FarmPolicy

August 18, 2019

Climate Legislation; Food Safety; CFTC Issues; Farm Policy Perspective (Time Magazine); CRP; Sugar Issues; Nutrition Program; and Trade

Climate Legislation

Traci Watson reported earlier this week at the USA Today Online that, “New forests would spread across the American landscape, replacing both pasture and farm fields, under a congressional plan to confront climate change, an Environmental Protection Agency analysis shows.

About 18 million acres of new trees — roughly the size of West Virginia — would be planted by 2020, according to an EPA analysis of a climate bill passed by the House of Representatives in June.

That’s because the House bill gives financial incentives to farmers and ranchers to plant trees, which suck in large amounts of the key global-warming gas: carbon dioxide.”

The USA Today article indicated that, “The environmental benefits are clear. More trees would not only lower carbon dioxide levels, but they would improve water quality, because they need lower levels of pesticides and fertilizers, says agricultural economist Bruce McCarl of Texas A&M University, who contributed to the EPA analysis.

“The plan would, however, be hard on ranchers and farmers and potentially food prices, says American Farm Bureau chief economist Bob Young.

“In the Senate, which is likely to consider a similar bill this fall, there are some who worry the loss of farmland would lead to increases in food prices worse than those seen in mid-2007, when costs spiked 7% to 8% above 2006 levels.

“If those food prices seemed high, ‘wait till you start moving agricultural acres into climate-change areas,’ warns Sen. Mike Johanns, R-Neb., Agriculture secretary for President George W. Bush.

“McCarl says food costs would stay roughly the same.”

The article also noted that, “The latest EPA analysis does not say where the farmland would be lost. However, an EPA study done in 2005 that analyzed climate-change policies similar to the House bill found that trees would overgrow farms primarily in three areas:
-Great Lake states: Michigan, Minnesota and Wisconsin.
-The Southeast: Virginia, North Carolina, South Carolina, Georgia and Florida.
The Corn Belt: Illinois, Indiana, Iowa, Missouri and Ohio.”

Hembree Brandon reported yesterday at the Delta Farm Press Online that, “The American Clean Energy and Security Act (HR 2454) also known as the Waxman-Markey bill, ‘isn’t out of the woods yet — things could change dramatically in the Senate,’ [Mark Nechodom, deputy director of the U.S. Department of Agriculture’s Office of Ecosystem Services and Markets] says. [Nechodom was speaking at a climate change legislation workshop at Mississippi State University.]

“‘The timeline is constantly shifting, and the president’s health care agenda is among the many things that could affect the bill’s ultimate outcome. But, despite all the political winds, we have work to do to be ready for whatever may eventually become law. USDA has been working diligently with other agencies trying to determine where the content of the legislation is likely to go.

“‘We’re looking at potential markets and trading mechanisms, with a focus on the measurement of public goods and services that can be provided by private landowners — primarily ag lands and forestry operations — and how they might become markets from which people can get a real paycheck for providing those public services. It’s basically land-based emissions reduction, or carbon sequestration, provided by private landowners.’

Essentially, Nechodom says, each landowner who manages his land would make decisions based on a portfolio approach.”

A Daily Radio News item from USDA noted yesterday (audio report) that, “Agriculture Secretary Tom Vilsack in his Iowa State Fair appearance this week heard farmers’ misgivings about a proposed cap and trade program, but defended the idea, saying it could bring more income to farmers long term.”

And a separate USDA Daily Radio News piece pointed out that, “Agriculture Secretary Tom Vilsack at the Iowa State Fair saying that cap and trade legislation, if written and carried out properly, could add to farmers’ net income.”

Megan Luther reported yesterday at the Argus Leader Online (South Dakota) that, “What started out as a forum to update constituents on federal agricultural legislation at DakotaFest quickly turned into a lively partisan discussion on health care reform and climate change.

“Several hundred people gathered Wednesday morning at the farm show just outside Mitchell to listen to Sen. John Thune [R-SD] and Rep. Stephanie Herseth Sandlin [D-SD].”

The article added that, “Herseth Sandlin was one of 44 Democrats who voted against the [climate] legislation and wants Congress to take its time to do it right. She encouraged the mostly rural crowd to keep an open mind with climate change legislation. ‘Our economy depends on the climate because our economy depends on agriculture.’

Thune is worried about the price farmers will pay because of the Democrats’ environmental policies. Herseth Sandlin took issue with the characterization. ‘Don’t be scared that the Democrats are in charge,’ Herseth started to state but was drowned out by laughter and a few boos from the crowd.”

An update posted yesterday at AgWired.com documented the following comments that were made at the South Dakota Forum: “I will work with every fiber of my being to defeat the [climate] bill that passed in the House,” promised Senator Thune. “I think we should all be in favor of cleaning up the environment, but it shouldn’t be at the expense of the American farmer and rancher. Let me make this point clear: We can’t quantify the benefits of cap-and-trade legislation, but we all know how much it’s going to cost us.”

“There is no doubt that we need to do something about climate change,” said Representative Herseth-Sandlin. “I did not vote for HR 2454 as it was written, and the bill has absolutely no chance of passing the Senate in its current form. I believe we need to have a production title to offset the costs for cap-and-trade. This shouldn’t be a patchwork quilt of regulations. We need to slow the process down a bit and do this bill right. I share the same concerns as Senator Thune, but there are people that believe carbon sequestration could be beneficial to agriculture. So, let’s work together to make sure this bill doesn’t harm the agriculture industry.”

From an international perspective, the AP reported yesterday that, “Reversing global warming will cost up to $185 billion (euro130 billion) a year before 2020 and require more action by world governments than currently pledged, an international environmental analysis group said Thursday.

“ClimateWorks Foundation said U.N. climate change talks would fail to reach a meaningful agreement with the proposals made so far, and that a new approach was needed.

“‘Climate change is a solvable problem, and the solution presents a major opportunity in terms of both economic growth and global development,’ said a report by the foundation’s European branch. But it warned that ‘current commitments and actions are insufficient’ to ensure deep cuts by 2050 in carbon dioxide emissions.

“ClimateWorks provides economic and environmental analysis for the U.N. talks aimed at reaching a new accord to replace the 1997 Kyoto Protocol on reducing greenhouse gases.”

Rachel Pannett and Jeffrey Ball reported today at The Wall Street Journal Online that, “Australia approved a mandate to use more renewable energy but set aside a debate over capping its greenhouse-gas emissions, signaling the tensions that face governments around the world in tackling climate change.

“Lawmakers Thursday approved legislation that would require 20% of Australia’s electricity generation to come from renewable sources by 2020.

“The passage follows a move by the government to separate its renewable-energy program from a plan to place a mandatory cap on greenhouse-gas emissions, which was rejected by the Senate last week.

The wrangling Down Under mirrors divisions in the U.S. and around the world over how to move to cleaner energy systems.”

Meanwhile, The Washington Times editorial board stated in today’s paper that, “With national attention focused on President Obama’s troubled health care reform efforts, we can’t afford to take our eyes off his other flawed and costly priority – ‘cap and trade’ global-warming legislation.

“Expanding the size of government is one of the many problems with the House-approved version of cap-and-trade. Mr. Obama and House Democrats plan to spend more tax dollars than they are acknowledging to increase the number of federal regulators to implement a job-killing, growth-limiting bill that raises energy costs for every American.”

Today’s opinion item added that, “With the Senate expected to return to drafting its version of the bill in September, it’s important to recognize the fiscal danger and job losses that accompany cap-and-trade legislation. Cap-and-trade should be opposed with the same furor we’ve seen against the Democrats’ proposed health care plans.”

Food Safety

DTN Political Correspondent Jerry Hagstrom reported yesterday (link requires subscription) that, “Whether the U.S. Senate takes up a Food and Drug Administration food-safety modernization bill this fall depends on whether the Health Education, Labor and Pensions Committee finishes the health-care reform bill and has time to take it up, a Senate Democratic aide said Tuesday.

“After the House passed a food-safety bill on July 30, Senate Democratic leadership staff listed the food-safety bill introduced by Senate Majority Whip Dick Durbin, D-Ill, as one Senate Majority Leader Harry Reid, D-Nev., would like to move this fall. But on Tuesday, a Senate Democratic aide said, ‘It is unclear at the moment whether the Health committee will be able to do it because of their involvement in health-care reform.’ Durbin introduced his bipartisan bill in March and it was referred to the Health committee, but no hearings have been held.”

CFTC Issues

A news release issued yesterday by the Commodity Futures Trading Commission (CFTC) stated that, “[The CFTC] and the Securities and Exchange Commission (SEC) today announced that the two regulatory agencies will hold joint meetings to seek input from the public on harmonization of market regulation. President Barack Obama in June called on the two regulators to recommend changes to their statutes and regulations that would eliminate differences with respect to similar types of financial instruments.

“The first meeting, on September 2, 2009, will be held at the CFTC, and the second meeting, on September 3, 2009, will be held at the SEC.”

The release added that, “On June 17, 2009, the White House released a White Paper on Financial Regulatory Reform calling on the CFTC and SEC to ‘make recommendations to Congress for changes to statutes and regulations that would harmonize regulation of futures and securities.’

“Specifically, the White House recommended ‘that the CFTC and the SEC complete a report to Congress by September 30, 2009 that identifies all existing conflicts in statutes and regulations with respect to similar types of financial instruments and either explains why those differences are essential to achieve underlying policy objectives with respect to investor protection, market integrity, and price transparency or makes recommendations for changes to statutes and regulations that would eliminate the differences.’”

Reuters writer Charles Abbott reported yesterday that, “More over-the-counter derivatives should face mandatory clearing, a U.S. futures regulator said in suggesting improvements to the Obama administration plan to regulate the vast OTC derivatives market.

Gary Gensler, chairman of the Commodity Futures Trading Commission, also suggested language to prevent foreign exchange swaps from eluding regulation and stronger rules against fraudulent marketing of ‘rolling spot’ commodity contracts.”

Mr. Abbott added that, “The chairman of the Senate Agriculture Committee, who has filed a bill to ban OTC trading, said in a statement that he welcomed the suggestion of stronger requirements for clearing.

“‘His (Gensler’s) suggestions carry weight, as they should,’ said Agriculture chairman Tom Harkin, Iowa Democrat.

“The CFTC oversees the futures market and would share duties with the Securities and Exchange Commission, which is in charge of equities markets, in regulating derivatives.”

Also yesterday, Reuters reported (article posted at DTN, link requires subscription) that, “Business at the Chicago Board of Trade is expected to remain robust even though U.S. grain markets are bracing for further government curbs on speculative position limits after a surprise move against two companies on Wednesday.

“Fears that a crackdown on speculators could drive some of the CBOT’s futures trade overseas may be overstated as no market can match the Chicago exchange’s stature as the world’s largest grain mart and the global trendsetter for corn, soy and wheat prices.

“The CFTC on Wednesday withdrew so-called no-action letters that exempted Deutsche Bank AG’s DB Commodity Index Tracking Master Fund and Gresham Investment Management from speculative positions limits for wheat, corn and soy futures.”

Farm Policy Perspective (Time Magazine)

Bryan Walsh penned an item that was posted yesterday at Time Online entitled, “Getting Real About the High Price of Cheap Food.”

Here is one excerpt from the lengthy piece: “But we don’t have the luxury of philosophizing about food. With the exhaustion of the soil, the impact of global warming and the inevitably rising price of oil — which will affect everything from fertilizer to supermarket electricity bills — our industrial style of food production will end sooner or later. As the developing world grows richer, hundreds of millions of people will want to shift to the same calorie-heavy, protein-rich diet that has made Americans so unhealthy — demand for meat and poultry worldwide is set to rise 25% by 2015 — but the earth can no longer deliver. Unless Americans radically rethink the way they grow and consume food, they face a future of eroded farmland, hollowed-out countryside, scarier germs, higher health costs — and bland taste. Sustainable food has an élitist reputation, but each of us depends on the soil, animals and plants — and as every farmer knows, if you don’t take care of your land, it can’t take care of you.”

CRP

A news release issued yesterday by the USDA stated that, “The USDA Farm Service Agency (FSA), on behalf of the Commodity Credit Corporation (CCC), today asked the public for comments on the Conservation Reserve Program and scheduled nine public meetings from Sept. 15 through Oct. 8 to solicit comments on the program.

“The meetings will be held in Washington, Montana, Minnesota, Kansas, Illinois, Oklahoma, New Mexico, Georgia and Pennsylvania. Topics to be discussed at the public meetings include provisions dealing with cropping history requirements, crop rotation practices, contract incentives, program enrollment terms and the Conservation Reserve Program (CRP) enrollment authority of 32 million acres established for the remainder of the 2008 Farm Bill.”

Sugar Issues

The Washington Times editorial board noted in today’s paper that, “Americans love sugar so much that we protect the domestic industry by limiting sugar imports. This works like a jawbreaker in the U.S. economy.

“By keeping sugar prices artificially high, import limits result in food manufacturing job losses and higher prices for everything from hamburger rolls to sweet treats. Sugar industry protectionism is estimated to cost U.S. families as much as $2 billion annually, according to the Cato Institute. Domestic food processors — including General Mills, Hershey and Kraft — are pressing the U.S. Department of Agriculture to ease import limits to stave off a possible sugar shortage.”

The opinion piece added that, “Although the department predicted last week that U.S. sugar supplies will drop 43 percent by September 2010, 1.25 million short tons of raw sugar sit in U.S. warehouses, according to the agency. The American Sugar Alliance, a sugar industry trade group, argues this is enough to meet foreseeable domestic demand for the sort of refined sugar that goes into products like cookies.

“This doesn’t mean food producers are wrong in arguing that the department should increase the level of tariff-free imports when needed, as it did in 2006 and 2008, but import politics can be a sticky business. Big Sugar is a powerful lobby protected by lawmakers from sugar beet and cane producing states in the South and upper Plains.”

Concluding, the Washington Times item stated that, “Higher costs, whether artificially inflated or not, are passed on to consumers. This undermines the buying power of the U.S. dollar. Protectionist policy may be sweet for big sugar, but it is hard for the rest of us to chew on.”

Nutrition Program

Monica Eng reported in today’s Chicago Tribune that, “Illinois suffers from the fourth-highest level of childhood obesity in the nation, with Chicago kids checking in heavier than the rest of the state. Yet, while many school districts are phasing out sweet treats, Chicago Public Schools officials continue to say, let them eat cake.

And it’s not just cake that the district serves daily to most grade schoolers. It’s also chocolate fudge pudding, Keebler Elf Grahams, vanilla creme cookies, double fudge cookies, lemon flavored creme cookies, Rice Krispies treats, pound cake, chocolate cookies with candy pieces and comfort cake with icing, according to school menus.

Earlier this year, district officials told the Tribune that this daily dessert policy was ‘currently under evaluation.’ But even with the district in financial crisis, the Tribune has learned the district will continue to buy and serve the sweets to most of its 240,000 elementary school kids — 80 percent of whom are on the free and reduced lunch program.”

Trade

The USDA’s Economic Research Service (ERS) issued a report yesterday entitled, “What the 2008/2009 World Economic Crisis Means for Global Agricultural Trade.”

An ERS summary of the report stated that, “The global economic crisis that started in late 2008 has led to a sharp curtailment of international trade, including a short-term decline in the value of global agricultural trade of around 20 percent. After slowing, global agricultural trade will continue to grow in the future. The crisis is leading to a realignment of exchange rates, and the ultimate resolution of the crisis will depend on adjustments in the exchange value of the U.S. dollar. The U.S. agricultural sector would benefit from a depreciating dollar, which results in high export earnings, high agricultural commodity prices, increased production, and increased farm income.”

Keith Good

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