FarmPolicy

November 17, 2019

Congressional Hearings; Budget-Climate Change; Cuba; and the MILC Program

House Ag Subcommittee Hearing: State of the Farm Economy

Yesterday, the House Agriculture Subcommittee on General Farm Commodities and Risk Management held a hearing to review the state of the farm economy.

In his opening statement (Word document) to the Committee, USDA Chief Economist Joe Glauber noted that, “Mr. Chairman, members of the Subcommittee, thank you for the opportunity to discuss the economic outlook for U.S. agriculture. This time last year, the outlook picture was quite different than today: prices for most commodities were near record highs and rising; and farm exports and farm income were projected to be at record levels. There were concerns about whether there would be enough crop production to meet global demand. Livestock, dairy and poultry producers were seeing their operating margins squeezed, and food price inflation was being discussed with concern for the first time in almost 20 years.

What a difference 12 months make. We have seen prices for most commodities fall 40-50 percent from their midyear peaks. The global economic slump has cast a pall on most markets and, while net cash income is projected at high levels relative to historical averages, there remains much uncertainty.”

Dr. Glauber’s prepared remarks also included several helpful figures and tables including; a summary of key farm economic indicators, an overview of net cash income, and this table summarizing farm real estate values.

All of the opening statements from witnesses at yesterday’s hearing can be found here.

During the question portion of the hearing, Rep. Jerry Moran (R-Kansas) asked Dr. Glauber about the USDA’s definition of a farm and expressed concern that the current definition can have important impacts on some statistical measurements in the U.S. agricultural sector.

To listen to this portion of the conversation from yesterday’s hearing, just click here (MP3, 3:00).

In a related publication regarding the definition of a “farm,” USDA’s Economic Research Service published a report last month entitled, “Exploring Alternative Farm Definitions: Implications for Agricultural Statistics and Program Eligibility.”

An ERS summary of the report indicated that, “Meeting agricultural policy and statistical goals requires a definition of U.S. agriculture’s basic unit, the farm. However, these goals can be at odds with one another. USDA defines ‘farm’ very broadly to comprehensively measure agricultural activity. Consequently, most establishments classified as farms in the United States produce very little, while most production occurs on a small number of much larger operations. While desirable for obtaining comprehensive national coverage, measurement and analysis based on the current definition can provide misleading characterizations of farms and farm structure in the United States. Additionally, more stringent requirements have been proposed for farms to qualify for Federal agricultural program benefits. This analysis outlines the structure of U.S. farms, discusses the current farm definition, evaluates several potential criteria that have been proposed to define target farms more precisely, and examines how these criteria affect both statistical coverage and program eligibility.”

In another exchange, Rep. Blaine Luetkemeyer (R-Missouri) inquired about how the potential costs of cap and trade legislation might impact U.S. agricultural producers.

To listen to this exchange, which included comments from Dr. Howard K. Gruenspecht, Acting Administrator for the Energy Information Administration, just click here (MP3-2:00).

Senate Agriculture Committee Hearing to Consider Pending Nominations

Also yesterday, the Senate Agriculture Committee held a hearing to considered the following executive branch nominees for key positions at USDA: Joe Leonard Jr., of the District of Columbia, to be an Assistant Secretary of Agriculture for Civil Rights [related testimony]; Kathleen A. Merrigan, of Massachusetts, to be Deputy Secretary of Agriculture [related testimony]; and James W. Miller, of Virginia, to be Under Secretary of Agriculture for Farm and Foreign Agricultural Services [related testimony].

A replay of yesterday’s hearing in its entirety can be found here; while audio excerpts from the hearing that featured questioning from Sen. Pat Roberts (R-Kansas) can be heard by clicking here (MP3-10:53).

Among the topics brought to the conversation by Sen. Roberts were issues associated with federal crop insurance.

Senate Environment and Public Works Committee Subcommittee on Clean Air and Nuclear Safety: RFS

Also in the Senate yesterday, the Senate Subcommittee on Clean Air and Nuclear Safety held a hearing entitled, “Oversight – the Environmental Protection Agency’s Renewable Fuel Standard.”

To listen to a portion of Subcommittee Chairman Tom Carper’s (D-Delaware) opening statement at yesterday’s meeting, just click here (MP3-1:50).

With respect to this hearing, Reuters writer Tom Doggett reported yesterday that, “The U.S. Environmental Protection Agency said on Wednesday it will take another year to complete government testing on whether higher levels of ethanol can be blended into gasoline without harming engines.

“Ethanol is now approved to make up 10 percent of gasoline in cars and trucks. Producers are pushing the government to allow higher ethanol blend levels, as more ethanol will be required each year under federal law.”

Mr. Doggett indicated that, “Margo Oge, Director of the EPA’s Office of Transportation and Air Quality, told a Senate panel the agency is working with the Energy Department to test the impact of higher ethanol levels and hopes to finish ‘over the course of the next year.’

In a statement to a Senate Clean Air and Nuclear Safety Subcommittee hearing, Oge said the tests should provide ‘emissions and durability data to support a decision on the appropriate use, if any, of higher blends of ethanol in gasoline vehicles and engines.’”

Yesterday’s Reuters article stated that, “Oge noted that the EPA received a petition last month from Growth Energy and 52 ethanol manufacturers to allow gasoline to contain up to 15 percent of ethanol by volume.

“Oge said the agency ‘will soon’ publish the proposal and seek public comment. She said EPA has 270 days to act on the request, from March 6 when it was received.”

Philip Brasher also reported on yesterday’s RFS hearing and noted yesterday at The Des Moines Register Online that, “Oil refiners want the government’s biofuels mandates suspended, citing the limits on how much ethanol can be blended into gasoline.

“Charles Drevna, [prepared testimony] president of the National Petrochemical & Refiners Association, also labeled as unworkable a proposal under consideration by the Environmental Protection Agency to allow newer cars to run on higher amounts of ethanol than is now permitted.

“‘We’re using as much corn as this country can for fuel,’ Drevna said after testifying before the Senate Environment and Public Works Committee.”

Mr. Brasher added that, “Blake Early, [prepared testimony] who follows fuel issues for the American Lung Association, told the Senate committee that it was too soon for the EPA to allow higher levels of ethanol in gasoline;” [and] “Nathanael Greene [prepared testimony] of the Natural Resources Defense Council said mandates are necessary to encourage development of biofuels from non-food feedstocks such as grasses.”

Budget-Climate Change

Walter Alarkon reported yesterday at The Hill Online that, “More than two-dozen Senate Democrats crossed the aisle to vote to ban the use of the controversial budget reconciliation process to make it easier to pass climate change legislation.

“The measure deals a blow to the Obama administration and liberal senators who were looking to pass a cap-and-trade system to put limits on carbon emissions blamed for global warming and to generate more than $600 billion in new government revenue. By attaching the cap-and-trade system to the budget resolution by way of the reconciliation process, cap-and-trade supporters would have lowered the number of votes needed to pass it in the Senate from 60 to 51.”

The Hill article explained that, “The restriction on using reconciliation was proposed by Sen. Mike Johanns (D-Neb.) as a budget amendment [see related press release]. It was approved 67-31, with 41 Republicans and 26 Democrats voting for it.

“Johanns told reporters that the Democratic support for his amendment had more to do with senators’ concerns about procedure in the upper chamber.”

The article went on to state that, “”It really did get to the very substance of what the Senate is about. That is that on complicated issues, it often requires 60 votes,” Johanns said.

“He noted, however, that the vote reflects a concern in the Senate over the increased costs passed on to consumers that would result from caps on emissions by energy companies.

“‘There are huge economic consequences to cap-and-trade legislation,’ Johanns said. ‘It will impact everybody.’”

Meanwhile, in more specific developments regarding climate change legislation, an update posted yesterday at The 25 x 25 Blog indicated that, “Sen. Debbie Stabenow (D-MI) has introduced legislation that would provide offset opportunities for agriculture and forestry, a key requirement for the sectors to get fully involved in the climate change debate and become willing participants in a climate change regulatory system.

Chris Adamo, legislative counsel for Sen. Stabenow, said the legislation was offered as an amendment in the ongoing budget resolution debate this week. Adamo struck a theme echoed throughout the day at the 25x’25 Summit: agriculture and forestry need to be at the table as climate change regulation is negotiated. Furthermore, he said, agriculture should be a welcome presence. ‘Agriculture provides (climate change) cost reductions for all industries,’ Adamo said, citing his home state of Michigan as an example. Agriculture is the number two revenue-producing industry in the state, but because of the vast offsets the sector can provide, it will make the cost of combating climate change cheaper for manufacturing, Michigan’s number one industry.”

Additional perspective on climate change legislation was included in this update (“Lobbyists Offer Outlook for Congressional Action on Climate Change“), which was also posted yesterday at The 25 x 25 Blog.

Ken Anderson reported yesterday at Brownfield that, “The coalition known as 25 x ‘25 has issued guidelines that it says will insure a strong role for agriculture and forestry in climate change legislation.

“‘We really feel this is a new day for agriculture and forestry,’ says Nathan Rudgers, former New York Agriculture Commissioner and chairman of the 25 x ‘25 Carbon Work Group, ‘and rather than ducking, denying and deflecting, we have the opportunity to provide solutions. Offset provisions are critical and we need correct, enabling policy that includes agriculture and forestry.’”

And Dan Looker reported yesterday at AgricultureOnline that, “The timing couldn’t have been better. A day after Representative Henry Waxman (D-CA) released a ‘discussion draft’ of legislation meant to combat global warming, an agricultural group released its own report on exactly how farmers, ranchers and forest owners can help reduce greenhouse gas emissions.

“The report, ‘Agriculture and Forestry in a Reduced Carbon Economy: Solutions from the Land,’ was released Wednesday by 25x’25, a group that has been lobbying for energy legislation to provide 25% of the nation’s fuel supply from renewables by 2025.

“The group argues that agriculture and forestry can help capture carbon in soil, plants and trees, but only if climate change legislation includes a cap and trade program that will adequately reward landowners for doing do.”

DTN writer Todd Neeley reported yesterday (link requires subscription) that, “Amid talk about where agriculture fits in the national debate on carbon emissions reduction, [Ohio farmer Bill Richards] said he has known the answer for about 40 years.

“‘I give my example to show what can be done,’ Richards said during the Fifth National Renewable Energy Summit presented by the National 25x’25 Alliance in Washington Wednesday. ‘No-till is the carbon-reduction solution with extra bonuses.’”

Mr. Neeley added that, “As federal lawmakers increasingly focus on climate change and limiting carbon emissions, agriculture is becoming an important representative at the table. No-till farming goes far beyond its carbon-reduction capabilities, he said. It improves water quality and helps the environment — both key components of sustainable agriculture.”

DTN Ag Policy Editor Chris Clayton, who is in Brussels this week, provided an interesting perspective on climate change in an update posted yesterday at the DTN Ag Policy Blog (“Agriculture and Climate Change in the U.S. and EU”).

Mr. Clayton indicated that, “EU officials I have spoken with say they are watching closely what happens in the U.S., which they believe is way behind the curve on this topic. Whatever does or does not happen in the U.S. this year, whether it affects agriculture directly or not, will be critical for setting the agenda for a global conference on climate change next December in Copenhagen, Denmark.

The European Union doesn’t allow farmers to participate in the EU cap-and-trade program for carbon credits, but that doesn’t mean agriculture is not part of the agenda. The EU on Wednesday issued a white paper announcing the EU Commission is launching a new debate on how European agriculture will adapt to climate change. The report noted that agriculture is facing droughts in the south, flooding in the north and a lack of water resources in other parts of the European Union. Sound familiar?” (See related links on EU developments here and here.)

Bettina Boxall reported in today’s Los Angeles Times that, “As California warms in coming decades, farmers will have less water, the state could lose more than a million acres of cropland and forest fire rates will soar, according to a broad-ranging state report released Wednesday.

The document, which officials called the ‘the ultimate picture to date’ of global warming’s likely effect on California, consists of 37 research papers that examine an array of issues including water supply, air pollution and property losses.”

Cuba

Martin Kady II reported yesterday at Politco.com that, “Cuban-born Mel Martinez isn’t happy with some of his fellow senators — including top Republicans — who are building real momentum to overturn the embargo on travel to Cuba.

“On Tuesday, a bipartisan group of senators introduced a bill that would lift the 40-year ban on Americans traveling to Cuba and loosen agriculture and trade restrictions.

“And this time around, there’s no Republican in the White House threatening to veto any such bill.

“‘This is the time to support pro-democracy activists in Cuba, not provide the Castro regime with a resource windfall,’ Martinez said. ‘Changing travel restrictions for U.S. citizens will simply allow Americans to contribute to the resources available to the Castro regime to perpetuate its repression.’”

MILC Program

A news release issued yesterday by USDA stated that, “Secretary of Agriculture Tom Vilsack announced today that because of low dairy prices across the country, producers participating in USDA’s Milk Income Loss Contract (MILC) program will begin to receive payments.

“‘President Obama understands that dairy farmers are struggling during these tough economic times,’ said Vilsack. ‘Today, as a result of low dairy prices, we are distributing MILC payments to ensure that dairy producers have the financial assistance they need. This action will also stimulate local economies,’ said Vilsack.”

Keith Good

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