FarmPolicy

June 28, 2017

Climate Legislation; Land Values; Ag Appropriations; Food Aid & Africa; and Biofuels

Climate Legislation

DTN Ag Policy Editor Chris Clayton reported yesterday that, “The potential shift in agricultural land use is becoming a major battleground in the fight over climate legislation in Congress.

“Key Republican lawmakers opposing the climate bill contend that it could lead to tens of millions of acres shifting from crops to trees. But supporters of the legislation say carbon offsets will not be so lucrative that landowners would bypass cash rent for carbon credits. At best, some marginal ground would be lost.

“House Agriculture Committee Ranking Member Frank Lucas, R-Okla., again pushed the issue Tuesday, calling for more hearings on the climate bill and stating that ‘according to press reports, EPA is projecting this legislation would take 56 million crop acres out of production due to afforestation.’”

Mr. Clayton added that, “Sen. Mike Johanns, R-Neb., said an analysis by the American Farm Bureau Federation that said 40 million acres would come out of crop production. Farm Bureau had used EPA data to make that forecast. Johanns also wrote in a later op-ed piece that ‘another analysis predicts a loss of 78 million acres to trees. That’s nearly 20 percent of our nation’s total cropland — a staggering number.’ Republicans on the Senate Agriculture Committee have also called for more hearings on the bill.”

The DTN article explained that, “An EPA analysis of the climate bill last month stated overall land area in crops would shift to forest under the bill. But that analysis was completed before House lawmakers struck an agreement that created agricultural carbon offsets. The EPA has not released an updated study factoring in an agricultural carbon program pushed by House Agriculture Committee Chairman Collin Peterson, D-Minn.”

Yesterday’s article pointed out that, “At a hearing last month, Johanns sparred with Secretary of Agriculture Tom Vilsack about potential crop acreage loss and the impact on both food and livestock feed. Vilsack declined to forecast an acreage shift, but instead highlighted that future productivity gains by agriculture would outpace any acre losses.

“‘The critical issue here and the one that Sen. Johanns and I just didn’t seem to be able to connect on was the difference between land and crop land, productive land,’ Vilsack said in a phone interview. ‘There is a fundamental difference. I don’t know if you can necessarily estimate with any degree of accuracy precisely how much crop land is going to be taken out of production because it may very well be that people choose to take land out of CRP (Conservation Reserve Program). It may be that they choose to take land that is not particularly productive today and utilize it as a place to plant trees or take other steps that would qualify for offsets.’”

Meanwhile, DTN Political Correspondent Jerry Hagstrom reported yesterday (link requires subscription) that, “Although climate change and health care reform legislation are both meeting resistance in rural America, House Agriculture Committee Chairman Collin Peterson, D-Minn., warned farmers Monday that it is ‘unrealistic’ to think that the government is not going to take action on controlling greenhouse gases and that he thinks action to curb health care costs is warranted.

“In a speech by conference call from Minnesota, Peterson told the American Sugar Alliance that after the Supreme Court ruled two years ago that the Environmental Protection Agency must regulate greenhouse gases under the Clean Air Act, ‘It’s unrealistic to think that nothing will happen.’ The Supreme Court ruling, he said, had motivated him to get the House climate change bill ‘into the shape we can live with.’”

(FarmPolicy.com Note: Recall that GOP Sen. Lugar has expressed a counter point on the EPA regulatory issue- see this Brownfield article from July 30.)

Mr. Hagstrom added in the DTN article that, “In the Senate, Peterson said, ‘Our bill will be in the minimum. If a bill comes out, it will be better.’ The House-passed bill would stop EPA from analyzing the impact of U.S. ethanol production on land use in other countries for five years, and Peterson noted that with congressional action ‘at least we’ll have a seat at the table.’”

Tom Steever, in an article posted yesterday at Brownfield, also touched on the issue of climate change legislation and potential EPA regulation. In part, Mr. Steever reported that, “Senator Charles Grassley says Senate colleagues are in a quandary whether to pass responsible clean air legislation so that the Environmental Protection Agency doesn’t first establish even more onerous regulations. Grassley, a GOP lawmaker from Iowa, points out that neither legislative or regulatory action would be effective if only taken by the United States.

“‘You’d have coming out of EPA regulations then where even the director of the EPA testified before the committees that if the United States [implements clean air rules] just by itself, it’s not going to accomplish any reduction in CO2,’ said Grassley during a conference call to reporters Tuesday.”

In a related article regarding Chairman Peterson, the AP reported yesterday that, “Skeptical rural voters quizzed two Minnesota congressmen Tuesday over their support of climate change legislation.

Reps. Collin Peterson and Tim Walz were questioned closely by attendees at the annual Farmfest expo for supporting a House bill that some fear could hurt small farmers by making them pay for producing greenhouse gases.

“Both men are members of the House Agriculture Committee. Peterson, the chairman, said Tuesday he voted for the bill only because he knew it wouldn’t become law immediately. He had urged support for the bill after winning a number of concessions that he said would benefit agriculture and ease the impact of higher energy costs on people living in rural areas.

“‘In spite of the fact that they gave me everything I wanted in agriculture … it needs some more work,’ he said.”

Yesterday’s AP article added that, “The climate change bill is far from becoming law. It must also pass the U.S. Senate, which recesses this month, and would then go to a conference committee to resolve two different versions of the bill.”

Meanwhile, with respect to Senate activity on climate change legislation, a news release issued yesterday by Finance Committee Chairman Max Baucus (D-Montana) stated that, “[Chairman Baucus] tackled issues related to prospective climate change legislation in a hearing today addressing the distribution of emissions allowances and revenues. Senator Baucus pressed a panel of experts on the most effective allowance structure, and how best to direct revenues to the benefit of consumers. Baucus has convened four hearings on prospective climate change legislation this year, including separate examinations of both tax and trade implications, and revenues and auctions under an emissions reduction program.

“‘Addressing climate change is a national and global priority, and certainly includes a series of difficult questions. These questions include how best to structure an emissions reduction program so that carbon‐intensive companies meet their obligations while reducing the burden on American families,’ said Baucus. ‘The work of the Finance Committee is key to this effort. I will continue to work with my colleagues on Finance and other relevant committees to move a climate bill that strikes the right balance for the environment, and for America’s families, companies and workers.’”

Sen. Grassley’s opening statement from yesterday’s hearing can be viewed here, while a replay of the entire hearing is available here.

John Stephenson, the Director of Natural Resources & Environment at the Government Accountability Office (GAO) also testified as at yesterday’s Senate Finance Committee hearing on climate change.

Reuters writer Timothy Gardner reported yesterday that, “At a hearing on Capitol Hill, the Government Accountability Office, an arm of Congress, concluded thatconsumers will bear most of the costs of a cap and trade system’ as companies pass along their increased energy costs.

“The GAO added, however, ‘These costs could be largely offset depending on how revenues are used.’”

Yesterday’s Reuters article added that, “Fellow Democrat Blanche Lincoln drove that point home during the hearing, calling the House-passed bill ‘deeply flawed’ and one that would hurt rural areas like her home state of Arkansas, which rely more heavily on petroleum fuels to drive long distances and grow crops.

“But Senator John Kerry, a leading proponent of cap and trade legislation, accused some companies of engaging in ‘bogus arguments’ that inflate the potential costs to consumers. He warned that if Congress fails to pass a climate bill, the Environmental Protection Agency likely would step in with carbon regulations that would be more onerous on companies.”

Land Values

Lauren Etter reported in today’s Wall Street Journal that, “Farm real-estate values fell for the first time in more than 20 years, according to government statistics released Tuesday.

“The U.S. Agriculture Department said in its annual report that the value of all land and buildings on U.S. farms averaged $2,100 an acre Jan. 1, down 3.2% from last year. The decline in farm real-estate values was the first since 1987, the agency said.

“Farm real-estate values had been climbing steadily over the past decade, reaching record levels last year amid soaring grain prices and a growing interest in using corn and soybeans for biofuels. The rural boom also attracted speculators and investors looking to profit from the rise in land prices across the Farm Belt.

“But a deflation of the commodity markets and the overall wilting of the economy are now trickling down to the farm.”

(FarmPolicy.com Note: See related graphs from yesterday’s USDA report on land values: U.S. Average Farm Real Estate Value, 2000-2009; 2009 Farm Real Estate Value by State; U.S. Average Cropland Value, 2000-2009.)

Reuters writer Charles Abbott noted yesterday that, “Cash rent for cropland for this year average $90 an acre, up $4.50 an acre. USDA said the increase reflected high crop prices in 2008.”

Bloomberg writer Alan Bjerga indicated yesterday that, “Agricultural commodities including corn, wheat and soybeans plunged from records last year, as the recession worsened and the world’s farmers increased production of some crops. The USDA expects net-farm income to drop 20 percent this year to $71.3 billion from last year’s record.”

In other news on the U.S. agricultural economy, the AP reported yesterday that, “In Vermont, milk prices paid to farmers dropped to about $11 per 100 pounds in June from $19 a year earlier. Meanwhile, production costs remain about $17 per 100 pounds.

The price plunge has put the state’s $2 billion-a-year dairy industry on the brink of collapse. Vermont has lost more than 250 dairy farms in the past five years, and they’re going under this year at a rate of about six a month.

“‘It’s an economic disaster, what’s happening on the landscape,’ state Agriculture Secretary Roger Allbee said.”

However, Sen. John McCain (R-Arizona) has expressed little sympathy with respect to these harsh economic conditions.

DTN Ag Policy Editor Chris Clayton, at his Twitter page yesterday, pointed to a recent article (“McCain attacks agricultural spending”), which reported that, “If farmers haven’t figured out how to make a profit from milk, Mr. McCain said, they might want to look for another way to make a living, considering Congress has directed $3.8 million at the effort over the past decade.”

Ag Appropriations

Bloomberg writer Alan Bjerga reported yesterday that, “The U.S. Senate approved a $125 billion budget for the Agriculture Department and the Food and Drug Administration, boosting funds for farm subsidies and food safety.

“The budget, which covers programs such as crop supports and land conservation, passed by an 80-17 vote. About half of the spending plan for the fiscal year that starts Oct. 1 covers food stamps, which went to a record 33.8 million people in April.

Funding for the Commodity Credit Corporation Fund, which covers farm subsidies, would rise 25 percent to $13.9 billion. Corn, wheat and soybean prices have plunged from last year’s records and aid to dairy farmers has increased after Class III milk futures dropped 32 percent in the past year.

“‘These projects help to improve farm profits, reduce our dependence on fossil fuels, conserve our soil and water and boost our rural economy,’ Senator Tom Harkin, an Iowa Democrat who leads the Agriculture, Nutrition and Forestry Committee, said in a statement.”

Mr. Bjerga added that, “One difference is that the Senate version sets conditions under which a ban on cooked chicken imported from China may be lifted. The House legislation continues the ban.

“China has filed a complaint with the World Trade Organization over the ban, which is sponsored by Representative Rosa DeLauro, a Connecticut Democrat who heads a subcommittee that oversees agriculture spending. She says the Asian nation doesn’t have proper safeguards in place to guarantee the chicken won’t cause illness.”

The AP reported yesterday that, “The Senate on Tuesday passed a $124.3 billion agriculture spending bill that pays to add millions of people to the food stamp rolls as rising numbers of the jobless are forced into the program.

“Money for the federal school lunch program is going up 12 percent as well, while a popular program that gives additional food aid for poor children and pregnant women received a 9 percent increase in funding.”

The AP article explained that, “As the nation’s unemployment rate nears 10 percent, a record 34.4 million people — or one in nine Americans — were participating in the food stamp program as of May. That’s an increase of 650,000 people from the previous month and up 6 million from the same time last year.”

In addition, the AP indicated that, “The House passed companion agriculture spending legislation last month. Tuesday’s action by the Senate sends the measure into talks between the two chambers to resolve differences.

In a surprising development, the Senate voted to add $350 million to the measure to lift milk price supports — the amount the government pays for surplus milk products — by an estimated $1.50 per hundredweight, which should inch milk prices higher.

“The amendment, by Bernie Sanders, I-Vt., barely prevailed on a 60-37 vote. Sixty votes were required because the amendment broke budget rules.”

“Most farm subsidies are funded through a separate multiyear farm bill passed by Congress last year,” the AP article said.

Food Aid & Africa

Reuters writer Duncan Miriri reported yesterday that, “The United States wants to cut Africa’s dependence on food handouts and adopt a sustainable approach to tackling the continent’s chronic food shortages, its agriculture secretary said on Tuesday.”

“‘The United States understands that it has to be more than providing periodic emergency food aid. It has to focus on sustainable solutions to hunger, food security and poverty,’ said Tom Vilsack, U.S. agriculture secretary, ahead of a two-day Afro-U.S. trade meeting which opens in Nairobi on Wednesday.”

The article added that, “Offering affordable credit to farmers, support to women farmers and providing new technology to encourage irrigation where appropriate, were some of the areas to be considered, said Vilsack, a former two-term Iowa state governor.”

A related news release from the U.S. Trade Representatives Office yesterday stated that, “United States Trade Representative Ron Kirk arrived today in Nairobi, Kenya for the 8th Annual African Growth and Opportunity Act (AGOA) Forum from August 4-6. Topics of discussion will involve issues and strategies for advancing trade, investment, and economic development in Africa, as well as ways that both Africa and the U.S. can benefit from mutual trade.”

And a recent State Department news release noted that, “Secretary of State Hillary Rodham Clinton begins a seven-nation trip to Africa at the 8th U.S. – Sub-Saharan Africa Trade and Economic Cooperation Forum (known as the AGOA Forum) in Nairobi, Kenya.

This trip will highlight the Obama administration’s commitment to making Africa a priority in U.S. foreign policy. This will be the earliest in any U.S. administration that both the President and the Secretary of State have visited Africa.”

Alan Boswell reported yesterday at the Voice of America Online that, “U.S. Secretary of Agriculture Tom Vilsack was in Kenya Tuesday touting a new U.S. global food security initiative. The agriculture secretary will attend the African Growth and Opportunity Act Forum, which is also being attended by U.S. Secretary of State Hillary Clinton.”

The article noted that, “Vilsack used the meetings to discuss a new initiative by U.S. President Barack Obama to help improve food security in struggling countries. The President has asked Congress for $1 billion in 2010 for the global agricultural development program.



“Vilsack stressed that while emergency food aid is often necessary for humanitarian purposes, the far more sustainable alternative for the long term was to help developing countries build up their own agriculture sectors.”

A related news release issued on Monday by the International Food & Agricultural Trade Policy Council (IPC) (“IPC and the Partnership to Cut Hunger and Poverty in Africa Call for Significant Reforms to Increase the Impact of AGOA,” noted that, “The International Food and Agricultural Trade Policy Council (IPC) and the Partnership to Cut Hunger and Poverty in Africa today called for significant reforms to increase the impact of the African Growth and Opportunity Act (AGOA) on African agriculture. Agriculture employs 2/3 of Africans and is increasingly identified as a key catalyst for broad-based economic development and poverty reduction on the continent.”

In a related article, Mary Beth Sheridan reported in today’s Washington Post that, “As Secretary of State Hillary Rodham Clinton begins a seven-country African trip with a visit to Kenya, the main U.S. foreign aid agency is in limbo, entering its seventh month without a permanent director despite pledges by the Obama administration to expand development assistance and improve its effectiveness in poor countries.

“Clinton has backed the use of ‘smart power’ — employing a full range of economic, military, political and development tools in U.S. foreign policy — but many aid experts are questioning whether the U.S. Agency for International Development could lose clout under her plans. While Clinton has championed additional personnel for USAID, aid groups worry that the once-autonomous agency could be swallowed up in the State Department, with long-term development goals losing out to short-term political aims.”

Biofuels

The Washington Post editorial board noted today that, “President Obama’s nominee as ambassador to Brazil, Thomas A. Shannon Jr., is a longtime diplomat trained to speak honestly without giving unnecessary offense. So when Sen. James Webb (D-Va.) asked Mr. Shannon during his July 8 confirmation hearing about lifting the 54-cents-per-gallon tariff on imported ethanol, most of which comes from Brazil, the State Department veteran responded carefully. ‘I personally believe that it would be beneficial, sir,’ Mr. Shannon remarked, ‘but I recognize that, especially in the U.S. Congress, there are different views at this point in time.’ In other words: It might be a good idea, but Congress sets policy, not ambassadors.

Innocuous as it was, this statement did not go down well with Sen. Charles E. Grassley, the Republican from Iowa — and fierce defender of that corn-growing state’s ethanol industry, a sector whose prosperity the tariff protects. Even a hint of opposition to the tariff was intolerable to Mr. Grassley, so he threatened to block the Shannon nomination unless the Obama administration ‘clarified’ its stand. No doubt mindful of Mr. Grassley’s leverage over the Senate Finance Committee’s health-care reform effort, the White House gave him what he wanted: a letter last week from Secretary of State Hillary Rodham Clinton and U.S. Trade Representative Ron Kirk promising ‘no plans’ to change the tariff. Mr. Shannon’s confirmation is back on track.”

The Post opinion item stated that, “The U.S. ethanol tariff irritates that relationship, and Mr. Shannon was absolutely right when he implied that both countries would benefit from free trade. The tariff expires next year; its bipartisan critics in the Senate will probably try again to kill it. To win, they would need help from President Obama, who unwisely backed the tariff as a senator from corn-growing Illinois and as a candidate for the White House — but who could adjust his position now. Alas, the hope of that is fainter after Mr. Grassley’s little power play.”

Keith Good

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