at some Farm Credit System institutions when year-end results are released within the next few days, even though bad loans aren’t as steep as regulators had been expecting. Farm Credit’s Lending Corporation won’t release full results until March.

“‘Farm lenders own a lot of cows and sows’ after the deep downturns in dairy and pork industry the past several years, one Farm Credit System lender told me. By that he means that farm lenders hesitated to pull credit on troubled borrowers as quickly as they did in the 1980s, hoping markets would turnaround. After the pork industry’s 2-1/2 year profit crisis, however, some borrowers are so far in the red, it’s hard to fathom how they will come up with the equity to farm in the future, he adds.

“It’s not that the value of their collateral collapsed, it’s that their operating losses wiped out a lifetime of equity, he adds.”

In related news, Darrin Youker reported yesterday at the Reading Eagle Press Online (PA) that, “Dairy farmers will be unable to survive the next few years without action by the federal government.

“That is the message a group of dairy farmers from across southeastern Pennsylvania gave to U.S. Rep. Tim Holden during a meeting with dairy farmers last week.”

“‘We need to get our arms around this issue,’ Holden said. ‘The peaks and valleys are getting too steep.’”

Also with respect to dairy, USDA released its Milk Production report on Friday, which noted in part that, “The annual production of milk for the U.S. during 2009 was 189 billion pounds, 0.3 percent below 2008 [related graph].”

The report added that, “The average number of milk cows on farms in the U.S. during 2009 was 9.20 million head, down 1.2 percent from 2008 [related graph].”

In livestock news, a Daily Radio News Line item from USDA on Friday (one-minute audio report) noted that, “The beef cattle herd is expected to continue getting smaller with prospects for steer prices getting better.”

The audio summary referred to Friday’s Cattle on Feed report from USDA, which stated that, “Cattle and calves on feed for slaughter market in the United States for feedlots with capacity of 1,000 or more head totaled 11.0 million head on February 1, 2010. The inventory was 3 percent below February 1, 2009 [related graph].”

Meanwhile, Bloomberg writer Alan Bjerga reported on Friday that, “U.S. crop values fell 6.3 percent last year as the global recession reduced demand and record output boosted supplies.

“The value of all crops was $157.5 billion, down from $168.2 billion in 2008 and the lowest since 2006, the U.S. Department of Agriculture said today in a report. Field crops fell to $128 billion, down 7 percent, with wheat and hay plummeting, while fruits and nuts dropped 6.6 percent to $17.1 billion.” (A summary table from Friday’s report highlighting the crop values of several commodities can be viewed here).

On the issue of agricultural land values, Chuck Zimmerman reported on Friday at AgWired.com that, “Farmland values was a very important topic of discussion at the Farmland Investment Fair put on by the Chicago Farmers. One of the educational sessions on the topic was conducted by Mike Shane, First Farm Credit Services.

“Mike told me they focused on what land values are now and what drives them. They can’t predict them of course. He says they’ve see a leveling off of values in recent years and decline in certain areas like the Dekalb, Kane and McHenry county areas around Chicago but if you go further south in the state they’re more flat or even higher. Land is still available and they’ve seen some land sell for as much as $8K in those areas.”

The AgWired link includes a three-minute audio replay of Chuck’s discussion on land values with Mike Shane.”

In news regarding trade and ag exports, Reuters writer Roberta Rampton reported on Friday that, “Chinese farm exports are set to become a greater source of trade tension as China boosts its production and becomes a bigger player in world markets for labor-intensive crops, a U.S. agricultural economist said on Friday.”

The article noted that, “The political and trade strains between the two nations are unlikely to spill over into soybean trade, [Colin Carter of University of California-Davis] said.

“Soybeans are the top U.S. export to China, which the USDA forecast will become the top overall foreign market for U.S. farm goods in a few years.”

“If China had to produce its own soybeans, it would need 30 percent more farmland, Carter said.”

Environmental Regulation (NEPA) and the Farm Bill

Noelle Straub of Greenwire reported on Friday at The New York Times Online that, “A top Obama administration official yesterday defended a new draft proposal that will require federal agencies to consider climate change during environmental analyses of proposed projects as ‘straightforward, common-sense guidance.’

“Under the draft guidance released yesterday by the White House Council on Environmental Quality, agencies will have to consider greenhouse gas emissions and climate change effects when carrying out National Environmental Policy Act reviews. CEQ will take public comment for 90 days on the proposal.”

Friday’s article added that, “‘I think there was really no question that there are environmental effects associated with climate change, and how could we not have that as part of agencies’ thinking as they look at their NEPA obligations and looking at environmental impacts?’ Sutley told E&E. ‘I think what we’ve tried to craft is some very straightforward, common-sense guidance.’

“Agencies will need to look at emissions that may be produced by projects such as a landfill or coal-fired power plant. They also must consider climate change effects on projects — for example, whether plans for infrastructure along the coast would need to change due to projected sea level rise.”

Washington Post writer Juliet Eilperin added additional perspective on the CEQ development in an update posted on Thursday at the Post Carbon Blog: “NEPA, a 40-year old law, requires the federal government to evaluate the environmental impact of any activity it takes part in or sanctions, whether it’s providing funds for a highway or allowing snowmobile riders into Yellowstone National Park.”

Ms. Eilperin noted that, “Nancy Sutley, Chair of the White House Council on Environmental Quality, said the move represented an attempt to modernize the landmark federal law. ‘Our country has been strengthened by the open, accountable, informed and citizen-involved decision-making structure created by NEPA,’ Sutley said. ‘We are committed to making NEPA workable and effective, and believe that these changes will contribute significantly to both goals.’”

As the executive branch fosters NEPA application with respect to climate change issues, some have openly speculated and suggested that the law should be applied to the Farm Bill.

On Friday, an article published at the Harvard Law & Policy Review Online, titled, “Forty Years After NEPA’s Enactment, It Is Time for a Comprehensive Farm Bill Environmental Impact Statement,” indicated that, “Also among the losers are the industries and individuals that experience the negative environmental impacts of U.S. farm policy, including diminished water and soil quality, decreased biodiversity, dwindling freshwater resources, and increased greenhouse gas (GHG) emissions. This article addresses these damages and the failure of federal agencies to observe a law that might provide some measure of transparency, level-headed comparative analysis, and perhaps even mitigation: the National Environmental Policy Act of 1969 (NEPA).”

The law journal article (full copy available here) stated that, “This article describes how and why federal agencies should subject the Farm Bills to the EIS [environmental impact statement] process by focusing, as an illustration, on the impacts best analyzed by existing research: those caused by corn overproduction and perpetuated by recent corn and ethanol subsidies. Part I describes current Farm Bill programs with demonstrated causal links to environmental and socioeconomic damages. Part II lays out the applicable standards for a NEPA challenge to a legislative enactment. The authors prefer and advocate for a voluntary EIS but acknowledge that applying NEPA to the next Farm Bill may take more than persuasion. Part III, therefore, develops a litigation strategy and concludes that the 2012 Farm Bill represents a ripe opportunity to turn to NEPA for science-based reform.”

However, at the conclusion of the article, the authors stated that, “The legal principles articulated here make clear that litigation is a viable option with a reasonable chance of success. Of course, plaintiffs must be selected, legal arguments crafted, and target programs of NEPA litigation chosen with care given the parties that may perceive a threat from the EIS process, such as corporations that profit from the cheap inputs provided by current farm policy. The authors present these arguments in the hope that litigation will prove unnecessary. Relevant agencies in the Obama Administration may voluntarily initiate an EIS for the next Farm Bill.”

Chris Clayton provided additional perspective and analysis of the law journal article, the NEPA issue, and the Farm Bill in an update posted yesterday at the DTN Ag Policy Blog: “Still, the point of the article is critical. NEPA requires that federal agencies conduct environmental impact statements before enacting any legislation that could significantly impact the environment. Citing subsidies for commodity crops that aid to increase production, and subsidies for ethanol in the farm bill that have the same effect, the article maintains there is a strong legal case to be made in federal court against USDA on the 2008 farm bill because USDA does not conduct environmental impact statements on rules coming out of the farm bill.”

Mr. Clayton added that, “USDA actually did get into trouble in 2008 by attempting to loosen the rules on haying and grazing Conservation Reserve Program land without conducting an environmental impact statement. Wildlife groups took USDA to federal court in Seattle and won an injunction stopping USDA from continuing the program. The Harvard L&PR article makes the case that an environmental impact statement should have been conducted because of a reduction in CRP acreage in the farm bill and the environmental impact because, according to the article, most of that acreage goes into corn, which then turns into ethanol. Such changes, the article states, lead to more hypoxia and soil erosion, as well as impacts on increased greenhouse gas emissions. The argument is made that NEPA requires a comprehensive review of the 2008 farm bill. Further, the article states who could be potential litigants in a case against USDA over the farm bill. While such a court case likely would not translate into significant changes of policy for the 2008 farm bill, the article states that such legal action could shape the outcomes of the 2012 farm bill.”

Climate Issues

Reuters writer Richard Cowan reported yesterday that, “A last-ditch attempt at passing a climate change bill begins in the Senate this week with senators mindful that time is running short and that approaches to the legislation still vary widely, according to sources.

“‘We will present senators with a number of options when they get back from recess,’ said one Senate aide knowledgeable of the compromise legislation that is being developed. The goal is to reduce emissions of carbon dioxide and other greenhouse gases that scientists say threaten Earth.

“The options will be presented to three senators — Democrat John Kerry, independent Joseph Lieberman and Republican Lindsey Graham — who are leading the fight for a bill to battle global warming domestically.”

A news release issued on Friday by the American Farm Bureau Federation stated that, “American Farm Bureau Federation President Bob Stallman called on Congress to adopt a resolution of disapproval of the Environmental Protection Agency’s ‘endangerment finding’ and the proposed regulation of greenhouse gases under the Clean Air Act.

“In a strongly worded letter sent today to all members of Congress, Stallman said the choice is clear. ‘The real opportunity to stop EPA’s onerous regulations is to adopt a resolution of disapproval. Farm Bureaus across the country are well aware that the true measure of a [congressional] member’s support for agriculture will be his or her introduction of a resolution of disapproval and adding his or her name to a discharge petition bringing that resolution to the floor for a vote.’”

Jim Tankersley reported in today’s Los Angeles Times that, “At a time when the U.S. economy is desperate for jobs and investment in future growth, a slew of clean-energy projects are on hold largely because of political stalemate in Washington.

“With President Obama’s energy and climate proposals bottled up in Congress, business leaders say they cannot tell what direction government policy will take on a variety of issues, including new energy taxes, tougher emissions standards for factories and vehicles, and guaranteed markets for start-up wind and solar power plants.

“That has companies reluctant to pull the trigger on green-energy investments that could create employment and combat climate change.”

The editorial boards at The New York Times, The Wall Street Journal, and The Washington Post all provided opinion items on climate issues in today’s papers.

The Times noted that, “The underlying thought is that the ultimate goal is a safe planet, and that absent a top-down global treaty, that goal is probably best achieved by aggressive, bottom-up national strategies to reduce emissions. Not that these are a sure thing; the United States, embarrassingly, has no national strategy. Until it gets one, it can hardly lecture anyone else. Nor will the world stand a ghost of a chance of bringing emissions under control.”

The Post stated that, “A gradually rising carbon tax made sense even before ‘global warming’ entered most people’s vocabulary. Almost as useful would be a simple cap-and-rebate system that required industry to pay for greenhouse-gas emissions. Either would reduce American dependence on dictators in Saudi Arabia and Venezuela while lowering air pollution of all kinds. Neither would require a complicated government bureaucracy of the kind that has understandably alarmed some people while giving others a pretext for opposition. And if politicians can’t bear to stand behind an increased tax, the revenue from either proposal could all be returned in a fair and progressive way.”

The Journal stated that, “We need scientists who apply scientific objectivity, or the closest approximation of it, and then present their information with enough transparency that people can weigh the evidence. Instead of a group of scientists anointed by the U.N. telling us what to think, the spirit of the age is that scientists need to provide open access to information on which others can make policy decisions.

“The lesson of the chill of the global-warming consensus is this: Those who want to persuade others of the truth as they see it need to make their case as transparently as possible. Technology enables access to information and leads us to expect open debates, conducted honestly and in full view. This is inconvenient for those who want to claim unequivocal truth without having the evidence. But that’s the way it is.”

Biofuels

Philip Brasher reported in yesterday’s Des Moines Register that, “The law that guarantees Iowa’s ethanol producers a growing demand for their product also is creating a market for a foreign rival: Brazilian companies that make the fuel from sugar cane.

“Brazilian ethanol already is coming into the United States. Like corn ethanol, the Brazilian product counts toward meeting the nation’s annual mandates for conventional ethanol.

“But Congress in 2007 also required refiners to start using more environmentally friendly alternatives, known as advanced biofuels, that would result in lower greenhouse gas emissions than conventional ethanol. For now, Brazil’s sugar cane ethanol is the most widely available fuel that qualifies for mandates that will rise to 5 billion gallons by 2022.”

Mr. Brasher explained that, “U.S. producers, worried about the competition from Brazil, are gearing up for a fight in Congress to maintain a 54-cent-per-gallon tariff on imported ethanol that is set to expire at the end of the year.

“Brazil has been pushing to eliminate the tariff, and there are bills pending in Congress to reduce or end the tariff. The bills are sponsored by lawmakers from California and other states whose consumers stand to benefit from importing cheaper Brazil ethanol rather than using corn ethanol from the Midwest.”

California Water

Bettina Boxall reported in today’s Los Angeles Times that, “When California Sen. Dianne Feinstein drafted legislation that would weaken endangered species protections to deliver more water to San Joaquin Valley farms, her rationale was jobs.

“‘People in California’s breadbasket face complete economic ruin,’ the Democrat said in a recent statement.

“She was joining a chorus of Central Valley politicians and farm groups that during the last year have painted the region as a dust bowl, beset by drought and environmental protections that are cutting vital water deliveries and the jobs that depend on them.”

The article noted that, “But crop and labor statistics for 2009 belie the image of a withering farm economy teetering on the edge of collapse.

“‘People make a lot of claims, but the data you see is showing growth,’ said Paul Wessen, an economist with the California Employment Development Department. ‘We’re just not seeing the job loss.’”

Reuters writer Dan Whitcomb reported yesterday that, “Senator Dianne Feinstein, who angered environmentalists, fishing groups and other Democratic lawmakers by proposing to divert more water to California’s farmers, said on Friday she was working to avoid controversial legislation.”

Animal Agriculture

Jess McKinley reported in today’s New York Times that, “California may soon place animal abusers on the same level as sex offenders by listing them in an online registry, complete with their home addresses and places of employment.

“The proposal, made in a bill introduced Friday by the State Senate’s majority leader, Dean Florez, would be the first of its kind in the country and is just the latest law geared toward animal rights in a state that has recently given new protections to chickens, pigs and cattle.

“Mr. Florez, a Democrat who is chairman of the Food and Agriculture Committee, said the law would provide information for those who ‘have animals and want to take care of them,’ a broad contingent in California, with its large farming interests and millions of pet owners. Animal protection is also, he said, a rare bipartisan issue in the state, which has suffered bitter partisan finger-pointing in the wake of protracted budget woes.”

Keith Good

February 19

USDA Outlook; Food Security; Biofuels; Climate Issues; and USDA Civil Rights

USDA Outlook

USDA chief economist Joe Glauber provided an updated economic outlook for agriculture yesterday at the Department’s Annual Outlook Forum in Arlington, Virginia.

In part, Dr. Glauber noted that, “On February 11, USDA’s Economic Research Service (ERS) released its initial estimates of farm income and production expenses for 2010. ERS forecasts net cash income at $76.3 billion, up $5.5 billion from 2009” [related graph from presentation].

And with respect to crop prospects for 2010, Dr. Glauber stated that, “Less land is expected to be planted to the major field crops in 2010 as prices continue to ease from their record levels in 2008…Total planted area for the 8 major crops (wheat, corn, barley, oats, sorghum, soybeans, upland cotton, and rice) is expected to decline to 247.3 million acres, down 1.6 million from 2009. The 8-crop total is down 5.7 million acres from the recent high in 2008 as the net returns outlook is much less favorable than 2 years ago when prices were at or near record highs” [related graph from presentation].

More specifically, USDA estimated that, “Corn plantings for 2010 are expected to rise 2.5 million acres from last year to 89.0 million, the highest level since 2007;” and, “Production is projected at a record 13.2 billion bushels, up just slightly from the 2009/10 record crop as higher area more than offsets a return to trend yields with normal weather.” [Note: Last month a separate estimate regarding corn planted acres for 2010 from a Land Grant University Economist came in at 89.5 million acres. The USDA will release the results of its survey of farmer planting intentions on March 31].

“Corn use for ethanol in 2010/11 is projected 5 percent higher at 4.5 billion bushels reflecting higher mandates for biofuels use and continued profitability for ethanol producers and blenders [related graph from presentation]. The year-to-year increase is lower than for 2009/10 when ethanol corn use expanded 17 percent [related graph from presentation].”

“U.S. corn exports for 2010/11 are projected up 5 percent at 2.1 billion bushels as global livestock production rebounds following the global economic crisis;” and, “The season-average farm price is projected at $3.60 per bushel, down $0.10 from the midpoint of the 2009/10 forecast as forward pricing opportunities will be at lower levels than for last year’s crop.”

With respect to soybeans, yesterday’s presentation indicated that, “Soybean planted area for 2010 is expected to fall nearly 500,000 acres from last year to 77.0 million acres as improved returns for corn and rotational considerations boost corn plantings;” and, “Production is projected at 3.26 billion bushels, down about 100 million bushels from the 2009/10 record crop of 3.36 billion on lower planted area (77 million acres, down 0.5 million) and lower (trend) yields of 42.9 bushels per acre compared with last year’s record 44.0 bushels per acre.”

“The season-average farm price is projected at $8.80 per bushel, down $0.65 from the midpoint of the range of the 2009/10 forecast as record South American production weighs on the market.”

For wheat, Dr. Glauber stated that, “Wheat planted area for 2010 is expected to decline 5.3 million acres to 53.8 million. Winter wheat seeded area at 37.1 million acres is down 6.2 million from 2009 and the lowest since 1913;” and, “The 2010/11 season-average farm price is projected at $4.90 per bushel, up $0.05 from the midpoint of the 2009/10 projection, but domestic prices remain under significant pressure from large domestic and global supplies.”

Bloomberg’s Alan Bjerga and Jeff Wilson, writing yesterday on the USDA estimates, reported that, “Cotton production will rise to 16 million bales, from 12.4 million in 2009, with supplies on July 31, 2011, projected at 3.4 million bales, up from 3.3 million this year. A bale weighs about 480 pounds.”

Philip Brasher noted yesterday at the Green Fields Blog (The Des Moines Register) that, “And remember all that concern about rising food prices a few years ago? Food prices jumped by 6.4 percent in 2008 but were up just 0.5 percent last year, due in part to lower energy and transportation costs. This year food prices are expected to rise about 3 percent, which would be in line with historic trends, Glauber said.”

Also yesterday, Dr. Glauber pointed out that, “The livestock, poultry, and dairy sectors are being challenged by continued weakness in domestic and global demand for meat and dairy products. Trade restrictions continue to pressure red meat and poultry exports. Although producers have cut back production in 2009, improved returns will likely slow the rate of production decline in pork and dairy, while an improved forage base has allowed cattle producers to keep cattle on grass longer. Broiler production is expected to gradually increase during 2010 after more than a year of production declines. Total meat production is forecast to be down about 0.5 percent from 2009, with milk production declining about 0.2 percent.”

A related AP article from today reported that, “Only months ago, dairy producers were slaughtering an average of 50,000 dairy cows a week because a milk glut made it impossible to sell their milk for what it cost to produce. Now, with prices improving, dairy farmers are reversing course, saying they’ll produce as much milk as possible this year.

“It’s a wise strategy, according to most industry experts. Milk prices are expected to rebound in 2010 thanks to improved U.S. sales and a recovering export market, so producing as much milk as they can may be the best way for dairy farmers to make up last year’s losses.”

Also yesterday, USDA released its Outlook for U.S. Agricultural Trade report, which noted in part that, “Fiscal 2010 agricultural exports are forecast at $100 billion, up $2 billion from the November forecast and $3.4 billion above final FY 2009 exports. Global economic recovery and healthy commodity prices are supporting exports.”

As a general overview of yesterday’s USDA Outlook Forum, Philip Brasher reported yesterday at the Green Fields Blog (The Des Moines Register) that, “The attacks on conventional agriculture at USDA’s outlook conference have gotten under the skin of some in traditional agribusiness.

“Tim Burrack, an Arlington, Ia., corn and soybean grower and chairman of the Iowa Corn Promotion Board, stood up at the end of a session this afternoon on locally grown foods and said, ‘This is not the USDA that I’ve known.’ The lead speaker at the session was Deputy Agriculture Secretary Kathleen Merrigan, who has directed the department’s shift in emphasis toward local and organic foods.”

“Afterwards, a representative of a major agribusiness group was heard to call this year’s outlook conference the ‘The Attack on Traditional Agriculture Conference.’”

Food Security

A news release issued yesterday by the UN’s Food and Agriculture Organization stated that, “Urgent investments, major agricultural research efforts and robust governance are required to ensure that the world’s livestock sector responds to a growing demand for animal products and at the same time contributes to poverty reduction, food security, environmental sustainability and human health, FAO said today in a new edition of its flagship publication the State of Food and Agriculture (SOFA).  

“The report stresses that livestock is essential to the livelihoods of around one billion poor people. Livestock provides income, high-quality food, fuel, draught power, building material and fertilizer, thus contributing to food security and nutrition. For many small-scale farmers, livestock also provides an important safety net in times of need.”

Meanwhile, an update posted yesterday at the L.A. Unleashed Blog (Los Angeles Times), stated that, “[Lawyer Antoine F. Goetschel] is Europe’s only animal lawyer and the figurehead for a movement that wants to expand Zurich’s pioneering legal system across Switzerland.

“Voters will decide in a March 7 poll whether every canton (state) should be required to appoint an animal lawyer to represent the interests of pets and farm animals in court — in effect a dedicated public prosecutor for dogs, cats and other vertebrates that have been abused by humans.

“‘Swiss law has taken a big step forward in recent years,’ particularly for animals that live in groups, Goetschel tells The Associated Press.”

Biofuels

Reuters writer Charles Abbott reported yesterday that, “Agriculture Secretary Tom Vilsack urged Congress on Thursday to reinstate the $1 a gallon biodiesel tax credit, calling it ‘an important credit’ and ‘a support mechanism’ for renewable fuels.

“The credit expired at the end of 2009.

“Farm groups and allies in Congress are seeking a revival retroactive to January 1, but do not have a legislative vehicle for it.

“At the Agriculture Department’s annual Outlook forum, USDA chief economist Joe Glauber said the future of soyoil as a feedstock for biodiesel is dependent on the future of the credit. Without it, other vegetable and animal oils will be more economical, he said.”

Climate Issues

A statement issued yesterday by American Farm Bureau Federation President Bob Stallman stated that, “The American Farm Bureau Federation has filed a legal challenge to the Environmental Protection Agency’s December finding that greenhouse gases endanger public health and welfare. The agency’s action constitutes the first step toward economy-wide regulation of greenhouse gases. It is an effort to achieve through regulation what has failed to pass Congress and failed as well at the Copenhagen talks.

“EPA regulation of greenhouse gas emissions from farms and ranches through the Clean Air Act could lead to costly and burdensome mandates on America’s food, fiber and renewable fuel producers. It is imperative that the U.S. Court of Appeals conduct a thorough review of the EPA’s endangerment finding.”

Robin Bravender of Greenwire reported on Wednesday at The New York Times Online that, “Industry groups, conservative think tanks, lawmakers and three states filed 16 court challenges to U.S. EPA’s ‘endangerment’ finding for greenhouse gases before yesterday’s deadline, setting the stage for a legal battle over federal climate policies.

“Filing petitions yesterday were the Ohio Coal Association, the Utility Air Regulatory Group, the Portland Cement Association, the state of Texas and the Competitive Enterprise Institute. Another was filed by a coalition that includes the National Association of Manufacturers (NAM), the American Petroleum Institute, the Corn Refiners Association, the National Association of Home Builders, the National Oilseed Processors Association, the National Petrochemical and Refiners Association, and the Western States Petroleum Association.

“The lawsuits ask the U.S. Circuit Court of Appeals to review EPA’s determination that greenhouse gases endanger human health and welfare. That finding — released in December in response to a 2007 U.S. Supreme Court ruling — allows the agency to regulate the heat-trapping emissions under the Clean Air Act. Observers expect the court to consolidate the petitions.”

In executive branch developments on the climate issue, Jim Tankersley reported in today’s Los Angeles Times that, “The Obama administration proposed rules Thursday that could affect construction of coal-fired power plants and other government-approved projects that produce large amounts of greenhouse gases.

“The guidelines for the first time set uniform standards on how federal agencies consider the causes and effects of climate change during their environmental analyses. They would require study of the greenhouse gas emissions of any project expected to emit at least 25,000 metric tons of carbon dioxide a year — roughly 4,600 cars’ worth.

“The types of projects that could be affected include large-scale landfills, coal-fired power plants and coal mines that give off methane.”

Today’s article noted that, “The guidelines instruct federal agencies to ‘consider opportunities to reduce [greenhouse gas] emissions caused by proposed federal actions’ and ‘use the NEPA [National Environmental Policy Act] process to reduce vulnerability to climate change impacts.”

“Such analysis would not necessarily affect a project’s fate. White House officials said the rules were not meant to regulate greenhouse gas emissions. But after analysis, officials could decide whether a reduction in emissions was needed.”

From a political perspective on the climate debate, Ben Geman reported yesterday at The Hill’s Energy and Environment Blog that, “Sen. John Kerry (D-Mass.), continuing his combative stance on climate change of late, said Thursday that ‘fanatics, naysayers, and science deniers’ will not prevent international action on climate change.  

“Kerry made the comment as part of his response to the news that United Nations climate chief Yvo de Boer will step down this summer.” (See related article in today’s Washington Post).

Mr. Geman added that, “Kerry, and Sens. Lindsey Graham (R-S.C.) and Joe Lieberman (I-Conn.), are leading Senate efforts to craft a compromise bipartisan climate bill. But they face major hurdles winning the needed 60 votes and securing space on the election-year agenda.

“Kerry’s combative tone comes as the landscape for climate advocates has become more difficult.”

Meanwhile, Amy Harder reported yesterday at the National Journal Online that, “John Podesta has ‘hope,’ but certainly not confidence, that Congress can pass a comprehensive climate and energy bill by this spring, a target date set by Senate Majority Leader Harry Reid, D-Nev. In an interview Wednesday with NationalJournal.com, the chief of the Center for American Progress discussed the importance of a price on greenhouse gas emissions and insists that there are Republicans who would support such a measure. President Obama has not, in recent speeches, explicitly endorsed a price on carbon. But Podesta says it’s essential to cut emissions by the amount the administration agreed to in the Copenhagen Accord: 17 percent below 2005 levels by 2020.”

Edited excerpts of the interview are also available at the National Journal link.

USDA Civil Rights

Kevin Bogardus reported yesterday at The Hill Online that, “Sen. Blanche Lincoln (D-Ark.) said Thursday she will work on Capitol Hill to resolve discrimination claims against the Agriculture Department (USDA).    

“The centrist senator, who is in charge of the Senate Agriculture Committee and is facing a tough reelection campaign this year, said she will help find funding to resolve black farmers’ discrimination claims against USDA after the Obama administration reached a new settlement with the group.”

The Hill article explained that, “The Justice Department and USDA announced their deal with the black farmers Thursday, agreeing to a $1.25 billion settlement. It follows a 1999 agreement, known as the Pigford settlement, where the federal government agreed to compensate black farmers for decades of discrimination. The new settlement was reached to allow late claimants who missed the original Pigford settlement to re-file and secure compensation.

“The $1.25 billion figure encompasses $100 million already appropriated in the 2008 Farm Bill as well as the administration’s 2011 budget request of $1.15 billion to resolve the remaining claims.”

A news release issued yesterday by Iowa GOP Senator Chuck Grassley stated that, “Approximately 75,000 black farmers filed their claims of discrimination through the Pigford consent decree process past the deadline for their claims to be evaluated on the merits. As a result, thousands of victims of discrimination continue to be denied an opportunity even to have their claims heard.

“Grassley has led the effort to put in place a process where these African American farmers can have the opportunity to plead their case based on the merits. He introduced legislation in 2007 and pressed for it to be included in the 2008 farm bill.

“‘I had originally hoped that the Pigford v. Glickman settlement would take care of the injustice that had been left untouched for decades. Unfortunately, many people were shut out of the process. When it became apparent that the Department of Agriculture would not act, we took further steps and introduced legislation to right the wrongs. We finally got something included in the last farm bill and now, with today’s announcement, African American farmers who were wronged by the USDA are one step closer to a full resolution and well-deserved justice.’”

Keith Good

February 18

Crop Insurance; Biofuels; CRP; Food Security; Climate Issues; and Animal Agriculture

Crop Insurance

DTN Ag Policy Editor Chris Clayton reported yesterday (link requires subscription) that, “Potential cuts to the crop insurance industry would be about 20 percent less than originally proposed, but agent commissions would be capped under a new draft of the standard reinsurance agreement between USDA and the crop insurance industry, USDA officials said Wednesday.” [Note: For more background on the standard reinsurance agreement, click here and here.]

“Though USDA had originally declined to detail the savings in the first proposal, the White House’s proposed budget detailed $8 billion in crop insurance savings over 10 years. Officials said Thursday the actual projection was closer to $8.4 billion. The proposed changes would still cut costs for crop insurance by about $6.7 billion over 10 years, based on percentages and numbers offered by USDA officials.

“‘I think the companies overall would be satisfied with the direction of the movement,’ said Bill Murphy, administrator of USDA’s Risk Management Agency.”

Yesterday’s article noted that, “Murphy, [Michael Scuse, USDA's deputy undersecretary for Farm and Foreign Agricultural Services] and other USDA officials briefed reporters Wednesday just before Murphy prepared to offer the second draft to a crop insurance industry meeting being held this week in San Diego. Snow days in Washington last week slowed work on the proposal, but Murphy said he is still able to detail the changes to crop insurance executives and agents who are attending the convention.

“USDA officials have already met with most insurance companies to explain some of the proposals, Murphy said. The responses were a mix of positive and negative, depending on the specific issue, he said.”

Mr. Clayton pointed out that, “One key proposal by USDA would cap agent commissions. One of the problems with some companies or lucrative policies in corn and soybean country is companies are actually paying more in agent commissions than the companies receive in A&O reimbursement for those policies. So USDA proposes a ‘soft cap’ on agent commissions at 80 percent of the A&O reimbursement.

“To offset the cap in commissions, USDA would allow companies to offer profit-sharing incentives to agents as well.”

Biofuels

An article posted earlier this week at ICIS.com reported that, “In a keynote speech to open the [Renewable Fuels Association’s] National Ethanol Conference in Orlando, [RFA president and chief executive Bob Dinneen] called for greater effort by the industry to ‘tear down the blend wall’ that has generally held the ethanol content in US gasoline at the 10% level, known as E10.

“US ethanol production has grown to the point that the E10 market is nearing saturation. But the use of higher blends for ordinary cars has been held back by concerns over possible engine damage and the potential voiding of the manufacturers’ warranty coverage.

“Dinneen called on the government to accelerate its testing of E15 and E20 blends, adding that the RFA’s goal is to win endorsement of higher blends for all vehicles – not just those manufactured in 2001 and later, as has been suggested by the EPA.”

In December, EPA indicated that a decision regarding E15 would be made sometime in mid-2010.

However, DTN writer Todd Neeley reported yesterday (link requires subscription) that, “If U.S. convenience stores have it their way they will not be pumping E15 anytime soon — or at least until they get answers to several pressing questions.”

Mr. Neeley indicated that, “But gas station owners are worried about liability issues that could come from selling E15, said John Eichberger, vice president of government relations for the National Association of Convenience Stores. The fuel distributors Eichberger represents also are concerned they will be unable to handle higher ethanol blends for a number of reasons.

“‘Right now no retailer can sell ethanol blends above E10,’ he said, because their pumps are not certified to handle higher blends. Eichberger said gas stations are already ‘breaking the law’ in selling E85 using pumps that are not certified to dispense the fuel.

“In a phone interview Wednesday, Brian Jennings, executive vice president of the American Coalition for Ethanol, said he thought Eighberger’s comments about pump blends were ‘over the top.’ Jennings said no one is breaking the law, but that each piece of an E85 pump has not received certification from Underwriters Laboratory, which is typically used to set national or state standards for certain industry equipment.”

Yesterday’s DTN article added that, “Still, Eichberger said in his presentation there were other reasons for concern, especially if station clerks are required to police the type of fuel motorists are buying at the pump. EPA said late last year the agency may allow the use of E15 for vehicles built in 2001 and newer. So if a consumer pumps E15 in a vehicle that is not allowed to use the blend, he said, the station will be legally liable for any damage to a vehicle.”

Meanwhile, Cindy Zimmerman reported yesterday at the DomesticFuel Blog that, “The new rule for the expanded Renewable Fuel Standard, fresh out of the box just two weeks ago, was the main topic of discussion at the Renewable Fuels Association’s 15th National Ethanol Conference in Orlando. Sarah Dunham, Transportation and Regional Programs Division Director with the U.S. Environmental Protection Agency, boiled down the guts of the new RFS2 in a 45 minute presentation that highlighted changes made in lifecycle analysis determinations from the rule as originally proposed.

“‘I can safely say that this is the area we got more comment than any other area in the rule,’ Dunham said, calling it very constructive and helpful to get real data and science to apply to the rule. This led to ‘significant’ decreases in estimates of international indirect land use change related to biofuels production, ‘more than 50-60-70 percent in some cases,’ she added. Using corn ethanol as an example, she noted that the final rule factored in both increasing yields and the value of co-products, which had not been in the original model.

“Dunham also talked about how EPA addressed ‘uncertainty’ in their analysis. ‘There is inherent uncertainty in these assessments,’ she said. ‘And we thought it was important to try to formally recognize that uncertainty’ and incorporate it into the analysis. The assessments will be updated over the next two years as more information becomes known.”

An audio replay of Dunham’s presentation is available at the DomesticFuel link.

And a news release issued yesterday by the American Soybean Association (ASA) stated that, “[ASA] is calling for the Senate to reinsert a retroactive extension of the biodiesel tax incentive in the first Jobs Bill it passes to save the jobs of 23,000 people working in the biodiesel industry. The biodiesel tax incentive had been included in a version of the Senate Jobs Bill unveiled last week by Senators Max Baucus (D-MT) and Chuck Grassley (R-IA), but Senate Majority Leader Harry Reid (D-NV) later stripped the biodiesel and other tax provisions out of the bill. Production of biodiesel, a homegrown renewable fuel, also supports higher prices paid to farmers for their soybeans, which contributes additional employment opportunities in both urban and rural communities.”

With respect to the jobs bill, Jay Heflin reported yesterday at The Hill Online that, “Senate Majority Leader Harry Reid (D-Nev.) lacks the votes to begin debating his targeted jobs bill, according to sources monitoring the legislation.

“Reid needs 60 votes to open debate on the $15 billion jobs bill. The vote is scheduled for Monday, when lawmakers return from the Presidents Day recess.

“‘I understand Reid does not have the votes for cloture on Monday on his jobs bill,’ one source said.”

Yesterday’s article added that, “‘The biodiesel tax credit in the [Baucus-Grassley] jobs bill is the only option being considered that will guarantee that workers can be put back to work the day after it is signed into law,’ said Dan Farney, an Illinois Soybean Association farmer, in prepared remarks. ‘Illinois biodiesel plants are laying off more green-collar employees every day that the tax credit is allowed to go unsigned. This just adds to our nation’s and state’s unemployment problems.’

“[Sen. Chuck] Grassley’s state has been negatively affected by the tax credit’s expiration. On Tuesday the Iowa Republican condemned Reid for striking extenders from his jobs bill for political gain.

“‘The industry is hemorrhaging jobs and we can do something to stop it,’ Grassley told reporters. ‘Yet Sen. Reid decided that it was more important to play political games than actually saving and creating jobs in the private sector.’”

Conservation Reserve Program (CRP)

Thom Gabrukiewicz reported yesterday at the Argus Leader Online (South Dakota) that, “South Dakota has more than 1 million acres enrolled in CRP, but that number continues to decline.

“‘I see this from a different vantage point, other than going out and getting a limit,’ said U.S. Department of Agriculture Secretary Tom Vilsack, who came Tuesday to Brent and Lisa Rossow’s Horse Barn & Hunt Club near Lakefield, Minn., as part of an informal conservation forum presented by Pheasants Forever.

“The evening included comments from Rep. Tim Walz, DFL-Minn., and Rep. Collin Peterson, D-Minn., chairman of the House Agriculture Committee.”

The article added that, “‘I see it as an economic driver,’ Vilsack said. ‘There’s $180 billion spent hunting and fishing – and most of that is spent in rural communities that need those dollars.’

“Pheasant hunting brought in $219 million in tourism to South Dakota both in 2007 and 2008.

“But as more acres are taken out of CRP – farmers are tempted to put lands around wetlands and unbroken prairie back into production as rent and commodity prices outstrip what they can get from the program – sportsmen worry about the future of the pheasant in the Upper Midwest.”

Yesterday’s article pointed out that, “Farmers and ranchers nationally get an average of $51 an acre for enrolling in CRP.

“‘We can’t continue to ask farmers and ranchers to take a $30 hit per acre for conservation,’ [Matt Holland, senior field coordinator with Pheasants Forever] said. ‘Payments have to be competitive.’”

Food Security

Tom Daschle indicated in an opinion item published earlier this week at Politico that, “Late last month, leaders from around the world convened in Davos, Switzerland, for the World Economic Forum’s annual conference of international leaders to address shared global challenges. While efforts to restore stability and prosperity to our financial system rightfully framed the conference agenda, I was most encouraged by the forum’s consideration of a topic even more fundamental to the survival of people around the globe but one that has received far less attention in the press and among policymakers: In order to feed a global population boom of 9 billion people by 2050, we will need to more than double our current levels of food production and develop a set of innovative strategies to combat a host of global-hunger-related and nutritional issues.”

The former Senate majority leader added that, “Great challenges demand even better solutions, and better solutions can come only from the collaboration and competition of those willing to advance new ideas and technologies. Recently, I agreed to chair the new DuPont Advisory Committee on Agricultural Innovation and Productivity for the 21st Century, which seeks to do just that, by exploring how agricultural innovation can help us meet the food, feed, fiber and fuel demands of the coming decades. Innovation will lie at the heart of the agricultural revolution necessary to accomplish our goal of feeding the world by 2050 without increasing pressure on our world’s already strained and limited resources. In fact, innovation in agriculture won’t just provide more; it can also provide ‘better’ — growing crops with nutritional benefits and developing seed that increases yield worldwide.”

Mr. Daschle pointed out that, “First, we must support scientific and technological innovation in agriculture. In the past 25 years alone, farmers in the United States have boosted corn production by more than 40 percent. And products in the ag pipeline offer the promise of nutritional outputs that will improve products and boost yields. In order to realize these new technologies, we must foster innovation by incentivizing and encouraging investment in biotech and broader agricultural research and development.”

And Philip Brasher reported yesterday at The Des Moines Register Online that, “Pioneer Hi-Bred is joining with the Bill and Melinda Gates Foundation to help scientists in Africa develop genetically engineered corn varieties that would allow poor farmers increase their yields with less fertilizer.

“The aim of the project is to increase corn yields by 50 percent over the average now reached by African varieties, said Paul Schickler, president of Pioneer, a Johnston-based unit of DuPont.

“The project represents the latest effort by U.S. seed giants to promote their products as being potentially beneficial to small-scale farmers in Africa, a continent with chronic food shortages but where countries have been reluctant to permit genetically modified crops.”

Climate Issues

John M. Broder reported in today’s New York Times that, “The early optimism of environmental advocates that the policies of former President George W. Bush would be quickly swept away and replaced by a bright green future under Mr. Obama is for many environmentalists giving way to resignation, and in some cases, anger.

“Mr. Obama moved quickly in his first months in office, producing a landmark deal on automobile emissions, an Environmental Protection Agency finding that greenhouse gases endanger public health and welfare, a virtual moratorium on oil drilling on public lands and House passage of a cap-and-trade bill.

“Since then, in part because of the intense focus on the health care debate last year, action on environmental issues has slowed. The Senate has not yet begun debate on a comprehensive global warming bill, the Interior Department is writing new rules to open some public lands and waters to oil drilling and the E.P.A. is moving cautiously to apply the endangerment finding.”

Mr. Broder added that, “Environmental advocates largely remained silent late last year as Mr. Obama all but abandoned his quest for sweeping climate change legislation and began to reach out to Republicans to enact less ambitious clean energy measures.

“But the grumbling of the greens has grown louder in recent weeks as Mr. Obama has embraced nuclear power, offshore oil drilling and ‘clean coal’ as keystones of his energy policy. And some environmentalists have expressed concern that the president may be sacrificing too much to placate Republicans and the well-financed energy lobbies.”

Meanwhile, Washington Post writer Juliet Eilperin reported yesterday at the Post Carbon Blog that, “Most people think of Sen. John McCain (R-Ariz.) as one of the biggest proponents of curbing greenhouse gas emissions to combat climate change.

“Maybe, maybe not.

“In an interview with conservative radio talk show host Barry Young on Tuesday, McCain claimed he never supported capping greenhouse gas emissions at a certain level.”

Ms. Eilperin added that, “McCain has yet to decide whether to support climate legislation this year, including an effort being led by his two closest friends in the Senate, Lieberman and Lindsey Graham (R-S.C.). [McCain spokeswoman Brooke Buchanan] said McCain is waiting to see how much support the bill will provide for the nuclear industry, along with provisions aimed at reprocessing and storing spent nuclear fuel.

“‘It comes down to this nuclear issue,’ she said. ‘He does not believe we can have a viable climate legislation without this nuclear component.’”

And more specifically with respect to agriculture, Agri-Pulse Senior Editor Stewart Doan filed an audio report yesterday that featured perspective on cap and trade issues from American Farm Bureau President Bob Stallman. To listen to this audio report, just click here (MP3- 1:30).

Animal Agriculture

Chris Clayton noted earlier this week at the DTN Ag Policy Blog that, “The Humane Society of the United States now has someone dedicated to watching it. The Center for Consumer Freedom has created www.humanewatch.org to keep tabs on what’s happening with the Humane Society and how HSUS is spending its money.

“As the CCF’s news release states: The Humane Society of the United States has become the animal rights industry’s most powerful player, but it has avoided serious public scrutiny for years. HSUS raises nearly $100 million annually from Americans who largely believe their donations filter down to local pet shelters and improve the lives of dogs and cats. But in 2008, less than one-half of one percent of HSUS’s budget consisted of grants to actual hands-on ‘humane societies’ that deal with the thankless task of sheltering unwanted pets.”

The new webpage was also a topic that was discussed in some detail on Monday’s AgriTalk Radio Program with Mike Adams.

Keith Good

February 17

Farm Bill- Chairman Peterson

DTN Political Correspondent Jerry Hagstrom reported yesterday (link requires subscription) that, “House Agriculture Chairman Collin Peterson said Monday he believes the next Congress may have to take up a reconciliation bill that could include a rewrite of the farm program.

“Speaking by telephone to the American Association of Crop Insurers convention here [San Diego], Peterson said he is not an advocate of a reconciliation bill but believes that international concerns about U.S. finances and difficulties in selling U.S. bonds overseas may force the next Congress to consider a reconciliation bill.”

Mr. Hagstrom explained that, “A reconciliation bill updates existing laws to pull them in line with changes made in a budget resolution. As its passage only requires a simple majority in the Senate, a reconciliation bill can be used to push through legislation for which there aren’t 60 votes to break a filibuster.

“‘This budget is completely out of control,’ Peterson said. ‘I’m not advocating reconciliation. We have a very good possibility after this election, no matter who wins, to force the mother of all reconciliation.’”

Yesterday’s DTN article pointed out that, “Peterson said one reason he wants to hold farm bill hearings this year is to be ready if he needs to put a farm bill in a reconciliation bill. Peterson plans to hold three hearings in Washington in late March and early April and field hearings in July. He said he wants to avoid holding hearings between August and the November elections because he wants the hearings to be bipartisan. ‘Being bipartisan takes a lot of time. Bipartisanship is hard to come by,’ Peterson said.

“If a reconciliation bill does not affect the process, Peterson said he plans to proceed with writing the farm bill early in 2011, mark it up in the fall of 2011 and finish it before the current bill expires.

“Peterson said he is opposed to the Obama administration’s plans to cut $8 billion from crop insurance expenditures over the next 10 years, in part because he wants to preserve as high a baseline for agriculture as possible for the next farm bill or reconciliation negotiations.”

Todd Kurtz reported earlier this week at WDAY Online (Fargo, ND) that, “Congressman Collin Peterson told a crowd of more than 40 farmers that he’ll start working on the next farm bill earlier than usual.”

“Peterson says there is two main reasons to start early. First because he wants another bi-partisan bill and says its long task to get everyone on the same page. Second he thinks the mother of all reconciliations is inevitable, putting the farm bill on the table for cuts.” (Note that this link includes a video replay highlighting Chairman Peterson’s comments).

Meanwhile, Tom Cherveny reported in today’s West Central Tribune (Willmar, Minn.) that, “[Sec. of Agriculture Tom Vilsack] spoke Tuesday at Southwest Minnesota State University in Marshall at the third annual Home Grown Economy conference hosted by U.S. Collin Peterson, D-Minn.

“The local foods movement has the attention and the support of the federal government today, according to Peterson, chairman of the House Agriculture Committee.

“It’s simple, according to Peterson: There is a market for local foods, and agriculture stands to gain jobs and income by serving it.

“At the same time, he emphasized that there ‘is room for everybody in agriculture.’ The expansion of a local foods economy can occur alongside of — and not at the expense of — commodity-based agriculture.”

Anthony Kiekow reported earlier this week at KSAX Online (Minn.) that, “U.S. Rep. Collin Peterson and U.S. Agriculture Secretary Tom Vilsack attended a ‘Homegrown Economy’ event at Southwest Minnesota Sate University in Marshall Monday.

“At the event the powerful political pair conversed with local farmers about selling locally grown food to Minnesotans.

“‘Whenever something is grown in the same area it’s bought it’s always fresher. That’s just common sense,’ Peterson said.” (Note that this link includes a video replay highlighting Chairman Peterson and Sec. Vilsack in Marshall).

And Deb Gau reported yesterday at The Marshall Independent Online (Minn.) that, “They may need some initial help to develop a connection with consumers, but small farms can make a difference in the rural economy, U.S. Secretary of Agriculture Tom Vilsack said Monday.

“‘The reality is we need all kinds of farms in this country,’ Vilsack said, from small organic farms to large commercial farms.

“The main challenge will be helping small farmers open connections for local customers, Vilsack and U.S. Rep. Collin Peterson said. Vilsack and Peterson arrived in Marshall Monday for the Home Grown Economy conference held at Southwest Minnesota State University.”

Biofuels

Cindy Zimmerman reported yesterday at the DomesticFuel Blog that, “Compared to last year, Renewable Fuels Association president and CEO Bob Dinneen faced a much happier crowd for the opening session of the 15th Annual National Ethanol Conference.

“‘A year ago, at this event, we met amidst the worst economic climate since the Depression. Commodity markets were in upheaval, investment dollars had evaporated, gasoline demand was falling, production costs were rising, plants were closing and the very foundation of our industry and our economy was shaking,’ said Dinneen.”

Yesterday’s update added that, “Among the accomplishments for the industry, Dinneen noted 15% growth, reopening 14 plants that had been previously idled, starting up 8 new plants, and adding1.5 billion gallons of capacity. The ethanol industry contributed $53.3 billion to the economy, along with 400,000 jobs and reducing oil imports by 364 million barrels.”

The DomesticFuel link also included an audio replay of Mr. Dinneen’s remarks yesterday, while a text of his remarks can be viewed here.

RFA also released its 2010 ethanol industry outlook report yesterday, titled, “Climate of Opportunity,” which can be downloaded here.

In other news, Philip Brasher reported yesterday at the Green Fields Blog (The Des Moines Register) that, “Sen. Charles Grassley is offering no timetable for reviving the biodiesel tax credit now that Senate Democratic leadership has nixed the plan to include it in a jobs bill.

“The Iowa Republican says an extension of the biodeisel subsidy could be added to an energy bill that the Senate may consider later this year or dealt with when the Senate debates the future of the estate tax. ‘Who knows when they are going to get passed,’ Grassley said of those bills on a conference call with reporters today.

“The next target for dealing with the biodiesel credit could be the Easter congressional recess, he said.”

Bloomberg writer Mario Parker reported yesterday that, “The U.S. ethanol industry faces a challenge in extending its tax credit to avoid a repeat of the meltdown that’s ravaged biodiesel, a lobbyist said today.

“Refiners receive a 45-cent tax credit for each gallon of ethanol blended into gasoline and Brazilian imports of the fuel are smacked with a 54-cent tariff. They both expire Dec. 31.”

The article noted that, “The extensions ‘will happen but it will be a very, very tough’ battle, said Jon Doggett, vice president of public policy for the National Corn Growers Association. He was speaking at the National Ethanol Conference in Orlando, Florida.

“The tax credit that supports the U.S. biodiesel industry expired at the end of 2009 as Congress focused on health care legislation, driving production of the fuel to a near halt, according to the National Biodiesel Board, the industry’s primary trade group.”

In other news regarding biofuels, a news release issued yesterday by Growth Energy indicated that, “Growth Energy today welcomed the words of a top General Motors executive who said that the United States must substantially build out the infrastructure to deliver ethanol to consumers. Growth Energy’s position is that increasing the number of blender pumps would give drivers a choice of mid- and high-level ethanol blends in more locations across the country.”

And with respect to next generation biofuel production, Jessica Leber of ClimateWire reported yesterday at The New York Times Online that, “Many cellulosic fuel producers are working with enzymes to break down tough, inedible plant parts, such as corncobs or switch grass, into simpler sugars that can be fermented to ethanol. Now enzyme companies say they are near to breaking down another tough obstacle: the cost of enzymes that will make the next generation of low-carbon fuels.

“The progress may help put cellulosic ethanol on course to compete commercially when the first large plants open next year.”

Ms. Leber added that, “Novozymes, the world’s largest industrial enzyme producer, today launched a new line it says will yield ethanol from plant wastes at an enzyme price of about 50 cents a gallon. The latest product of a decade of research, this marks an 80 percent price drop from two years ago, according to Global Marketing Director Poul Ruben Andersen.

“The advances, Andersen said, will help bring cellulosic ethanol production prices to under $2 a gallon by 2011, a cost on par with both corn-based ethanol and gasoline at current U.S. market prices.”

Climate Issues- Judicial Perspective

Robin Bravender of Greenwire reported yesterday at The New York Times Online that, “Critics of U.S. EPA’s climate regulations are lining up to launch legal battles against the agency’s ‘endangerment’ finding amid a looming deadline for court challenges.

“The U.S. Chamber of Commerce on Friday petitioned (pdf) a federal appeals court to reconsider EPA’s determination that greenhouse gases threaten public health and welfare, a finding that paves the way for broad regulations of the heat-trapping emissions.

“The challenge from the industry trade group is the latest of a series of legal attacks against the finding, and observers say more could appear before tomorrow’s deadline for critics to file petitions in the U.S. Circuit Court of Appeals for the District of Columbia.”

The AP reported yesterday that, “Texas became the first state to challenge the federal government’s finding that greenhouse gases are dangerous to people, claiming Tuesday that the ruling is based on flawed science and would wreck the state’s economy.”

And David A. Fahrenthold reported in today’s Washington Post that, “Virginia Attorney General Ken Cuccinelli II (R) on Tuesday filed paperwork attacking the legal underpinnings of an Obama administration effort to regulate greenhouse gas emissions, joining a crowd of political conservatives and business groups with similar objections.”

Climate Issues- Legislative Perspective

In legislative developments on the climate issue, Darren Samuelsohn of Greenwire reported yesterday at The New York Times Online that, “Senate promoters of a comprehensive climate and energy bill are reaching out to moderate Republicans and Democrats, but they have little to show for it.

“The nation’s economic troubles and election-year politics are making a signature item on President Obama’s domestic agenda a tough sell, despite the optimism expressed by the legislation’s leading advocates, Sens. John Kerry (D-Mass.), Lindsey Graham (R-S.C.) and Joe Lieberman (I-Conn.).

“‘I’m trying to avoid talking to people like … Senator Kerry and all of the people that are the stalwarts on the [climate bill], because I think we’ve got other things we’ve got to finish up before we embark upon that,’ Sen. Claire McCaskill (D-Mo.) said earlier this month.”

In related news, Washington Post writer Juliet Eilperin reported yesterday at the Post Carbon Blog that, “Sen. Blanche Lincoln (D-Ark.) is undeterred by the recent Sierra Club radio attack ad that criticizes her efforts to halt the Environmental Protection Agency from regulating greenhouse gases.

“‘Senator Lincoln acted on behalf of Arkansas workers, employers and consumers to protect them from burdensome regulation,’ said her spokeswoman Katie Laning Niebaum. ‘That’s why more than two dozen businesses and agricultural groups either based in Arkansas or with ties to the state supported Senator Lincoln’s efforts to prevent EPA’s overreach of regulatory powers.’”

Christa Marshall of ClimateWire reported yesterday at The New York Times Online that, “Companies and groups with deep coffers are lining up to change climate legislation emerging as an alternative proposal to cap and trade in Congress.

“The growth in lobbying from well-funded players signals that the bill from Sens. Maria Cantwell (D-Wash) and Susan Collins (R-Maine) has potential to gain momentum on Capitol Hill, analysts say.

“‘Companies are lobbying because they think the bill has legs or they want to ensure against the possibility that it does,’ said Kenneth Green, an analyst at the American Enterprise Institute, a conservative think tank.

“Since the two senators introduced their bill in December, more than 40 businesses and organizations announced plans to lobby on the measure via official disclosure forms filed with Congress.”

Climate Issues- Executive Branch Perspective

Stephen Power reported in today’s Wall Street Journal that, “President Barack Obama’s 2011 budget calls for an array of regulations, subsidies and taxes aimed at cutting emissions of greenhouse gases, even as a sweeping climate bill sits on ice in the Senate.

“Mr. Obama’s budget calls for $39 billion in tax increases on fossil-fuel producers over 10 years. It also includes an estimated $1.4 billion to help developing countries address the impacts of climate change, reduce deforestation and shift to low-carbon energy sources. And it proposes tripling federal support for nuclear energy, by adding $36 billion in new loan authority for an Energy Department program aimed at speeding the construction of new reactors.”

The Journal article noted that, “Mr. Obama has called on Congress to pass legislation that would require industries to pay for their emissions of heat-trapping gases linked to climate change. But Senate leaders have repeatedly pushed back their timetable for action, amid objections from many Republicans and some Democrats that such legislation would drive up energy costs and lead to job losses in fossil-fuel and manufacturing industries.”

Climate Issues- External Variables

Stephen Power and Ben Callelman reported in today’s Wall Street Journal that, “Three big companies quit an influential lobbying group that had focused on shaping climate-change legislation, in the latest sign that support for an ambitious bill is melting away.

“Oil giants BP PLC and ConocoPhillips and heavy-equipment maker Caterpillar Inc. said Tuesday they won’t renew their membership in the three-year-old U.S. Climate Action Partnership, a broad business-environmental coalition that had been instrumental in building support in Washington for capping emissions of greenhouse gases.

“The move comes as debate over climate change intensifies and concerns mount about the cost of capping greenhouse-gas emissions.”

And the editorial board at The New York Times indicated today that, “Disclosures of isolated errors and exaggerations in the 2007 report from the United Nations panel on climate change do not undermine its main finding: that the planet has been warming gradually for more than a century and that human activity is largely responsible. But the misstatements have handed climate skeptics a public relations boost.”

In a briefing with reporters yesterday, Special Envoy on Climate Change Todd Stern was asked about recent analytical errors and climate change. During the exchange, which is available here (MP3-2:15), Mr. Stern expressed that the “fundamental science of climate change” is “quite overwhelming,” and that climate change is a “serious and growing problem.”

Trade

The “Washington Insider” section of DTN indicated yesterday (link requires subscription) that, “One of the longest trade disputes between the United States and Mexico concerns truck access to interior markets on both sides of the border. The 1994 North American Free Trade Agreement deal called for a cross-border access initiative to phase-in beginning in 1995. Congress halted that effort citing safety concerns, among others.”

Yesterday’s item stated that, “Now, Mexico has once again raised the issue in a meeting between U.S. Trade Representative Ron Kirk and the Mexican Minister of Economy, Gerardo Ruiz. The Mexican official told the press the dispute will surely be resolved this year. Kirk said he expects to undertake consultations with Congress to come up with a ‘sensible program.’

“Kirk also said with the ‘offending’ appropriations language now removed, his office, along with U.S. Transportation and Commerce officials will begin a dialogue with Congress to come up with a ‘sensible program’ for Mexican trucks. This suggests the administration thinks it has a deal with congressional appropriations committees not to continue the pilot-program prohibition in the current appropriations bill.

“‘We have a green light to go forward and start consultations with Congress and stakeholders in the United States, and I have committed to [Ruiz] that we will keep him appraised [sic] of progress every step of the way,’ Kirk said. ‘We will be very willing to work together on a common solution to a common problem,’ Ruiz responded.”

The DTN analysis piece added that, “The U.S. position on Mexican truck access has been a matter of concern to a number of agricultural interests for several years, and has become a much broader irritant since Mexico won the right to retaliate on a broad range of products and services. Advocates of stronger trade ties with Mexico argue that while safety and environmental concerns are important, they can be handled adequately by tough regulations and increased monitoring, and that the way to define these is to proceed with pilot trials.

“Because Mexico is a huge agricultural market for U.S. agricultural products, disputes such as this one deserve priority attention from both sides — especially so, given the administration’s new export initiative. Thus USTR Kirk can expect to find himself under the microscope in terms of his promised efforts to find a credible solution to both the current truck access impasse and to improved overall U.S. trade relationships with Mexico, Washington Insider believes.”

California Water

The Los Angeles Times editorial board indicated today that, “[Sen. Dianne Feinstein (D-CA)] announced that she would attach a rider to an upcoming federal jobs bill that would boost water deliveries from the Sacramento-San Joaquin River Delta to a vocal agribusiness community in the west San Joaquin Valley. Because these farmers were late to the game of acquiring water rights, they’re the first to get shorted when deliveries are cut, as they were last year because of drought conditions and court- ordered pumping restrictions aimed at restoring fish populations. West valley farmers only got about 10% of their allocations of federally subsidized water in 2009, and Feinstein’s rider would ensure they get closer to 40% this year and next.

“Feinstein says she’s proposing the amendment because ‘people in California’s breadbasket face complete economic ruin without help.’ Indeed, unemployment is running alarmingly high in some Central Valley communities. But then, they’ve long been beset by chronic unemployment. Moreover, a report by the University of the Pacific suggests that the vast majority of the region’s job losses have been in the construction industry, not agriculture. And it’s perverse to insert language in a jobs bill aimed at benefiting farmworkers without considering the impact on fishermen, whose industry has been devastated by heavy pumping of delta water. The delta is home to hundreds of species, including the increasingly threatened chinook salmon.”

The LA Times added that, “That’s only the beginning of what’s wrong with Feinstein’s amendment. If approved, it would create a legal morass around conflicts between federal and state endangered species protections. Worse yet, it would blow apart the trust built up among competing stakeholders during years of negotiations preceding last year’s water package. Her attempt to make an end run around this bipartisan process, at the behest of a powerful interest group, could destroy what limited progress has been made and end in years of litigation and acrimony.

“Though the west valley’s farms are important to the state’s economy, they are located in a naturally arid landscape that’s unsuited to agriculture; moreover, runoff from the area contains heavy selenium deposits, which turned a local reservoir into a toxic waste dump. If cuts in water deliveries make it expensive to farm in such unsustainable places — well, maybe that’s as it should be. The region should only get its water allotment if managers deem there is enough surplus to allow it.”

Keith Good

February 16

Food Security- Focus on India and Biotechnology

The AP reported yesterday that, “Last week, India halted the commercial release of the world’s first genetically engineered eggplant, called Bt brinjal. The environment minister, Jairam Ramesh, said that given the lack of consensus within the scientific community and the pitch of public opposition, further study was needed to guarantee consumer safety.

“Why the skepticism over a technology many scientists say is crucial for feeding the 9 billion people who will populate the planet by 2050?

“To many in India, embracing Bt brinjal — which has a gene owned by Monsanto Co — also means embracing corporate farming and surrendering some control of the nation’s food supply to a powerful foreign company. They worry this could have disastrous consequences for the nation’s 100 million small farming families.”

The article stated that, “Whether India, like China, will ultimately embrace GM food is a question with profound implications.

“At issue is how India — which the U.N. says will surpass China as the world’s most populous country by 2030 — will feed itself.

“Many other transgenic food crops are in the works, including staples like rice. Advocates say these new strains will boost yields and stabilize supply by, for example, improving drought resistance. Their fate now hangs in the balance, scientists say.”

Yesterday’s article explained that, “Rising wealth has increased India’s appetite, even as agricultural productivity languishes. Food inflation is at 18 percent, due to supply bottlenecks and widespread drought. And the World Health Organization says 21 percent of Indians still don’t get enough to eat every day, with 46 percent of children underweight.

“Despite its high-tech image, India remains a nation of small, mostly poor farmers, many of whom are skeptical of the promises of industrialization. At least 45 percent of the population relies on agriculture for their livelihood, and most have small, family run farms — a far cry from the U.S., where less than 2 percent of Americans farm for a living.

“The fate of these small farmers is at the center of the Bt brinjal debate.”

The article went on to provide this additional context: “Critics in India say America, where most soybeans and corn have some genetic modification, is not asking tough enough questions about GM food.

“The debate also rages on in Europe, where the 27-member European Union has approved only one genetically modified crop, maize Monsanto 810. Illustrating the deep divide, despite the approval, six countries have imposed a moratorium on the corn crop: France, Germany, Luxembourg, Greece, Austria and Hungary. And even in countries like Italy, where no formal ban applies, no one chooses to plant the crop, cultivated most prevalently in Spain.

“The transgenic landscape is remarkably different in the U.S.

“‘By the early ’90s we had a working (regulatory) framework in place that allowed developers to go to the agencies and say, ‘I’ve got this new product, here’s my data, do you approve it?’ said Bruce Chassy, a professor of food microbiology at the University of Illinois.

“That’s exactly what some Indians don’t want.”

And Reuters writer Rina Chandran reported today that, “A genetically modified version of eggplant, a staple in fiery curries, was slated to be the first GM food introduced into India in a bid to stabilize food prices and mitigate some of the effects of climate change on Indian food crop yields.

“Yet, Environment Minister Jairam Ramesh blocked the release of the vegetable until further notice following an outcry by environmentalists and some farmers. The opposition to GM foods was so heated that some protesters burned effigies.”

The Reuters article stated that, “‘This is bad for the country’s agricultural and biotechnology future. Our scientists have lost their credibility, companies will be unwilling to invest more money, and it will take us a long time to pick up the pieces again,’ said C. Kameshwar Rao, an official at the Foundation for Biotechnology Awareness & Education, a GM advocacy institute.

“‘Scientists can’t win a shouting match with politicians.’

“India’s farm sector has changed very little since the advent of the Green Revolution with crop yields failing to keep up with soaring population growth and rising incomes.”

Today’s article indicated that, “Even though the GM seeds for the vegetable would likely cost three times the price and farmers would need to purchase seeds for every sowing rather than reusing crop seeds, proponents say the extra expenses would be compensated by lower pesticide costs and less devastating crop loses.

“Expanding India’s food supply is crucial in a country of one billion people, with predictions the population might reach 1.4 billion by 2025.

“The United Nations’ Food and Agricultural Organization has said food production will need to double by mid-century to meet demand from a growing world population, prompting calls for a second Green Revolution.”

Dairy Issue

Lauren Etter reported in today’s Wall Street Journal that, “From a strip mall in this town of 7,200 [Wauseon, Ohio], Willy van Bakel built a multimillion-dollar business bringing fellow Dutch dairy farmers to America. They’re ‘dreamers’ like himself, he says.

“Mr. van Bakel’s company, Vreba-Hoff Dairy Development, signed up 70 Dutch immigrants over the past decade for a package deal designed to help them start dairy farms here. Typically, Mr. van Bakel helped clients sell their farms in the Netherlands and used the proceeds as seed money to finance bigger dairies with more cows in America.”

The Journal article indicated that, “Today, the dream has soured. About a dozen of his clients have filed for bankruptcy protection or are being foreclosed on by banks. Sixteen farms sit idle because construction was halted for lack of financing. Mr. van Bakel says his lender reneged on an agreement to provide funding. Some of these farmers have been waiting for five years or more and still have no farm, despite having given Mr. van Bakel millions of dollars from the sale of their old farms.

“Now Mr. van Bakel faces lawsuits from farmers, lenders and suppliers alleging, variously, that he owes them money and that he misused their funds. Some farmers accuse Mr. van Bakel of overcharging them for the dairies and cutting corners on construction.”

Aquaculture

Kimberly Kindy reported in today’s Washington Post that, “The whiskered, bottom-feeding catfish is one of the lowliest creatures on Earth. But for months, catfish have been at the center of an intense Washington lobbying effort pitting domestic producers against importers.

“At issue is how catfish will be regulated and whether Vietnamese imports pose a health risk to American consumers. U.S. catfish producers used a multimillion-dollar lobbying effort to persuade Congress in 2008 to tighten regulation of the single species of fish, a program expected to incur $5 million to $16 million in start-up costs with its launch next year.

“The battle has sparked threats of a trade war from Vietnam, which wants its fish excluded from the regulations. The Vietnamese ambassador to the United States, Le Cong Phung, has called Congress hypocritical for changing the rules on catfish to give an advantage to domestic producers.”

Ms. Kindy pointed out that, “Under the farm bill passed in 2008, catfish inspections are moving to the U.S. Department of Agriculture, which has spent 18 months crafting regulations. The rules, which are still secret, might be approved by the Office of Management and Budget as early as Tuesday. All other fish remain under the purview of the Food and Drug Administration.

“Domestic catfish producers argue that tougher regulation — which would increase onsite inspections and testing — would force foreign producers to adhere to safety standards more in line with those that domestic producers must follow.”

Today’s article noted that, “The catfish wars have been brewing since 2002, when Congress passed a farm bill barring Vietnamese fish farmers from labeling their fish as catfish. The Vietnamese fish is from the genus Pangasius; the law mandated that only fish in the Ictaluridae family, which is produced in the United States and is commonly called channel catfish, could bear the catfish label. The two fish have a similar taste.”

“By 2008, when another farm bill made its way through Congress, Americans were eating slightly less domestically produced catfish than they had in 2002. But consumption of Pangasius — which is typically called basa at fish markets — had skyrocketed. Price was a factor. Wholesale, basa sells for $1.75 to $2 per pound, while channel catfish goes for a dollar more.

“Domestic trade groups tried a new tactic. They argued that a more rigorous catfish inspection program was needed to improve foreign farming practices, especially in Vietnam. Though they had fought in 2002 to bar Pangasius from bearing the catfish label, by 2008 they did an about-face, calling it ‘imported catfish’ that should be included in the USDA program,” the article said.

Sec. Vilsack- USDA Issues

Krissah Thompson authored a “Q and A” report in today’s Washington Post with Agriculture Secretary Tom Vilsack.

In part, the Post item indicated that, “When Tom Vilsack became head of the Agriculture Department last year, he faced a backlog of 11,000 civil rights complaints and several unresolved class-action lawsuits from minority farmers and ranchers.

“The largest case, known as Pigford, remains open. It originally was settled in 1999 for $1 billion after 16,000 black farmers said they had been unfairly denied farm loans. Thousands of black farmers later complained that they were unaware of the suit, and in 2008 it was reopened. Some farmers have said the Obama administration is not moving fast enough, and on Monday they protested outside the USDA headquarters.

“Vilsack said in an interview Friday that he is close to a resolution and is working hard to transform the department’s handling of civil rights.”

Biofuels

An update posted yesterday at the “Green House” section of USAToday Online stated that, “As companies push to cash in on President Obama’s call for biofuels and clean coal technologies, two are touting a way to turn government and other paper waste into fuel, or ‘trashanol.’

“Yes, all those thousand-plus-page pieces of legislation can now be turned into a biofuel that the manufacturers say emits up to 90% less carbon dioxide than gasoline.

“On recent demonstration drives around Washington, Denmark’s Novozymes and Maryland-based Fiberight used their so-called trashanol to power a flex-fuel Chevy HHR and Ford F150.”

Yesterday’s update indicated that, “‘Enzyme technology is ready for market,’ Adam Monroe, president of Novozymes North America, said in a statement. His company received two Energy Department research grants, in 2002 and 2008, worth $14.5 million, to reduce the cost of enzymes and improve their efficiency in coverting cellulose to biofuels.

“His company has also received a $28.4 million tax credit to build an enzyme manufacturing plant in Blair, Neb., which it says will create 100 new green jobs.”

Meanwhile, a press release issued yesterday by the Renewable Fuels Association stated that, “The U.S. ethanol industry exported 5.64 million metric tons (mmt) of distillers grains worth nearly $1 billion in 2009, shattering the previous record set in 2008, according to data released last week by the Foreign Agriculture Service. Exports in 2009 were 24 percent above 2008 levels and more than five times higher than the amount of distillers grains exported just five years ago.

“Distillers grains are the livestock feed coproduct of ethanol production from grain. In a typical dry mill ethanol biorefinery, one-third of every bushel of corn entering the facility is returned to the market in the form of high protein, nutrient rich livestock feed. Only the starch portion of the corn kernel is converted to fuel, while the remaining protein, fat and other nutrients remain intact in the coproduct.”

Recall that last week The New York Times editorial board weighed in on the new EPA guidelines regarding biofuel classification, which included consideration for international indirect land use changes when figuring emissions calculations.

Two letters to the editor in response to the Times position on this issue were published in today’s paper.

National Corn Growers Association President Darrin Ihnen stated that, “While American corn farmers are pleased the Environmental Protection Agency recognizes that corn ethanol offers significant reductions in greenhouse gas emissions compared with gasoline, we disagree strongly with its dependence on — and your support for — the theory of international indirect land use change.

“Upwardly trending corn yields disprove this theory. In 2009, for example, farmers grew enough corn to break 2007’s production record, and we did so harvesting nearly seven million fewer acres.”

And Renewable Fuels Association President Bob Dinneen noted that, “While praising the Environmental Protection Agency’s recent decision supporting the expansion of biofuels production, you continue to insist on a direct connection between America’s production of corn and land use impacts in sovereign countries elsewhere in the world.

“These so-called indirect land use impacts have questionable scientific validity. In fact, more than 100 scientists and Ph.D.’s have stated: ‘The ability to predict this alleged effect depends on using an economic model to predict worldwide carbon effects, and the outcomes are unusually sensitive to the assumptions made by the researchers conducting the model runs. In addition, this field of science is in its nascent stage, is controversial in much of the scientific community, and is only being enforced against biofuels.’”

Mr. Dinneen added that, “In a rush to continue denigrating American agriculture, you ignore land use and carbon impacts of oil production, the increasing efficiency of corn and ethanol production in the United States and the fact that logging, cattle ranching and other activities have a more destructive impact on tropical forests than anything else.”

Climate Issues

Ben Geman reported yesterday at The Hill’s Energy and Environment Blog that, “A top Obama administration scientist on Monday struck back at climate skeptics who claim that record snowstorms this winter have undercut evidence of global warming.

“‘It is important that people recognize that weather is not the same thing as climate,’ said Jane Lubchenco, head of the National Oceanic and Atmospheric Administration.

“Lubchenco, speaking on NPR’s ‘Diane Rehm Show,’ said the planet is warming but that weather is variable. The snowy weather, Lubchenco said, ‘is not a contradiction and it is not really unexpected.’”

Meanwhile, Bloomberg writer Stuart Biggs reported yesterday that, “Phil Jones, the professor at the center of a scandal over hacked e-mails on climate change, said his data wasn’t well organized and the period since 1995 hasn’t seen statistically significant global warming, British Broadcasting Corp. reported.

“Jones, who stepped aside as head of the Climate Research Unit of the University of East Anglia in the U.K. pending an inquiry, said lack of organization contributed to his refusal to share data with climate-change skeptics, according to a transcript of his interview with the BBC.

“Jones also said scientists hadn’t yet settled the debate over whether global temperatures in medieval times were warmer than recently, the BBC said. Jones stood by the view that global warming was most likely predominantly man-made.”

California Water

Recall that a Greenwire article from last week reported that, “Sen. Dianne Feinstein has targeted the Senate jobs bill in a bid to guarantee more water for struggling farmers in California’s San Joaquin Valley regardless of restrictions imposed by the Endangered Species Act.

“Feinstein’s office yesterday announced plans to attach a rider to the jobs bill, calling it the ‘Emergency Temporary Water Supply’ amendment. It would seek to ensure that farmers and water districts get between 38 percent and 40 percent of their normal allocations. A final draft of the amendment is yet to be written, her office said.”

The editorial board at The San Francisco Chronicle offered a perspective on this development yesterday, noting in part that, “Sen. Dianne Feinstein should drop her end-run bid to ship delta water south for farming. Her plan defies court rulings, endangered-species protections and scientific studies.

“The water grab disrupts years of negotiations over balancing the state’s needs by rewarding one group – drought-stricken farmers – at the expense of fishing and environmental groups, also living with declining water supplies. Worse yet, Feinstein’s action short-circuits a study she ordered up by the National Academy of Sciences on river-flow rules designed to safeguard smelt and salmon.

“The senator was at pains to explain that her idea is only in draft form, suggesting that it may be a negotiating tactic.”

The Chronicle opinion item stated that, “She’s advanced a plausible argument, but any solution needs analysis and group agreement. Water deliveries to some farmers are 10 percent of past levels, and she’s proposing to boost these allotments to 30 to 40 percent.

“Feinstein’s plan would greatly help the parched west side of the San Joaquin Valley, where farmers have idled hundreds of thousands of acres for lack of water.”

“California water policy needs a political champion willing to take on a complicated issue. That means adopting a balanced approach, not one that bails out one side at the expense of all others,” the opinion item said.

Keith Good

February 12

ERS- Farm Income

The U.S. Department of Agriculture’s Economic Research Service (ERS) updated its 2010 Farm Sector Income Forecast yesterday, and noted in part that, “Net farm income is forecast to be $63 billion in 2010, up $6.7 billion (11.8 percent) from 2009. The 2010 forecast is $1.4 billion below the average of $64.5 billion in net farm income earned in the previous 10 years. Still, the $63 billion forecast for 2010 remains the fifth largest amount of income earned in U.S. farming. The top five earnings years have occurred since 2003, attesting to the profitability of farming this decade. Farm income exceeded $80 billion in 2004 and 2008 and topped $70 billion in 2005 and 2007 [see related graph].”

ERS indicated that, “Macroeconomic forces undergird our optimism in projecting a boost in 2010 farm income. Fertilizer prices have fallen by about 50 percent in the past year. The dollar’s decline against other currencies should make agricultural exports of both crops and livestock/meat more competitive. Continued population growth, particularly in developing countries, will increase global demand if accompanied by rising incomes.

“The falling value of the dollar increases the price of imported crude oil, raising the cost of fuels for farmers, but that trend is partially offset by benefits to farmers who produced biofuel feedstocks. Ethanol and biodiesel plants that were shut down or running at less than full capacity are expected to increase production as crude oil prices increase, which should increase the demand for corn and soybeans, providing support for prices.”

With respect to production costs, yesterday’s update stated that, “Total production expenses in 2010 are forecast to rise to $281.4 billion, $0.7 billion (0.3 percent) higher than a revised forecast of $280.7 billion in 2009. This small increase follows a dramatic drop in 2009, when total expenses fell $9.3 billion (3.2 percent), and puts expenses at the second highest level ever [see related graph].”

On the issue of government payments, ERS explained that, “Direct government payments are expected to total $12.4 billion in 2010, a 4-percent decrease from the projected $12.9 billion paid out in 2009 [see related graph]. This level would be 20 percent below the 5-year average for 2005-09. Direct payments under the Direct and Countercyclical Program (DCP) and the Average Crop Revenue Election Program (ACRE) are forecast at $4.8 billion for 2010. Direct payment rates are fixed in legislation and are not affected by the level of program crop prices. Authorized under the Food, Conservation, and Energy Act of 2008 (2008 Farm Act), ACRE provides revenue insurance to producers in exchange for a 20-percent reduction in their annual direct payment allotments beginning with the 2009 crop year. ACRE program payments are forecast to be $438 million in 2010.

“Countercyclical payments are forecast to decrease by 27 percent from $1.23 billion in 2009 to $895 million in 2010. Strong cotton prices in 2010 are responsible for this projected decrease. Only upland cotton and peanuts are projected to receive countercyclical payments in 2010. Marketing loan benefits—including loan deficiency payments, marketing loan gains, and certificate exchange gains—are projected at $95 million in 2010, down 90 percent from 2009 levels. Wheat producers are projected to receive $85 million in marketing loan benefits. Prior to 2010, upland cotton producers realized almost 91 percent of the total marketing loan benefits. However, strong cotton prices projected for 2010 will be too high for cotton producers to qualify for marketing loan benefits. The other crops receiving marketing loan benefits are wool, mohair, and pelts.

“The Milk Income Loss Contract Program (MILC) compensates dairy producers when domestic milk prices fall below a specified level. Payments are made monthly and are made only on a ‘capped’ level of production. High milk prices for most of 2008 meant that only relatively small program payments were recorded. The low prices in 2009 due to the ongoing effects of the global recession generated $900 million in MILC payments. For 2010, milk prices are expected to rebound such that only $30 million in MILC payments will be made.”

ERS- Baseline

Also yesterday, ERS updated its Agricultural Baseline Projections, which “provides longrun projections for the farm sector for the next 10 years. These annual projections cover agricultural commodities, agricultural trade, and aggregate indicators of the sector, such as farm income and food prices.”

In a closer look at farm income variables, ERS noted that, “Net farm income declines in the near term from the high levels of 2007 and 2008, but then grows moderately over the next decade and exceeds the average of the previous 10 years by the middle of the projection period [see related graph]. Sustained biofuel demand and strengthening global food demand provide a major impetus for projections of rising cash receipts after 2009.”

“Direct government payments to farmers are projected to fall from a projected $12.4 billion in 2010 to an average of less than $10 billion annually in 2011 to 2019 [see related graph]. Price-dependent program benefits account for a declining share of payments,” ERS noted, adding that, “With higher prices, government payments have a smaller role in the agricultural sector’s income. Government payments, which represented more than 8 percent of gross cash income in 2005, account for less than 3 percent during most of the projection period. Conversely, the sector relies on the market for more of its income. Cash receipts plus farm-related income rise to more than 97 percent of gross cash income.”

Economic Report of President-Climate Change

The Council of Economic Advisers released its Economic Report of the President for 2010 yesterday.

Neil Irwin reported in today’s Washington Post that, “The economy is projected to add jobs this year at a pace too sluggish to make much of a dent in unemployment, according to a new White House forecast that suggests President Obama’s advisers expect the jobless problem to be a fact of life throughout his term.”

“The nation will add an average of 95,000 jobs a month this year, according to the forecast, a bit below the number that economists think needs to be generated just to keep up with population growth. The unemployment rate is projected to come down quite slowly after that, averaging 8.2 percent in 2012, when Obama will be up for reelection,” Mr. Irwin said.

The report noted in chapter nine (“Transforming the Energy Sector and Addressing Climate Change”) that, “The planet has not experienced such rapid warming on a global scale in many thousands of years, and never as a result of emissions from human activity. By far the largest contribution to this warming comes from carbon intensive fossil fuels, which the world depends on for cooking, heating and cooling homes and offices, transportation, generating electricity, and manufacturing products such as cement and steel.

“The potential for significant damages if emissions from these activities are not curbed makes it crucial for the world to transform the energy sector. This transformation will entail developing entirely new industries and making major changes in the way energy is produced, distributed, and used. New technologies will be developed and new jobs created. The United States can play a leadership role in these efforts and become a world leader in clean energy technologies. The transformation to a clean energy economy will also reduce our Nation’s dependence on oil and improve national security, and could reduce other pollutants in addition to greenhouse gases.”

The report added that, “In his first year in office, the President took several other significant and concrete steps to transform the energy sector and address climate change. Significantly, the Environmental Protection Agency (EPA) issued two findings in December 2009. The first finding was that six greenhouse gases endanger public health and welfare. The second finding was that the emissions of these greenhouse gases from motor vehicles cause or contribute to pollution that threatens public health and welfare. These findings do not in and of themselves trigger any requirements for emitters, but they lay the foundation for regulating greenhouse gas emissions.”

Meanwhile, a news release issued yesterday by the University of California at Davis noted that, “The looming threats of global climate change and population growth call for sweeping changes in how the world produces its food and fiber, warns a group of prestigious scientists, including an expert in plant genetics at the University of California, Davis.

“The research team, led by Nina Federoff, science and technology adviser to Secretary of State Hillary Clinton, suggests that there is a ‘critical need to get beyond popular biases against the use of agricultural biotechnology,’ as well as explore the potential of aquaculture and maximize agricultural production in dry and saline areas. Their recommendations will appear as a perspective piece titled ‘Radically Rethinking Agriculture for the 21st Century’ in the Feb. 12 issue of the journal Science.”

A special collection posted a Science Online titled “Food Security,” can be viewed here.

Jobs Bill-Biofuels

Shailagh Murray and Ben Pershing reported in today’s Washington Post that, “Senate Majority Leader Harry M. Reid (D-Nev.) announced Thursday that his chamber would move quickly to pass four popular provisions aimed at creating jobs, potentially with the bipartisan backing that has proven elusive in recent months.

“The provisions were plucked from a broader package of business incentives and unemployment aid negotiated by Senate Finance Chairman Max Baucus (D-Mont.) and his GOP counterpart, Sen. Charles E. Grassley (Iowa). But instead of advancing the bigger bill, Reid announced that he would break it into two parts, bringing the jobs-related incentives to a vote on Feb. 22. The remaining measures would move later as a separate bill.”

James Hohmann and Lisa Lerer reported yesterday at Politico that, “Members of the Senate Finance Committee unveiled a long-awaited bipartisan jobs bill Thursday morning — only to have it scrapped within hours by Senate Majority Leader Harry Reid.

“The Nevada Democrat killed the bill after hearing complaints from members of his own caucus, who argued that Finance Committee Chairman Max Baucus (D-Mont.) had gone too far beyond the core goal of job creation in order to win over Republican support.

“It was a major rebuke for Baucus, who’d spent weeks working with Iowa Sen. Chuck Grassley, the ranking Republican on his committee, trying to come up with a bill that Republicans would support.”

Ben Geman reported yesterday at The Hill’s Energy and Environment Blog that, “Senate Majority Leader Harry Reid’s (D-Nev.) decision to push a pared-down jobs package that omits several energy provisions is drawing criticism from biodiesel producers seeking extension of lapsed tax credits. Sen. Charles Grassley (R-Iowa), a proponent of the industry, isn’t thrilled either.

“An extension through 2010 of biodiesel tax credits was part of a jobs plan unveiled by Senate Finance Committee leaders Thursday morning. But the $1-per-gallon biodiesel blending credit and several other energy provisions are no longer in what Reid said will be the first of several jobs measures.

“‘Clearly, the National Biodiesel Board is disappointed that Senate leadership decided to pull the biodiesel tax incentives from the current jobs bill,’ said Michael Frohlich, a spokesman for the trade group. He added that leadership should recognize that ‘saving 23,000 jobs that are in immediate jeopardy is inextricably linked to a true job-saving and creation agenda.’”

Mr. Geman explained that, “Extension of the credits is a top priority for Grassley, the Finance Committee’s top Republican. Iowa has over a dozen biodiesel plants, according to the Iowa Renewable Fuels Association.

“Jill Kozeny, a spokeswoman for Grassley, said there is biodiesel production in 44 states overall. ‘They are losing jobs since the credit expired at the end of the year, and restoring the credit as quickly as possible is essential to saving these renewable energy jobs,’ she said.   

“But with Reid’s decision, Grassley and other lawmakers will have to look to subsequent bills for their favored energy measures.”

In other issues regarding biofuels, C. Boyden Gray, who served as White House counsel to President George H.W. Bush, and as ambassador to the European Union under President George W. Bush, penned a column earlier this week in the Washington Times titled, “Getting a true measure on biofuels.”

In part, Mr. Gray noted that, “Little noticed outside a small policy community, an issue has quietly arisen in recent years that, while seemingly technical, has the potential to derail the nation’s attempts to address the issues of energy security and the environment. The issue is how or whether to count the effects of ‘indirect’ land use — including as far away as Southeast Asia or Brazil — in determining the total greenhouse gas emissions from renewable fuels like ethanol, the very fuels that will enable us to reduce our dependence on imported oil. The wrong answer to this question could severely affect the increased use of alternative fuels, aggravating our energy dependence.”

After detailed analysis, Mr. Gray stated that, “The combination of sustainable forests, sustainable agriculture and greater use of biofuels is not merely a dream — it is today’s reality. In fact, the EPA deserves credit for recognizing a crucial point: that the protein byproduct of ethanol production is better feed for cattle than corn itself, thus maintaining the availability of feed for cattle while reducing their dangerous methane emissions at the same time.

“But the flawed ‘indirect’ land-use issue nevertheless remains available to be misused someday, to deny the full and proper accounting of all of the environmental and energy benefits of renewable energies such as ethanol.”

Analysis of USDA

DTN Ag Policy Editor Chris Clayton reported yesterday (link requires subscription) that, “If there is one consistent message from Secretary of Agriculture Tom Vilsack in the past year, it’s that USDA is not just the place that sends farmers checks and gives food aid to people.

“Instead, Vilsack is fond of saying his department is the ‘everyday, everyway USDA.’

“Vilsack’s approach partially deflects the idea that USDA is a giant department that largely serves a small segment of the population by duplicating programs in other parts of the federal government. Instead, the Obama administration makes the case that there’s something at USDA for everybody.”

Mr. Clayton noted that, “But the combination of the organic gardens, farmers’ markets, the appointment of organic expert Kathleen Merrigan as USDA deputy secretary and Merrigan’s initiative, ‘Know Your Farmer, Know Your Food,’ created some grumblings. Even though USDA agencies spent a lot of time to develop rules from the 2008 farm bill, there are questions about the commitment to production agriculture.” [Note: Stewart Doan, a Senior Editor at Agri-Pulse recently interviewed Dep. Sec. Merrigan, to listen to this wide ranging discussion, just click here].

“‘What we have seen coming out of them thus far, specifically, I think we have to talk about the shift from what I would characterize as mainstream, traditional, production agriculture to a USDA that, by any measure, is clearly more focused on what I would call niche markets,’ said Chuck Conner, former deputy secretary of agriculture and now president of the National Council of Farmer Cooperatives.

“‘Locally grown, organically grown, farmers’ markets, all those kinds of things, are clearly getting far more attention down there today than what I would call traditional, production agriculture,’ said Conner.”

The DTN article added that, “National Farmers Union President Roger Johnson disagrees, but he said he’s also heard the statements. Johnson said he was on a panel of farm organizations in late January when someone made the statement, ‘It seems like this administration doesn’t care about production agriculture. What do you think about that?’ Most of the groups on the panel, however, said the administration has worked aggressively on trade, and USDA officials make it clear there is always an open door, he said.

“‘There was nothing said on the panel that sort of agreed with that perception,’ Johnson said. He added that USDA also now invites commodity and general-farm groups to talk with senior USDA officials about issues within the department and with agriculture.”

And later, Mr. Clayton explained that, “Though Conner raised issues about a shift in mindset at USDA, he and other production-agricultural groups are more prone to highlight the current challenges with EPA than USDA. Conner said his group has a long list of agenda items, but two-thirds of those concerns focused on EPA regulations and proposals.

“‘Many of our guys and the farmers and ranchers in the Midwest, the guys I see often, continue to be nervous about what the EPA will continue to do in the near future in regards to the blend wall and raising the 10 percent blend situation,’ Conner said. ‘All indications are that continues to be moving, though a lot more slowly than what many of these guys would like to see.’

“When asked by reporters about the Obama administration at the American Farm Bureau convention, AFBF President Bob Stallman also talked more about EPA regulations than USDA. Stallman cited more proposed rules on water quality, greenhouse gas emissions, pesticides and herbicides as some examples.”

Marian Burros reported yesterday at Politico that, The Obama administration’s competing agricultural policies could prompt a bad case of indigestion — or whiplash.

“Longtime food policy observers are having a difficult time squaring the Department of Agriculture’s entrenched preference for high-tech industrial agriculture that emphasizes biotechnology and genetically engineered crops with its newfound interest in helping those who favor low-tech ag: small farmers, advocates of organic and local food and champions of sustainability.

“Margaret Mellon, senior scientist with the Union of Concerned Scientists, describes the USDA as schizophrenic. ‘It wants to promote both organic and sustainable local,’ she said. ‘It is also committed to promotion of biotech here and around the world. So far, there has not been collision between those two priorities, but I’m not sure that situation will last much longer.’”

The lengthy Politico article noted too that, “With the appointment of Merrigan, he seemed to seal his small-farmer credentials. Merrigan founded the Know Your Farmer, Know Your Food initiative, described on its website as a governmental effort ‘to help create the link between local production and local consumption.’

“Her efforts have even given some agribusiness-biotech supporters pause. Sen. Mike Johanns (R-Neb.), who held Vilsack’s job in the Bush administration, now questions USDA’s commitment to biotech and industrial-scale agriculture.

“‘There seems to be, from the current administration, an idyllic vision of the countryside, without much of a realistic understanding of how modern-day agriculture feeds an ever-growing population,’ he said.”

Keith Good

February 5

Congressional Agenda; Trade; Climate Issues; Biofuels; NAIS; and Ag Economy

Congressional Agenda

Lori Montgomery reported in today’s Washington Post that, “Congress agreed Thursday to revive the pay-as-you-go budget rules that helped wipe out massive deficits and balance the budget during the Clinton administration, although the new version includes a long list of exceptions that would permit Democrats to add at least $1.5 trillion to the nation’s tab over the next decade.

“The House voted 233 to 187 to approve the rules, known in congressional shorthand as paygo. The rules were adopted last month by the Senate and now go to President Obama for his signature.

“The return to paygo comes as record deficits push the government more deeply into debt than at any time since the 1950s. Democrats attached the new rules to a must-pass measure that raises the legal limit on government borrowing by a record $1.9 trillion. With the public debt expected to hit the current cap by next week, the increase — which was approved on a separate vote, 217 to 212 — authorizes the Treasury Department to continue borrowing to cover the nation’s bills through early next year.”

The Post article added that, “Obama praised the legislation’s passage. ‘PAYGO would hold us to a simple but bedrock principle: Congress can only spend a dollar if it saves a dollar elsewhere,’ he said in a statement. ‘Mandatory spending increases and tax cuts must be paid for; they’re not free, and borrowing to finance them is not a sustainable long-term policy.’

“The revival of paygo is part of a three-step strategy for tackling the nation’s budget problems. Obama has also pledged to freeze non-security spending for three years and to create a bipartisan commission to come up with a plan for reducing projected budget deficits.”

An update posted yesterday at CQPolitics.com reported that, “Senate Democratic leaders said Thursday they will try to move jobs-focused legislation to the floor next week that would likely include business tax breaks and the extension of numerous economic stimulus measures that are set to expire.”

Alexander Bolton reported yesterday at The Hill Online that, “But [Sen. Majority Leader Harry Reid (D-Nev.)] and other leaders declined to discuss key details, such as how much the package would cost, how many jobs it would create and how it would be paid for. Reid had yet to secure a Republican co-sponsor for the package.”

With respect to the jobs issue, Rebecca Smith reported yesterday at The Wall Street Journal Online that, “The U.S. could add hundreds of thousands of jobs if Congress requires that part of the nation’s electricity be derived from renewable sources, according to a study released Thursday.

“The study, by Navigant Consulting, said a renewable-energy standard requiring utilities to produce between 20% and 25% of their energy from wind, solar and other renewable sources would create between 191,000 and 274,000 jobs.

“More than half would be high-value manufacturing jobs that could help the U.S. boost exports and develop an advantage in technological innovation, said Navigant, a business consultancy that conducted the study for the RES Alliance for Jobs, a consortium of renewable-energy companies.”

Trade

Helene Cooper reported in today’s New York Times that, “The administration on Thursday unveiled its new strategy to make good on President Obama’s promise to double American exports in the next five years. The approach included pledges to pursue more trade agreements, increase pressure on trading partners to open markets and the creation of an export promotion cabinet.

“But in announcing the new strategy [transcript, video], the commerce secretary, Gary Locke, did not say when the administration might send Congress three completed free-trade accords — with Colombia, Panama and South Korea. Many trade specialists say that is essential to prod other countries to negotiate with the United States. But the move is likely to cause a rift with Mr. Obama’s liberal supporters in the Democratic Party, as well as free-trade opponents in the Republican Party.

“Still, many trade specialists nonetheless welcomed the new strategy, particularly, they said, because it was the first time that the Obama administration had embraced trade liberalization vigorously.”

The Times article added that, “Treasury Secretary Timothy F. Geithner told a House budget hearing on Wednesday that the administration ‘absolutely’ planned to make passage of the three trade pacts part of the new export strategy this year. ‘It’s not just that,’ Mr. Geithner said. ‘We want to be in the game in Asia as they move to negotiate new agreements there.’”

Darrell A. Hughes reported yesterday at The Wall Street Journal Online that, “U.S. President Barack Obama wants the Export-Import Bank to increase export financing for small- and mid-sized businesses and is proposing that the amount of credit available be increased to $6 billion in the next year, Commerce Secretary Gary Locke said Thursday.

“The proposed increase from $4 billion is part of Obama’s plan to double exports over the next five years, an effort being organized by the Commerce Department.”

And Philip Brasher pointed out yesterday at the Green Fields Blog (The Des Moines Register) that, “Locke offered little new as far as agricultural exports specifically. He noted that the president’s budget proposes an additional $54 million for export promotion. The department wants to hire more staff overseas to talk up U.S. products.

“At the same time, however, the budget would slash the Market Access Program that subsidizes private promotional programs. The program is especially popular with fruit and vegetable producers and has subsidized marketing campaigns for everything from asparagus to wine. (The Wine Institute is getting $7 million this year.) The White House budget office questions whether the program is really effective, but Congress rejected Obama’s attempt to cut the program last year.

“By the way, Agriculture Secretary Tom Vilsack emphasized earlier this week at a budget briefing with reporters that the president was not promising to double agricultural exports, which totaled nearly $97 billion last year.”

The Los Angeles Times editorial board indicated today that, “It has taken the loss of 4 million jobs in one year and a nationwide unemployment rate of 10% for President Obama to finally take a firm stand on the economic benefits of free trade.”

The LA Times opinion piece added that, “Of course, doubling annual exports to between $2 trillion and $3 trillion in such short order is a tall order, and it is almost impossible to see how the goal can be met without action on the three pending free-trade agreements. Ratification would add an estimated $15 billion annually in exports, and the deal with South Korea is particularly important for California agriculture; exports of dairy, almonds, walnuts, pistachios and pomegranate juice could hit the $1-billion mark in the next few years. Continued inaction, by contrast, would endanger several hundred thousand jobs, according to the U.S. Chamber of Commerce. Also, the president seemed to contradict himself by being both populist and pro-trade, urging taxation of companies that move jobs overseas — that threat is a favorite, but those companies also account for 44% of the nation’s exports. It’s unclear how penalizing them will help meet the president’s goal.

“Still, Obama’s positive tone is welcome.”

In other trade news, Reuters news reported yesterday (article posted at DTN, link requires subscription) that, “U.S. and Brazilian officials have begun talks to try to settle a trade dispute at the World Trade Organization over U.S. cotton subsidies, the U.S. ambassador to Brazil said on Thursday.

“The South American agriculture giant was expected to present a definitive list of U.S. targets for retaliation in coming days.

“Until last month, Brazilian authorities said they had seen no signs from their U.S. counterparts that the United States wanted to negotiate a settlement.”

Yesterday’s Reuters article stated that, “Total sanctions could be worth $829 million based on 2008 data for the export credit guarantee program, Brazil’s foreign trade ministry said in December.

“Brazil had already identified more than 200 possible U.S. targets for trade retaliation, ranging from foodstuffs to textiles to pharmaceuticals.”

And a news release issued earlier this week by Rep. Adrian Smith (R-Neb.) stated that, “[Rep. Smith (R-NE)] today joined with a number of his House colleagues in signing a letter to Taiwan’s Representative to the United States Jason Yuan expressing their disappointment with the recent unilateral decision by Taiwan to bar the import of certain beef and beef products and urging a reversal of the policy.

“Nebraska has the top three beef cow counties in the U.S., and produces more beef per square mile than any other state. Nebraska ranks first in the country in live animal and meat exports ($1.1 billion) and number one in cattle harvest (seven million head).”

“‘Export markets are critically important to Nebraska’s beef industry. America has the safest food supply in the world and I am disappointed Taiwan took this action, which is in direct violation of a bilateral agreement concluded by our nations just two months ago. Taiwan should honor its commitments to provide full market access to U.S. beef and beef products,’ Smith said.”

Climate Issues

The Los Angeles Times editorial board indicated today that, “If changes in the public mood and the party alignment of the U.S. Senate have stalled healthcare legislation, they may have thrown the highly anticipated climate bill under a bus.

“Even before Republican Scott Brown’s stunning election to the Senate in traditionally Democratic Massachusetts last month, it was proving hard to corral moderate Democrats to support a bill capping greenhouse gas emissions. Now they’re afraid to back anything that could be perceived as harmful to the economy. ‘Realistically, the cap-and-trade bills in the House and the Senate are going nowhere,’ Sen. Lindsey Graham (R-S.C.) told the New York Times. That’s a distressing comment coming from one of the three senators supposedly crafting a compromise climate bill that’s capable of achieving a filibuster-proof majority in the Senate.

“President Obama has backed down too. On Tuesday, he signaled that cap-and-trade could go the way of healthcare reform’s ‘public option,’ saying it could be removed from the climate bill. That would eliminate the market mechanism for pricing greenhouse gas pollution — and without setting such a carbon price, other measures under consideration, such as a national renewable energy standard, won’t go far enough to significantly slow global warming.”

However, Christa Marshall of ClimateWire reported yesterday at The New York Times Online that, “The Obama administration’s top climate adviser strongly defended a cap on emissions a day after the president suggested Congress might move an energy bill without such a cap in place.

“White House climate and energy adviser Carol Browner used th