FarmPolicy

August 21, 2019

Doha, EU CAP “Health Check,” Ethanol Issues and Payment Limits

Doha

Reuters writer Jonathan Lynn reported yesterday that, “Trade negotiators will step up work for a new global pact following a call from the weekend G20 summit, but have not agreed a date for ministers to come to Geneva to seek a breakthrough, diplomats said on Monday.

“Leaders of the G20 group of major rich and emerging economies agreed on Saturday to try to approve the outlines of a new accord in the World Trade Organisation’s (WTO) Doha round by the end of the year as part of efforts to deal with the worst financial crisis since the 1930s.”

Mr. Lynn explained that, “But a meeting of about 30 key WTO ambassadors agreed negotiators must still narrow the gap on a range of technical issues before trade ministers can follow up that clear political signal with any chance of success.

“‘We begin the acceleration straight away and let’s see where we get to,’ said Australia’s WTO ambassador, Bruce Gosper, who chairs the WTO’s policy-making General Council.”

The Reuters article added that, “A study published on Friday by the International Food Policy Research Institute said that failure to complete the Doha round could put more than $1 trillion in world trade at risk.

“That comprises $336 billion in foregone trade from the cuts in subsidies and tariffs proposed under Doha, and $728 billion in lost sales if countries raise tariffs to ceilings permitted under existing rules, but not in use.”

Concluding, the article indicated that, “Any meeting of ministers would have to take place before December 19, when the WTO holds its last general council meeting before closing for the Christmas break, diplomats said.

“Before that meeting could take place, WTO mediators for the agriculture and industry talks would need to update the negotiating texts they issued in July, as the basis for a deal.”

DTN Political Correspondent Jerry Hagstrom reported yesterday (link requires subscription) that, “World Trade Organization member countries need to submit any changes in their positions in the Doha Round of agriculture negotiations by later this month if there is to be any hope of an agreement before the end of the year, the chairman of the negotiations told member nation representatives at a meeting Monday in Geneva.

Crawford Falconer, the New Zealand ambassador who chairs the agriculture talks, set a Nov. 28 deadline for changes. Falconer also told journalists in Geneva that he had issued the call for changed positions in reaction to the statement by G-20 leaders in Washington this past weekend that WTO member countries should ‘strive to reach agreement this year’ on how to proceed with the round.”

Mr. Hagstrom stated that, “The ministers called for a conclusion to the Doha Round as part of their statement after the meeting in Washington during the weekend, and there are rumors that WTO Director General Pascal Lamy will call a meeting of trade ministers in December. But the prospects for progress are not great because world leaders are not certain President-elect Barack Obama would support an agreement reached by President George W. Bush, and upcoming elections in India would make it difficult for Indian negotiators to make concessions.

“Falconer said he arrived at the Nov. 28 deadline by counting backwards from Dec. 18-19, the last possible dates for a meeting of the WTO General Council before Christmas. Falconer said that if he receives changes in position by Nov. 28, he will write a new draft of the agriculture text during the first week of December. Falconer plans to leave his position before Christmas.

“Falconer also told journalists it was particularly important that the 20 countries that met in Washington show movement in their positions, but he added that none of those countries has sent any message to him since the meeting. Falconer also said that the statement from Washington means ‘It’s next week or bust. It’s hard to get away from that.’”

Xinhua news reported yesterday that, “There is no reason why a final agreement on the long-stalled Doha Round of global trade talks cannot be reached by the year end, a European Union (EU) spokesman said Monday.

“‘The leaders’ meeting in Washington gave a very clear signal to trade ministers to get back to work to conclude this round, preferably at the end of this year,’ the European Commission spokesman for trade, Peter Power, said during his daily media briefing here [Brussels].

The article noted that, “With political will and leadership, there is no reason why the Doha Round cannot be completed before Christmas since 80 percent of the work had been done in July, said Power.

“Trade ministers from major World Trade Organization (WTO) members met in Geneva in July in a key effort to revive the round, but they failed to wrap up the negotiations due to disagreements between the Untied States and India on a special safeguard mechanism for agricultural products of developing countries.”

And on Sunday, EU Trade Commissioner Catherine Ashton stated that, “World leaders have now committed themselves in the clearest and most determined manner ever to the successful conclusion of the Doha world trade talks. It now falls to trade ministers and Pascal Lamy to make this a reality, by tackling the few remaining issues where agreement eluded us in July in Geneva. With the right combination of hard work and leadership we should now aim to agree the framework of a final deal before Christmas.”

And James Quinn noted yesterday at the Telegraph Online that, “Bar the resumption of the Doha round of the world trade talks, the commitment to reform the IMF and the World Bank, and a closer watch being kept on cross-border banks, what was actually achieved? [at the weekend G20 summit]

“The answer is that it depends on who you listen to. Take Conservative leader David Cameron, for example. ‘On trade, after so many false dawns, does the Prime Minister believe this time there is a real prospect of agreement on Doha?’ Mr Cameron asked in response to Gordon Brown’s statement after the summit ended on Saturday.

“World Trade Organisation chief Pascal Lamy, the man who is running the Doha round, believes that the G20 has provided a major impetus to concluding the talks by the end of the year.

But perhaps Cameron is right to be doubtful. Yesterday, India’s trade and commerce minister said it would not compromise on some of the issues which saw it fall out with the US during the most recent talks in July, suggesting few of the barriers have been solved.”

Prime Minister Brown stated yesterday to the House of Commons that, “Some have argued that as long as the trade talks remain deadlocked on specific issues no deal can be agreed. But the G20 was explicit about the action we have to take: for the first time we have instructed our trade ministers to agree, by the end of the year, the outlines needed for a successful conclusion to the Doha trade round.”

Meanwhile, Alan Beattie reported today at the Financial Times Online that, “Russia said yesterday it will push ahead with sharp rises in import duties in the near future in spite of signing the Group of 20 communiqué that promised not to introduce protectionist measures for a year.

“Dmitry Pankin, deputy finance minister, said Moscow would increase tariffs on imported cars, a move that had already been planned to protect Russian car producers. Russia has also announced a general review of trade agreements, including commitments made as part of its application to join the World Trade Organisation. The review may result in duties being increased and import quotas for sensitive products being cut.

“Mr Pankin said there was no contradiction between Russia’s actions and the communiqué it signed as a member of the G20 leading economies in Washington on Saturday. The agreement was portrayed by the UK and US as a powerful statement against protectionism.”

EU CAP “Health Check”

Yesterday, EU Agriculture Commissioner Mariann Fischer Boel issued a statement before the decisive negotiations on the CAP Health Check, which begin on Wednesday: “This week’s Agriculture Council is a key moment in the development of the Common Agricultural Policy. The Health Check is designed to help farmers meet the challenges they face now. We cannot afford to let this opportunity slip away. We all have to come to Brussels willing to compromise. But we also need to be bold. Our proposals aim to further modernise, simplify and streamline the CAP and remove remaining restrictions on farmers to help them respond to market signals. We need to free our farmers to follow their business instincts, whilst continuing to provide them with support from the public purse. There are a number of issues which remain open as we enter the final round of talks. We propose to shift more money into Rural Development by further reducing direct payments to farmers above a €5,000 threshold. This is crucial if we are to equip our farmers to face the new challenges of the 21st century – like climate change, water management, the protection of biodiversity and the development of bioenergy. And it will also play a key role in helping sectors which face a difficult period of adjustment, such as dairy farmers in mountain regions. Milk quotas are set to go in 2015, but we must give the dairy sector a soft landing through a sensible increase in quotas between now and then. We need to give farmers the maximum flexibility by phasing out most of the remaining production-linked payments. Of course we understand the need to maintain coupled payments in certain circumstances and that is reflected in our proposals for sheep, goat and suckler cow payments. The need for tailor-made solutions for certain sectors is the driving force behind our proposal to allow Member States to top slice up to 10 percent of their direct payments and transfer this money into crisis management measures and programmes to help farmers in disadvantaged regions. Finally, we need to return the intervention mechanism to its original purpose as a genuine safety net. I realise that every minister will have his or her own priorities. We all have our shopping lists, but I believe that we are all in the same shop. We need to find a workable compromise which everyone can live with. But we need to remain faithful to the principles of the Health Check. I believe a very good deal is within reach. I will do all I can to make sure we achieve it.”

Ethanol Issues

DTN writer Todd Neeley reported yesterday (link requires subscription) that, “A coalition of groups, including government watchdog organizations, environmental organizations, hunger advocacy groups and food industry groups, have scheduled a press conference at the National Press Club in Washington, D.C., Tuesday, to call on the federal government to end ethanol subsidies, according to a news release from the groups.”

The DTN article noted that, “‘On Nov. 18, a wide array of allies will gather to call on the next administration and Congress to repeal ethanol subsidies which are partially responsible for the rising food prices facing Americans,’ the news release said. ‘Thirty years ago this November, Congress created the first subsidy for ethanol, and those subsidies have since ballooned, costing taxpayers nearly $5 billion annually and leading to increased food prices by diverting our food crop to ethanol.’”

Meanwhile, The New York Times editorial board stated in today’s paper that, “One of the 2007 energy bill’s most ambitious provisions — the ethanol mandate — has turned out to be its most troublesome. The provision would boost ethanol production from 7-plus billion gallons today to 36 billion gallons by 2022. In practical terms, this means doubling the production of corn ethanol until advanced forms of ethanol and other biofuels kick in.”

The Times opinion piece stated that, “Congress stipulated that ethanol be cleaner than gasoline and handed the job of measuring emissions to the Environmental Protection Agency, which has found itself under ferocious pressure. The ethanol industry wants its product shown in the best possible light. Environmentalists want an honest accounting, which the public deserves but which they do not think an industry-friendly Bush administration is capable of.

The most contentious question involves the emissions caused by direct and indirect changes in land use associated with growing biofuels. Until late last year, corn ethanol had been seen as at least carbon neutral — and thus much cleaner than gasoline — because the greenhouse gases it absorbed while growing canceled out the gases it emitted during combustion. This made it a win-win fuel — even a win-win-win fuel — because it also encouraged the construction of ethanol refineries in the American heartland and eased, to some extent, America’s dependence on imported oil.

“But then came a spate of new studies arguing that earlier calculations had failed to account for the emissions caused when land is cleared and tilled, releasing large quantities of stored carbon. In particular, the studies said, the earlier scenarios had overlooked the indirect or ripple effects of ethanol production — the carbon released when the diversion of land from food to fuel in the Corn Belt causes farmers elsewhere in the world to clear untouched land to make up for the loss.”

“In any case, it is the E.P.A.’s duty under the law to give the most unbiased, accurate accounting it can. The issue here is the fate of the planet, not the fate of a particular industry,” the Times editorial said.

The Associated Press reported yesterday that, “Expansion of vast sugarcane plantations across Brazil to meet growing worldwide demand for ethanol won’t harm the Amazon, a top Brazilian official said Monday.

“Speaking at the start of a five-day international conference on biofuels, presidential chief of staff Dilma Rousseff said Brazil will soon unveil an agricultural zoning plan to specify where crops across Latin America’s largest nation can be grown for fuel and food.”

And more specifically with respect to the U.S. ethanol industry, P.J. Huffstutter reported in today’s Los Angeles Times (“Ethanol’s troubles have sapped the dreams of an Indiana town”) that, “Already battered by other market forces, the ethanol industry has been hit hard by the banking world’s credit crunch, and the seemingly bright future of corn-based biofuel has been cast in doubt.”

Payment Limits

The “Washington Insider” section of DTN noted yesterday (link requires subscription) that, “One of the continually troublesome questions about farm programs is the definition of just who is a farmer. The problem arises because supporters of farm programs are constantly besieged by questions of why this or that type of producer should (or should not) be considered eligible for farm payments. Payment size is a somewhat troublesome guideline because while small farmers are often seen to be the most needy, larger producers account for most of the food and fiber.

“The result has been a mish-mash of eligibility rules that limit most payments to a maximum amount, and also define producers’ eligibility on the basis of their total farm income — adjusted gross income, and their total non-farm income.

“And, to be eligible, producers are required to be actively engaged in farming — whatever that means. In the 2008 Act, Congress required USDA — through the managers’ statement — to consider the degree of farming ‘activity’ in setting new eligibility guidelines for payments.”

The DTN piece added that, “Some seasoned lawmakers with a strong interest in the outcome recognize that it is likely that some career USDA staffers eventually will be required to confront the issue and are pushing for something specific to happen. Sen. Chuck Grassley, R-Iowa, among others, want the definition of ‘actively engaged’ to be tightened by specifying a minimum number of hours that must be spent farming or managing a farm operation to be eligible for payments.

“However, the issue is attracting opposition from others, including southerners who argue that it would not be fair for those who must hold several jobs to make ends meet. Recently, 64 House members, many from the South, wrote USDA opposing any change to the definition of an ‘actively engaged’ farmer.”

Concluding, the DTN item explained that, “This issue could begin to resonate among producers, but appears to be supported mainly by those who fought last year to reduce payment limits sharply — a push that gained very little support from urban lawmakers in spite of strong pressure from Grassley and his Democratic counterpart, Ag Committee Chairman Tom Harkin, Iowa. That effort was reined in by a united front of southern lawmakers. And, unless the issue gains more support from non-aggies this time around, it is likely to face the same skepticism — a fact that could lead to a marked lack of interest at USDA under both administrations, Washington Insider believes.”

***

Lastly today, in an Email news update from yesterday, the U.S. Environmental Protection Agency indicated that, “On October 31, 2008, EPA finalized a rule helping to protect the nation’s water quality by requiring concentrated animal feeding operations (CAFOs) to safely manage manure. The final rule responds to a February 2005 federal court decision that upheld most of the agency’s 2003 CAFO rule, but directed further action or clarification on some portions. The regulation requires that an owner or operator of a discharging CAFO must apply for a permit under the Clean Water Act. EPA is also providing an opportunity for operators of non-discharging CAFOs to obtain certification as zero dischargers. The final rule also requires that a nutrient management plan (NMP) must be submitted as part of a CAFO’s permit application. In addition, the final rule includes clarifications regarding water quality-based effluent limitations and use of best management practices to meet zero discharge requirements, as well as affirming the 2003 rule requirement for reducing fecal coliform through the use of best conventional technology.

EPA is hosting a webcast on November 19, 2008 at 12:00 PM EST. This webcast will introduce CAFO owners and operators, members of the public, and State or Tribal permitting authorities to the new requirements of the final CAFO regulations. There will be an opportunity during the webcast for the public to submit questions to the EPA presenters about the final rule. To sign up for this free webcast, go to www.epa.gov/npdes/training.”

Keith Good

Comments are closed.