FarmPolicy

October 26, 2014

Climate Change; Production- Food Costs and Global Food Security; Ag Sector Issues

As negotiations over the Waxman-Markey bill continue, recent news reports indicate that concerns from agricultural and rural stakeholders regarding the bill persist.

Farm Payments, Carbon Sequestration

Reuters writer Charles Abbott reported on Friday that, “The climate change law being written in Congress is unlikely to pay directly U.S. farmers if they alter their operations to control greenhouse gases, said the House Energy Committee chairman on Friday.

“Energy chairman Henry Waxman, the lead sponsor of the climate bill, also told reporters it was dubious if a new land stewardship program would be created with the goal of locking carbon in the soil.

Waxman commented after meeting four dozen farm-group leaders for 90 minutes. He said the meeting underlined distrust in farm country of the Environmental Protection Agency, which would have a major role in climate programs. Urban lawmakers are skeptical the Agriculture Department has the expertise to oversee carbon offset programs.”

Friday’s article noted that, “[Waxman] said the climate bill was unlikely to go to a floor vote next week;” and added that, “Asked if there would be direct payments to farmers, Rep. Edward Markey said of the idea, ‘It’s not going to lead you anywhere.’”

FOXNews.com reported on Friday that, “A key Democrat said Friday that he doesn’t see any way party leaders could bring a controversial, energy and climate change bill to the floor for debate next week because of concerns coming from the agriculture industry.

“‘I don’t see how we do that,’ said House Agriculture Committee Chairman Collin Peterson D-Minn.

Peterson’s comments came after a negotiating session ‘blew up’ Thursday night as he and other key players tried to forge a deal.”

Meanwhile, Mark Steil reported on Thursday at Minnesota Public Radio Online that, “At one time it was thought that climate change legislation would be a substantial money maker for agriculture.

Those hopes are fading, and Minnesota Farm Bureau President Kevin Paap said his organization even opposes the current bill. He said the legislation will boost energy prices for farmers and others, without much of a payback.”

Allocation of Rural vs. Urban Emission Allowance Credits

Bloomberg writers Lorraine Woellert and Simon Lomax reported on Friday that, “A House vote on legislation to control greenhouse-gas emissions is awaiting a nod from rural Democrats, who won’t sign off on a bill until they see promised revisions in writing, House Agriculture Committee Chairman Collin Peterson said.

“‘They want to see language,’ said Peterson, a Minnesota Democrat. ‘There’s a lot of distrust.’”

The Bloomberg article explained that, “Waxman and House Speaker Nancy Pelosi of California want the full House to vote on the bill as soon as next week. That plan has been tripped up by rural lawmakers whose constituents are heavily dependent on coal-fired electricity, which would be more costly under the bill. Farmers also fear that the measure would increase fuel and fertilizer costs while shortchanging them for emissions cuts from climate-friendly farm practices.”

Darren Samuelsohn reported on Friday at The New York Times Online (ClimateWire) that, “Waxman, for example, offered to give additional emission allowances to rural electric cooperatives, according to Rep. Jim Costa (D-Calif.), a member of the Agriculture Committee. Peterson had first raised the allocation issue earlier this week, telling reporters Wednesday that he was pressing for less than 1 percent of the overall pool to be given for free to the power companies that service about 42 million Americans.

“‘What I basically said to those guys is, look, this is not a huge amount, fix it,’ Peterson said. ‘Find some way to fix this. That’s what you’ve got to do here.’”

Focus on Chairman Peterson

Stephen Power reported in today’s Wall Street Journal that, “The fate of the leading proposal to curb U.S. greenhouse-gas emissions is in the hands of Rep. Collin Peterson, a Marlboro-smoking free spirit who scoffs at warnings about climate change and says the Environmental Protection Agency is ‘in bed with’ corporations opposed to the ethanol industry.

“Mr. Peterson — a Minnesota Democrat whose chairmanship of the House Agriculture Committee gives him sway over Farm Belt lawmakers — has forced Democratic Party leaders to slow their drive to pass climate legislation and to consider amending it in ways that some environmentalists worry will lessen its effectiveness.

Mr. Peterson on Friday asked White House officials and Agriculture Secretary Tom Vilsack to intervene in negotiations between him and the climate bill’s main sponsor, Rep. Henry Waxman (D., Calif.). ‘I’m getting tired of going around in circles,’ Mr. Peterson told reporters.”

Today’s Journal article explained that, “The resistance to the climate bill from Mr. Peterson and other farm-state Democrats has exposed divisions within the majority party over whether Congress should attempt such far-reaching and potentially costly environmental legislation at the same time it is trying to overhaul the U.S. health-care system.

Mr. Peterson, who was first elected to Congress in 1990, wants the party’s leaders to soften the climate bill’s impact on coal-burning power plants, scale back existing regulation of ethanol, and make other changes that, if adopted, could steer huge sums of money to farmers who engage in environmentally friendly practices.

“With Republicans expected to oppose the measure en masse, the votes of Farm Belt Democrats are critical to the House climate bill’s future. But some of the changes Mr. Peterson wants could make it less palatable to Democrats who are more liberal.”

A recent news release issued by the House Agriculture Committee Republicans stated that, “Ranking Member Frank Lucas, along with seven other ranking Republicans of other committees, held a press conference today to oppose efforts by Democratic leaders to block full and open debate on the Waxman-Markey cap-and-trade bill, otherwise known as the national energy tax. These eight committees have jurisdiction over the bill but have been bypassed by Democratic leaders who are rushing the bill through Congress and plan to hold a vote on this bill as early as next week.

“‘The agriculture committee has had one hearing on this bill without a markup in sight. The Committee took testimony from eight witnesses, covering a wide variety of rural interests, plus Secretary of Agriculture, Tom Vilsack. Not one of these individuals endorsed the bill as it reads today. Secretary Vilsack called it ‘a work in progress.’ This is not the way you create law,’ added Lucas.

“This comes as more than 100 agriculture groups have publicly expressed opposition to the Waxman-Markey bill (H.R. 2454). In a month’s time the number has grown from 23 to 115. The latest groups to join the cause include the National Cattlemen’s Beef Association (NCBA) and the National Pork Producers Council (NPPC). To date, no large farm groups have endorsed it.”

Focus on Cost Estimates

On Saturday, Bloomberg writer Simon Lomax reported that, “A proposed ‘cap-and-trade’ law to cut U.S. greenhouse gas emissions would cost $22 billion a year by 2020, or $175 for every household, the Congressional Budget Office said.

“The legislation, which the U.S. House may vote on as early as next week, softens the impact on consumers by giving some industries free carbon dioxide permits, also called allowances, and selling others at auction to raise money for tax relief, CBO said.”

The Bloomberg article added that, “Without these measures, the price tag would be $110 billion a year, or $890 per household, CBO said in an analysis prepared for Representative Dave Camp, the Michigan lawmaker who leads the Republicans on the House Ways and Means Committee.

“‘Higher costs would stem from the fact that most economic activity is based on fossil fuels’ that produce greenhouse gases when burned, the CBO analysis said. ‘In most cases, the firms required to hold the allowances would not bear that cost; rather, they would pass it onto their customers in the form of higher prices.’”

Climate Change and Appropriations Issues

Robin Bravender, Ben Geman and Taryn Luntz reported on Friday at The New York Times Online (GreenWire) that, “House appropriators approved a $10.6 billion spending bill for U.S. EPA last night, tucking in several amendments aimed at insulating agricultural interests from the reach of federal climate regulations.

“The House Appropriations Committee cleared the fiscal 2010 Interior and Environment spending bill after adding provisions to block EPA regulations requiring factory farms to report their greenhouse gas emissions and exempt livestock operations from possible carbon regulations.

“The committee voted 31-27 to adopt an amendment that would prevent funding from this or any other bill to go toward a rule that requires mandatory reporting of greenhouse gases from manure management systems at large factory farms.”

Friday’s article added that, “The committee also approved an amendment that would prevent the government from requiring livestock producers to obtain permits under the Clean Air Act.

“Some agriculture groups and farm-state lawmakers are concerned that if EPA moves to regulate greenhouse gases under the Clean Air Act, EPA could impose fees on livestock operations for the methane emissions that result from the flatulence and burps from their cows or pigs. EPA Administrator Lisa Jackson has repeatedly said the agency has no intention to pursue such regulations.

“But the amendment would prohibit EPA from requiring Clean Air Act permits for carbon dioxide, methane and other greenhouse gases emitted by livestock. The provision, introduced by Rep. Todd Tiahrt (R-Kan.), was approved by voice vote.”

The article also pointed out that, “The committee rejected, 29-30, Rep. Jo Ann Emerson’s (R-Mo.) amendment that would have blocked EPA from measuring ‘indirect’ emissions from land-use changes when calculating the carbon footprint of biofuels [Related article available here].

“Emerson and many other farm state lawmakers — most notably Agriculture Chairman Collin Peterson (D-Minn.) — oppose the way EPA is determining biofuels’ emissions in draft rules to implement the national renewable fuels standard that was expanded in a 2007 law.”

Climate Change: International Developments

Meraiah Foley reported in today’s New York Times that, “Two years after Prime Minister Kevin Rudd drew worldwide applause for reversing Australia’s longstanding refusal to ratify the Kyoto protocol on global warming, the government’s ambitious plan to change the way Australians use energy is facing major obstacles, raising the prospect of an early election with climate change as the central issue.”

Reuters writers Stuart Grudgings and Brian Ellsworth reported on Friday that, “Brazil will pay small farmers to plant trees in deforested Amazon areas to slow rain forest degradation, President Luiz Inacio Lula da Silva said on Friday as he unveiled a broad plan to protect the region.

“The effort may help stave off growing international pressure on Brazil to reduce deforestation that scientists say spurs global warming, providing alternative livelihoods to poor Amazon dwellers who live off timber exploitation.”

Production- Food Costs and Global Food Security

Recall that earlier this month the Heritage Foundation indicated that the Waxman-Markey climate bill currently under debate would likely translate into substantially higher costs for agricultural producers.

More specifically, the Heritage Foundation explained that, “The cost of producing everything from wheat to beef will increase. ..This increase gets quickly translated into much higher food prices for consumers at the grocery stores.”

Agricultural stakeholders often note that their production costs could increase under Waxman-Markey, but as break-even price levels change, consumers will ultimately bear the brunt of this cost shift.

And, as recent news reports document, additional food inflation would add to an already bleak and deteriorating environment with respect to global food security.

Reuters news reported on Friday that, “The global economic crisis will help push 100 million people into poverty this year through lost jobs and lower earnings, leaving one sixth of the world’s population living in hunger, a U.N. agency said on Friday.

The U.N. Food and Agriculture Organization (FAO) forecast the number of people living in hunger would reach a record high of 1.02 billion this year, exacerbated by persistently high prices for staples following the food crisis of 2006-2008.

“Not only will the global slowdown destroy livelihoods in the developing world — where almost all of the world’s hungry live — it will reduce aid spending from wealthy countries by around a quarter, just when it is most needed, the FAO warned.”

Ag Sector Issues: Egg Production

Jim Downing reported on Saturday at the Sacramento Bee Online that, “After a bruising campaign last fall, Californians voted by a 27-point margin in favor of what was billed as an effective ban on cages for egg-laying hens.

The Humane Society of the United States, which sponsored the measure, may have won that battle. But the war over Proposition 2, it seems, is just getting started.

“The egg industry says the proposition might allow it to use cages, and wants an interpretation from the state to support that idea. The Humane Society isn’t budging. It says voters meant to enact a ban on cages, and that’s what they should get.”

The Bee article explained that, “While the Humane Society presses its advantage, the egg industry is seeking to find some leverage of its own in the language of the proposition.

“While billed as a ban on the wire boxes that house most of California’s egg-laying hens, Proposition 2 doesn’t explicitly prohibit cages.”

“Egg farmers say they intend to comply with Proposition 2’s standards. But they also say there’s more than one way to do that,” the article noted.

Mr. Downing pointed out that, “Defending its interpretation of Proposition 2 is critical to the Humane Society’s national strategy. In addition to backing AB 1437, the group is supporting bills with language virtually identical to Proposition 2 in two other states, and is planning a ballot measure in Ohio.

“Aggressive litigation is part of that strategy.

The group has sued the University of California over an analysis of Proposition 2 published by a group of researchers last July. Cited widely in newspaper articles during the campaign, the report concluded – among other things – that the ballot measure would effectively kill the California egg industry.”

Keith Good

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