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Climate Change Issues; Crop Insurance; NASS Reports; Food Safety; and Trade

Climate Change Issues: International Perspectives

Bloomberg writer Robert Fenner reported yesterday that, “Australia’s government will stick by plans to reintroduce legislation in February to create a national carbon emissions trading system after the bill was rejected by the Senate earlier this month.

“‘The parliament meets at the beginning of February and we will be putting the legislation again to the parliament,’ Finance Minister Lindsay Tanner told reporters in Melbourne today. ‘That commitment stands.’

“The government plan, employing carbon trading similar to that used in Europe, would raise average annual household costs by A$624 ($556) and make services such as electricity more expensive, Tanner said today, citing Treasury data. Opposition leader Tony Abbott, who took the role one day before the Senate rejected the bill, argues the proposal will raise costs by A$1,100 without mitigating climate change.”

Yesterday’s article explained that, “Australia, the world’s biggest coal exporter, proposes to introduce carbon trading by 2011 to reduce its greenhouse gases by 5 percent to 15 percent of 2000 levels in the next decade, according to the proposed laws.

While the U.S. is the biggest greenhouse-gas producer among developed nations, Australia has overtaken it as the biggest per-person emitter of carbon dioxide, British risk analysis firm Maplecroft said Sept. 9.

Senators voted 41 to 33 against the bill, the second time in three months it failed to make it through the upper house.”

James Kanter reported in today’s New York Times that, “The French Constitutional Council has rejected a tax on carbon emissions strongly backed by President Nicolas Sarkozy that was to take effect Friday. But his ruling conservative party said the measure would be redrafted so it could be passed into law next year.

“The council, which evaluates the constitutionality of proposed laws, ruled late Tuesday that the bill contained too many exemptions for polluters, broke with past practices and threatened to make tax collection unfair.

The decision is a blow to Mr. Sarkozy, who has sought to burnish his green credentials by holding international talks next year to seek agreement on emission cuts after the Copenhagen climate conference. Environmental groups have said they expect the talks to be held in Paris.”

The Times article added that, “The Copenhagen conference, which ended without a timetable to reach a binding global agreement to curb greenhouse gas emissions, represented a humiliation for European Union leaders seeking to lead global efforts to tackle climate change.

“Mr. Sarkozy said he strongly favored the tax, scheduled to go into force on the first day of the new year, as a way to shift France onto a low-carbon path and modify the way the state collects revenue.

“The tax was set at 17 euros for each ton of carbon dioxide.”

Meanwhile, in an opinion item posted today at The Wall Street Journal Online, Brahma Chellaney indicated that, “China has been publicly excoriated by U.S. officials and others for opposing a binding climate-change deal at this month’s United Nations summit in Copenhagen. But the real loser was India.

“By aligning itself with China’s negotiating position, India bracketed itself with the world’s largest polluting nation. This tack has been months in the works; back in October, New Delhi signed a five-year memo of understanding with Beijing and agreed, among other things, to present a united front in Copenhagen. Environment Minister Jairam Ramesh went so far as to declare there ‘is no difference’ between the two countries’ negotiating positions.

Yet there is a huge difference in actual emissions. China is the world’s largest polluter, responsible for 24% of global carbon emissions. Most of these emissions are due to China’s economic development path, which has relied heavily on carbon-intensive, manufacturing industries. China’s per-capita carbon emissions are four times higher than India’s, which boasts the lowest per-capita emissions among all-important developing countries, at 26% of the world’s average.”

Mr. Chellaney pointed out that, “China also doesn’t share India’s basic approach to curbing global warming. New Delhi wants per-capita emission levels and historic contributions to the build-up of greenhouse gases to form the objective criteria for any global carbon mitigation plan. China, as the world’s factory, wants a different formula that discounts carbon intensity linked to export industries.

Nor does India have much in common with other major developing nations, either in its carbon profile or industrial-development levels. For example, in 2007 (the latest figures available) India’s per-capita emissions totalled 1.2 tons; South Africa, 9.4; China, 4.8; and Brazil, 2.1, according to the U.S. Energy Information Administration.”

And in conclusion, the opinion item noted that, “In Copenhagen, India would have done better to delink itself from China and the other two leading developing nations and to encourage the world’s largest polluters—the U.S. and China—to do a deal.

India not only aligned itself with the wrong group, but also it presented itself inadvertently as a major global polluter by making common cause with China, whose developmental path threatens to unleash a carbon tsunami on the world. After all, had the situation in Copenhagen been reversed—with India’s per-capita emissions four times higher than China’s, and with India in the line of international fire—would Beijing have helped provide New Delhi diplomatic cover?”

Crop Insurance

Arthur D. Postal reported yesterday at Property & Casualty Online that, “Proposed cuts in the crop insurance program are sending alarms through the insurance industry for both underwriters and agents.

“Under a proposal unveiled earlier this month, the Obama administration wants new cutbacks in the program that in addition to other recent action, would collectively reduce government involvement in the program by close to 30 percent.

“‘We definitely cannot live, without a doubt, with what they have suggested,’ said Robert Parkerson, president, National Crop Insurance Services, the liaison to the U.S. Department of Agriculture’s Risk Management Agency (RMA). RMA represents the 16 carriers that provide crop insurance to an estimated 270 million acres of all crops grown in the U.S., an estimated 78 percent of all tillable land. The group also helps develop policies, claims procedures, research on new plants and new genetic seed processing for the agriculture industry.”

The article indicated that, “According to various officials, the Obama administration wants to use the funding cuts from the crop program to increase the Agriculture department’s child nutrition programs by at least $1 billion a year over the next 5 years.

“The child nutrition programs include the school lunch and breakfast programs; the women, infants and children’s special nutrition program, or WIC; and commodity distribution programs.”

NASS Reports

Yesterday, the U.S. Department of Agriculture’s National Agricultural Statistics Service (NASS) released its monthly Agricultural Prices report.

In part, yesterday’s report stated that, “The corn price, at $3.59 per bushel, is down 6 cents from last month and 52 cents below December 2008 [related graph]… The soybean price, at $9.96 per bushel, increased 43 cents from November and is 72 cents above December 2008 [related graph]… and…The December all wheat price, at $4.81 per bushel, is up 2 cents from November but $1.14 below December 2008 [related graph].”

With respect to dairy and livestock, the NASS report noted in part that, “The December all milk price of $16.30 per cwt is up $1.00 from last month and 80 cents from December 2008. The fluid grade milk price is $1.00 higher and the manufacturing grade milk price increased $1.10 from the previous month [related graph]…and…The December hog price, at $43.70 per cwt, is up $3.50 from November and $1.80 higher than a year ago [related graph].”

And more specifically with respect to the swine sector, NASS also released its Quarterly Hogs and Pigs report yesterday.

In part, the NASS report stated that, “U.S. inventory of all hogs and pigs on December 1, 2009 was 65.8 million head. This was down 2 percent from December 1, 2008 and down 2 percent from September 1, 2009 [related graph].”

John Perkins reported yesterday at Brownfield that, “USDA’s quarterly hogs and pigs report showed slower than expected herd contraction.”

And an update posted yesterday at The Des Moines Register Online reported that, “Sam Carney of Adair, president-elect of the National Pork Producers Council, said ‘I was hoping for about a 5 percent drop.’

“Carney and other pork industry leaders have been urging greater reduction in swine herds to bring production in line with demand.”

The Register item indicated that, “Hog producers have suffered losses for two years because of high feed costs, a drop in exports and a falloff in demand caused by the H1N1 flu virus scare earlier this year.

“The USDA has given hog producers some help by purchasing $162 million worth of surplus pork during the last year. In Canada the government is offering the nation’s hog industry a collective $75 million for farmers to stop producing hogs for at least three years.

Economists have said the U.S. needs to reduce its swine herd by as much as 10 percent for supply and demand to come into profitability for hog producers.”

An update from the USDA’s Daily Radio News Service (audio report, about one-minute) indicated yesterday that, “Pork producers are cutting the size of their herds, but the reductions are less than many in the industry expected.”

Food Safety

Michael Moss reported in today’s New York Times that, “Eight years ago, federal officials were struggling to remove potentially deadly E. coli from hamburgers when an entrepreneurial company from South Dakota came up with a novel idea: injecting beef with ammonia.

“The company, Beef Products Inc., had been looking to expand into the hamburger business with a product made from beef that included fatty trimmings the industry once relegated to pet food and cooking oil. The trimmings were particularly susceptible to contamination, but a study commissioned by the company showed that the ammonia process would kill E. coli as well as salmonella.

Officials at the United States Department of Agriculture endorsed the company’s ammonia treatment, and have said it destroys E. coli ‘to an undetectable level.’ They decided it was so effective that in 2007, when the department began routine testing of meat used in hamburger sold to the general public, they exempted Beef Products.”

The Times article added that, “With the U.S.D.A.’s stamp of approval, the company’s processed beef has become a mainstay in America’s hamburgers. McDonald’s, Burger King and other fast-food giants use it as a component in ground beef, as do grocery chains. The federal school lunch program used an estimated 5.5 million pounds of the processed beef last year alone.

But government and industry records obtained by The New York Times show that in testing for the school lunch program, E. coli and salmonella pathogens have been found dozens of times in Beef Products meat, challenging claims by the company and the U.S.D.A. about the effectiveness of the treatment. Since 2005, E. coli has been found 3 times and salmonella 48 times, including back-to-back incidents in August in which two 27,000-pound batches were found to be contaminated. The meat was caught before reaching lunch-rooms trays.”

Mr. Moss went on to explain that, “Presented by The Times with the school lunch test results, top department officials said they were not aware of what their colleagues in the lunch program had been finding for years.

In response, the agriculture department said it was revoking Beef Products’ exemption from routine testing and conducting a review of the company’s operations and research. The department said it was also reversing its policy for handling Beef Products during pathogen outbreaks. Since it was seen as pathogen-free, the processed beef was excluded from recalls, even when it was an ingredient in hamburgers found to be contaminated.

“The Beef Products case reveals a schism between the main Department of Agriculture and its division that oversees the school lunch program, a divide that underscores the government’s faltering effort to make hamburger safe. The U.S.D.A. banned the sale of meat found to be contaminated with the O157:H7 strain of E. coli 15 years ago, after a deadly outbreak was traced to Jack in the Box restaurants. Meat tainted with salmonella is also a hazard. But while the school lunch program will not buy meat contaminated with salmonella, the agriculture department does not ban its sale to the general public.”

Trade

Ting-I Tsai reported today at The Wall Street Journal Online that, “Taiwan is negotiating a closer relationship with its onetime enemy, China, while its ties with Washington are being strained by the island’s new proposed ban on U.S. beef.

“The U.S. Department of Agriculture and the Office of the U.S. Trade Representative Wednesday expressed concerns after Taiwan’s parliament proposed an amendment to the country’s Food Sanitation Act that would bar imports [related graph] of some U.S. beef products.”

The Journal article explained that, “Taiwanese President Ma Ying-jeou decided in October to lift previous bans and allow imports of U.S. ground beef, bone-in beef and cow offal, after two years of negotiations between Taipei and Washington. Parliament declined to endorse Mr. Ma’s decision.

“Because of the proposed ban, Taiwan’s minister of economic affairs, Shih Yen-shiang, told parliament Wednesday that resumption of talks on a free-trade pact with the U.S. would be indefinitely delayed. Minister of Foreign Affairs Timothy Yang told parliament that the proposed ban would hurt recently improved relations with the U.S.

The amendment is scheduled to be voted into law on Jan. 5, likely overturning President Ma’s October decision.”

Julie Harker reported yesterday at Brownfield that, “Senator Chuck Grassley says his office is monitoring an amendment in the Taiwanese legislature that would reinstate restrictions on US beef. It’s a proposed ban on all skull, brain, spinal cords, ground beef, offals and related products from the U.S. for a period of 10 years, starting in 2006. The Iowa Republican says this is highly politicized in Taiwan and runs counter to the big agreements Taiwanese officials signed with soybean and corn growers in Iowa and other states several months ago, ‘You know, these sort of showboat approaches where you have signing ceremonies for buying and then things coming out of the political world where they’re trying to make things more difficult for trade between our two countries just doesn’t add up.’”

Keith Good