FarmPolicy

April 25, 2017

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.”

Yesterday’s Reuters article explained that, “The current limit of 10 percent has been in place since 1978, but ethanol manufacturers say that level must be increased to accommodate rising federal ethanol production mandates.

“The Renewable Fuel Standard enacted by Congress requires 11.1 billion gallons of renewable fuels such as ethanol to be blended into the nation’s gasoline supply this year. The mandate, rising annually, will reach 36 billion gallons in 2022.

With a 10 percent blend rate, the Energy Department estimates that as early as 2013 the amount of ethanol required to be produced will exceed the amount the U.S. vehicle fleet could consume.”

Siobhan Hughes and Lauren Etter
reported in today’ Wall Street Journal that, “The U.S. Environmental Protection Agency has opened the door to allowing higher mixes of ethanol in gasoline, a potential boon to farmers and the struggling ethanol industry, but opposed by auto makers whose consumer warranties typically are tied to the current EPA standard.”

The Journal writers indicated that, “Pushing against the auto industry’s objections are farmers, investors in ethanol-fuel start-ups, big agricultural commodities companies and some environmental groups that argue the U.S. would be better off substituting home-grown biofuels for foreign oil.

“Currently nearly a quarter of all corn produced in the U.S. is used to make ethanol. That’s up from about 12% in 2004. A higher blend ratio would help support corn prices.”

“An oversupply of ethanol has prompted a wave of bankruptcies and made the ethanol industry eager to expand its market. Ethanol producers are being squeezed as corn prices stay relatively high and as ethanol prices stay relatively low. Todd Alexander, a partner at Chadbourne & Parke LLP, estimates that some ethanol producers are losing up to 10 cents on every gallon of ethanol,” the Journal article said.

James R. Healey reported on this development at today’s USA Today Online and noted that, “Automakers — who would be on the hook for E15-related warranty claims — are testing blends up to E20 in conventional vehicles. The Department of Energy also is conducting tests, but it could be a year or more before results are in.

“EPA isn’t expected to decide until December.”

More specifically with respect to deadlines, Dan Looker reported yesterday at Agriculture Online that, “There is a catch to the EPA announcement — a time limit of 30 calendar days to comment, during the busiest time of the year for most corn farmers and many livestock producers as well. The EPA is expected to publish a notice in the Federal Register next Wednesday, which will start the 30-day clock ticking. After that, the agency has 270 days from its receipt of the March 6 letter (December 1, 2009) to decide if it’s going to allow higher blends.”

Mr. Looker pointed out that, “Senator Tom Harkin, the Iowa Democrat who heads the Senate Agriculture Committee also welcomed the news Thursday that EPA is moving ahead with the request.

“‘I am pleased that EPA is moving forward to receive comments and decide whether to approve the sale of higher ethanol blends based on the law and scientific facts. Studies have been done that indicate E15 is safe for use in conventional vehicles and I believe its use should be approved unless there are reasons found not to do so,’ said Harkin. ‘Increasing ethanol blend levels can help decrease our dependence on foreign oil and create new ‘green’ jobs here in Iowa and across the country.’”

Ethanol- Food Price Debate

Meanwhile in a related development, DTN writer Todd Neeley reported yesterday (link requires subscription) that, “Agriculture and ethanol group leaders, citing a Congressional Budget Office report that said ethanol’s role in food-price increases last year was minimal, renewed their call Thursday for congressional hearings on the causes of higher food prices. They also demanded apologies from the Grocery Manufacturers Association and others who blamed ethanol for those price increases.”

(Note: see related news items from the National Corn Growers Association, American Farm Bureau Federation; and the National Farmers Union.)

Mr. Neeley noted that, “The CBO study showed ethanol accounted for just .5 to .8 percentage points of an overall 5.1-percent increase in food prices in 2008 — despite claims by the GMA and other groups that ethanol was the main driver in rising prices.”

Peanuts

The Associated Press reported yesterday that, “The battered peanut industry has a new message: Peanuts are safe to eat, and there’s a law in the works to make them even safer. So have a handful.

“In a nutshell, that’s the theme of a lobbying and public relations campaign to help the industry rebound from a salmonella crisis blamed for killing at least nine people and sickening nearly 700 others.”

The AP article added that, “The effort by farmers and food manufacturers is part of a delicate strategy: Backing new federal food safety rules to help reassure consumers, while opposing steps they think go too far. It also illustrates a hard lesson learned by groups that find themselves in Congress’ crosshairs: It is better to help lawmakers shape regulations than to let others do it for you.”

Yesterday’s article stated that, “‘We know things are going to have to be done, and we want to be part of fixing the problem,’ said Mike McLeod, a lobbyist representing the Western Peanut Growers Association, whose members are Texas peanut farmers. ‘We want to be perceived as being constructive in trying to get this problem behind us.’



“The nation’s 10,000 peanut growers get nearly $1 billion a year for their crops, with products like peanut butter and candy generating billions more, according to Stanley Fletcher, a University of Georgia agriculture professor specializing in peanuts.

Fletcher estimates farmers alone could lose $500 million this year from the salmonella crisis, with an additional $500 million lost in overall economic activity. That makes tougher safety standards an easier sell to an industry which might otherwise resist.”

With respect to food safety legislation, the AP article stated that, “The most prominent food safety bill is one sponsored by Senate Majority Whip Richard Durbin, D-Ill., backed by Republican Sens. Saxby Chambliss and Johnny Isakson of Georgia. It would require companies to have food safety plans, empower the Food and Drug Administration to recall tainted products and require annual FDA inspections of facilities it considers high risk.

Durbin’s bill has drawn praise from farmers, food manufacturers and consumer advocates, though there are divisions over whether to seek even stricter legislation. Consumer groups prefer at least yearly inspections for all food facilities, fees on food manufacturers to pay for the inspections and electronic tracking of food shipments.”

After additional analysis, yesterday’s AP article concluded by noting that, “Peanut farmer Jimbo Grissom of Seminole, Texas, chairman of the Western Peanut Growers Association, wrote to President Barack Obama asking him to reassure consumers that peanut butter from supermarkets is safe. In a radio address, Obama had said his daughter Sasha often eats peanut butter sandwiches and said parents shouldn’t have to worry about their childrens’ lunches. [Note: See this FarmPolicy.com update from March 20 for complete details on this issue].

“‘We want to make sure that your statements do not lead Americans to believe that the peanut butter on their supermarket shelves is unsafe,’ Grissom said in a letter distributed to newspapers.

Grissom said he has received no response.”

Food Safety

More broadly on the food safety issue, Reuters writer Christopher Doering reported today that, “Efforts to overhaul the U.S. food safety system could suffer unless major gaps in state and local programs are repaired and integrated with changes taking place in Washington, experts said on Friday.

State and local agencies have difficulty preventing and responding to outbreaks of foodborne illnesses because of chronic underfunding, varying levels of resources, different methods in addressing food safety and barriers preventing collaboration, the researchers said in a report.

“‘It really starts with the reality that they are the foundation of the system,’ said Michael Taylor, a professor of health policy at George Washington University who helped write the report.

The study, released by the university, was based on information from federal, state and local officials and others. It is the latest to offer advice to U.S. policymakers looking for ways to improve the food safety system.”

And in a related article, Andrew Martin reported in today’s New York Times that, “With huge losses from food-poisoning recalls and little oversight from the federal Food and Drug Administration, some sectors of the food industry are cobbling together their own form of regulation in an attempt to reassure consumers. They are paying other government agencies to do what the F.D.A. rarely does: muck through fields and pore over records to make sure food is handled properly.

“These do-it-yourself programs may provide an enhanced safety level in segments of the industry that have embraced them. But with industry itself footing the bill, some safety advocates worry that the approach could introduce new problems and new conflicts of interest. And they contend that the programs lack the rigor of a well-run federal inspection system.

“‘It’s an understandable response when the federal government has left a vacuum,’ said Michael R. Taylor, a former officer in two federal food-safety agencies and now a professor at George Washington University. But, he added, ‘it’s not a substitute’ for serious federal regulation.”

The Times article explained that, “For many years, the food industry lobbied against initiatives that would have strengthened the F.D.A.’s oversight. But industry attitudes are changing as food-borne pathogens turn up repeatedly in foodstuffs once regarded as safe, like peanuts and pistachio nuts, costing those industries millions in lost sales.”

Rural Economy

The Associated Press reported yesterday that, “A new survey of rural bankers in 11 Midwest and Plains states suggests the region’s economy remains weak, but there are also signs it may soon improve.

“The bankers who responded to the monthly Rural Mainstreet survey say they’re more optimistic about the future despite low farm equipment sales.”

The AP article noted that, “Creighton University economist Ernie Goss says he thinks the overall rural economic index has bottomed out even though it remains in negative territory. In increased to 21.7 in April from March’s 18.7.

“The survey’s index ranges between 0 and 100, and any score below 50 on the index suggests a contracting economy over the next three to six months in rural areas dependent on agriculture and energy production.”

And the article pointed out that, “The farmland price index improved to 41.2 in April from March’s record low 33.1. But the index remains well below the peak of 81 it set in January 2008.”

Nonetheless, Jim Downing reported today at the Sacramento Bee Online that the dairy industry is still suffering from low prices.

Mr. Downing indicated that, “Drink up – milk prices are expected to stay low through summer as the dairy business struggles with a glut.”

The Bee article added that, “But milk is still selling for far less than it costs to produce. As production outpaces demand, analysts and farmers expect the market to stay weak for the next few months.

“‘We’ll just be prepared for an ugly financial situation,’ said Case Van Steyn, who milks about 1,000 cows in the Galt area.

The dairy sector is stuck with too many cows and not enough demand. And over the past couple of years rising feed prices increased costs.”

WIC-Obesity

A news release issued yesterday by USDA stated that, “Agriculture Secretary Tom Vilsack said that a USDA study being released today found that participation in USDA’s Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) is not related to being overweight.

“‘One of the most worrisome aspects of the growing tide of obesity in the United States is the high rate of overweight children,’ Vilsack said. ‘President Obama and I are concerned because over one in five young children, ages 2 to 5, are at risk of being overweight-and their numbers have grown in the past two decades.’

“Vilsack said he was pleased to learn that the overall results of WIC and the Battle Against Childhood Overweight, a report by USDA’s Economic Research Service (ERS), found that body weight was not associated with WIC participation. The number of young children whose families participate in WIC doubled from 1.7 million in 1988 to 4.0 million in 2007.”

Climate Change

The Washington Post editorial board noted today that, “As soon as next week, the Environmental Protection Agency could follow through on an order from the Supreme Court to either declare carbon dioxide a pollutant or to say why it isn’t. That decision could usefully signal to the world that the United States is serious about regulating greenhouse gas emissions. But it should also send a shiver down Congress’s collective spine. Because the regulation of carbon will have a profound effect on the American economy, this vital task should be the responsibility of Congress, not of unelected officials at the EPA.

“The EPA does have the authority under the Clean Air Act to regulate air pollutants that have ‘effects on [public] welfare,’ ‘on . . . weather, . . . and climate, . . . as well as effects on . . . personal comfort and well-being.’ Emitted greenhouse gases, particularly carbon dioxide, will have such effects. The Supreme Court’s 2007 ruling in Massachusetts v. EPA affirmed this when the majority concluded that the EPA had the authority to control emissions from motor vehicle tailpipes and ordered the agency to issue an endangerment finding. Then-EPA Administrator Stephen L. Johnson was close to doing so on the basis of public welfare, but he opted for another public comment period after intense pressure from the Bush administration.”

The Post opinion item added that, “The probable and impending endangerment finding by current EPA Administrator Lisa P. Jackson would fulfill the court’s mandate and then require Ms. Jackson to devise regulations for the transportation sector. But having declared greenhouse gases a pollutant, the agency would have to set about the long process of regulating such gases from all other sources as well. The U.S. Chamber of Commerce expresses concern about the impact of such regulation on the construction industry, because residential and commercial buildings are larger sources of global-warming pollution than are motor vehicles. Rep. John D. Dingell (D-Mich.), then-chairman of the House Energy and Commerce Committee, predicted last year that seeking to control climate change with such piecemeal regulation would lead to a ‘glorious mess.’

The best way to stop this from happening is for Congress to adopt a more rational scheme, by putting a price on carbon with a tax (ideally) or a cap-and-trade market.”

For more background on this issue, see this FarmPolicy.com update from April 8.

Hunger

An editorial posted yesterday at The Financial Times Online stated that, “As we agonise about the recession, we should remember that humanity’s greatest economic problem is more basic: how to get enough food, a challenge still faced by millions.

“This weekend the Group of Eight leading countries gathers in Italy for its first ever meeting of agriculture ministers. Their goal must be to move food policy up the global political agenda to a position where it is treated as the vital international security matter it is.”

The FT item noted that, “Food exporters and importers alike need well-functioning international markets in food, which encourage efficient global production patterns. The responses to the crisis, sadly, have been in the opposite direction: export bans, land grabs of arable territory and secretive bilateral barter deals. These policies must stop. They are self-destructive and costly, and for poor countries ruinous. They do harm to others, as they undermine trading systems that benefit all.

“Governments must provide global public goods. Research is needed to boost productivity, especially for African crops, and must not be hampered by opposition to genetically modified food. Mechanisms must be found to hedge against price volatility that discourages production even when prices are high.

“The G8 has rightly invited important emerging countries to the table. But are agricultural ministers, who usually see their job as helping their own farmers, up to the task? Food security is the greatest threat to human well-being today. It should not be lost in quibbles about the branding of Parma ham.”

Keith Good

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