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Climate Change Issues; Animal Agriculture; Crop Insurance; Energy Prices; and Crop Reports

Climate Change Issues

Reuters writer Charles Abbott reported yesterday that, “The largest U.S. farm group called on Congress on Tuesday to prevent the government from regulating greenhouse gases if lawmakers kill climate change legislation.

“The 6-million-member American Farm Bureau Federation (AFBF) also underlined its firm opposition to legislation to reduce emissions of carbon dioxide and other gases blamed for boosting global temperatures.

In their first item of policy work, delegates at the AFBF annual meeting voted to support ‘any legislative action’ to suspend authority of the Environmental Protection Agency to regulate greenhouse gases under air pollution laws.”

Mr. Abbott explained that, “The EPA cleared the way for such regulation a month ago by ruling that greenhouse gases endanger human health.

“It offered a route to control greenhouse gases, if Congress does not pass a climate law. AFBF staff say the Senate is unlikely to pass a ‘cap and trade’ climate bill this year.

“At least one bill is pending in the House to prohibit EPA regulation of greenhouse gases. Senators say they may offer amendments to do the same thing.”

DTN Ag Policy Editor Chris Clayton reported yesterday (link requires subscription) that, “In a convention that centered heavily on the American Farm Bureau Federation’s opposition to climate legislation, Farm Bureau’s voting delegates quickly passed a statement Tuesday telling Congress to defeat the cap-and-trade bill.

“Given the concentrated and evident effort throughout the convention to defeat climate legislation, there was little doubt the group would come out with strong policy and statements against a cap-and-trade bill. Delegates unanimously approved a ‘sense of the delegate body’ statement in opening their policy debate Tuesday morning, stating the Farm Bureau ‘strongly opposes cap-and-trade proposals before Congress and strongly supports any legislative action that would suspend EPA’s authority to regulate greenhouse gases under the Clean Air Act.’ Delegates then added comparable language to the group’s policy book.”

Mr. Clayton added that, “Despite arguments by some outside of Farm Bureau that a climate bill would be beneficial for farmers, the Farm Bureau stated that ‘the potential benefits of agricultural offsets are far outweighed by the costs,’ and would harm one of the world’s most productive agricultural economies.

“Further, EPA and USDA analysis states a proposed cap-and-trade program would cause as much as 59 million acres to move out of crop and pasture if carbon prices traded at $70 a ton by 2050. Farm Bureau stated that would damage the ability of farmers to ‘feed a growing world population and create conditions for rising consumer prices.’”

With respect to efforts to curb the EPA’s authority to regulate greenhouse gases, Bloomberg writer Simon Lomax reported today that, “Former Vice President Al Gore joined a dozen Senate Democrats in opposing a Republican effort to block the Environmental Protection Agency from placing limits on greenhouse-gas emissions.

“The Republicans may soon try to ‘strip’ the EPA of ‘its ability to regulate most carbon pollution, letting the worst polluters off the hook,’ Gore, who won an Oscar and a Nobel Peace Prize for his efforts to publicize global warming, said yesterday in an e-mail to supporters.

A Senate confrontation over the Obama administration’s move to limit emissions from cars, trucks and industrial sources may come as early as next week. Democrats have agreed to give Republicans a vote on the issue when they debate legislation to raise the nation’s debt ceiling, Jim Manley, a spokesman for Senate Majority Leader Harry Reid, a Nevada Democrat, said in an e-mail.”

The Bloomberg article explained that, “Senator Barbara Boxer, a California Democrat and chairman of the Senate Environment and Public Works Committee, said in a letter to lawmakers yesterday that she expects Republicans to try to reverse the EPA’s so-called endangerment finding.

“Senators should uphold the EPA’s authority because ‘repealing an endangerment finding based upon years of work by America’s scientists and public health experts is not appropriate,’ Boxer said in the letter, which was signed by the 11 other Democrats on her committee.”

Today’s Bloomberg article added that, “Senator Lisa Murkowski, an Alaska Republican, will have a chance to offer an amendment dealing with the EPA’s proposed greenhouse gas regulations when the debt-ceiling legislation is debated Jan. 20, Manley said.

Murkowski plans to decide ‘in the next couple of days’ whether to seek a vote on that amendment, her spokesman, Robert Dillon, said in an e-mail. The lawmaker, who failed last year in an effort to curb the EPA’s authority, is also considering a disapproval motion under the Congressional Review Act to block the proposed greenhouse-gas regulations.”

Meanwhile, in his DTN article from yesterday, Chris Clayton also pointed out that, “Several senators who have expressed concern about cap-and-trade have stated they could support a renewable energy portfolio. Sen. Charles Grassley, R-Iowa, told reporters Tuesday in a conference call that he does not see the Senate debating a cap-and-trade bill in 2010. But Grassley added he does think the Senate will debate an energy bill. Grassley, who is ranking member of the Senate Finance Committee, said he and Chairman Max Baucus, D-Mont., are already working on energy tax incentives.

“‘I think it’s fair to say an energy bill will be taken up … I like the RPS (Renewable Portfolio Standard), and I would vote for some compromise in that area.’”

In addition, Michael O’Brien, writing yesterday at The Hill’s Blog Briefing Room, indicated that, “The Senate will move on energy and environmental issues in 2010, but not cap-and-trade legislation, Sen. Chuck Grassley (R-Iowa) asserted Tuesday.”

The Hill item stated that, “Grassley said the energy legislation is likely to follow along the framework crafted by Energy and Natural Resources Committee Chairman Jeff Bingaman (D-N.M.), with tax provisions added in by the Senate Finance Committee, on which Grassley serves as the top Republican member.

“The Iowa Republican said that the bill may include a renewable electricity standard as a key component, a provision which would require utility companies to generate a certain portion of their energy from renewable resources by a target date.”

However, Washington Post writer Juliet Eilperin reported yesterday at the Post Carbon Blog that, “The political class is chattering about how Congress may opt this year for an energy bill that doesn’t cap greenhouse gas emissions. But environmentalists said Tuesday they would not accept that sort of legislative solution.

“In a morning conference call with reporters, Jeremy Symons, senior vice president for the National Wildlife Federation, said his group and others still see a binding limit on carbon dioxide and other greenhouse gases as a litmus test for legislation they can support.”

Ms. Eilperin indicated that, “This position could set up an eventual standoff between green groups and some centrist senators, who see a bill with energy efficiency and renewable energy targets as an acceptable fallback option. The Senate Energy and Natural Resources Committee has passed such a bill already.”

And Jim Snyder reported yesterday at The Hill’s Energy and Environment Blog that, “Environmentalists say they’ll be steadfast in insisting Democrats include a cap on carbon dioxide with any energy legislation they try to pass.”

Mr. Snyder noted that, “The idea of passing legislation that would seek to reduce greenhouse gases but stops short of a hard cap on emissions surfaced again last week after Sen. Jeff Bingaman (D-N.M.) was quoted as saying that a cap-and-trade bill will be hard to pass this year.

“Bingaman is the chairman of the Senate Energy and Natural Resources Committee. The panel has passed a bill that includes new incentives for energy efficiency programs and a mandate for renewable electricity production. Bingaman is also among a group of senators pushing an expansion of a renewable energy tax credit program.”

And with respect to the domestic economy and the climate agenda, Darren Samuelsohn of ClimateWire reported yesterday at The New York Times Online that, “Advocates for comprehensive climate legislation should look no further than the nation’s unemployment rate as they ponder their chances for success this year.

“With more than 10 percent of the country’s work force currently out of a job, experts say it won’t bode well for the climate bill’s prospects if that number gets any worse.”

Yesterday’s article indicated that, “President Obama has already made clear that his focus in 2010 will be on the economy, with spending on clean energy technology a major theme for bringing jobs back to the nation’s industrial heartland and beyond. But now he must determine if he can shoehorn a sweeping environmental bill into law at the same time Democrats face a major electoral test in November.”

“With about 10 months to go until Election Day, longtime supporters of a climate bill say they expect the president to double down on the climate and energy issue by pushing the Senate to finish the work that the House completed last summer,” Mr. Samuelsohn said.

Animal Agriculture

Lauren Etter reported in today’s Wall Street Journal that, “A year after Californians approved stricter rules on the treatment of farm animals, Idaho and other states are trying to lure away the Golden State’s poultry and egg farmers with promises of friendlier regulations and lower costs.

“In Idaho, as lawmakers convened Monday, Republican state Sen. Tim Corder said he would introduce legislation designed to attract California chicken farmers who might consider relocating. In Nevada, Pershing County is aggressively recruiting poultry farmers in California, the nation’s fifth-largest producer of eggs. Georgia’s poultry industry also has reached out to some California farmers in a bid to woo them eastward, California egg-industry officials say.”

Today’s Journal article noted that, “In Idaho, where there’s currently little poultry production, Doug Manning, economic-development director of the town of Burley, said he wanted to offer incentives to poultry farmers as a way to increase jobs and tax revenue in the area. He has heard from a few California farmers who ‘are looking at some options,’ Mr. Manning said. ‘We said, ‘When you’re ready, give us a chance.'”

“Idaho is no stranger to California farmers. In the past decade, the state has attracted scores of dairy farmers from California seeking cheaper land and less regulation.”

Crop Insurance

DTN Ag Policy Editor Chris Clayton reported yesterday (link requires subscription) that, “A farm-state senator expressed concern Tuesday that proposed cuts in crop insurance could hurt farmers’ ability to manage their own risk, and might also appear to pit farmers against school children in the fight for federal dollars.

“Right now, the crop-insurance industry is in the midst of renegotiating the standard reinsurance agreement with USDA’s Risk Management Agency. The agreement establishes the premium subsidies and payments for administration and operating expenses at crop-insurance companies. Fifteen companies nationally are covered under the contract.

“Sen. Charles Grassley, R-Iowa, told reporters in a conference call Tuesday that he is worried about the extent of the cuts crop insurers could face and whether ‘the delivery of crop insurance is going to adversely impact farmers.’”

Yesterday’s DTN article stated that, “Grassley pointed out that the 2008 farm bill cut projected crop-insurance spending through 2012 by $5.6 billion. The reinsurance agreement being proposed by USDA could cut another $4 billion, he said.

“‘At some point, the services, the one-on-one contact between the farmers and agent will suffer,’ Grassley said. ‘I think that these cuts might hurt the relationship, hurt the program, and hurt the ability of farmers to manage their own risks.’”

Meanwhile, a National Crop Insurance Services news release from yesterday stated that, “Florida has just over $3 billion in liability in crop insurance on crops ranging from citrus and citrus trees to nursery and fresh market tomatoes. ‘All of it is protected against the record freeze that hit this past weekend, and those producers who suffered losses can rest assured that crop insurance indemnities will be paid timely,’ said Bob Parkerson, President of National Crop Insurance Services.

“If producers think they have a loss on an insured crop, they must:

1. notify their crop insurance agent within 72 hours of the initial discovery of damage;

2. continue to care for the crop and protect it against further damage, if possible; and,

3. obtain consent from the insurance company prior to destroying any of the insured crop.

“‘There are other requirements that insureds need to follow that can be found in their specific policy,’ said Parkerson. ‘But these three are key for right now.’”

Energy Prices

Brian Baskin reported in today’s Wall Street Journal that, “Energy prices are undergoing a long, slow march higher as major economies shake off the effects of last year’s recession, the U.S. Energy Information Administration said Tuesday in its monthly outlook.

The agency expects global gross-domestic-product growth to increase from 2.5% in 2010 to 3.7% next year, enough to prevent oil and natural-gas prices from heading back toward the multiyear lows hit in 2009. At the same time, the gradual nature of the recovery and ample inventories built up during the downturn should prevent a repeat of the spike in energy prices during 2008.”

Crop Reports

A news release issued yesterday by USDA’s National Agricultural Statistics Service (NASS) stated that, “U.S. farmers produced the largest corn and soybean crops on record in 2009, according to the Crop Production 2009 Summary released today by [NASS].

“Corn production is 13.2 billion bushels, 1 percent above the previous record of 13 billion bushels set in 2007, and 9 percent higher than 2008. Corn yields reached an all-time high in 2009 at 165.2 bushels per acre, eclipsing the previous record of 160.3 bushels per acre set in 2004. Planted area, at 86.5 million acres, is the second highest since 1949, behind 2007’s 93.5 million acres.

“The 2009 soybean crop broke records for planted and harvested area as well as for yield and production. Soybean production totaled 3.36 billion bushels, up 13 percent from 2008 and up 5 percent from the previous record set in 2006. The average yield per acre is 44 bushels, up .9 bushels from the previous record set in 2005. Farmers nationwide planted a total of 77.5 million soybean acres and harvested 76.4 million acres in 2009, both up 2 percent from the previous record set last year.”

Ian Berry and Scott Kilman reported in today’s Wall Street Journal that, “Amid record U.S. soybean exports to China, the USDA raised its month-old forecast of the season-average price of the recently harvested soybean crop by 1.6% to $9.65 a bushel, give or take 75 cents a bushel. Likewise, the USDA raised its price forecast for the fresh corn crop by 4.2% to $3.70 a bushel, give or take 30 cents a bushel.

“‘A few years ago, a corn crop of this size would have meant $2-a-bushel corn,’ said Larry Salathe, the USDA’s senior economist. The USDA also raised its outlook for sorghum and barley prices.”

The Journal article added that, “The ethanol-fuel industry, which was blamed by food executives for helping to inflate grocery bills, is emerging from an industry-wide shakeout with an even bigger appetite for corn. The rebounding price of gasoline has lifted the price of the alternative fuel to profitable levels again. Ethanol industry officials say there is sufficient corn for both fuel and food.

The USDA said Tuesday it expects the ethanol industry to consume one-third of the 2009 corn crop, or 14% more corn than from the 2008 harvest.”

A more detailed analysis of yesterday’s crop reports, which in addition to the NASS final production estimates and the updated world supply and consumption projections, also included December 1, 2009 stocks estimates and U.S. winter wheat seedings estimates, see this article by University of Illinois Agricultural Economist Darrel Good, “Larger Corn and Soybean Crops, Fewer Winter Wheat Acres.”

Keith Good