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Climate Issues; Crop Insurance; Brazil Cotton Case; and The Senate Ag Committee

CORRECTION: The hotlink to the “Copenhagen Accord” in yesterday’s FarmPolicy update was incorrect- as it was a link to a draft of the agreement. The correct link to the final “Copenhagen Accord” can be found here.

Climate Issues- Senate Perspectives

Politico writer Lisa Lerer reported yesterday that, “A day after the U.N. climate change conference ended in a fizzle, Senate Majority Whip Dick Durbin said Sunday that he hopes the Senate will pass its own climate change bill sometime next year.

“But to meet even that not-so-firm deadline, supporters will have to win over critics who say that President Barack Obama promised too much in Copenhagen — and that the international community didn’t do nearly enough.”

Ms. Lerer noted that, “Appearing on ABC’s ‘This Week’ on Sunday, Senate Minority Whip Jon Kyl (R-Ariz.) predicted that not even a majority of the Senate’s Democrats would stand behind Obama’s pledge to provide billions of dollars in U.S. aid to help developing countries deal with the effects of global warming.

“And Sen. Lindsey Graham (R-S.C.), who is working with Sens. John Kerry (D-Mass.) and Joe Lieberman (I-Conn.) on a bipartisan climate change bill, acknowledged on CNN’s ‘State of the Unionthat some of his colleagues will view the Copenhagen deal as ‘ineffective,’ even though it adds ‘some transparency that we don’t have today.’”

The Politico article indicated that, ““If China will not let us verify, we’re going to have a heck of a time here,’ said Sen. Ted Kaufman (D-Del.). ‘An agreement’s no good if you can’t verify.’

“‘The reality for states like Pennsylvania is, even as we move forward with any kind of climate change legislation, there are going to be cost impacts,’ said Sen. Bob Casey (D-Pa.). ‘We want to make sure we’re not adding yet another cost impact that other countries don’t have to shoulder.’”

In more detail regarding Sen. Durbin’s perspective, the article stated that, “But Durbin made no commitments during an appearance Sunday on ABC’s ‘This Week.’ Pressed twice by anchor George Stephanopoulos to say whether Democrats will pass a cap-and-trade bill in 2010, the Illinois Democrat dodged the question once, then hedged.

“‘We have a responsibility to deal with this issue,’ Durbin said. ‘We have to acknowledge the obvious. China, one of our great competitors in the world, is taking the green leap forward, as they say. They are committing themselves to this new energy-efficient economy, and they are building companies even in the United States that will make those products. Will the United States stand by the sidelines or will we be part of this leap forward? I don’t want to lose those jobs.’

“Stephanopoulos: ‘So, that’s a yes?’

“‘Well, we’re going to move forward on it,’ Durbin said. ‘I hope we can get it done this coming year.’”

In a separate article from today, Lisa Lerer reported at Politico that, “Senate Republicans warned Monday that the bruising fight over health care reform could deliver a knockout blow to another Democratic priority: passage of a climate change bill in 2010.

“With a united Democratic Caucus, Senate Majority Leader Harry Reid was able to get to cloture on health care without a single GOP vote. But Democrats aren’t united on climate change, and the bitter battle over health care has left even sympathetic Republicans with little desire to help — a dynamic that would likely doom the bill to legislative failure.

“‘It makes it hard to do anything because of the way this was handled,’ said Sen. Lindsey Graham (R-S.C.).”

The article included these comments from Senators on climate change legislation:

“‘Right now, I would say that cap and trade is stalled,’ said Maine Sen. Susan Collins.”

“‘I give it a very low chance,’ said Alaska Sen. Lisa Murkowski, a potential GOP target for bill supporters. ‘What it comes down to is our ability to work together as a body. And right now, the indicators are not very positive for climate change.’”

“‘It will take a lot of work,’ said Sen. Chris Dodd (D-Conn.). ‘We need to take a break around here and step back before we try anything of any controversy.’”

Today’s Politico article added that, “Sen. Byron Dorgan (D-N.D.) has been pushing to move energy legislation that passed the Senate Energy and Natural Resources Committee in June — and leave behind the cap-and-trade proposal he opposes.

“‘We’re going to have wasted a year, in my judgment,’ he said. ‘My hope is when the calendar turns and January comes, we’ll have the opportunity to be able to grab and seize the progress that was made in the energy committee.’”

Meanwhile, Bloomberg writers Jim Efstathiou Jr. and Kim Chipman reported yesterday that, “The first offer by China and India to limit greenhouse gases in a global agreement may help U.S. President Barack Obama win over members of the Senate who don’t want to impose similar restrictions on American companies.

“The accord brokered by the three countries last week at United Nations talks in Copenhagen, while not legally binding, also calls for international verification. That addresses demands by senators who oppose UN rules that may hurt U.S. businesses’ ability to compete in the global marketplace.

“‘The agreement helps us politically deal with the concerns that we would be putting American manufacturers at a disadvantage,’ Senator Benjamin Cardin, a Maryland Democrat, said in an interview on Dec. 19, the day most of the world’s nations endorsed a framework termed the Copenhagen Accord.”

Darren Samuelsohn of ClimateWire reported yesterday at The New York Times Online that, “President Obama may have improved his chances for passing global warming legislation in the Senate by forging an interim international agreement here that puts both rich and poor countries on a path to curtail greenhouse gas emissions.

“During the round-the-clock, raucous negotiations that ended Saturday, Obama and his team worked with the leaders of China, India, Brazil, South Africa and about 20 other countries to commit to emission cuts that will be open to international review.

“While much work still needs to be done before the interim Copenhagen Accord becomes a legally binding treaty, it won some early praise from some who are key to moving a climate bill through the Senate.”

However, the article indicated that, “Obama still has much to do both to sell the Copenhagen Accord internationally and move climate legislation on Capitol Hill. Conservative Republicans and longtime industry opponents quickly savaged the agreement as a toothless failure. And many other moderates that Obama likely will need to pass a climate bill remained far from convinced the international deal has any merit.”

Reuters writer Timothy Gardner reported yesterday that, “U.S. lawmakers face an uphill battle enacting a climate bill in 2010 that includes a cap-and-trade market in greenhouse gases, after this month’s U.N. meeting in Copenhagen failed to hammer out a global pact on emissions cuts.

“U.S. climate legislation remains likely as lawmakers feel pressure to help the country lead in production of low-carbon energy sources such as wind, solar and nuclear power.

But the Copenhagen Accord did not include emissions targets. This will make it difficult for lawmakers to argue that the United States should have a cap while China, the world’s top emitter of greenhouse gases, and other big polluters are not legally required to act on climate.”

Ken Anderson reported yesterday at Brownfield that, “The chairman of the National Farmers Union’s legislative committee says it’s possible cap-and-trade legislation in Congress could be pushed back to 2011.

“John Hansen, who is also president of Nebraska Farmers Union, doesn’t think the lack of a binding agreement among nations at the international climate change conference will have much impact on the legislation. He says bigger factors will be the bitter fight over health care reform and the fact that 2010 is an election year.”

Climate Issues: International Perspectives

Nathanial Gronewold of GreenWire reported yesterday at The New York Times Online that, “The U.N. secretary-general tried today to put a positive spin on a controversial accord that came out of climate change talks in Copenhagen last week.

Secretary-General Ban Ki-moon insisted that the Copenhagen Accord fulfills the parameters he had sought, even though the end result fell far short of even the most modest expectations voiced before the meeting.

“‘This was quite a significant achievement which we were able to make in Copenhagen,’ Ban told reporters.”

Sunil Raghu and Rakesh Sharma reported in today’s Wall Street Journal that, “India has come out quite well at the recent U.N. climate change talks in Copenhagen, environment minister Jairam Ramesh told lawmakers in the upper house of Parliament Tuesday.

“‘Undoubtedly, many developed countries want to see an end to the Kyoto Protocol, but we have been able to thwart these attempts for the time being,’ he said.”

Interestingly, Reuters news reported yesterday that, “Behind the scenes negotiating by major economies in Copenhagen to agree a climate accord may be a model for how to wrap up the Doha Round of trade talks, the head of the World Trade Organization said on Friday.

“‘You don’t get to a sort of overall agreement with 153 members without a number of behind the scenes bilateral testing and contacts, and of course, U.S., China, Brazil, India, EU, Japan, who are the sort of biggest players in international trade, have a special responsibility to move this forward,’ WTO Director-General Pascal Lamy told Reuters Insider.”

Keith Johnson reported in today’s Wall Street Journal that, “The failure of the United Nations climate summit in Copenhagen to produce a strong, binding agreement to cut carbon-dioxide emissions sowed gloom in European carbon markets Monday, with prices for carbon-emissions permits falling more than 8%.

“There were also political echoes to the Copenhagen summit’s acrimonious conclusion. Some senior officials, including British Prime Minister Gordon Brown and British climate-change secretary Ed Miliband, criticized the current U.N. framework for addressing climate change, which requires consensus among more than 190 countries.

“‘Never again should we face the deadlock that threatened to pull down those talks,’ Mr. Brown said Monday. ‘Never again should we let a global deal to move towards a greener future be held to ransom by only a handful of countries.’”

Climate Issues: Agricultural Issues

In a separate article posted yesterday at Brownfield, Ken Anderson reported that, “Just back from the international climate change conference in Copenhagen, Denmark, National Corn Growers Association president Darrin Ihnen says it was an ‘eye-opening’ experience.

“Ihnen—a corn grower from Hurley, South Dakota—says he was somewhat surprised at the animosity that many countries feel towards the U.S. and even U.S. agriculture. He says there is a real misunderstanding of how modern agriculture operates.”

Recall that Reuters news reported on Friday that, “The Agriculture Department will update a forecasting model that suggests climate legislation will prompt U.S. farmers to plant trees on 59 million acres of farmland, officials said on Friday.

“The forecast stirred concern among lawmakers and farm groups that crop and livestock production will be constrained for decades into the future while the U.S. population grows.

“‘If landowners plant trees to the extent the model suggest, this would be disruptive to agriculture in some regions of the country,’ said Agriculture Secretary Tom Vilsack. ‘I don’t believe the results … are necessarily an accurate depiction of the impacts of climate legislation.’”

The article stated that, “Vilsack said he directed USDA Chief Economist Joe Glauber to work with the Environmental Protection Agency to review the assumptions in the Forest and Agricultural Sector Optimization Model (FASOM), update the model and develop options to avoid adverse changes in the sector.

“‘The model could be updated to better reflect current legislative proposals,’ said Vilsack.”

The “Washington Insider” section of DTN provided more analysis on this issue yesterday (link requires subscription), noting in part that, “The question of what USDA really thinks about the effects of climate change legislation got murkier in spite of intense discussions throughout last week. Then, on Friday, Agriculture Secretary Tom Vilsack released yet another statement that satisfied almost nobody.”

After a detailed analysis, the DTN item concluded by saying, “It seems highly unlikely that the secretary’s promise of better information in the future will satisfy the Senate, perhaps especially Sen. Mike Johanns, R-Nebraska, who knows and respects the USDA staff involved, but strongly suspects that politics might have driven at least the earlier study results.

“It is possible that Vilsack can work with Johanns to outline a ‘design and review’ process that would satisfy increasingly skeptical observers. Nevertheless, because the stakes surrounding the legislation and its effects are so high, many observers are hopeful that Vilsack and the administration will take some such steps to generate realistic estimates of impacts that can help the Congress and the industry understand more specifically what is being proposed.”

Crop Insurance

DTN Political Correspondent Jerry Hagstrom reported yesterday that, “USDA’s Risk Management Agency has proposed changes to the crop insurance program that Obama administration officials say will save taxpayers money and strengthen the program. But crop insurance industry officials say the plan would damage the industry and result in a lower level of service to farmers.

For farmers, the stakes are high. But figuring out who is right and who is wrong is difficult in this technical field. The proposal changes the standard reinsurance agreement, the document that governs relations between the insurance companies and the government. It is renegotiated every few years in order to adjust to changing times. The negotiations are expected to be completed by April or May, USDA Risk Management Agency Administrator Bill Murphy told DTN in an interview, but the new agreement will not go into effect until the 2011 crop year.

“The negotiations will be dominated by the fact that as commodity prices have gone up in recent years, premium rates have gone up to cover the increased value of the crop. In turn, government administrative and operating expense payments to the companies have gone up because those payments are tied to the premium rates. RMA says the government’s payments to the companies rose from $1.8 billion in 2006 to an estimated $3.8 billion in 2009.”

Mr. Hagstrom explained that, “In writing the 2008 farm bill Congress forced reductions of $6.4 billion over 10 years and used the money to pay for other USDA programs. Now, crop insurance lobbyists say Obama administration officials have told congressional aides that they hope to cut the program by $4 billion over five years.

“Murphy declined to confirm that figure, but said the real issues in the negotiations are structural changes in the program that he believes will improve crop insurance in areas outside the Midwest and make the program cheaper for the companies to operate. Losses in the Midwest can be big, expensive and rare while losses in other parts of the country may be less severe but more frequent. For that reason, crop insurance companies prefer to do business in the Midwest and compete more for the business there, Murphy said. That means farmers in the rest of the country do not have the same level of service and competition.

“Murphy said his first offer to the companies would ‘rebalance’ the program so that the companies would have more of an opportunity to make a profit on insurance in other parts of the country. Midwestern farmers don’t need to worry that their insurance service will go down or become more expensive.”

The DTN article added that, “But lobbyists for crop insurance companies and agents disagree with some of Murphy’s assumptions and contend the cuts he wants are too deep.”

For additional information on this issue, see this FarmPolicy.com update from last week.

Brazil Cotton Case

An AFP article from yesterday reported that, “Brazil will be allowed to impose up to 829.3 million dollars in retaliatory sanctions against the United States over unfair US cotton subsidies, a source close to the World Trade Organisation said Monday.

“The WTO had given the green light for the sanctions in August, more than a year after it ruled the US subsidies breached trade rules, but had yet to specify the full amount allowed by a complex mathematical equation.

“‘The total amount of countermeasures authorised to Brazil would be 829.3 million dollars (587 million euros),’ the source said.”

Senate Ag Committee

A news release issued yesterday by the Senate Agriculture Committee stated in part that, “Chairman Blanche Lincoln, D-Ark., today announced the selection of Julie Anna Potts to serve as Chief Counsel for the U.S. Senate Committee on Agriculture, Nutrition and Forestry.

“Potts, an Alabama native, most recently served as General Counsel for the American Farm Bureau Federation. She is a graduate of Bryn Mawr College and George Washington University Law School.”

Keith Good