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Climate Change; Biofuels; California and the Executive Branch (Ag Issues); Budget Issues; Crop Progress; and Insurance

Climate Change

Dan Looker reported yesterday at Agriculture Online that, “Farm groups reacted negatively to last week’s passage of a climate change bill by the House Energy and Commerce Committee, but some are waiting to see if the bill can be improved before deciding to support it or work against it.

Mark Gaede, a lobbyist for the National Association of Wheat Growers, wants to see trading of agricultural offsets added to the climate change bill, but he thinks other farm groups may be making too much of the fact that agriculture isn’t mentioned in the bill yet.

“‘Because there’s been one markup of the bill in one committee does not mean we should be running around saying the sky is falling,’ Gaede told Agriculture Online.”

Mr. Looker added that, “Gaede believes that killing the climate change bill might be a bad option for agriculture because it would leave regulation of greenhouse gases to the Environmental Protection Agency. That could be much more costly to agriculture and offer no change for farmers to benefit from carbon trading, he said.

He’s hopeful that House Ag Committee Chairman Collin Peterson (D-MN) will be able to change the bill to include agricultural offsets and to give USDA the responsibility for regulating them.”

Yesterday’s Agriculture Online article indicated that, “Gaede sees the efforts of Representative Zack Space to get farming practices included in the bill as a positive sign. Space wanted the bill to list agricultural practices that would qualify for carbon credit trading. The committee didn’t approve Space’s amendment, for technical reasons.

“‘The efforts of Congressman Zack Space of Ohio were nothing short of extraordinary,’ Gaede said.”

Also with respect to Rep. Space, a news release issued yesterday by the National Corn Growers Association stated that, “The National Corn Growers Association (NCGA) has commended Rep. Zack Space (D-OH) for demonstrating leadership and commitment to the agriculture industry during the House of Representatives Committee on climate change legislation, the Energy and Commerce mark-up of H.R. 2454, the American Clean Energy and Security Act. During Committee proceedings on Thursday, Rep. Space offered two amendments that would be beneficial to corn growers and the entire agriculture industry.

“‘We appreciate the work of Congressman Zack Space and our other allies on the committee, for addressing issues important to our members,’ NCGA President Bob Dickey said. ‘We believe the bill in its current form will significantly increase the cost of production to corn growers without the opportunity to generate revenue from greenhouse gas (GHG) reductions. The congressman’s amendments are an important step in the right direction and represent an improvement to the legislation.’”

Meanwhile, Phillip Brownlee noted yesterday at a Wichita Eagle Newspaper Blog (Kansas) that, “Roger Johnson, president of the National Farmers Union, noted during a visit to Wichita last week that a cap-and-trade emission system could be a boon to Kansas farmers if it allows them to sell emission credits. Farmers could reduce their emissions and earn credits by means such as no-till farming, precision fertilizing and burning methane gas created by manure, Johnson said.”

As the Waxman-Markey climate legislation moves forward in the House, the “Washington Insider” section of DTN explained yesterday (link requires subscription) that, “House leaders have not announced a schedule for bringing the measure to the floor, although Majority Leader Steny Hoyer, D-Md., says it could come up in June or July.

“A measure of the bill’s complexity can be seen in the fact that before floor action can occur, eight other committee chairmen who share jurisdiction over the legislation must consider the bill, notably the Ways and Means Committee because of its revenue-raising proposals. In addition, other panels with jurisdiction are Foreign Affairs, Financial Services, Education and Labor, Science and Technology, Transportation and Infrastructure, Natural Resources, and Agriculture.”

And with respect to hurdles that Waxman-Markey may face along the way in the House, Lisa Lerer reported yesterday at Politco.com that, “Rural Democrats are threatening to vote against climate change legislation unless the Environmental Protection Agency halts new proposals that could hamper the development of corn ethanol.”

Ms. Lerer noted that, “The debate intensified recently when EPA released a draft decision ruling that ‘indirect land use’ issues must be considered when calculating the carbon footprint of corn-based ethanol. That decision raises the overall emissions of corn ethanol by including sometimes tenuously linked activities — critics say totally unrelated activities — in its carbon count. And in fact, the EPA finding showed that while biofuels from plants and other next-generation renewables reduce greenhouse-gas emissions, the fuel might not be as environmentally friendly as the law requires.

“Biofuels are required to generate 20 percent less greenhouse-gas emissions than gasoline — a standard substantially more difficult to meet when life cycle emissions are counted. EPA Administrator Lisa Jackson said certain types of corn-based ethanol reduce carbon emissions by only 16 percent and thus fall short of the mandate.”

Yesterday’s Politico article indicated that, “‘There’s just enough concerns that the committee members have pretty much decided to stick together — that unless we get a resolution here that we think we can live with, we don’t see how we can support this,’ said House Agricultural Committee Chairman Collin Peterson (R-Minn.).

“Peterson and the 26 Democrats on his committee say they will vote against climate change legislation passed by the House Energy and Commerce Committee last week unless it better addresses several concerns raised by farmers, including reversing the EPA decision.

The issue could be even dicier in the Senate, where Democrats most likely need almost every Democratic vote to pass a climate change bill. Senate Agriculture Committee Chairman Tom Harkin (D-Iowa) and 12 other farm-state senators sent a letter in March asking the EPA to refrain from including the effects of indirect land-use changes in their calculations; the agency has not yet responded, Harkin said last week.”

Looking at the Senate and climate change legislation, DTN Ag Policy Editor Chris Clayton noted at the DTN Ag Policy Blog yesterday that, “The length of time and battles that stem from confirming Supreme Court nominee Sonia Sotomayor will tie up the Senate this summer and likely make it hard for major legislative initiatives such as climate change and health care to move ahead at least until after the nomination process is over. Sen. Charles Grassley, R-Iowa, said any climate bill coming from the House would be ‘slowed up’ because of the nomination.

“‘As far as the Senate is concerned, it’s slowed up somewhat, as health care too would be slowed up for this same reason and that same reason is the nominee for Supreme Court,’ Grassley said in a weekly telephone call with Iowa reporters Tuesday. ‘That’s going to take a lot of time in the Senate. And so that’s one factor, and health-care reform is another factor.’

“Grassley also noted the climate bill moved out of the House Energy and Commerce Committee on a 33-25 vote, so the climate bill ‘is not going to have easy sledding’ in the House, either.”

Biofuels

Clifford Krauss reported in today’s New York Times that, “For decades, the big oil companies and the farm lobby have been fighting about ethanol, with the farmers pushing to produce more of it and the refiners arguing it was a boondoggle that would do little to solve the country’s energy problems.

“So why are technicians for BP, the giant oil company, now working at an experimental ethanol plant in this old Louisiana oil town, helping to make it more efficient?

The erstwhile enemies, it turns out, are gradually learning to get along, as refiners increasingly see a need to get involved in ethanol production. Ethanol, made chiefly from corn, now represents about 9 percent of the country’s market for liquid fuels. And the percentage is growing year after year because of federal mandates. With the nation’s thirst for gasoline, and the ethanol that is blended into it, expected to revive when the economy does, the oil companies want to be in a position to take full advantage.”

Today’s Times article noted that, “Only two years ago, BP had only a minuscule investment in biofuels. But since then the company has committed $1.5 billion to various projects. Along with its work with Verenium, it entered a partnership with a Brazilian concern last year to produce ethanol from sugar cane.

“Lessons learned in Louisiana may eventually help convert Brazilian cane into more advanced biofuels, researchers say, producing a potentially vast new reserve for BP.

“BP also speaks with optimism about a partnership with DuPont to test production of biobutanol, an advanced liquid alcohol fuel that is made from the same feed stocks as advanced ethanols and is compatible with existing pipelines and car engines. Executives say they hope to begin making the fuel in large amounts by 2013.”

California and the Executive Branch (Ag Issues)

Mike Soraghan reported yesterday at The Hill Online that, “Some California Democrats are upset with President Obama for skipping past the state’s Central Valley, devastated by foreclosures and high unemployment, as he heads to a $3 million Hollywood fundraiser Wednesday night.

“‘He’s not showing us any empathy,’ said Rep. Jim Costa (D-Calif.), who endorsed Obama over then-Sen. Hillary Rodham Clinton (D-N.Y.) in the Democratic primary last May. ‘He told us he would visit the heartland of California. He’s coming again and he’s not doing so.’”

More specifically with respect to agriculture, Mr. Soraghan pointed out that, “While Midwestern states are better known for farming, California’s giant economy also includes an agricultural powerhouse. Fresno County, for example, ranks first in the country for total value of agricultural products sold.

But that agricultural economy is in trouble. Unemployment in some Central Valley counties had hit 20 percent before dipping a bit in April. In some towns, unemployment is as high as 40 percent, even higher if you count illegal immigrants put out of work.

“The valley has been hit hard by court rulings that shut down irrigation in large swaths of the valley, which shuts down farms. Additionally, the implosion of the California real estate market has battered rural communities. In Merced, for example, 8.4 percent of homes went into foreclosure last year, the highest rate in California and triple the state average.”

Yesterday’s Hill article added that, “Costa’s criticism of Obama’s itinerary is part of his sense that the economic devastation in rural California isn’t getting the attention it deserves and that the administration lacks a focused rural agenda.

“He notes that for the first time in decades, none of the nine top jobs in the Agriculture Department (secretary, deputy secretary and seven undersecretaries) has gone to a Californian.

“And he sees the administration as having a Chicago and East Coast tilt, lacking a high-profile White House adviser on agriculture, a role now-Rep. Marion Berry (D-Ark.) fulfilled in the Clinton White House.

“‘I hope six months from now, there will be a clear rural agenda,’ Costa said. ‘I can’t see one now.’”

Mr. Soraghan added that, “Earlier this year, Obama clashed with some farm-state lawmakers over a proposal in the budget to save $10 billion over 10 years by cutting subsidy payments to large farms. Berry called it ‘an assault on production agriculture that was unnecessary and uncalled-for.’

“Berry said Obama appeared to back off after Emanuel walked him down to the Oval Office for a one-on-one meeting with Obama. The cut didn’t get in the budget, but the administration continues to support it.”

Budget Issues

On the issue of the budget and agriculture, the editorial board at the Boston Globe opined yesterday (“Fertilizer from the farm lobby”) that, “President Obama promised in February to ‘end direct payments to large agribusinesses that don’t need them.’ Ever since, farm-belt politicians and lobbyists have been trying to crop-dust him into backing off – a sad testament to the power of farming interests over basic budget sense.”

The Globe editorial noted that, “Obama’s proposal is quite modest, and has nothing to do with small farms. Rather, he wants to end direct subsidies to farms with an income of more than $500,000 a year. The administration also wants to reduce bloated crop insurance subsidies – another form of welfare for big corporate farms. But as the agribusiness lobby mobilizes, the administration hasn’t put enough emphasis on its own proposals.

The continuation of the status quo has massive implications, from driving out small farmers precisely when Americans are demanding healthy local produce, to mindless production of processed foods fueling the nation’s obesity epidemic. Indeed, Obama would use potential savings from cutting farm subsidies to promote better nutrition in school lunches and other federal food assistance programs.

“Obama should stick to his proposal and not be cowed. Skillful lobbyists have played on Americans’ empathy for family farmers while defending policies that primarily help corporate farms. The industry is reaping entitlements that need to end.”

To send a letter to the Boston Globe editorial board, just click here.

Crop Progress

DTN reported yesterday that, “Eighty-two percent of the U.S. corn crop is in the ground, according to the latest USDA Crop Progress report; that’s almost on track with last year’s pace of 86 percent but behind the five-year average of 93 percent.

“‘Indiana, Illinois and Ohio all made up ground over last week, improving by 31 percentage points, 42 percentage points and 37 percentage points respectively,’ said DTN Analyst John Sanow. ‘However, these key corn states are still behind the five-year average, and with more rain delays expected, we could see them fall behind again.’”

The DTN article stated that, “The soybean crop is 48 percent planted compared to a five-year average of 65 percent. ‘Many states — especially in the Eastern Corn Belt and Delta regions — are running well behind schedule because growers are focused on planting corn,’ Sanow said… [S]pring wheat plantings went from 50 percent complete last week to 79 percent complete; though the pace still lags the five-year average pace of 95 percent, it exceeds pre-report expectations of 70 percent to 75 percent.”

Insurance

A news release issued yesterday by USDA stated that, “USDA has expanded the Livestock Gross Margin insurance program for dairy cattle to producers in Kentucky, New Mexico, Tennessee and Washington, bringing the total number of states where this program is available to 33.

“‘Livestock Gross Margin provides convenience to producers who can sign up for the insurance 12 times per year and insure all their milk production they expect to market over a rolling 11-month insurance period,’ said Acting Administrator William J. Murphy. ‘This is a customized product and can be tailored to any size farm and is considered a bundled option insurance, similar to buying both a call option to limit higher feed costs and a put option to set a floor on milk prices.’”

Keith Good