FarmPolicy

August 21, 2019

Seventy Percent More Food By 2050; Ag Economy; Biofuels; Trade; and Climate Change (EPA Regulation)

Seventy Percent More Food By 2050

Reuters writer Svetlana Kovalyova reported yesterday that, “The world will have to produce 70 percent more food by 2050 to feed a projected extra 2.3 billion people and as incomes rise, the United Nations’ Food and Agriculture Organization said Wednesday.

Global cereals demand for food and animal feed is expected to rise to 3 billion tonnes by 2050 and more demand may come from the biofuels industry, the FAO said in a statement.

“Annual cereals output would have to grow by almost one billion tonnes from about 2.1 billion tonnes at present to meet the projected food and feed demand by 2050, the agency said.

Meat output should increase by more than 200 million tonnes to reach 470 million tonnes in 2050, the Rome-based FAO said.”

The Reuters article stated that, “‘FAO is cautiously optimistic about the world’s potential to feed itself by 2050,’ said FAO’s Assistant Director-General Hafez Ghanem. But he added that climate change and biofuels demand would be the main challenges for world agriculture.

“The world will need to increase investments in agriculture and also boost investments to improve access to food, ‘otherwise some 370 million people could still be hungry in 2050, almost 5 percent of the global population,’ the FAO said.

The number of hungry people will pass 1 billion this year, but food aid is at a 20-year low, the U.N. World Food Program (WFP) said last week.”

Yesterday’s article added that, “About 90 percent of the crop output growth is expected to come partly from higher yields, but arable land will have to expand by around 120 million hectares in developing countries, mainly in sub-Saharan Africa and Latin America, the FAO said.”

In a related article, Philip Brasher reported yesterday at The Des Moines Register Online that, “DuPont and Monsanto are tough competitors when it comes to selling seed to farmers, but the two companies are uniting to promote high-tech agriculture as a way of meeting rising global food needs.

“DuPont, parent company of Pioneer Hi-Bred of Johnston, and its rival have joined agribusiness companies Archer Daniels Midland and Deere in forming a coalition called the Global Harvest Initiative.

“Ellen Kullman, chief executive of DuPont, said Tuesday that the companies have a common interest in promoting policies that will ease the way for their products to be used globally to increase crop production.”

Mr. Brasher explained that, “Economists say food production needs to double in the next 40 years. In that period, climate change is expected to bring more frequent and severe droughts to parts of the world already struggling to feed their populations.”

Bloomberg writers Alan Bjerga and Peter Cook reported yesterday that, “Archer Daniels Midland Co., the world’s largest grain processor, expects improved yields will deliver enough crops during the next 40 years to supply rising demand for ethanol without hurting the food supply.

“Archer Daniels, based in Decatur, Illinois, plans to boost output and storage capacity as global food needs rise, Chief Executive Officer Patricia Woertz said yesterday in an interview with Bloomberg Television in Washington. Rising use of biofuels in the U.S. hasn’t cut available food supplies because of greater crop yields, she said.

“‘The ability to match the ethanol needs for corn is way outstripped by the additional yields,’ said Woertz, who runs the second-biggest U.S. ethanol producer. Increased yields have provided for greater exports in recent years even as ethanol production consumes almost a third of the U.S. corn crop, U.S. Department of Agriculture data show.”

The Bloomberg article indicated that, “More than 1 billion people are projected to go hungry each day this year, a record, the UN said in June. Farmland degradation, dwindling fish stocks, the use of cereal grains for animal feed and crops for fuel may also weigh on the food supply, the organization said in the February report. The UN said that the most immediate cause of rising poverty and hunger is the global economic crisis.”

Ag Economy

Art Hovey reported this week at the Lincoln Journal Star (Neb.) Online that, “You could call it the high-wire harvest, and Nebraska farmers are teetering at a time when the government’s income safety net is far too low to break their fall.

“Many, including Terry Keebler of Sterling, paid high prices for fuel, fertilizer and seed this spring. Since then, the prices of corn and soybeans have tumbled, squeezing their farming budgets so severely the University of Illinois is predicting a net loss of $8 an acre on corn and $15 an acre on beans.”

The article stated that, “The standard safety net is so low, said Brad Lubben, agricultural policy analyst at the University of Nebraska-Lincoln, that it’s as if farmers are operating with no net at all.

“‘Frankly,’ said Lubben, ‘that’s a fair statement.’

“Farmers still get a direct payment of 28 cents a bushel on corn, for example. But the trigger point of $2.35 a bushel for countercyclical payments, meant as a cushion against falling prices, isn’t very relevant unless those prices fall low enough to hit the trigger.”

Later, Mr. Hovey noted that, “Bruce Johnson said the University of Illinois is not alone in focusing on the income outlook at harvest.

“‘We’ve been watching that pretty close over the last weeks,’ said Johnson, a UNL ag economist.

One result of close attention is a prediction that net farm income in Nebraska will fall off from a record $4 billion last year, when ethanol was in its ascendancy, to perhaps $2.5 billion to $2.6 billion.

“That’s a 35 percent hit.”

Marisol Bello reported this week at the USA Today Online that, “Consumers are reaping some benefits as farmers take their biggest hit in 35 years: lower food prices at the supermarket.

“The U.S. Department of Agriculture forecasts farm income of $49.1 billion in 2009 when adjusted for inflation. That would be a 39% drop from 2008, a record year when U.S. farmers earned $80.4 billion after expenses.

It would also be the worst annual percentage drop since 1983. In dollars, it would be the worst since 1974, adjusted for inflation.”

The USA Today item added that, “Consumers are benefiting a little from farmers’ troubles, says Richard Volpe, a researcher in the Department of Agricultural and Resource Economics at the University of California-Davis. Supermarket prices on pork and dairy products are down, he says, but nowhere near as much as the drop in prices farmers are getting for their products.”

Meanwhile, Bob Meyer reported yesterday at Brownfield that, “The National Milk Producers Federation Strategic Planning Task Force has come up with a four-pronged approach to make the changes they see are needed in the nation’s milk pricing system.

For starters, the group wants to revamp the price support and Milk Income Loss Contract programs. Step two, create a dairy producer income insurance program; Third, improve participation in the Cooperatives Working Together (CWT) self-help program and fourth, reform the Federal Milk Marketing Order system including the elimination of unpopular aspects such as the federal make allowance and an effort to get California to join the federal program.”

And in other news, Ken Anderson reported yesterday at Brownfield (audio analysis included at the link) that, “Legislation working its way through the Michigan legislature would impose stricter animal husbandry rules on Michigan’s pork and poultry industries.

The bill, which has passed the Michigan House on an 87-20 vote, is the result of a compromise reached between the Humane Society of the United States (HSUS) and groups representing Michigan’s pork and poultry producers. This after HSUS threatened to seek a ballot initiative similar to California’s controversial Proposition 2.”

The Brownfield article stated that, “The bill would give producers ten years to make the transition to different systems. While the legislation is being compared to California’s law, Hines says it is actually closer to the compromise that HSUS negotiated with Colorado pork producers in 2008.

The bill now goes to the Michigan Senate for consideration.”

Biofuels

The AP reported today that, “U.S. Sen. Ben Nelson has joined several other Midwest senators in introducing federal legislation they say is aimed at protecting the region’s biofuels industry.

The Nebraska Democrat has put his name behind one measure intended to boost ethanol consumption and another that would prevent the U.S. Environmental Protection Agency from implementing a rule he says could hinder biofuels production.

The first measure — introduced Tuesday by Nelson, Sens. Tim Johnson, D-S.D., John Thune, R-S.D, and Chuck Grassley, R-Iowa — would direct the EPA to allow gasoline to contain up to a 15 percent ethanol blend. Ten percent is the current maximum allowed to be sold in the U.S.”

The article added that, “Nelson, Grassley and Sen. Tom Harkin, D-Iowa, also introduced another measure Tuesday that seeks to delay for at least one year a rule proposed by the EPA that would penalize U.S. biofuels producers for environmentally-damaging land use in other countries, such as clearing land for crops to make up for the loss of U.S. crops to biofuels production.”

With respect to these two measures, which were noted in Wednesday’s FarmPolicy.com update, Philip Brasher reported yesterday at the Greenfields Blog (The Des Moines Register) that one of them may not go forward.

Specifically, Mr. Brasher stated that, “Sen. Tom Harkin, D-Ia., and six other senators won’t go forward with legislation that would have protected the biofuel industry from some proposed EPA rules. The senators proposed an amendment to an EPA spending bill that would have barred the agency from considering impacts on international land use in evaluating the carbon footprint of U.S.-produced ethanol and biodiesel. Harkin received assurances that the agency would ‘carefully quantify and consider’ the uncertainties around analyzing biofuels, said spokesman Grant Gustafson, citing a letter today from EPA Administrator Lisa Jackson.

“In the letter, Jackson doesn’t back off using international land impacts in the agency’s calculations, citing the advice of scientists who reviewed EPA’s work:
‘The results of that peer review, and the comments we have received throughout the process indicate that it is important to take into account indirect emissions from biofuels when looking at the lifecycle emissions as required by EISA. However, it is also clear that there are significant uncertainties associated with these estimates and in particular, with the estimate of indirect land use change.’

“She went on to assure Harkin she would incorporate ‘estimates of uncertainty’ in the EPA’s final analysis.”

Trade

DTN Political Correspondent Jerry Hagstrom reported yesterday that, “Farm and agribusiness groups urged U.S. Trade Representative Ron Kirk this week to ask the World Trade Organization to establish a new compliance panel to update the recent WTO Brazil cotton case ruling to take into account changes the 2008 farm bill made in the USDA export credit guarantee program.

“The ruling affects the U.S. cotton industry, but analysts have said competitor countries could also use the theory behind the attack to challenge the export credit programs when they are used to encourage exports of other U.S. farm products.

In a letter Monday, CoBank, the National Cotton Council, the American Farm Bureau Federation and other farm groups said that under the new rules, the export credit program will make an overall profit for the government rather than be a subsidy, but that the WTO panel did not take this into account when it said Brazil would be entitled to place tariffs or other import penalties on an amount of U.S. products based on the use of the program.”

Mr. Hagstrom added that, “Todd Van Hoose of CoBank, the biggest financer of U.S. agricultural exports, said in an interview that Brazilian banks that serve South American importers of U.S. agricultural products have been the biggest user of the U.S. export credit programs since 2002 and contended the programs had indirectly helped maintain Brazil’s trade finance liquidity during its financial crisis from 2002-2003 and in last year’s global financial crisis.”

In a separate DTN article yesterday, Jerry Hagstrom reported (link requires subscription) that, “President Obama has nominated Islam A. (Isi) Siddiqui, a vice president of CropLife America and former aide to former Agriculture Secretary Dan Glickman, as the U.S. chief agricultural negotiator.

“The nomination comes after a large number of farm groups wrote to White House officials earlier this month asking that a chief agriculture negotiator be named as soon as possible.”

The National Pork Producers Council (NPPC) indicated yesterday in a news release that, “The [NPPC] today praised President Obama’s nomination of Dr. Islam A. Siddiqui as the Chief Agricultural Negotiator in the office of the U.S. Trade Representative, an agency critical to the health and profitability of the U.S. pork industry.

“USTR’s mission is to develop and coordinate U.S. international trade, commodity, and direct investment policy, and overseeing negotiations with other countries.

“‘We’re pleased to see someone with such a strong agriculture background as Siddiqui nominated for this post,’ said NPPC President Don Butler. ‘He’s a tough negotiator and is inheriting a lot of agricultural trade issues, with pork issues in China and Russia at the top of the list.’”

Climate Change

Traci Watson reported recently at USA Today Online that, “Two years ago, more than 180 nations made a bold promise: By the end of 2009, they would draft a sweeping treaty to slow climate change.

“Yvo de Boer, the United Nations’ top climate-change official, called the agreement ‘a real breakthrough,’ and British Prime Minister Gordon Brown expressed confidence it would produce ‘a deal … in 2009 to address the defining challenge of our time.’

Now the deadline is nearing, and hope is fading. The treaty is supposed to be finalized at talks that start Dec. 7 in Copenhagen, but diplomats have made almost no progress toward an agreement — a point made repeatedly by world leaders Tuesday at the U.N. climate summit in New York.”

The article noted that, “Twelve years ago, the Senate overwhelmingly opposed a global-warming treaty — 95 of the 100 senators voted for a resolution against any agreement that would harm the U.S. economy.”

And Ms. Watson explained that, “The clock is working against the U.S. team. Introduction of a Senate version of the climate bill has been delayed repeatedly and may not take place until October, in part because of the health care debate. Senate Majority Leader Harry Reid, D-Nev., said last week that a bill may not come up for a vote until 2010.

“The House version includes measures to soften economic impacts of reducing carbon dioxide emissions. Among them are financial aid to workers who lose their jobs because of the bill and barriers to importing goods from nations that don’t cut emissions.

Even so, most Republican senators oppose a bill on climate change, and many moderate Democrats — especially those from coal and manufacturing states in the Midwest — are worried that such a plan would mean job losses in their states.

There’s also a faction of senators who are skeptical that climate change is a problem at all.”

Walter Alarkon and J. Taylor Rushing reported earlier this week at The Hill Online that, “Senators from both parties bristled Tuesday at international pressure to pass climate change legislation ahead of the United Nations’ (U.N.) December summit on global warming.

“‘I’m not sure that the Senate is going to be dictated by the timing in December,’ Sen. Mark Warner (D-Va.) said of the upcoming gathering in Copenhagen, Denmark. ‘It would be helpful to go to that very important meeting with legislation, but I’m not sure people are going to feel comfortable rushing it.’

Sen. Ben Nelson (D-Neb.), who opposed a global warming bill creating a cap-and-trade system last year, said he doesn’t pay much attention to what people from other countries say about the Senate.

“‘We’re going to do it the way we think it’s appropriate to do it,’ Nelson said. ‘And we will not be driven by their criticisms.’”

Later, the Hill writers pointed out that, “Sen. Sheldon Whitehouse (D-R.I.) said the EU is right to blame the Senate for blocking long-needed action.

“‘Partly, it’s the fact that healthcare is crowding everything else out, but it’s also partly because the polluting industries see the Senate as a place where they can hold 40 votes,’ Whitehouse said.

Senate Environment and Public Works Committee Chairwoman Barbara Boxer (D-Calif.) and Sen. John Kerry (D-Mass.) plan to release their climate change bill within ‘a matter of days,’ Kerry told The Hill. He said that the bill would arrive on schedule, but he didn’t dispute the charge from Europeans that action has run into delays.”

In an update from yesterday, GOP members of the House Ag Committee indicated that, “The cost of a national cap-and-trade system is good paying manufacturing jobs in rural America. This is according to a recent study from Charles River Associates International (CRA) and The Fertilizer Institute.

“The study highlights the estimated economic contributions of the U.S. fertilizer manufacturing industry in 2006. It also explains how a national cap-and-trade system, as envisioned in the Waxman-Markey bill (H.R. 2454), will jeopardize the domestic fertilizer industry, which is critical for food production, food security, and a healthy U.S. economy.

“Ranking Member Frank Lucas recently visited one fertilizer plant in his Oklahoma district to emphasize the real risk of losing American jobs if the Waxman-Markey bill becomes law. Koch Nitrogen Company, LLC in Enid Oklahoma employs roughly 100 people plus numerous contractors. These jobs have an average compensation of $76,000, which is almost 80 percent greater than the U.S. average compensation across all industries. A national cap-and-trade system could force this plant to close because it would drive up the price of natural gas, which is critical for fertilizer production.”

In other climate related analysis, the U.S. Department of Agriculture’s Economic Research Service (ERS) released a report yesterday entitled, “Agricultural Land Tenure and Carbon Offsets.”

An ERS summary of the report stated that: “Agricultural Land Tenure and Carbon Offsets examines the potential role that land ownership might play in determining the agricultural sector’s involvement in carbon sequestration programs. By estimating the carbon sequestration potential of agricultural producers who own most of the land they operate, this report finds that land ownership should not be a constraining factor in agriculture’s ability to provide carbon offsets.”

Climate Change EPA Regulation

Lisa Lerer reported yesterday at Politico.com that, “Sen. Lisa Murkowski (R-Alaska) plans to introduce an amendment Thursday morning banning the Environmental Protection Agency from regulating carbon dioxide.

“The proposal is fiercely opposed by the administration, which sees EPA action as a way to pressure the Senate into passing cap and trade legislation curbing greenhouse gas emissions. Prospects for the bill have dimmed in recent weeks, as the health care debate has taken center stage.”

The article pointed out that, “‘We don’t think the amendment is a good idea,’ White House climate advisor Carol Browner said on Tuesday. ‘It could get you a situation where activities that should go forward — like investments in carbon capture and storage — wouldn’t be able to go forward.’

The amendment would stop the EPA from issuing new regulations capping greenhouse gases emissions from utilities and factories for one year. Murkowski plans to ask for her amendment to be brought up before the cloture vote on the Interior and Environmental Appropriations bill, according to aides.”

Keith Good

Comments are closed.