Agenda Filled with Farm Policy Issues; CFTC Issues; Climate Legislation; Mexican Ag Tariffs; Iowa Crop Damage; and Obesity
Agenda Filled with Farm Policy Issues
Janet Kubat Willette reported yesterday at AgriNews Online (Rochester, Minn) on comments made by House Agriculture Committee Chairman Collin Peterson (D-Minn.) at the FarmFest gathering that took place last week in Minnesota.
“Rep. Collin Peterson, D-7th District, said this Congressional session has been like drinking out of a fire hydrant,” the article said, adding that, “Once the farm bill passed, the chairman of the House agriculture committee wanted to focus on the ag department.”
“The department review was pushed onto the back burner by pressing issues caused by the collapse of the financial markets. Peterson, an accountant by training, devoted his time to studying credit default swaps and derivatives. He and Rep. Barney Frank are in 95 percent agreement on a bill to regulate Wall Street, Peterson said.”
The article noted that, “Next came climate change legislation. Peterson worked out a compromise to protect farmers.
“Then, it was food safety with agriculture divided as grain and livestock producers don’t want the Food and Drug Administration on the farm, Peterson said, while the fruit and vegetable producers do.
“Health care legislation awaits lawmakers when they return to Washington after Labor Day. Peterson said he’ll spend the recess talking with people in his district to discuss the issue.”
With respect to current regulatory issues associated with financial instruments, Zachary A. Goldfarb reported in today’s Washington Post that, “The Obama administration formally proposed legislation on Tuesday to regulate exotic financial instruments known as derivatives, the final piece of the broad rework of financial regulations to be delivered to Congress.
“Now, the hard part.
“When lawmakers return from recess, they will not only grapple with health-care reform but also take up a series of legislative changes aimed at creating a single agency to oversee credit card and mortgage lending, to give the Federal Reserve new powers, and to tighten regulations over a host of financial firms and practices.”
Today’s Post article added that, “With agreement by the House Agriculture and Financial Services committees over regulation of derivatives, the legislation proposed on Tuesday may not face as much debate as other issues. The administration proposes that most derivatives be traded on exchanges, like stocks and bonds, and that dealers — particularly banks — buying and selling derivatives meet robust requirements.
“Currently, the market for derivatives is unregulated. The Securities and Exchange Commission, the Commodity Futures Trading Commission and the banking regulatory agencies would share responsibility for oversight of the derivatives market.
“One open question is whether lawmakers will push for derivatives legislation to go beyond what the administration has requested.”
Bloomberg writer Dawn Kopecki reported yesterday that, “House Financial Services Chairman Barney Frank, a Massachusetts Democrat, and House Agriculture Committee Chairman Collin Peterson, a Minnesota Democrat, have already embraced many of Obama’s plans to overhaul the industry, according to a three-page proposal of their own released last month. Lawmakers still need to decide how to split oversight and enforcement between the SEC and CFTC.”
Reuters writers Charles Abbott and Rachelle Younglai reported yesterday that, “Key congressional members have already sketched out plans to supervise the loosely regulated industry. The administration’s plan is similar in most points to what Congress is crafting and includes giving the SEC and CFTC power to limit holdings of the swaps.
“CFTC Commissioner Bart Chilton said he was particularly pleased that the administration proposed position limits. The CFTC is weighing whether to set such limits on oil contracts, which soared to record highs last year amid complaints of speculation.”
And on climate change legislation, Keith Johnson, writing yesterday at The Environmental Capital Blog (The Wall Street Journal) noted that, “More grist for the argument over the cost of starting a cap-and-trade program in the U.S.: Simply expanding government agencies to handle all their new responsibilities will cost about $7.5 billion over the next decade, according to the Congressional Budget Office.
“USA Today reported today on the study, which was issued in June in answer to the House Energy Committee’s request for cost estimates on the global-warming bill. (The relevant bits are on pages 29 and 32.)”
The WSJ update added that, “The CBO concluded that a lot of federal agencies will have a lot more work to do, which will cost a lot of money. The Waxman-Markey bill ‘would require federal agencies to undertake a variety of rulemakings, conduct studies and assessments, prepare reports, and carry out other activities related to new programs authorized under the bill,’ the report found. Plus, other agencies would have to run the programs to allocate and auction off carbon-emissions permits.
“In the end, the CBO figures the net administrative costs will total $7.5 billion through 2019, including $540 million next year, ‘based on historical information on how large regulatory programs have been implemented and on information provided by EPA, FERC, and other agencies with significant administrative responsibilities under the bill.’”
Stephen Dinan reported in today’s Washington Times that, “To satisfy House Democrats’ low-cost solution to global warming, Americans would have to double their reliance on nuclear energy by 2030 – a target the nuclear industry says is unlikely and that many environmentalists and Democrats dislike.
“That is the conclusion of a new Energy Information Administration report that looked at the House Democrats’ global warming bill. To produce enough clean energy at a reasonable cost would require construction of dozens of new nuclear power plants, even though no new plant has been built in decades.
“The EIA, in its report last week, projected that to keep the costs of implementing the bill low for consumers – about $339 extra per household in 2030 according to their basic scenario – nuclear energy use would rise from 8 quadrillion BTUs a year to 16 quadrillion, or from 11.3 percent of total U.S. energy to 18.1 percent.
“That’s the largest projected increase of any source of energy, even topping renewable sources such as wind and solar power, which are supposed to be the hallmark of the bill, and would mean reliance on a controversial technology.”
In more specific news on biofuels and the climate debate, Reuters writer Timothy Gardner reported earlier this week that, “Makers of biofuels and plastics and chemicals made from crops want U.S. senators to change the climate bill to give them free pollution permits that would be needed to emit greenhouse gases under the legislation.
“Companies that make the alternative motor fuel ethanol and plastics from renewable biomass, rather than fossil fuels, have visited Senate offices to urge that 1 percent to 5 percent of the emissions permits in a cap and trade program outlined in the bill be given to the businesses from 2012 to 2050.
“Such credits were not included for those industries in the House of Representatives version of the bill passed in June. Democratic leaders hope the full Senate will vote on the legislation in October.”
In opinion related issues associated with climate change, Keith Johnson pointed out yesterday at the Wall Street Journal’s Environmental Capital Blog that, “A new Zogby poll of 1,000 likely voters commissioned by the National Wildlife Federation found that 71% of respondents supported the energy and climate bill the House just passed. That is, 45% ‘strongly favored’ it, and 26% ‘somewhat favored’ it. Some 28% were opposed, 19% ‘strongly’ so.
“Of course, when it comes to surveys on things like global warming, clean energy and the like, a lot depends on how the questions are phrased. Zogby asked potential voters to self-identify into one of two broad camps ahead of Senate action on the energy bill, which made it a closer-run thing.”
The Journal item explained that, “The first camp—‘I think the Senate should take action because I believe we need a new energy plan right now that invests in American, renewable energy sources like wind and solar, in order to create clean energy jobs, address global warming and reduce our dependency on foreign oil’—mustered 54% support.
“The second camp—‘I think the Senate should wait on this proposal, I believe the House energy bill is a hidden tax that will cost thousands of dollars every year in increased energy prices, weaken our economy further, and cause America to lose jobs to China and other countries’—got 41% support.”
And The Wall Street Journal editorial board opined in today’s paper that, “President Obama says his cap-and-trade energy tax won’t hurt the economy, but at least 10 Senate Democrats disagree. Last week they sent Mr. Obama a letter demanding that any bill taxing U.S. CO2 emissions must include a carbon tariff ‘to ensure that manufacturers do not bear the brunt of our climate change policy.’
“Hmmm. This sure sounds like an explicit admission that cap and tax would add so much to the cost of doing business in the U.S. that it would drive factories and jobs overseas. The 10 mostly liberal Senators come from states like Ohio, Michigan and West Virginia whose economies rely heavily on manufacturing and coal. ‘We must not engage in a self-defeating effort that displaces greenhouse gas emissions rather than reducing them and displaces U.S. jobs rather than bolstering them,’ wrote the Senators.”
From an international perspective, Rachel Pannett reported in today’s Wall Street Journal that, “Lawmakers are expected to reject legislation aimed at capping greenhouse-gas emissions in Australia this week in a move that could imperil one of the country’s most important economic initiatives in recent years.
“The debate is shaping up as the biggest test yet of Prime Minister Kevin Rudd’s nearly two years in office, and could result in a call for early elections if he can’t get key conservative lawmakers on his side. It could also provide a case study for similar debates in the U.S., where lawmakers are wrangling over a similar plan to set mandatory caps on greenhouse-gas emissions.
“That policy is set to be debated by the U.S. Senate next month after it passed the House of Representatives by a slim 219-212 margin in June.”
Mexican Ag Tariffs- Trucking Issue
The “Washington Insider” section of DTN stated in part yesterday (link requires subscription) that, “Increasingly, the fate of the Mexican truck issue in these talks [President Obama met with his NAFTA counterparts, Mexican President Felipe Calderon and Canadian Prime Minister Stephen Harper, this weekend in Guadalajara, Mexico] is seen as an indicator of future trade policy in general. The administration has been promising for some time that it will clarify its views on trade, including its commitment to work toward a Doha Round agreement and to support for free trade agreements already signed and awaiting consideration by the Congress — but, no such clarifications have been forthcoming.
“The Mexican truck issue appears to be a clear case of successive administrations bowing to special interests, while holding much broader trade interests hostage in the process. Of course, the argument for effective safety and environmental safeguards are valid but certainly would seem to have workable solutions — training, insurance and inspection programs, for example, rather than truck bans. The longer this ban is continued, the clearer the support grows for the argument that the issue is not about safety, but about protections for U.S. interest groups.
“President Obama has a chance to change this perception now, and his conversations in Mexico will be watched carefully to determine what course he intends to follow on this and similar issues, Washington Insider believes.”
Iowa Crop Damage
Dow Jones News reported yesterday (article posted at DTN, link requires subscription) that, “Hailstorms that ripped across central Iowa Sunday have caused farmers at least tens of millions of dollars in crop damage and could cut into the state’s corn and soybean yield, officials said Tuesday.
“The storms devastated corn and soybeans in a two- to four-mile area stretching across much of the state along U.S. Highway 20, said Jim Patton, Iowa State University regional extension education director.”
Yesterday’s article added that, “For farmers hit by the baseball-sized hail and heavy winds, the storms ruined what had been shaping up as a perfect crop, with possible record yields. In addition to the crops that have been destroyed, those on the fringes could continue to face problems, such as susceptibility to mold, depending on the weather, Patton said.
“‘We’re looking at significant individual operators having significant losses,’ he said. ‘Because it’s two to four miles wide, many of those operators had the majority of their operation in that space.’”
The AP reported yesterday that, “Despite two major storms that damaged hundreds of millions of dollars of crops, Iowa’s corn and soybeans are still in good shape this year, state Secretary of Agriculture Bill Northey said Tuesday.
“A storm in late July battered farms in six counties in northeast Iowa, causing $200 million in damage. Another storm on Sunday pelted five northern Iowa counties. Damage from that storm was still being assessed, Northey said.
“‘For the vast majority of producers out there, crops look so much better than a year ago,’ he said. ‘The rain, if you didn’t get hail, was a very good thing. There were probably thousands of happy farmers with that storm that came through and dozens of farmers that had some significant losses.’”
Nicholas Bakalar reported in yesterday’s New York Times that, “A nationwide survey of obesity rates offers very little good news. More than two-thirds of Americans are now overweight or obese, and the percentage is still rising.
“The report is based on data for 2005 through 2009 gathered by state health departments with the help of the Centers for Disease Control and Prevention.”
The Times article added that, “Still, compared with 2008, obesity rates rose in almost half the states, and decreased in none. In four states — Alabama, Mississippi, Tennessee and West Virginia — more than 30 percent of adults are obese. Eight of the 10 states with the highest obesity rates are in the South, and Colorado is the only state with a rate under 20 percent. Seven of the 10 states with the highest poverty levels are also among the 10 states with the highest obesity rates.
“The trend is up sharply. In 1991, no state had an obesity rate above 20 percent, and in 1981 the national average was 15 percent.
“The study, published by the Robert Wood Johnson Foundation and the Trust for America’s Health, found that in 30 states, 30 percent or more of children ages 10 to 17 were overweight or obese.”
In the past, attention has focused on correlation between obesity rates and participation in federal feeding programs such as SNAP (food stamps).
For more on this issue, see “Food Stamps and Obesity: What We Know and What It Means,” an Economic Research Service Amber Waves article from June 2008 which stated that, “Food stamp benefits do not increase obesity for most program participants, but there is a potential link for some subgroups.”