FarmPolicy

November 18, 2019

H1N1 Flu Issues; Climate Change, EPA and Production Agriculture; and USDA- First 100 Days

H1N1 Flu Issues

Jared Allen reported yesterday at The Hill Online that, “Farm-state lawmakers added their voices to those looking to protect the pork industry from bad press about the swine flu.

“And the first offensive they launched was against their own colleagues.

On Wednesday morning the House Agriculture Committee majority staff sent an e-mail out to all Democratic press secretaries asking them to stop referring to the Mexican-born flu as the ‘swine flu’ and imploring them to stop using pig graphics on their webpages.”

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Flu Issues; Food Security; Climate Change; and ACRE

Flu Issues

Andrew Martin and Clifford Krauss reported in today’s New York Times that, “The swine flu is producing global hesitation over eating pork.

“As more cases of the new influenza emerged on Tuesday, deepening worries about a possible pandemic, several nations slammed their borders shut to pork from the United States and Mexico. Wall Street analysts predicted a sharp decline of pork sales in grocery stores, and some consumers began steering clear of pork chops.

The pork industry reacted with frustration. Medical authorities say that people cannot contract the swine flu from eating properly cooked pork. There is no evidence so far that the people who are becoming sick were in contact with pigs. In fact, authorities are not even sure how susceptible pigs are to infection with the new flu.”

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Swine Flu Issues; Food Security; Budget; Climate Change; Biofuels- CARB Decision; and Other News

Swine Flu Issues

The Associated Press reported yesterday that, “[P]ork futures sank on the Chicago Mercantile Exchange amid rising concerns surrounding the global swine flu outbreak. Consumers are worried about catching the virus from the pork, analysts said, even as U.S. pork producers maintained that their product is safe and Americans cannot catch the virus while they cook their pork properly.

“Multiple countries are increasing their screening of pig products from some U.S. states and Mexico, while China and Russia have issued outright bans on pork from affected areas and Indonesia is blocking all pork imports.”

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Biofuels- CARB Decision; Climate Change; Hunger- Food Production; and Swine Flu

Biofuels- CARB Decision

Dan Looker reported on Friday at Agriculture Online that, “The nation’s corn ethanol industry took a hit on Thursday when the California Air Resources Board (CARB) approved a system of regulating greenhouse gases in fuels that makes gasoline look slightly greener than ethanol.

Even though only one board member voted against it, nearly half of the 10 board members said they had doubts about the accuracy of computer modeling that makes ethanol look worse because of its indirect effects. CARB assumes that growing corn in the Midwest to make ethanol leads to plowing up and burning grasslands and jungles elsewhere to grow more food. When the carbon dioxide released by those land use changes is added in to ethanol’s ‘carbon intensity value,’ gasoline looks slightly better.

So the board moved up a review of indirect fuel effects, from January 2012 to January 2011, the same year the rules for California’s low carbon fuel standard kick in.”

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Biofuels: Indirect Land Use; Climate Change; and Food Production – Prices (Ag Economy)

Biofuels: Indirect Land Use

Margot Roosevelt reported in today’s Los Angeles Times that, “California took aim Thursday at the oil industry and its impact on global warming, adopting the world’s first regulation to limit greenhouse gas emissions from the fuel that runs cars and trucks.

“The Air Resources Board voted 9 to 1 in favor of the complex new rule, which is expected to slash the state’s gasoline consumption by a quarter in the next decade. It seeks to expand the market for electric and hydrogen-fueled vehicles and jump-start a host of futuristic biofuels to replace corn-based ethanol, as well as oil.”

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Crop Insurance; Climate Change; Biofuels; CFTC Issue; Peanuts; and a CAP Update

Crop Insurance- Detailed Audio Backgrounder

Yesterday, I had the opportunity to speak with former USDA Chief Economist Keith Collins and Bob Parkerson, the president of National Crop Insurance Services about the federal crop insurance program.

We discussed a wide variety of issues associated with crop insurance. Specifically, yesterday’s conversation touched on budgetary issues and federal funding for crop insurance; the interaction of crop insurance with the new Average Crop Revenue Election program (ACRE) and Supplemental Revenue Assistance Payments program (SURE); the potential role of crop insurance in the future development of U.S. farm policy; and general issues which are unique to crop insurance which makes it distinct from other forms of federal agricultural support.

An audio replay of our conversation can be heard by clicking here (MP3- 30 minutes).

(Note also that FarmPolicy.com podcasts are also available via RSS feed at this address, feed://farmpolicy.typepad.com/farmpolicy/rss.xml).

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“Analysis from Brussels”- by Roger Waite- France Embraces CAP Reform

France Embraces CAP Reform

By Roger WaiteRoger is editor of AGRA FACTS, the Brussels-based newsletter on EU agriculture policy, and is a Journalism Fellow at the German Marshall Fund of the United States. “Analysis from Brussels” is posted exclusively at FarmPolicy.com.

While the CAP Health Check from last November will not go down in history as the biggest step in the process of reforming Europe’s Common Agricultural Policy (CAP), it may yet prove to be highly significant in that it has given France the chance to embrace the reform process. Indeed, the noises coming from French government circles in recent weeks have signalled a potentially decisive shift, which, based on past experience, will move the centre of gravity of the political majority within the EU. Paris has seen the writing on the wall (and the pressures to cut the CAP budget after 2013) – with French Farm Minister Michel Barnier and Prime Minister Francois Fallon claiming that France is in danger of being isolated unless it embraces reform now- and concluded that French cereal farmers get too much from the CAP, especially relative to French livestock producers.

Just to recap, back in November, the EU finalised the “Health Check”, which included three main elements in the way that Member States manage their CAP direct aids – i) committing to a further decoupling of EU direct support between now and 2013; ii) allowing Member States flexibility to redistribute up to 10% of their current direct aid “national envelope” (defined under “Article 68”) for various purposes (some of which may be non “Green Box in WTO terms), and iii) shifting a further 5% of funds away from direct aid [through “compulsory modulation”] towards Rural Development measures to address certain “New Challenges” defined as climate change, renewables, water scarcity, biodiversity loss, innovation and dairy restructuring. The Health Check also encouraged Member States to move away from a historical base for allocating payments on the grounds that this was less relevant as time goes on – but there was no obligation linked to this. As with the 2003/2004 “Fischler” reforms, the agreement leaves Member States more or less with the same envelope of funding, but has adjusted the menu of options for how to pay out this amount. It remains up to the Member States to decide how to administer its direct support, thereby highlighting the domestic national political priorities – and tensions. And this is what we are now seeing in France.

To put things more clearly in context, I should perhaps also add that it has become clearer than ever in recent months that the CAP is facing a radical reform for the period after 2013 – because of the need to define the new EU budget for the next 5-7-year period starting in 2014. In short, the implementation of the Health Check will be the last chance for Member States to organise their defence for the biggest ever reform battle ahead – where Farm Ministers might well be joined around the table by Finance Ministers and Heads of Government.

Following the Health Check, Member States have until the Summer to decide how they want to change the administration of their direct support, or Single Farm Payment (SFP) as it is now known – with the first changes applicable next year. For countries such as Germany or England [but not Scotland & Wales], which decided after the 2003 reforms to change their SFP system over a long transition period towards a flat-rate payment per hectare with very little “coupling” maintained, there will be few changes necessary. By contrast, those Member States that took a more conservative approach to implementing the Fischler reforms now have more to do. And to be clear, France was the Member State which maintained as many “coupled” payments as possible. To recap – following the Fischler reform, France still “couples” its payments for suckler cows (100%), calf slaughter premium (100%), sheep & goats (50%), adult cattle slaughter premium (40%), arable/cereals producers (25%) – and bases all remaining payments on a “historical model” (i.e. the amounts received in direct aid from 2000-2002.)

So, what is France going to do?
In a nutshell, Paris intends to address existing national disparities and redistribute €1.4bn of its overall l€8bn envelope of EU aid, i.e. 18% of the total, in what Minister Barnier has described as “a bid to maintain France’s grassland-based livestock production potential”. The first change is that the arable payments, the adult & calf slaughter payments, and the sheep & goat payments will be fully decoupled – and the suckler cow payment will be 25% decoupled, i.e. will stay 75% “coupled”. But rather than pass these previously coupled amounts back to the “usual” recipient as newly decoupled aid on a historical basis, Barnier is invoking a special clause which he himself negotiated into the Health Check political agreement (now defined as Article 63), which allows the Member State to rechannel this previously “coupled” funding. So, some €640m of previously coupled arable payments plus €130m previously coupled livestock aid will now be used to fund a new hectarage payment for grassland farming & forage crops (varying according to stocking density, but with a maximum of 0.8 livestock units per hectare). As you will note, this entails a significant shift from corn to horn.

In addition to this, Paris is seeking to use the above-mentioned Article 68 and the funds generated from compulsory modulation – some of which is supplemented by national funding – to further underline this shift of emphasis. Under Article 68, specific coupled payments will be “(re-)introduced for sheep & goats (worth €135m), mountainous milk production (€0.02 per litre –up to a total of €45m), durum wheat in traditional areas (€8m) and suckler calves (€5m), as well as payment for vegetable proteins (30m) and protein crops (€40m). Another new idea, agreed under the Health Check, is the use of €100m to provide start up help for a new risk management crop insurance system, plus €40m for a disease fund.

Then there are also changes to France’s Rural Development programme, financed by an increase the rate of modulation from the current 5% of direct aid payments per farm [excluding the first €5 000] to 10% by 2013. This will see an additional €240m going into the existing agri-environment grassland premium (€64m of which comes from national funds), €42m for less favoured area payments (€19m from national funds), and €32m into the New Challenges (€14m from national funds).

According to French government figures, French cereals farmers’ average income last year was double the average cattle farmer revenue – and four times greater than the average French sheep & goat farmer. Because the original calculation of the direct aids was based on regional reference yields (in the 1980s!), the highest rate of aid per hectare goes to the most productive farmland. By definition this tends to be the richest farmers who least need the support. A study by the French National Institute for Agricultural Research INRA has indicated that the plan will result in a “significant redistribution” of aid, which clearly favours grassland farms at the expense of grain farms. It estimates that direct aid to French cereal farmers will drop by €5 900 on average – equivalent to a 17% cut (based on 2003-2007 figures). By contrast, the change is likely to mean an average €7 800 increase in support for sheep farmers, equivalent to a 43% increase from the 5-year average – or a 29% increase from 2007 levels. Not surprisingly, French cereals farmers have been out on the streets. Curiously, few of them appear to be defending the status quo, merely criticising the speed and amount of the shift.

So, if France is now in effect admitting that grain farmers in the Paris Basin are being over-generously rewarded by the CAP, will the French government embrace a similar re-balancing at EU level? Yes, quite conceivably, but only on the condition that France maintains its overall €8bn envelope! After all, France should now be rewarded for making its payments more justifiable.

All eyes now turn to countries such as Spain and Italy, to see how they will choose to implement the Health Check.

By Roger Waite

Biofuels: Indirect Land Use; Climate Change; Executive Branch Ag Policy Perspectives; and Peanuts

Biofuels: Indirect Land Use

The Los Angeles Times editorial board noted on Monday that, “Until somebody comes up with a way to power a car with garbage, like the time-traveling DeLorean in ‘Back to the Future,’ our options are limited: gasoline and diesel, electricity, natural gas, liquid coal, hydrogen or plant-derived biofuels such as ethanol. Most people on both the right and the left agree that if we want to decrease our reliance on foreign oil and/or slow the progress of climate change, we’re going to have to use less of the first two and focus on some combination of the remaining five. Yet pursuing the alternatives can cause environmental and economic damage that’s as bad as, or worse than, that of oil and gasoline. So how do we come up with regulations that encourage cleaner fuels and discourage destructive ones, without making technology decisions that are better left to the free market?

That’s the challenge the state of California is taking on by creating a Low Carbon Fuel Standard, which after more than a year of development and hearings by the state Air Resources Board [CARB] is slated for approval Thursday. It’s a daunting task, all the more so because the state is trying to do something that hasn’t been tried before: regulate not just the direct ‘life-cycle’ emissions from producing, transporting and using fuels, but the indirect emissions that result when land is converted to grow crops for biofuels.

“This matters a great deal, because not all biofuels are created equal. Some of them, particularly ethanol produced from corn, raise food prices, pollute waterways as more fertilizer is spread over the fields, and encourage farmers in places such as Latin America to cut down more rain forest to grow crops. Yet measuring these indirect effects relies on untested and possibly unreliable science, which is why the biofuels industry is in an uproar over California’s proposed regulation.”

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G8: Food Security; Livestock Issues; Climate Change; and Farm Bill Issues

G8: Food Security

On Saturday, Secretary of Agriculture Tom Vilsack addressed the first-ever Group of Eight (G8) Agricultural Ministerial.

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EPA Acts on Climate Change; EPA Pesticide Case; Mexican Tariffs; Peanuts; and ACRE

EPA Move- Background

Juliet Eilperin reported in Saturday’s Washington Post that, “The Environmental Protection Agency yesterday officially adopted the position that carbon dioxide and other greenhouse gas emissions pose a danger to the public’s health and welfare, a move that could trigger a series of federal regulations affecting polluters from vehicles to coal-fired power plants.

The EPA’s action marks a major shift in the federal government’s approach to global warming. The Bush administration opposed putting mandatory limits on carbon dioxide and other greenhouse gases, on the grounds that they would hurt business, and the EPA had resisted identifying such emissions as pollutants under the Clean Air Act.

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EPA Considers E15; Ethanol- Food Price Debate; Peanuts; Food Safety; Rural Economy; WIC-Obesity; Climate Change and Hunger

EPA Considers E15

Reuters writer Ayesha Rascoe reported yesterday that, “The U.S. Environmental Protection Agency said on Thursday it is seeking public comment on whether to allow a higher level of ethanol to be blended into gasoline. [Note: more complete details on this EPA development can be viewed here].

“Growth Energy and more than 50 ethanol manufacturers petitioned the EPA last month to raise the maximum blend level for ethanol in gasoline from 10 percent to as much as 15 percent.”

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Fed Beige Book- Drought and Water Issues; Ethanol from Wood Chips; Environmental Issues and Agriculture; Animal ID System; and the National Peanut Board

Fed Beige Book- Drought and Water Issues

The Federal Reserve Board released its April edition of the Beige Book (Summary of Commentary on Current Economic Conditions by Federal Reserve District) yesterday; here is what some Districts indicated with respect to agriculture:

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Biofuels; Trade Issues; Climate Change Policy; Food Safety and International Ag Developments

Biofuels

Reuters writer Ayesha Rascoe reported yesterday that, “The U.S. government will eventually allow higher levels of ethanol to be blended into gasoline, Renewable Fuels Association President Bob Dinneen said on Tuesday.

Ethanol is currently approved to make up 10 percent of gasoline, but producers have lobbied the government to increase the blend level.

“‘I absolutely believe that when all the science is in, the efficacy of using greater than 10 percent blends will be validated,’ Dinneen told reporters at an Energy Information Administration summer energy outlook conference.”

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Climate Change; Trade Issues; Food Prices; Crop Progress; and USDA News

Climate Change

Mark Peters reported yesterday at The Wall Street Journal Online that, “Climate czar Carol Browner said she wants Congress to establish a broad U.S. greenhouse-gas policy before global climate-change talks near the end of the year.

“Speaking at a conference Monday at the Massachusetts Institute of Technology, Ms. Browner said she is confident Congress can move forward on a climate-change policy, citing hearings scheduled for next week on sweeping legislation proposed by Rep. Henry Waxman (D., Calif.) and Rep. Ed Markey (D., Mass). Ms. Browner didn’t provide a timetable for when she would like to see congressional action, but said advancing climate-change legislation is ‘absolutely essential’ to what the U.S. can accomplish during United Nations negotiations scheduled for December in Copenhagen.”

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EPA Pesticide Issue; Mexico Trade Issues; Peanuts; Poultry Issues; and USDA Personnel

EPA Pesticide Issue- Background

Recall that back in January, the United States Court of Appeals for the Sixth Circuit issued a ruling regarding pesticides and the Clean Water Act that had important implications for U.S. farmers. The ruling in the case, The National Cotton Council of America, et at., v. United States Environmental Protection Agency, which was handed down on January 7, 2009, can be viewed in its entirety by clicking here.

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Ag Economy; ACRE; Crop Insurance; Food Safety; Climate Change; and the White House Garden

Ag Economy

Clifford Krauss reported in today’s New York Times that, “Only a year ago, all the stars appeared to be aligned for American farm exports. China and other developing countries were fattening up growing herds of cattle on American corn, and they were importing record amounts of foods to meet the appetite of their expanding middle classes. A drought in Australia meant a shortage of wheat on world markets. The price of dairy products soared across the globe because of shortages.

Since then, all that has changed.

“The developing countries are slowing their food imports, it is raining again in Australia, and the price of dairy products is slumping. A strengthening dollar in recent months has made United States farm exports less competitive.

“‘What a difference 12 months can make,’ Joseph Glauber, chief economist of the Department of Agriculture, noted in Congressional testimony last week. ‘We have seen prices for most commodities fall 40 to 50 percent from their midyear peaks. The global economic slump has cast a pall on most markets.’”

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