FarmPolicy

November 17, 2019

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.”

The Journal article explained that, “As early as this month, the Environmental Protection Agency could declare that carbon dioxide is a danger to the public, triggering regulation of emissions under the Clean Air Act. Such a regulatory move is widely seen as part of the Obama administration’s strategy to pressure reluctant lawmakers into action.

Rep. Markey, who attended Monday’s event at MIT, said the goal is to complete federal legislation ahead of the U.N. meetings. But he added that even if Congress hasn’t passed a final bill, it will be clear to other nations that the U.S. is moving in a dramatically different direction on climate change.

Rep. Markey said legislation — rather than EPA regulation of carbon dioxide — would provide greater flexibility to ease the potential impact on the economy and consumers. He declined to give a specific time when the process should be taken over by the EPA if Congress can’t reach an agreement. Ms. Browner declined to take questions after the MIT event.”

For more on the political dynamic between the executive branch and Congress on the climate change issue, see this item from National Public Radio, which aired on Friday’s Talk of the Nation Program, “Can Obama Push Climate Policy Forward?

An update posted yesterday at the 25 x 25 Blog reminded readers that, “The House Agriculture Committee, under the leadership of Chairman Collin Peterson (D-MN), will be a key player in the ongoing development of climate change regulatory legislation, which was kick-started late last month with the release of proposed legislation from Reps. Henry Waxman (D-CA) and Edward Markey (D-MA). Peterson has made clear that his panel will work to insure final legislation includes provisions that will account for the contributions that agriculture and forestry can provide in reducing greenhouse gas (GHG) emissions, minimize the costs to the sectors from a new climate change regulatory system, and compensate the sectors for the emission reduction services they provide.”

Recall that back on March 12 Chairman Peterson announced, “That the House Agriculture Committee is seeking comments on proposals to address global climate change. The Committee is soliciting the opinions of more than 400 agricultural, environmental, scientific and educational groups and other members of the public, through a print- and web-based questionnaire.”

A related news release issued on Friday from the National Association of Wheat Growers (NAWG) stated that, “NAWG submitted its responses this week to a House Agriculture Committee questionnaire on climate change, emphasizing Association policy supporting a cap-and-trade program that allows unlimited agriculture sequestration.”

In part NAWG indicated that, “Legislation can be fashioned in such a way to provide both an economic benefit through the sale of agriculture and forestry carbon credits and use of the allowance pool to mitigate against any possible increases in input costs caused by greenhouse gas legislation. This is far preferable to the regulatory approach, which the EPA currently has under consideration to respond to a 2007 Supreme Court ruling determining carbon dioxide can be regulated under the Clean Air Act.”

NAWG also suggested that, “While the Environmental Protection Agency should have authority to administer the larger cap-and-trade program, USDA should exercise its statutory authority from the 2008 Farm Bill to administer the development and implementation of agriculture and forestry offset policies.”

More detail and background on this issue from NAWG is available here.

In other developments, the AP reported today that, “The U.S. dairy industry wants to engineer the ‘cow of the future’ to pass less gas, a project aimed at cutting the industry’s greenhouse gas emissions by 25 percent by 2020.

“The cow project aims to reduce intestinal methane, the single largest component of the dairy industry’s carbon footprint, said Thomas P. Gallagher, chief executive officer of the U.S. Dairy and Dairy Management Inc.’s Innovation Center in Rosemont, Ill.

“One area to be explored is modifying the dairy cows’ feed so they produce less methane, said Rick Naczi, the leader of the initiative.

“‘Right now there is some work being done on fish-oil additives and some other things,’ he said. ‘The cow is responsible for the majority of the greenhouse gas on the farm itself. We know there are ways that we can find to cut or reduce that production.’”

The article added that, “Greenhouse gas emissions are blamed for global warming. Cutting the dairy industry’s emissions by 25 percent would be equivalent to removing about 1.25 million passenger cars from the nation’s roads every year, Gallagher said.”

Trade Issues- WTO

Ian Elliott reported yesterday at Feedstuffs Online that, “In what could be a landmark case, European Union and Canadian officials moved closer in recent weeks to a dispute before the World Trade Organization over whether a government can use animal welfare concerns to restrict imports from another country.

“This dispute is over seal products. Some within the EU hold that Canada harvests seals in an inhumane manner. The EU executive has proposed — and the European Parliament is now debating — whether those animal welfare concerns are sufficient grounds for the EU to restrict imports of Canadian seal products.

“Canadian International Trade Minister Stockwell Day warned the EU April 3 that Canada will advance a complaint before WTO if the 27-nation bloc goes ahead with its proposed trade ban.”

Mr. Elliott explained that, “If it goes to WTO, the seal case will be among the first where how a country makes a product is the basis another government uses to restrict trade in that product.

“If the case does advance, WTO’s dispute panels and appeal body could well set a precedent on animal welfare and trade. If those supporting restrictions on the seal products win their argument, any government could use that precedent in the future to restrict imports of other goods, like pork, beef, lamb, poultry meat or eggs.”

Trade Issues- Mexico

Reuters writer Doug Palmer reported yesterday that, “Transportation Secretary Ray LaHood has sent the White House recommendations for ending a NAFTA trucking dispute, which is expected to be high on the agenda when President Barack Obama visits Mexico later this week, an administration aide said on Monday.

“The White House declined to say whether the administration would make an announcement before the president’s trip on a proposal to allow long-haul Mexican trucks to operate in the United States.”

Mr. Palmer indicated that, “Last month, Mexico slapped retaliatory tariffs on $2.4 billion worth of U.S. goods after Obama signed an omnibus spending bill that canceled a pilot program allowing Mexican long-haul trucks to operate in the United States.

“Since then, LaHood has met with 23 members of Congress and various business and labor groups in an effort to come up with a plan to reopen the market to Mexican trucks before Obama visits Mexico on his way to the regional Summit of the Americas meeting in Trinidad this weekend.

“‘The Department of Transportation has submitted a set of principles to the White House on cross-border trucking that is consistent with our NAFTA commitments. And those principles … are currently under review,’ an administration official told Reuters on condition of anonymity.”

Trade Issues- Cuba

Michael D. Shear and Cecilia Kang reported in today’s Washington Post that, “President Obama yesterday announced a series of steps aimed at easing the U.S. relationship with Cuba, breaking from policies first imposed by the Kennedy administration and stepping into an emotional debate over the best way to bring democratic change to one of the last remaining communist regimes.

“White House officials said the decision to lift travel and spending restrictions on Americans with family on the island will provide new support for the opponents of Raúl and Fidel Castro’s government. And they said lifting the ban on U.S. telecommunications companies reaching out to the island will flood Cuba with information while providing new opportunities for businesses.

Obama left in place the broad trade embargo imposed on Cuba in 1962. But just days before leaving to attend a summit with the leaders of South and Central America, he reversed restrictions that barred U.S. citizens from visiting their Cuban relatives more than once every three years and lifted limits on the amount of money and goods Cuban Americans can send back to their families.”

Mark Silva and Tracy Wilkinson reported in today’s Los Angeles Times that, “Several U.S. lawmakers, especially from farm states, are also pushing for trade restrictions to be eased. Obama is maintaining them, saying they can serve as leverage for the U.S. to pressure Cuba to free political prisoners and enact democratic reforms.”

Food Prices

Matt McKinney reported on Saturday at The Minneapolis Star-Tribune Online that, “Recent surveys have found that farmers, reeling from high fertilizer prices, are cutting back on the acreage of corn they’re planting and ramping up planting of soybeans. Total acreage planted is dropping, too. Generally speaking, shrinking supplies will drive up prices, assuming demand remains the same.

“So consumers could be facing another year of roller-coaster food prices. But don’t stock up your root cellar just yet.”

The article pointed out that, “Cheaper energy, with oil closing at $52.24 a barrel on the New York Mercantile Exchange, should prevent the runaway food prices of last year; A stronger dollar means more of the U.S. harvest stays here, bolstering domestic supplies; [and] The nation has more food stocked up than it did at this time last year.”

Food prices rose 5.5 percent last year, the largest increase since 1990, according to the Economic Research Service (ERS) at the U.S. Department of Agriculture. The USDA recently predicted food prices would rise 3 to 4 percent this year,” the article said.

A related item from the United Egg Producers United Voices publication (April 13) stated that, “Egg farmers across the country have once again shown their generosity and recognition of our citizens that are less fortunate and in need of food assistance. Working with Feeding America and their network of food banks, egg farmers will deliver more than 12 million eggs that will be distributed to soup kitchens and pantries.

“Sixty-six (66) egg farmers made deliveries to more than 95 food banks in the few weeks and days prior to Easter.”

Yesterday’s publication added that, “Showing appreciation for egg farmer’s donations, Vicky Escarra, chief executive of Feeding America said: ‘Eggs have always been an important staple in the American diet, but they are also one of the hardest categories to acquire.’ ‘With our food banks reporting a 30% increase in demand for emergency food assistance, compared to one year ago, this egg donation comes at a perfect time.’

“Egg farmers of all sizes participated in the Easter donation. The smallest donation was 1,800 eggs and the largest was 1,440,000 eggs.”

Meanwhile, on April 2, 2009, the Congressional Research Service (CRS) issued a report entitled, “Ethanol: Economic and Policy Issues,” which was prepared by Tom Capehart.

In part the CRS report noted that, “Federal support for biofuels and ethanol in particular is likely to be an issue facing the 111th Congress. Ethanol has received more federal support than other types of renewable energy. Some argue that the market, rather than the government, should direct investment, whether it be for ethanol, wind, solar, geothermal, or other alternatives. In addition, ethanol is used in internal combustion engines that mostly use fossil fuels, unlike alternatives such as battery or plug-in electric vehicles, which do not consume fossil fuels directly.

Other issues of congressional interest may include financial support for ethanol during the recession and the extension of the blender’s tax credit and the import tariff, both of which expire after 2010. The renewable fuel standard (RFS), which mandates increasing volumes of renewable fuel use through 2022 [related graph], may become an issue if biofuels production shortfalls occur and the mandate cannot be met. The U.S. Environmental Protection Agency (EPA) is drafting rules on the calculation of lifecycle greenhouse gas emissions that will determine which fuels qualify for the RFS. These rules will likely attract congressional scrutiny if they exclude major stakeholders in the ethanol industry. In addition, continuation of the RFS itself may be the subject of debate.”

With respect to issues associated with food prices, beginning on page 14, the CRS report stated that, “Critics of first generation ethanol claim it was responsible for a large proportion of recent food price increases that occurred in early 2008. As evidence they cite USDA’s estimate that the U.S. Consumer Price Index (CPI) for all food increased 5.5% in 2008, and 4.0% in 2007, compared with an average rate of increase of 2.5% for 1997 to 2006. In analyzing this criticism, however, it is important to distinguish between prices of farm-level commodities and retail-level food products, because most consumer food prices are largely determined by marketing costs that occur after the commodities leave the farm. The price of a particular retail food item varies with a change in the price of an underlying input in direct relation to the relative importance (in value terms) of that input. For example, if the value of wheat in a $1.00 loaf of bread is about 10-cents, then a 20% rise in the price of wheat translates into a 2-cent rise in a loaf of bread.

Considering corn’s relatively small value-share in most retail food product prices, some contend that it is unlikely that the ethanol-driven corn price surge is a major factor in current food price inflation estimates. Furthermore, many economists agree that the majority of retail food price increases were not mainly ethanol-driven, but rather were the result of various other factors, including a sharp increase in energy prices that rippled through all phases of marketing and processing channels, and the strong increase in demand for agricultural products in the international marketplace from China and India (a product of their large populations and rapid economic growth).”

In other food related news, Ron Smith reported yesterday at the Southwest Farm Press Online that, “Peanut butter is back.

“Following a downturn in sales of more than 19 percent in January, compared to year earlier sales volume, February numbers show the beginning of a recovery, a decline of only .84 percent, according to Marie Fenn, president and managing director, National Peanut Board in Atlanta.

“‘The data for March is even more encouraging,’ Fenn says. ‘In March 2009, there was an increase in volume sales of 5.6 percent over March 2008.’”

Yesterday’s article added that, “Fenn said peanut butter was never part of the salmonella related recall that began in January but confusion ‘among consumers about what peanut products are safe to eat,’ and resulting media coverage tarred peanut butter with the same wide brush that affected the small amount of tainted peanuts that were released into the market.”

Crop Progress

Reuters writer Mark Weinraub reported yesterday that, “Cold and rainy weather around the U.S. Midwest was keeping farmers out of their fields and delaying the start of corn planting, grain dealers said on Monday;” however, the article added that, “The delays were not yet threatening total production. Most farmers were accustomed to such delays. Large planters and high-tech tools such as global positioning systems for tractors allow growers to finish their planting tasks quickly once the weather cooperates.”

Susanne Stahl and Anthony Greder reported yesterday at DTN that, “Corn planting is off to a slow start, according to USDA’s latest Crop Progress report.”

The USDA report indicated that as of April 12, only two percent of the corn crop was planted compared to a five-year average of six percent.

USDA News

A news release issued on Friday by USDA stated that, “Agriculture Secretary Tom Vilsack today said that USDA will begin using an improved and more stable system for determining non-recourse marketing assistance loan repayment rates and loan deficiency payment rates for wheat, feed grains, pulse crops, oilseeds, wool, mohair and honey.

“‘The new method will moderate fluctuations of the loan repayment rate,’ said Vilsack. ‘In keeping with President Obama’s commitment to American agriculture, this decision reduces the effects daily market volatilities have on loan repayment rates and provides more certainty for producers who have taken advantage of marketing assistance loans or loan deficiency payments.’”

And USDA indicated yesterday that, “Agriculture Secretary Tom Vilsack today announced the appointment of Burnham John ‘Bud’ Philbrook as USDA’s Deputy Under Secretary for Farm and Foreign Agricultural Services (FFAS). Philbrook will largely have responsibility for the international side of the FFAS mission area.”

Keith Good

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