Dan Morgan, a former Washington Post reporter and former Transatlantic Fellow at the German Marshall Fund of the United States, who is now an independent writer specializing in agriculture and energy, has written a paper titled, “The Farm Bill and Beyond.”
A summary of the comprehensive paper, which was posted yesterday at the German Marshall Fund Online, indicated that, “More than a year after the U.S. Congress enacted a new multi-year farm bill (the Food, Conservation and Energy Act of 2008), the politics of agriculture in Washington have been substantially reshuffled. Proposed climate change legislation has confronted the farm bloc with issues that received scant attention in the farm bill itself. At the same time, the congressional energy committees and the Environmental Protection Agency (EPA)-not the traditional guardians of agriculture-have taken the lead in shaping climate and biofuels policies that could have long-term impacts on farmers. At the White House, President Obama has proposed cutting some key subsidies, and he has signaled interest in aligning himself-at least symbolically-with a grass roots movement that supports ‘sustainable agriculture’ and ‘healthy foods.’ These developments have moved long-standing tensions over agriculture policy to center stage.
“This paper by agricultural commentator and former GMF Transatlantic Fellow Dan Morgan examines these tensions in the context of the 2008 farm bill, with a view to setting the stage for the next phase of the debate in the United States and Europe over climate, energy, farm subsidies, food safety, trade, and agricultural aid to farmers in developing countries.”
In part, Mr. Morgan noted in his paper that, “In the Senate, Old Ag forces have been immeasurably strengthened by the naming last fall of Sen. Blanche Lincoln (D-Arkansas) to be Chairman of the Senate Agriculture Committee. She has ties to her state’s timber, rice, cotton, dairy, and meatpacking interests. [Sen. Tom Harkin (D-Iowa)], whom she replaced, had been one of the few Democratic senators with a vision of a farm policy different from the current one. In one of her first comments after being named, Lincoln described climate legislation—which is unpopular among Southern rice and cotton growers, who see higher costs and few benefits—as a ‘heavy lift.’ Her Republican counterpart, Sen. Saxby Chambliss (R-Georgia), the committee’s ranking member and a fellow battler against tightened limits on subsidies for rice and cotton, only adds to the new power of Southern agriculture. Lincoln’s appointment was yet another example of Democratic realpolitik trumping policy interests: It may weaken the prospects for climate change legislation, but it will strengthen her fund-raising ability going into a tough 2010 re-election campaign. Lincoln will be well positioned to influence trade and climate policy, farm subsidies, and food issues such as the use of growth hormones in milk and antibiotics in animal feeds (a key interest of Arkansas-based Tyson Foods, the world’s largest processor and marketer of beef, chicken, and pork).”
The paper also indicated that, “Ironically, many of the Agricrats and Blue Dog Democrats who have been the strongest opponents of a government option in health care reform are dogged defenders of the government option in agriculture. An ideologically consistent approach would be to reduce reliance on the plethora of government farm programs and increase reliance on a single, commercial insurance system more in tune with America’s pro-market, private enterprise values. Government support for the private insurance system would continue (just as the federal government plays a large role now in the private health care system), but with a view to gradually reducing taxpayer exposure.”
To download a complete copy of “The Farm Bill and Beyond,” just click here.
Meanwhile, in recent policy developments, DTN Political Correspondent Jerry Hagstrom reported yesterday (link requires subscription) that, “The American Farm Bureau Federation passed resolutions on Tuesday calling for more generous U.S. dairy policies and disaster aid, but the issues did raise regional battles among the delegates.”
Mr. Hagstrom explained that, “But a proposal to end Farm Bureau’s opposition to a supply management program for dairy failed on a vote of 277 to 83. Southern delegates in particular objected to a provision that would have called for the dairy industry to establish a program ‘to better manage milk supplies nationwide.’
“The delegates also included a provision to support using Cooperatives Working Together, a project of the National Milk Producers Federation to cull herds, and a phrase to ‘urge participation by all dairy producers.’
“Southern delegates also promoted and got a resolution passed calling on Congress to approve an ad-hoc disaster program.
“An Arkansas delegate said that Southern farmers have been subject to a series of weather-related disasters and that the 2008 farm bill disaster program, Supplemental Revenue Assistance Payments (SURE), will not be implemented quickly enough to help the Southern farmers and will not provide enough money.”
Keith Johnson reported yesterday at the Environmental Capital Blog (The Wall Street Journal) that, “Is the climate part of energy-and-climate legislation about to get thrown under the bus?
“As Congress gets back to work, one of the big questions looming on the Hill is whether it’s time to park plans for a national curb on greenhouse-gas emissions and focus on a narrower energy bill. The rationale? Energy reform, even to boost clean energy, enjoys some cross-aisle support. Capping greenhouse-gas emissions has proven a tough slog even within the majority Democrats. And the health-care fight has undoubtedly dented enthusiasm for another bruising battle.”
Lisa Lerer reported yesterday at Politico.com that, “Moderates don’t like cap and trade. Republicans question climate change. And even some liberal Democrats say there’s little chance for a climate bill to pass the Senate this year.
“Still, environmentalists and their supporters in Congress, who have spent a decade pushing for cap and trade, aren’t giving up.
“‘These are the dumb D.C. rumors that too often mark this city and are rendered meaningless on a daily basis,’ said Sen. John Kerry (D-Mass.), who’s carrying the climate legislation in the Senate. ‘We can cross the finish line this year.’”
Yesterday’s article noted that, “But environment groups and their business allies realize that they are now fighting for the very core of the bill: a cap on greenhouse gas pollution. And they’re ready to hold President Barack Obama accountable for his campaign promises to create a system that would curb the greenhouse gases responsible for climate change.”
“Environmental organizations are already pushing to grab coveted airtime in the president’s State of the Union address in the next several weeks. Ideally, they’d like a public promise that passing a climate bill will remain a top priority this year — even as the battered economy and the loss of jobs dominate a congressional agenda that still includes health care reform,” the Politico article said.
Ms. Lerer added that, “It remains unclear, though, who will take the lead in negotiating the agriculture provisions. In the past, farm groups looked to Sen. Debbie Stabenow (D-Mich.), a member of the Senate Agriculture Committee, to advocate for farm offsets and to negotiate a greater role for the Agriculture Department.
“But Senate Agriculture Committee Chairwoman Blanche Lincoln (D-Ark.) has said she intends to play a role in the debate. Climate advocates would prefer Stabenow take the lead, since Lincoln, who faces a tough reelection battle, has indicated that she has no desire to pass a cap-and-trade bill this year.”
Sen. Blanche Lincoln (D-Arkansas)
In additional news regarding Sen. Lincoln, Alex Isenstadt reported yesterday at Politico that, “At a time when as many as nine Republicans are queuing up for a shot at Sen. Blanche Lincoln (D-Ark.), a key Democratic constituency hasn’t entirely bought into the idea of her reelection to a third term: liberals.”
“While, according to some state political observers’ estimates, liberal voters account for only 15 percent to 25 percent of the voting public in Arkansas, their unrest has further imperiled her political standing as the sole Southern Democratic senator up for reelection in 2010,” the article said.
Yesterday’s article added that, “In perhaps the most glaring evidence of the left’s reluctance to embrace Lincoln, speculation continues that she could face a primary challenge from Lt. Gov. Bill Halter. During the past few months, Halter has been meeting with labor officials to discuss a prospective run, according to a source familiar with the talks, and has also huddled with progressive leaders in Washington — a group that has warmed to the idea of a Halter bid.”
Meanwhile, the “Washington Insider” section of DTN reported yesterday (link requires subscription) that, “With a large number of close election races shaping up for next year and control of Congress in the balance, considerable attention is being given to the views of Sen. Blanche Lincoln, D-Ark., the new chairman of the Senate Agriculture Committee — especially since she faces what is expected to be a tough re-election race in Arkansas this fall. As a member of the congressional leadership under close political scrutiny, her views offer insight into possible areas of legislative emphasis in the coming months.”
Yesterday’s DTN analysis indicated that, “As for farm programs, she defends the 2008 Act and argues it ‘was a bipartisan bill and it showed the most reforms of any major farm bill.’ She also suggests she will organize monthly meetings with Secretary Vilsack to foster ‘better communication’ between USDA and the Senate Ag Committee.”
“It appears now that Chairman Lincoln has strong support from producers in her state and that she will use her new position to build on that. However, as the administration continues to focus on highly contentious issues like health care, cap and trade and budget cuts, her political and leadership skills likely will face tough tests throughout the year,” the DTN item said.
DTN writer Todd Neeley reported yesterday (link requires subscription) that, “California’s Office of Administrative Law approved the state’s low-carbon fuel standard Tuesday, despite objections from the Renewable Fuels Association that the California Air Resources Board didn’t conduct a ‘fair’ public hearing on the new standard.
“The approval now clears the way for the state to establish carbon scores for fuels, including what will be a penalty for corn-based ethanol for so-called international indirect land-use change.
“An example of the theory of indirect land-use effects is that corn acres used for ethanol displace soybean acres, which boosts acres of soybeans in Brazil, causing pasture land to be displaced and prompting cattle producers in Brazil to level more rainforest land.”
A news release issued on Tuesday by the Renewable Fuels Association noted in part that, “Ignoring numerous examples of violations of California law by the Air Resources Board (ARB), the state’s Office of Administrative Law (OAL) has approved the Low Carbon Fuels Standard (LCFS) for implementation.
“‘Pursuing this strategy runs counter to the stated goals of Governor Schwarzenegger and the State Assembly to reduce carbon emissions from motor vehicles,’ said Renewable Fuels Association President Bob Dinneen. ‘As crafted, the LCFS would virtually eliminate domestic ethanol, the only viable low-carbon alternative to gasoline, from the California marketplace in favor of imported ethanol and futuristic fuel technologies such as hydrogen and the electric car.’”
Dan Chapman reported yesterday at the Atlanta Journal-Constitution Online that, “The December announcement from a small Atlanta company vowing to turn wood scrap into fuel in nearby Thomaston rang all too familiar: Yet another bold promise to create rural jobs, help wean the country from foreign oil and stem global warming.
“Since 2006, more than three dozen alternative energy projects — ethanol, biodiesel, wood pellets, wood-to-electricity — have been announced in Georgia with great fanfare and tens of millions of dollars in local, state and federal tax breaks.
“Most, though, have postponed production, reduced capacity, declared bankruptcy or remained commercially unfeasible. They struggle for financing, especially with the disappearance of credit and the recession.”
The AJC article stated that, “American Process Inc., whose Thomaston venture is bankrolled by energy giant Valero Energy, expects to be different. The Midtown-based company, with 40 employees in Atlanta, Greece and Romania, has extensive experience in the pulp and paper industry — a proving ground for its wood-to-fuel technology.
“API plans to transform a vacant factory in Upson County, about an hour south of Atlanta, into a biorefinery that could produce 80,000 gallons of ethanol by year’s end.
“‘Over the last few years, there’s been a lot of talk about all these technologies and breakthroughs, but progress has been slow,’ API President Theodora Retsina told The Atlanta Journal-Constitution during a recent interview about the bioenergy industry. ‘We’re setting out to prove that [our technology] is realistic, practical and financially viable, something investors can put their money into.’”
In other news regarding biofuels, a news release issued yesterday by POET indicated that, “A proposed ethanol pipeline would be an economic boost for the U.S., a new report demonstrates, creating almost 80,000 direct, indirect and induced jobs across the country.
“POET and Magellan Midstream Partners, L.P. have formed a joint venture to assess the feasibility of a 1,800-mile ethanol pipeline from ethanol production facilities in the Midwest, starting at Davison County, S.D., to distribution outlets in the northeast U.S., ending in Linden, N.J. Once the feasibility study is complete, the pipeline would be operational as early as 2014.”
And Jessica Leber of ClimateWire reported yesterday at The New York Times Online that, “Having launched its first pilot facility yesterday with Gov. Arnold Schwarzenegger looking on, California startup Cobalt Technologies is the latest in a growing number of biofuel ventures banking on biobutanol as an attractive ethanol alternative.
“Like ethanol, biobutanol can be fermented from plant sugars, either food grains or cellulosic plant parts. But because its structure is heavier than ethanol and more similar to gasoline, the advanced biofuel has a wider range of end uses — it can be burned as a stand-alone transportation fuel; blended with diesel, ethanol or gasoline; converted into jet fuel or plastics; or sold in existing industrial chemical markets.”
Bloomberg writer Whitney McFerron reported yesterday that, “Hog producers may benefit from record U.S. corn and soybean crops, as plunging feed prices reduce their costs.
“U.S. farmers will collect 13.151 billion bushels of corn and 3.361 billion bushels of soybeans, both records, in the 12 months starting Sept. 1, the Department of Agriculture said yesterday. Corn futures plunged 7.1 percent, the most allowed in Chicago, and soybeans sank 3.2 percent. Corn is the main ingredient in livestock feed, which also includes soybean meal.
“The record harvests are ‘very welcome news’ for hog farmers, plagued for two years by rising input costs and slumping meat demand, said Ron Plain, a University of Missouri economist in Columbia. Yesterday’s drop in corn prices means U.S. hog farmers, who have lost about $6 billion since October 2007, may start to make money again, he said.”
The Federal Reserve Board released its January Summary of Commentary on Current Economic Conditions yesterday. Commonly known as the Beige Book, the report included the following comments with respect to the agricultural economy.
Chicago District- “Some farmers still had corn in the field when snows blanketed the ground in December. The weather also prevented much of the normal fall tillage and fertilizer application. Still, corn and soybean yields were above average throughout the District. Furthermore, storage of the crop has not been a problem, since end users, especially ethanol plants, kept buying grain as it was harvested. Even with increased drying costs, corn prices were high enough for returns to approach breakeven; and with soybean prices moving higher, most farmers should more than cover their costs for soybeans. Wheat, milk, and hog prices also increased, whereas corn and cattle prices decreased from the previous reporting period. The reduced number of dairy cows helped boost milk prices. Some small dairy operations or those that raise their own feed were able to avoid further losses. Smaller dairy producers continued to benefit from government payments that larger producers had tapped out. Hog farms also drew closer to breakeven, but cattle operators faced pressures made worse by very cold temperatures which required the consumption of extra feed.”
Minneapolis District- “Agricultural activity declined. The wet fall caused farmers to incur extra drying expenses, and some shortages of propane were noted. A portion of the corn crop will have to be harvested in the spring because winter storms halted the already late harvest; this may constrain overall production from expected high levels. The heavy winter storms put stress on some cattle herds.”
Kansas City District- “Agricultural conditions improved since the last survey period. Farmers enjoyed above average corn and soybean yields, especially in Nebraska and Kansas. Despite planting delays, the winter wheat crop was progressing normally and was reported in good condition with ample snow cover. The post-harvest rise in corn and soybean prices spurred strong marketing opportunities and higher incomes for farmers. Livestock prices moved higher, narrowing losses for producers. Cattle feeding enterprises were operating at breakeven levels, but dairy and hog operations still faced significant losses. District contacts reported that farmland values firmed in the fourth quarter amid robust demand for good quality farmland and a limited number of farms for sale.”
Dallas District- “Rainfall continues to boost agricultural conditions across the state. Farmers have been able to plant the winter wheat crop into moist soil. Nearly all crops have been harvested, and the crop outlook for 2010 has improved. Although drought conditions have been alleviated, the dry spell has tightened producers’ cash flow and contacts say delayed disaster payments may prevent some farmers from planting the next round of crops.”
Lyndsey Layton reported in today’s Washington Post that, “In July, [Michael Taylor] became an adviser to Margaret Hamburg, commissioner of the Food and Drug Administration, and last Wednesday, he was named deputy commissioner for foods, a new position that elevates food in an agency long criticized for placing greater emphasis on drugs and medical devices.
“Congress is moving ahead with legislation to grant vast new authority to the FDA to ensure food safety — the House passed a bill last year and the Senate is expected to take up its version soon — and Taylor will be responsible for implementing new laws aimed at preventing outbreaks instead of merely reacting after they occur.
“‘We are at an historic tipping point — a moment when the forces have aligned like never before; the president, Congress, industry and the public have stepped up their support for our mission,’ Taylor told a gathering of FDA staff members last month.”
Today’s Post article added that, “Taylor has been bringing together divisions to make the agency more nimble. Food regulation is split among the Center for Food Safety and Applied Nutrition, where much of the scientific research takes place; the Center for Veterinary Medicine, which regulates the manufacture and sale of food additives and drugs for animals; and the Office of Regulatory Affairs, which handles inspections of domestic and imported products and works with state and local officials.
“Traditionally, the three sections were managed separately. Any proposed policy change had to be approved by each division and then was sent for review by the general counsel in the commissioner’s office. It took years to get anything done, Taylor said.
“Now, Taylor has pulled together a senior leadership team that cuts across the three divisions and has created similar cross-sectional teams to work on core issues. ‘The idea is to get the best thinking on the table early,’ he said.”