FarmPolicy

August 30, 2014

The Budget, Climate Change and Agriculture: Debate Continues; Biofuels; Trade; and Animal Agriculture

The Budget, Climate Change and Agriculture: Debate Continues

Bloomberg writer Alan Bjerga reported yesterday that, “President Barack Obama’s plan to cut $1.05 billion a year in farm subsidies won’t work for growers of corn, soybeans and other crops and stands no chance of passing Congress, the head of the House Agriculture Committee said.

“‘It’s more than dead on arrival,’ Representative Collin Peterson, a Minnesota Democrat, told reporters after speaking at the National Farmers Union annual conference in Arlington, Virginia. ‘They’re going to have to go back to the drawing board.’”

Mr. Bjerga explained that, “Obama’s budget would phase out one type of subsidy to farmers with annual sales exceeding $500,000 and cap all payments to any single farmer at $250,000. Cotton farmers would also have to cover storage costs now subsidized by the government. These savings would be largely offset by $985 million a year in extra spending on child nutrition.

“Payments to high-income farmers have been criticized by groups ranging from the National Taxpayers Union to the Environmental Working Group as ineffective government spending. The USDA last month said farm subsidies are expected to fall to $11.4 billion this calendar year, down 8.1 percent from last year and the lowest since 1997 [related graph]. Obama’s plan would phase out direct acreage-based subsidies over three years while keeping wealthy farmers eligible for programs based on crop prices.”

Kara Rowland, writing in today’s Washington Times, reported that, “Mr. Peterson, Minnesota Democrat, scoffed at a proposal to eliminate direct payments to farmers earning more than $500,000 annually as a misguided idea from ‘some bean counter over at [the Office of Management and Budget].’

“‘This is a very stupid idea,’ Mr. Peterson said Monday at a farmers convention. ‘If you got a 100-cow dairy, you’re probably going to have over a $500,000 gross [income]. So you’ll probably surprise the Minnesota 100-cow dairyman that he’s a millionaire.’

Mr. Peterson, a fiscally conservative Blue Dog Democrat, said he has personally expressed his views to Mr. Obama, Vice President Joseph R. Biden Jr., White House Chief of Staff Rahm Emanuel and Agriculture Secretary Tom Vilsack.

“‘I had a good conversation with Rahm and Biden,’ he said, adding that the discussion with the president was ‘very short.’”

The Washington Times article added that, “A spokeswoman for Mr. Vilsack said the administration looks forward to discussing the proposal with Congress.

“‘In these difficult economic times, tough choices have to be made and responsibility for our future has to be shared. This proposal will target payments to those who need it most while making real investments in rural America and providing strong support for family farmers,’ Nayyera Haq said.”

Jackie Calmes and Carl Hulse provided a broader look at President Obama’s budget proposal in today’s paper, which included this snippet on the agricultural portion of the spending outline: “Billions in savings from cutting government subsidies to big farmers and agribusinesses? No dice, said Senator Kent Conrad of North Dakota, who heads the Senate Budget Committee.”

Meanwhile, Philip Brasher reported yesterday at The Green Fields Blog (The Des Moines Register) that, “The Obama administration has clearly gotten the message that it’s proposal to slash direct farm payments is in trouble in Congress.

“‘We’re willing to work with Congress. They may have better ideas. We’re open to better ideas,’ Vilsack said at a news conference today.

“The president of the American Farm Bureau Federation, Bob Stallman, said flatly last Friday that the administration’s proposal was dead because of the opposition of farm-state lawmakers, both Democrats and Republicans.”

[Note: Mr. Stallman appeared yesterday on the AgriTalk Radio Program with Mike Adams. The executive branch budget proposal was a topic of discussion on yesterday’s show, to listen to a portion of the program, just click here (MP3- just over a minute)].

Mr. Brasher added that, “Vilsack had vigorously defended the plan through last week as a choice between subsidizing wealthy farmers and feeding hungry kids, but that comparison didn’t sit well with farmers who felt they were being pitted unfairly against children.

“Vilsack said today that the administration’s main goals are to ensure that subsidies ‘go to farmers that need them’ and to steer producers toward payments that would be based on addressing environmental issues, primarily reductions in greenhouse gases.

“‘We don’t necessarily have all the right answers. There may be different ways to do what we think needs to be done,’ Vilsack said.”

Ken Anderson, writing yesterday at Brownfield, provided more detail on Sec. Vilsack’s news briefing yesterday (including a an eight minute audio clip), and reported that, “In a telephone news conference Monday, Secretary of Agriculture Tom Vilsack responded to criticism of the administration’s proposal to limit direct payments to farmers—specifically, using 500-thousand dollars in gross income as the cut-off point.

“Vilsack cited numbers from the ag census showing a decline of 80,000 farms in the 10-thousand to 500-thousand dollar gross income range.

“‘And so we obviously need to make sure that the safety net is available so that we try to stop that erosion of what we would traditionally think of as good operations—and important operations—to maintain the vitality of rural America,’ Vilsack says.”

The Brownfield update added that, “With considerable focus on climate change and energy policy, Vilsack says the administration sees additional income possibilities for farmers and ranchers.

“‘We think there is tremendous economic opportunity if the cap and trade system that’s being discussed is set up properly,’ says Vilsack, ‘with appropriate offsets for ag practices, for the way in which we farm, the way in which we raise livestock, the use of land for potential carbon sequestration—all of those are income opportunities.’

Vilsack says agriculture should not be afraid of cap and trade, but should embrace it.”

USDA’s Daily Radio Newsline included a segment yesterday entitled, “Vilsack on Direct Payments, Budget and New Revenue Sources,” in which, “The Agriculture Secretary explains the dialogue created by a proposal to reduce farm subsidies to certain producers also opens talk of new income avenues such as through climate change.” To listen to this one-minute overview, just click here.

In comments delivered yesterday to the National Farmers Union convention, Senate Agriculture Committee Chairman Tom Harkin (D-Iowa) stated that, “As we move ahead on climate change legislation, it’s important to recognize the role that agriculture can play in controlling greenhouse gases by taking CO2 out of the atmosphere and storing carbon in soils. Farms can also limit greenhouse gas emissions through modified cropping or livestock production processes. A cap and trade system must be designed to compensate agricultural producers correctly for their actions.”

In a related article, Reuters writer Charles Abbott reported yesterday that, “The House Agriculture Committee will canvass 400 groups for ways that American farmers can make money from efforts to control greenhouse gases, Chairman Collin Peterson said on Monday.

“Peterson said the committee probably would hold hearings in three or four weeks on the issue. A bill could follow the hearings, Peterson said on the sidelines of the National Farmers Union convention.

“‘We need to get out ahead of this and figure out how agriculture can be a beneficiary of this,’ Peterson said.”

Mr. Abbott explained that, “Peterson said his committee would send letters soon to 400 groups to ask their ideas of how farmers could benefit from so-called cap-and-trade carbon controls.

While the lawmakers were upbeat, the president of the American Farm Bureau Federation told reporters last week that climate-change legislation may hurt, rather than help, the farm sector.

“AFBF President Bob Stallman said emissions legislation could drive up the cost of fuel, fertilizer and pesticides while the payment per-acre for carbon control is low.”

Biofuels

Reuters writer Christopher Doering reported yesterday that, “An increase in the ethanol-gasoline blend rate to 12 or 13 percent could be accomplished quickly and with minimal scientific review, giving a needed boost to the future of the industry, U.S. Agriculture Secretary Tom Vilsack said on Monday.

A formal request to boost the ethanol blend rate to as high as 15 percent from the current cap of 10 percent was submitted to the U.S. Environmental Protection Agency last week by Growth Energy, an ethanol trade group. The EPA has 270 days to review, collect public comment and make a decision.

“‘We’d love to see 15 percent. Right now my focus is on 12, 13 percent because I think it is doable more quickly,’ Vilsack told reporters.”

And Reuters writer Charles Abbott reported yesterday that, “House Speaker Nancy Pelosi said on Monday that she supported a higher ethanol-to-gasoline blend rate as a way to reduce reliance on petroleum imports.

“‘It seems to me we should be able to do that,’ Pelosi told reporters after speaking to the National Farmers Union convention.”

Mr. Abbott indicated that, “Earlier in the day, Agriculture Secretary Tom Vilsack told the NFU that he believed the government could move ‘fairly quickly’ to a 12 percent or 13 percent blend as an interim step. House Agriculture Committee chairman Collin Peterson, Minnesota Democrat, said, ‘I think we’re going to 13 percent.’”

DTN Ag Policy Editor Chris Clayton reported yesterday (link requires subscription) that, “Tom Buis did his best to explain to farmers on Sunday night why he is leaving as president of the National Farmers Union to take up the fight for rural America on renewable energy.

“‘We’re going to start to go back to basics and educate these people on the value of renewable fuels,’ Buis told National Farmers Union delegates and supporters at the group’s banquet Sunday night.

After serving as president of NFU since 2006, Buis announced last week he is leaving NFU after the convention to take over as chief executive officer for Growth Energy, a new group created to help promote renewable energy and counter criticisms and attacks on the ethanol industry. Buis said he sees renewable energy as ‘the whole ballgame for rural America’ in terms of both rural development and expanded production of energy. Buis said agriculture and renewable energy suffered setbacks last year when both food and oil companies teamed up to blame high food prices on ethanol production.”

Meanwhile, Hyun Young Lee reported in today’s Wall Street Journal that, “Oil prices jumped to a two-month high as the recent militant attack on a Nigerian oil pipeline sharpened supply concerns while the market weighs the prospects of another OPEC production cut.

“But while the crude market eyes another run at $50 a barrel, persistent worries about oil demand could make it tough to hold on to such gains.

“The price of light, sweet crude for April delivery rose $1.55, or 3.4%, to settle at $47.07 a barrel on the New York Mercantile Exchange, the highest since Jan. 6.”

For more on oil prices see this article, “Wondering if Crude Could Fall Even More,” from today’s New York Times.

Reuters writer Christine Stebbins reported yesterday that, “U.S. soybean and corn prices rose Monday, with soy buoyed by strong demand for spot supplies to meet export commitments and corn lifted by higher energy markets, analysts said.

“‘Corn gained a lot more than beans. It’s getting some support from crude oil being up,’ said analyst Roy Huckabay, analyst with The Linn Group in Chicago.

Higher gasoline and crude oil prices make ethanol more attractive as a fuel additive, and ethanol is refined from corn in the United States.”

Trade

The Associated Press reported today that, “Former Dallas mayor Ron Kirk, apparently on course to be the next U.S. trade representative, told senators yesterday that his main objective as the nation’s top trade official would be enforcing existing laws and insisting that U.S. trade partners play by the rules.

“Revelations that Kirk had tax payment problems, like several other Obama administration nominees, were barely mentioned in the abbreviated confirmation hearing of the Senate Finance Committee.”

Financial Times writer Alan Beattie provided analysis yesterday regarding the future direction of U.S. trade policy, and noted in part that, “But the main struggle will be with Capitol Hill. ‘My sense, perhaps optimistically, is that philosophically the Obama administration isn’t that far away from where we were on the overall direction of trade policy,’ says Dan Price, senior partner at the law firm Sidley Austin and a top White House international economics official under George W. Bush. But he adds: ‘The question is whether they are willing to spend political capital with Congress to push ahead with a policy of liberalisation.’

“On Capitol Hill an increasingly assertive band of self-styled ‘fair traders’ sceptical of past trade deals such as the North American Free Trade Agreement (Nafta) has been warning Mr Obama to keep his election promises to toughen protections for labour standards and the environment. Mike Michaud, a congressman from Maine, recently got 54 representatives to sign a letter calling for the White House to renegotiate Nafta, stop talks over a bilateral investment agreement with China, drop plans for a wider trans-Pacific trade pact and throw out pending bilateral deals with Panama, South Korea and Colombia left over from the Bush administration.”

And former USTR Charlene Barshefsky opined in today’s Washington Post that, “President Obama faces two immediate challenges: restoring economic growth and renewing global faith in America’s judgment. A robust trade policy is essential to both.”

“Instead of small agreements with small countries, and rounding-error results for our economy, finish the Doha round of global trade talks on acceptable terms,” she said.

Animal Agriculture

Rod Smith, writing recently at FeedStuffs Online, reported that, “California’s passage last November of the ballot initiative on farm animal housing, Proposition 2, has opened the door for animal rights activists to begin promoting a vegan lifestyle for California consumers, according to a coalition of activist groups that was announced last week.

“The coalition said it was establishing the ‘Operation Prop 2 Follow-Through Campaign’ with an intention ‘to promote a vegan diet in California.’

“The coalition, led by the Farm Animal Rights Movement (FARM), said it wanted to take advantage of the extent to which Prop 2 made people aware ‘of factory farm atrocities’ and take the awareness to what would be the next level to provide animals complete protection from those atrocities by urging Californians to become vegans, which means not only not consuming food and beverages produced from animals but also not wearing anything produced from animals, such as leather or wool.”

Mr. Smith explained that, “Prop 2 requires that all farm animals, ‘for all or the majority of any day,’ not be confined or tethered in a manner that prevents them from lying down, standing up, turning around and/or fully extending their limbs without touching another animal or an enclosure such as a cage or stall.

“It primarily addresses hens housed in cages and sows and veal calves housed in stalls but ignores much of the science of such housing systems that has been developed over several years by producers and animal ethicists and scientists.”

Eric Bailey and Patrick McGreevy reported in Saturday’s Los Angeles Times that, “In the aftermath of a big victory for Proposition 2, the November ballot measure that made groundbreaking changes in the confinement of farm animals, state lawmakers from both parties are pushing changes affecting Fido, felines and even flocks of geese.”

Assemblyman Jared Huffman (D-San Rafael) is pushing anew onto turf already plowed by Proposition 2, that supermarket eggs imported from out of state be from cage-free hens only,” the article said.

Keith Good

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