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EWG Database Update

Associated Press writer Lauren Villagran reported yesterday that, “Wheat prices surged to a record high for 2007 Monday as heavy rains threatened to damage an already tarnished crop…. While rain soaked Midwestern wheat fields on Monday, dry skies stifled the moisture-hungry eastern Corn Belt, sending corn prices above $4 a bushel… Bullish traders also ran with a report from the U.S. Department of Agriculture on Monday in which the agency lowered its projections for winter wheat production this month and raised its export projections. Shortfalls in other producing nations will raise overseas demand for U.S. wheat, the USDA said.”

I. EWG Database Update
II. Energy Bills
III. Canada’s WTO Case / Doha
IV. Grain Prices

I. EWG Database Update

Associated Press writers Sam Hananel and Mary Clare Jalonick reported yesterday that, “From Texas billionaires to Washington lobbyists, it’s no secret that wealthy people can get federal farm subsidies.

“But now, for the first time, new Agriculture Department data makes it easier to see exactly who benefits from the nation’s generous farm subsidy program.

“Instead of having to sift through a complex web of corporations, partnerships and other business entities, the USDA has assigned a specific dollar amount to the individuals behind the businesses.

The Environmental Working Group (EWG) will release an update to their searchable database of farm subsidy recipients today.

“Senate Agriculture Committee Chairman Tom Harkin, D-Iowa, said the new data could affect farm bill negotiations this year as lawmakers consider reducing direct payments to farmers.”

The AP story added that, “The Environmental Working Group, a public interest group that has long pushed for more equitable distribution of farm subsidies, has compiled the data and will post it online for users beginning Tuesday.

“EWG president Ken Cook said he hopes the new information will help spur reforms as Congress and the Bush administration consider what a new multibillion-dollar farm bill should look like.

“‘It really does raise the question why shouldn’t we at least impose some sort of reasonable test of means before we disperse all this money,’ Cook said.

“The database includes about 358,000 beneficiaries who received $9.8 billion in crop subsidy benefits between 2003 and 2005.”

In conclusion, the article pointed out that, “[Former Texas Rep. Charlie Stenholm], who received payments totaling $168,626 for farming wheat and cotton with his son on his Texas farm, says EWG has in the past organized its data in a misleading way to prove a point.

“‘Most American people do not support farm subsidies,’ Stenholm said. ‘Anything you can do to make them look as bad as they possibly can works to your advantage.’

“Still, he said, he believes Congress is moving toward a reduction in direct payments, which are not based on current crop production or prices. Harkin supports this approach, and many members believe it would free up money for other programs.”

According to an update posted yesterday at the Mulch Blog, Ken Cook noted that, “EWG’s new 2007 Farm Bill Database provides full disclosure, starting here at Mulch at 12 noon Eastern time, June 12… And look for a surprising new feature on the Web site when we light it up.”

And an EWG news release noted that at 10:00 Eastern today, “Environmental Working Group President Ken Cook and Vice President for Information Technology Chris Campbell will publicly unveil a new, companion version of the Environmental Working Group’s heavily trafficked Farm Subsidy Database.” The event will take place at The National Press Club’s First Amendment Lounge, 529 14th St. NW, 13th Floor Washington, DC.

Bloomberg news writer Alan Bjerga also filed a report yesterday on the EWG database, noting that, “The database was compiled by the Washington-based Environmental Working Group to encourage Congress to pass income-based ‘means tests’ for farm-aid recipients, said Ken Cook, the group’s president. It’s being released as congressional committees draft a new multibillion-dollar farm bill.”

The article noted that, “‘Larger subsidies reflect larger risks,’ said Mary Kay Thatcher, lobbyist for the American Farm Bureau Federation, which has the most members of any U.S. farmer organization. Any means test could lead to even more restrictive standards, she said.”

Jake Thompson, writing in today’s Omaha World-Herald reported that, “Nebraska’s 3rd Congressional District [31,774 farms] received the highest amount in federal farm subsidies among the nation’s 435 congressional districts in recent years, new data released Monday show.

“Farmers in the 3rd District, which covers the western three-fourths of the state, received more than $1.7 billion in government crop subsidies from 2003 to 2005, according to the Environmental Working Group, a public interest group.

“North-central Iowa’s 4th District [24,501 farms] ranked third nationwide, with $1.2 billion in subsidy payments to farmers from 2003 through 2005; western Iowa’s 5th District [26,562 farms], ranked sixth with $1.1 billion in payments to farmers, the group reported.”

The article added that, “Given the number of farms in their districts, their rankings in subsidies isn’t surprising, said two Nebraska and Iowa congressmen.

“Rep. Adrian Smith, R-Neb., said his 3rd District, one of the geographically largest in the country, is a ‘very ag-productive district.’

“Brandon Lerch, spokesman for Rep. Steve King, R-Iowa, who represents the 5th District, noted that it ranks second nationwide among all congressional districts in total agricultural exports.”

More specifically, the article stated that, “The new data shed light on how many Nebraskans and Iowans might exceed a $250,000 cap. Previous data suggested that only a few dozen Nebraska and Iowa farms received more than that amount each year.

“But according to the new data, more than 80 farm operations in Nebraska topped $250,000 in government subsidies in 2005. The largest was Kaliff Farms in York, which received $1.5 million in crop subsidies in 2005, the data show.

“In Iowa, 70 farms exceeded $250,000 in crop subsidies in 2005, according to EWG’s analysis.”

Rick Barrett reported yesterday at the Milwaukee Journal Sentinel Online that, “Soaring demand for corn to make ethanol has driven corn prices higher this year. Expected corn acreage is higher in nearly every state as the favorable prices encourage farmers to plant more of the ubiquitous crop.

“With higher income from corn, farmers raising that crop won’t receive subsidies that are as big.

“‘The ethanol boom has changed things,’ [Rock County, farmer Gary Hahn] said. ‘I don’t think these big subsidies are going to be an issue like they were in the past.’”

Interestingly, it is not just caps on Title I commodity payments that are getting attention, Congressional Quarterly writer Catharine Richert reported yesterday that, “Capping farm payments long has divided Midwestern lawmakers from their Southern colleagues — and now the idea threatens to alienate Western and Northeastern lawmakers as well.

“House Agriculture Committee Chairman Collin C. Peterson, D-Minn., said last week that he is considering language in this year’s farm bill that would cap the sum that farmers can receive for applying environmentally friendly practices on their land. Money saved by the limits — which are similar to those being eyed for crop subsidies — would be used to expand other cash-strapped programs in the five-year authorization.”

Ms. Richert added that, “Peterson’s plan, which could come up in subcommittee next week, already isn’t playing well with lawmakers from California nor among other Westerners and representatives of Northeastern states, where conservation dollars are in high demand because farmers and ranchers in those regions qualify for few other federal subsidies.”

Meanwhile, Reuters writer Charles Abbott reported yesterday that, “Antihunger and environmental groups have asked the U.S. Congress to guarantee them $15 billion in additional spending, some of it at the expense of traditional U.S. crop subsidies.

“Environmentalists on Monday raised a direct challenge to farm subsidies, asking House and Senate leaders to increase land stewardship spending by $10 billion over five years, nearly a 40 percent increase from current levels.

“‘In particular, we urge you to finance new investments in conservation through reforms to farm bill policies and through new funding and offsets from sources outside the farm bill,’ two dozen environmental groups said in a letter.”

The article indicated that, “Pivotal sessions are approaching for nutrition and crop subsidy programs. A House Agriculture subcommittee is scheduled to vote on public nutrition programs on Thursday. Another subcommittee will meet next Tuesday to outline crop supports through 2012.”

II. Energy Bills

Steven Mufson, writing in today’s Washington Post, reported that, “With U.S. gasoline prices near record levels, the Senate is to take up an energy bill today that Democratic leaders hope will be a rallying point for voters concerned about national security and climate change as well as pump prices.”

The Post article added that, “The energy package also features a boost in the use of renewable fuels for vehicles to 36 billion gallons by 2022, including 15 billion gallons of corn-based ethanol and the rest from cellulosic ethanol sources.

“Although popular in Congress, a group of food companies — including beef, pork and poultry producers, Coca-Cola, PepsiCo, Kellogg and H.J. Heinz — sent a letter to [Senate Majority Leader Harry M. Reid (D-Nev.)] and Senate Minority Leader Mitch McConnell (R-Ky.) opposing the mandate and tax credits given for ethanol use.”

Mr. Mufson also pointed out that, “Much could turn on a single word. Some lawmakers, most likely led by Sen. Pete V. Domenici (R-N.M.), may try to alter the standard from ‘renewable’ to ‘alternative,’ which could include nuclear or certain kinds of coal-fired plants. A similar word change in the mandate for renewable motor fuels could open the way for coal-to-liquids projects, a change advocated by [Sen. Barack Obama (D-Ill.)] and Sen. Jim Bunning (R-Ky.). Environmentalists have warned that to replace significant amounts of gasoline with liquid coal would mean a huge increase in mining and would produce twice as much global warming gases as would conventional gasoline.”

Edmund L. Andrews reported in today’s New York Times that, “With gasoline prices hovering near all-time highs, the Senate on Monday began debating a sprawling energy bill that has already kicked off an epic lobbying war by huge industries, some of them in conflict with one another: car companies, oil companies, electric utilities, coal producers and corn farmers, to name a few.”

The Times article noted that, “But Charles W. Stenholm, a former Democratic representative from Texas, is lobbying on behalf of oil producers and cattle farmers against big subsidies for corn-based ethanol.

“The Senate bill, as well as a similar measure in the House, would force automakers to increase the fuel economy of their cars and light trucks. It would require a huge expansion of alternative fuels for cars and trucks as well as electric power plants. And it is expected to offer as much as $25 billion in tax breaks over 10 years to promote those fuels.”

Mr. Andrews went on to explain that, “One fight will be over whether to increase the government’s mandate for production of renewable fuels for cars and trucks to 36 billion gallons a year in 2022 from about 8.6 billion gallons a year in 2008.

“President Bush proposed a similar goal in January, but Mr. Bush’s mandate could be satisfied in part with coal-based liquid fuels. The coal industry, which has political support in both parties, is pushing for the government to guarantee billions of dollars in loans for coal-to-liquid plants as well as price subsidies and long-term government purchases.”

And Jim Snyder writing this morning at the Hill webpage explained that, “In another example of the expanding constituencies tracking energy legislation, a group of 15 food groups wrote members to oppose the bill for another reason: a mandate that calls for the production of 36 billion gallons of alternative fuels each year by 2022. Less than 7 billion gallons of renewable fuels are currently produced a year.

“Most of the new fuel would have to come from ‘advanced biofuels.’ That definition doesn’t include corn-based ethanol, which accounts for nearly all of the renewable fuels produced currently. Still, farm groups blame an existing renewable fuels mandate with raising the price of corn, which farmers use to feed their livestock, and oppose the new mandate.

“‘We are concerned that the aggressive increase in biofuels mandates contained in the Senate legislation raises fundamental concerns and questions about the impact that an increased federal government mandate for corn-based ethanol will have on the livestock and food industry’s ability to produce competitively available, affordable food,’ the group said in a letter. The companies and groups that signed the letter include H.J. Heinz, the National Chicken Council, National Pork Producers Council, and the National Turkey Federation.”

In related news, the Government Accountability Office issued a report yesterday entitled, “BIOFUELS: DOE Lacks a Strategic Approach to Coordinate Increasing Production with Infrastructure Development and Vehicle Needs,” (full report, one page summary) which stated in part that, “Existing biofuel distribution infrastructure has limited capacity to transport the fuels and deliver them to consumers. Biofuels are transported largely by rail, and the ability of that industry to meet growing demand is uncertain. In addition, in early 2007, about 1 percent of fueling stations in the United States offered E85—a blend of about 85 percent ethanol and 15 percent gasoline—or high blends of biodiesel, such as B20 or higher. Increasing the availability of E85 at fueling stations is impeded largely by the limited availability of ethanol for use in high blends. Several policy options, such as mandating their installation, could increase the number of biofuel dispensers in stations. However, until more biofuel is available at a lower cost, it is unlikely that more fueling stations would lead to significantly greater biofuels use.”

III. Canada’s WTO Case / Doha

The Associated Press reported yesterday that, “Canada will ask the World Trade Organization next week to launch a formal investigation into U.S. farm subsidy programs, according to an internal WTO document obtained Monday by The Associated Press.

“Washington is expected to delay the establishment of an investigative panel at the June 20 meeting of the WTO’s dispute settlement body. Under the Geneva-based trade body’s rules, a panel’s establishment can only be blocked once.”

The AP article added that, “On Monday, Brazil and India challenged the United States to offer ‘real’ cuts in annual handouts to American farmers or risk another setback in the World Trade Organization’s long-suffering round of global commerce talks.”

IV. Grain Prices

Associated Press writer Lauren Villagran reported yesterday that, “Wheat prices surged to a record high for 2007 Monday as heavy rains threatened to damage an already tarnished crop…. While rain soaked Midwestern wheat fields on Monday, dry skies stifled the moisture-hungry eastern Corn Belt, sending corn prices above $4 a bushel… Bullish traders also ran with a report from the U.S. Department of Agriculture on Monday in which the agency lowered its projections for winter wheat production this month and raised its export projections. Shortfalls in other producing nations will raise overseas demand for U.S. wheat, the USDA said.”

Also yesterday, USDA released their June world supply and consumption projections.

A summary of the report issued yesterday by University of Illinois Agricultural Economist Darrel Good indicated that, “For corn, the USDA lowered the projection of U.S. exports for the current year by 50 million bushels to a total of 2.15 billion. That projection is 100 million bushels below the April forecast and about equal to exports of last year. Year ending stocks are forecast at 987 million bushels and the marketing year average price is expected to be between $3.00 and $3.10, compared to last month’s expectation of $3.00 to $3.20. No changes were made in the projections of production and consumption for the 2007-08 marketing year. Stocks on September 1, 2008 are projected at 997 million bushels and the average farm price for the year ahead is forecast in a range of $3.10 to $3.70.

“For soybeans, the USDA made no changes in the projections for the current U.S. marketing year. The pace of the domestic crush through April suggested that the projection for the year might be increased. Projections for the 2007-08 U.S. marketing year were also unchanged from May, except that the forecast of the marketing year average price was increased by $.15, a range of $6.65 to $7.65.”

The summary of the report also stated that, “On the surface, the changes in the USDA projections released on June 11 might be interpreted as slightly negative for corn and soybean prices and supportive for wheat prices. However, prospects of declining world inventories of feed grains, wheat, and oilseeds in an era of rapidly increasing consumption will likely keep grain and oilseed prices well supported. Threats to production of any of the major crops has the potential to send prices sharply higher. On-going dry conditions in western Australia and the eastern U.S. are of particular importance. Crop condition ratings for the U.S. corn and soybean crops have started at extremely high levels. As of June 3, 78 percent of the corn crop and 71 percent of the soybean crop were rated in good or excellent condition. It is highly unlikely that ratings at those high levels can be maintained. Some deterioration in ratings are expected to be reflected in the report to be released on June 11. In addition, the lack of precipitation in the near term forecast for some of the driest areas is of some concern.

“November 2007 soybean futures just traded to a contract high of $8.80 and November 2008 futures have reached the $9.00 mark. December 2007, 2008, 2009, and 2010 corn futures contracts are over $4.00, with the deferred contracts reaching new highs. Prospects for extreme price volatility will make new crop corn and soybean pricing decisions very difficult, particularly for those in dry areas. Still, the high prices offer the potential for good returns in 2007-08.”

Keith Good