FarmPolicy

October 20, 2014

Climate Legislation; Dairy Issues; Biofuels, CFTC; and Food Safety

Climate Legislation- Senate

Anna Palmer reported today at Roll Call Online that, “Despite a marathon negotiating effort by House Agriculture Chairman Collin Peterson (D-Minn.) earlier this month to provide enough incentives to bring the farming community on board, agriculture groups are still split over the [climate change] legislation.

“In fact, the American Farm Bureau Federation, long a powerful industry lobby, is taking direct aim at killing climate change legislation in the Senate.”

The Roll Call article pointed out that, “The National Farmers Union and the American Farmland Trust have taken exactly the opposite tack.

“Both groups endorsed the House bill and support climate change legislation moving forward in the Senate.”

Ms. Palmer explained that, “The fracture among the agriculture trade groups is occurring after a period of relative unity during the 2008 farm bill, a cohesion that came despite efforts by the environmental community and the Bush administration to play certain agriculture associations off each other.

“Former Texas Rep. Charlie Stenholm (D), who now lobbies on behalf of agriculture interests, says opponents of the bill are widespread.

“‘There is tremendous opposition from rural [communities], not just farm groups,’ according to Stenholm. ‘It’s not that they aren’t being appreciative of the work Collin and the Ag Committee did in getting what they were able to get in, but the bottom line is [that] oil was signaled out to bear the cost of any cap-and-trade.’”

Several U.S. Senators and other stakeholders weighed in yesterday on the likelihood of the upper legislative body passing climate change legislation this year in an update that was posted at The Hill’s Congress Blog. Specifically, Senators answered the following question: “With political capital being spent on healthcare, can climate change legislation become law this year?

Arkansas Democratic Senator Mark Pryor, who represents a state with a large and very diverse agricultural sector, noted in part that, “I think people around the country are tired of us not dealing with the big issues. I think we are trying to deal with that, and you know at the end I’m not sure I can vote for either one of these, I don’t know what the bills look like yet but I’m glad that senators and congressmen and White House officials are working on this and hopefully we’re going to get something like this reform.”

For his part, Senator John Kerry (D-MA) indicated in an extensive interview on Monday that, “We’re going to get it done.”

Darren Samuelsohn, who conducted the interview, stated that, “In an interview with Yale Environment 360, John Kerry praises the carbon cap-and-trade legislation now being debated in the U.S. Senate, describes its importance to upcoming climate talks in Copenhagen, and explains how he plans to help the landmark legislation clear the Senate and become law.”

In his weekly tele-news conference with reporters yesterday, DTN Ag Policy Editor Chris Clayton asked Iowa GOP Senator Chuck Grassley an interesting question regarding carbon offsets and land use: “I’m curious because Republicans, on one hand, believe that there aren’t going to be a whole lot of benefits for cap-and-trade for agriculture. And, yet, there’s this fear that there’s going to be a whole lot of acreage taken out of production. And if there’s not going to be a whole lot of benefits for a farmer to get into that aspect of it, then why would there be this belief that a lot of acreage would go from cropland to forestry? Do you see my question there?”

To listen to this exchange between Mr. Clayton and Sen. Grassley, just click here (MP3-1:09).

Climate Legislation- House

House Agriculture Committee Ranking Member Frank Lucas (R-OK) was a guest on yesterday’s AgriTalk radio program with Mike Adams and the issue of climate legislation was discussed in some detail.

To listen to a clip from yesterday’s AgriTalk program on the climate issue with Mike Adams and Rep. Lucas, just click here (MP3-3:50). In part, the discussion touched on USDA’s recent preliminary analysis of the House bill and concerns regarding production costs.

Climate Legislation- Future Litigation

An update posted yesterday at the U.S. Agricultural & Food Law and Policy Blog (“Passage of Climate Bill Could Mean Busy Courts”) pointed to a recent article in the Monterey County Herald (California) Online (“Judges lay out challenges of climate change legislation”) which stated that, “If David Bookbinder, the Sierra Club’s top lawyer, believed the Waxman-Markey bill making its way through Congress was going to become law, he would be losing a lot of sleep.

“‘But let me tell you, I’ve been sleeping 10 hours a night since I got here,’ Bookbinder quipped Thursday at the Ninth Judicial Circuit Court Conference in Monterey.

He and four lawyers discussed a slew of possible law enforcement aspects of climate change legislation at the annual gathering of federal judges and court officials from the Western United States.

“‘This is the most complex piece of legislation in the history of our country, which may make it the most complex piece of legislation in human history,’ Bookbinder said.”

The article added that, “If the bill dies in the Senate, Bookbinder said, it will be the third cap-and-trade bill to meet its end there.

But if Waxman-Markey or a similar bill passes, it will no doubt keep federal judges very busy.

“‘There will be a burgeoning amount of climate change legislation in the federal courts,’ said Richard Frank, director of the California Center for Environmental Law & Policy, a research institute in Berkeley.”

Climate Legislation- International Issues- China

Annys Shin and Mary Beth Sheridan reported in today’s Washington Post that, “The United States and China pledged Tuesday to lay a foundation for a global economic recovery by pursuing policies aimed at easing their massive trade imbalance and improving regulation of the financial system.

“The commitments by the two major engines of the global economy came at the end of two days of high-level discussions in Washington that covered a broad range of topics besides the global recession, including North Korea, nuclear proliferation and climate change.

The talks, co-chaired by Treasury Secretary Timothy F. Geithner and Secretary of State Hillary Rodham Clinton, produced little in the way of substantive agreements. Instead, officials from both countries outlined common concerns that they said they would continue to address: the trade imbalance, financial regulatory reform, protectionism and climate change. They also said they would work to reform the governance of the International Monetary Fund and the World Bank to better reflect China’s status as the world’s third-largest economy.”

More specifically with respect to climate change and the China talks, a Department of Energy Email news item from this morning stated that, “The United States and China signed an agreement on Tuesday to enhance cooperation between the two countries on climate change, energy, and the environment. The Memorandum of Understanding (MOU) elevates climate change in the relationship between the two countries, committing them both to reaching a successful international agreement that addresses the problem. The MOU also expands cooperation between the two countries to accelerate the transition to a sustainable, low-carbon global economy. Specifically, it lays the foundation for expanded cooperation in combating climate change and developing and promoting energy efficiency, renewable energy, smart grid technologies, electric vehicles, and other energy technologies. Under the MOU, the United States and China will establish an ongoing dialogue on what they are doing to reduce greenhouse gas emissions and to advance international climate negotiations in preparation for the United Nations Climate Change Conference in Copenhagen this December. The MOU was one of the results of the U.S.-China Strategic and Economic Dialogue, which was held in Washington, D.C., on Monday and Tuesday.”

Dairy Issues

A news release issued yesterday by the House Agriculture Committee stated that, “Today, the House Agriculture Subcommittee on Livestock, Dairy, and Poultry held its third hearing this month to review the economic conditions facing the dairy industry. Subcommittee Chairman David Scott of Georgia called today’s hearing to continue to hear from producers across the country about the steep decline in milk prices since 2007, and the effects those prices are having on the dairy industry.

“‘This month’s hearings have demonstrated that we have just about as many different points of view on dairy policy as we have dairy producing regions of this country,’ Chairman Scott said. ‘Nevertheless, last week, we were able to make progress in agreeing to some basic points, which shows that our ideas about where dairy policy should go are not irreconcilable. While there is a tremendous amount of work to be done in developing a broader consensus on many of the issues facing the dairy industry, I feel that this series of hearings has laid the groundwork upon which we can build for the future.’”

Bob Meyer reported yesterday at Brownfield that, “The one thing everyone in dairy agrees on is there is a severe crisis for dairy producers today. How to fix the situation is not as easily arrived at. The House Agriculture Subcommittee on Livestock, Dairy and Poultry heard from dairy producers on Tuesday and the suggested solutions varied.”

The National Farmers Union issued a news release yesterday, which noted in part that, “California Farmers Union President Joaquin Contente testified on behalf of National Farmers Union before the House Agriculture Subcommittee on Livestock, Dairy and Poultry today on the financial crisis gripping dairy farmers.

“‘In my lifelong history as a dairy farmer, I have never seen prices remain this far below our costs for this long and I have never seen so many dairy producers so desperate for relief,’ Contente said. ‘In my county alone 25 dairies have either filed or are in the process of filing for bankruptcy and many more are closer to bankruptcy each day.’”

An American Farm Bureau Federation news item from yesterday noted that, “America’s dairy producers find themselves in a ‘price-cost squeeze’ between plummeting milk prices and feed costs that have remained high. Several public and private assistance initiatives are in place, but relief is not yet being fully felt at the farm gate, an Iowa dairy farmer today told a House Agriculture subcommittee.

“Iowa Farm Bureau President Craig Lang, partner in a dairy with his father, brother and sons, testified on behalf of the American Farm Bureau Federation before the subcommittee on livestock, dairy and poultry during a hearing on the economic challenges facing the dairy sector.”

Yesterday’s Brownfield update included audio interviews with both Contente and Lang.

Meanwhile, an item posted on Friday at Yahoo! News Online stated that, “In response to rising production costs and low milk prices, Governor Edward G. Rendell has asked the federal government to help dairy farmers facing dire economic conditions.

The Governor, along with seven of his colleagues from states in the Northeast, wrote to U.S. Secretary of Agriculture Tom Vilsack requesting debt forgiveness or an interest-free extension of at least six-months on dairy farmers’ USDA loans.”

The letter can be viewed here.

Biofuels

Chris Clayton reported yesterday at the DTN Ag Policy Blog that, “Thomas Shannon, who Reuters described as a ‘career diplomat,’ has learned the perils of being nominated to an administration post. Shannon, nominee to be ambassador to Brazil, slipped in his nomination hearing back on July 8 and stated that it would be ‘beneficial’ if the 54-cent tariff on foreign ethanol were removed.”

Mr. Clayton explained that, “Sen. Charles Grassley, R-Iowa, told Iowa agricultural reporters on Tuesday that he had put a hold on Shannon’s nomination vote until Shannon clarified his comments. Grassley highlighted that ‘As a senator and as a presidential candidate, President Obama supported keeping the U.S. tariff on imported ethanol.’”

Growth Energy and the Renewable Fuels Association, both issued news updates yesterday on this issue.

CFTC

Zachary A. Goldfarb reported in today’s Washington Post that, “Federal regulators moved closer on Tuesday to issuing new rules to limit oil speculation, addressing concerns that Wall Street firms may have manipulated the price of oil through financial trading.

“The Commodity Futures Trading Commission held the first of three hearings to explore ways to keep financial firms from amassing such large positions in energy markets that they have outsized power to affect prices.”

Amanda DeBard reported in today’s Washington Times that, “Intervention in the energy futures markets could be the government’s next step to prevent a recurrence of last summer’s price spikes at the gas pump.

“Gary Gensler, chairman of the Commodity Futures Trading Commission, said at a hearing Tuesday that he thinks ‘we must seriously consider setting strict position limits in the energy markets,’ marking a major potential shift in government policy.”

Edmund L. Andrews added in today’s New York Times that, “Mr. Gensler, President Obama’s choice to head the agency, was sympathetic to complaints from Democratic lawmakers that purely financial traders, who typically never take physical delivery of the oil or gas, have aggravated the violent swings in energy prices in the last several years.

“Big buyers of oil-based fuels, like airlines, gasoline retailers and municipal power companies, have loudly complained about the volatility in energy prices and blamed much of it on the surge in financial trading.”

Reuters writer Charles Abbott reported yesterday that, “Americans want stronger federal control of financial markets, even if markets seemed to have stabilized after last autumn’s world financial meltdown, the head of the U.S. futures regulatory agency said on Tuesday,

“‘Inaction is just not acceptable,’ said Gary Gensler, chairman of the Commodity Futures Trading Commission, during an interview with Reuters Television.”

In related news, Bob Dinneen, the president of the Renewable Fuels Association, sent a letter yesterday to Chairman Gensler, which stated in part that, “As the national trade association for America’s ethanol industry, we are pleased to see the Commodity Futures Trading Commission take an aggressive stance on the speculation that has roiled oil markets over the past several months.

“While I do not know the full extent of the report the Commission intends to release in August, I would encourage you to examine the role of speculation in grain markets in addition to speculation in oil. As you well know, the rapid rise and fall in price for grains such as corn corresponded perfectly with the dramatic price swings for oil. Such a close correlation may suggest that grain and other commodity markets were simply along for the ride.”

And, The Wall Street Journal editorial board indicated today that, “The oil speculators are back—that is, back in the cross-hairs of the political class. On Tuesday, Commodity Futures Trading Commission Chairman Gary Gensler uttered the Pentagon-like phrase that ‘every option must be on the table’ to curb ‘excessive speculation.’ If you’re wondering what makes speculation ‘excessive,’ in Washington the answer is this: Speculation becomes excessive when prices move in a politically inconvenient direction. Which brings us to the real meaning of the three days of theater, er, hearings that Mr. Gensler is conducting this week.”

After additional analysis, today’s Journal editorial concluded by saying, “There is an alternative to the market price—it’s called price controls. And the danger is that this is where we’re headed politically. If curbing speculation by limiting trader positions or restricting the ability of ‘non-commercial’ buyers to trade is a politically acceptable way to dampen volatility (remember the onions), the logical next step is a political diktat that oil will not be bought or sold above a certain price.

“Truth is, we need more speculators, not less. They’re the people who can help prices find the right level, because there is no ‘right’ level other than the one the market gives us. And that’s why, in turn, excessive speculation is nothing more—or less—than a convenient fiction for when prices don’t move the way politicians would like.”

Food Safety

Jane Zhang reported yesterday at The Wall Street Journal Online that, “The House is expected to vote Wednesday on legislation that would significantly increase the Food and Drug Administration’s funding and authority to police food safety.

“Democratic leaders will bring up the legislation under a procedure that allows limited debate and no amendments and requires a two-thirds supermajority vote to pass. The bill unanimously passed the House Energy and Commerce Committee in June.

“The vote was scheduled after negotiations averted a prolonged turf battle between two powerful Democrats: House Agriculture Committee Chairman Collin C. Peterson of Minnesota and Rep. John Dingell of Michigan, the Commerce Committee’s chairman emeritus. The committees were still working on the final language Tuesday afternoon.”

The Journal article added that, “Mr. Peterson had threatened to stop the legislation if it didn’t explicitly exempt livestock or grain farmers and others that are regulated by the U.S. Department of Agriculture. Mr. Dingell, the legislation’s main sponsor, has said the legislation wasn’t intended to overlay FDA rules on USDA regulations.

“The negotiations over the USDA-FDA regulatory boundaries didn’t include Republicans on the Agriculture Committee, and Rep. Frank Lucas of Oklahoma, the senior Republican on the committee, sent a letter to lawmakers urging them to vote against the bill. ‘It will lead to huge regulatory burdens on our nation’s farmers and ranchers, and it contains very little that will actually contribute to the goal of safer food,’ he said in a statement Monday night.”

Keith Good

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