FarmPolicy

January 22, 2020

Climate Issues; Agricultural Economy; Biofuels; and Trade

Climate Issues

Jeanne Cummings reported yesterday at Politico that, “Defying conventional wisdom that a hardened partisan divide and looming midterm elections will prevent the type of compromises necessary for big reforms, business leaders and environmentalists are redoubling their efforts to advance an energy and climate bill in the Senate.

“It’s a seemingly improbable goal, but upending that way of thinking is one of the objectives of a Capitol Hill lobbying blitz launched last week by executives from nearly 200 large and small companies. A dozen CEOs — including Shell Oil’s Marvin Odum, Duke Energy’s Jim Rogers and NRG Energy’s David Crane — are scheduled to meet with lawmakers and administration officials Tuesday.”

The article noted that, “The intensive lobbying effort comes at a time when the so-called tripartisan team of Sens. John Kerry (D-Mass.), Lindsey Graham (R-S.C.) and Joe Lieberman (I-Conn.) is working to develop a bill that can pass.

“In addition, the White House is working aggressively to demonstrate its willingness to make significant compromises to get a bill passed.

“‘We’re going to need more than Lindsey Graham,’ Carol Browner, who is overseeing the legislative effort at the White House, told POLITICO. ‘He’s very cognizant of that, as are we. As we demonstrate that we are being pragmatic and open to thinking about all of the energy solutions, that will be important to some Republicans.’”

Ms. Cummings indicated that, “But with health care reform put on the back burner, the notion of running without a major accomplishment could spook some lawmakers enough to engage in the energy debate, which typically is driven by regional interests rather than party identification.

“In addition, the shift in emphasis in the debate to job creation — an issue that better fits the voters’ top priorities — could make an energy and climate bill more appealing.”

With respect to the jobs link, Jim Snyder reported yesterday at The Hill Online that, “Backers of climate-change legislation are making an extra push to link clean energy with job growth as the administration and congressional Democrats look for ways to lower unemployment.”

“With the unemployment rate still hovering around 10 percent, environmentalists and businesses that favor climate legislation say they are revisiting the theme that the climate and energy bill could provide a boost to the economy,” Mr. Snyder said.

Yesterday’s article added that, “The Labor Department on Friday reported unemployment fell to 9.7 percent in January from 10 percent in December. Some analysts had expected greater job growth.”

Meanwhile, Lisa Lerer reported yesterday at Politico that, “It’s no secret that Scott Brown, the Senate’s newest Republican, will oppose health care reform. But what about the president’s energy and climate agenda?

“That’s one of the most intriguing questions churning on Capitol Hill as Brown takes his seat amid a renewed push for Senate action on comprehensive legislation aimed at expanding and cleaning up the energy sector.

“His past is checkered on the issue.”

In more specific agricultural developments on the climate issue, Chris Clayton noted yesterday at the DTN Ag Policy Blog that, “Most studies regarding the impact of the House climate bill on agriculture highlight potential afforestation due to acreage shifts based on the price of carbon. A study by University of Minnesota researchers shows that ‘a method to decrease carbon concentrations by converting farmland to woodlands would be ineffective,’ according to an article published by the campus newspaper, the Minnesota Daily.

The study shows it would be ecologically and economically unfeasible to convert millions of acres of cropland to forestry.”

A news release issued by the University of Minnesota late last month (“University of Minnesota study: Planting trees, restoring prairies help reduce C02 — but not enough to make a difference”) stated that, “Promoting activities such as planting new forests and restoring prairies will have little effect on offsetting carbon dioxide emissions, because there simply isn’t enough idle land available to add up to significant carbon sequestration, a new study from the University of Minnesota shows.”

The release indicated that, “The study was led by Cinzia Fissore, a research associate in the Department of Soil, Water and Climate, with contributions from Javier Espeleta, a former University of Minnesota research associate; Ed Nater, professor in the Soil, Water and Climate department; Sarah Hobbie, professor in the department of Ecology, Evolution and Behavior and Peter Reich, professor in the department of Forest Resources. The team estimated how much carbon different plant types and management practices can remove from the atmosphere and store in biomass and soil upon conversion from cropland. Among the possibilities they considered, planting forests and perennial grasslands such as prairies led to the greatest carbon storage for a given area.

“However, the potential to offset substantial emissions is constrained by the lack of large areas of idle land available for conversion to forests or grasslands. Achieving substantial offsets would require taking large areas of land out of agricultural production. For example, converting even 10 percent of current cropland in an 11-state Upper Midwestern region into a combination of new forests and grasslands, along with planting more trees in existing forests, would offset less than 5 percent of total carbon dioxide emissions for the region.”

With respect to climate issues and the executive branch, Juliet Eilperin reported in today’s Washington Post that, “The Obama administration proposed a new climate service on Monday that would provide Americans with predictions on how global warming will affect everything from drought to sea levels.

“The National Oceanic and Atmospheric Administration Climate Service, modeled loosely on the 140-year-old National Weather Service, would provide forecasts to farmers, regional water managers and businesses affected by changing climate conditions.

“The move is essentially a reorganization of NOAA, and would bring the agency’s climate research arm together with its more consumer-oriented services. It would not come with a boost in funding.”

Ms. Eilperin explained that, “Commerce Secretary Gary Locke said in an interview that the service would be able to provide advice on such diverse topics as where ski operators might want to refocus their activities in light of changing snowfall patterns and which farm crops will need increased irrigation.

“In the same way businesses such as the Weather Channel and AccuWeather.com have taken advantage of the National Weather Service’s predictions, Locke said, ‘you’ll see much of the private sector will want to build on this one-stop shop of climate services.’

“In order to formally launch the reorganization, Locke said, the House and Senate Appropriations committees with jurisdiction over NOAA will have to approve the move, which is planned for Oct. 1.

“Even without the reorganization, NOAA has recently been providing more detailed climate-related forecasts. The National Integrated Drought Information System, which became law in December 2006, provides drought forecasts and impacts for the West and Southwest for at least a season and up to a year. Climate models suggest that both these regions will experience increasing dryness over the next 20 to 40 years, and Lubchenco said the agency will expand this system to cover the Southeast as well.”

In other climate developments, Reuters writer Alister Doyle reported on Sunday that, “The main impact of climate change will be on water supplies;” while Elisabeth Rosenthal penned an article in today’s New York Times titled, “U.N. Climate Panel and Chief Face Credibility Siege.”

Agricultural Economy

The AP reported yesterday that, “Idaho is among several states watching to see if a California animal cruelty law drives flocks of big egg farms there to fly the coop.

“California voters in 2008 approved Proposition 2, banning cramped cages for laying hens by 2015.

Neither Idaho nor Nevada, where officials are aggressively courting the Golden State egg industry, have restrictions on ‘battery cages’ that leave chickens little room to spread their wings.”

The article noted that, “Idaho Sen. Tim Corder has no desire to change that in his state. Industry should decide, Corder insists.

“Still, the Senate Agriculture Committee chairman does want to revamp rules governing where and how giant poultry farms are operated to skirt pitfalls that accompanied explosive growth of Idaho’s dairy industry. His state went from 180,000 cows in 1990 to 530,000 in 2009 to become the third-biggest milk producer after California and Wisconsin, but the arrival of mega-dairies caught regulators flat-footed and prompted environmentalists to call foul.”

Yesterday’s article added that, “One University of California-funded study before the 2008 ballot measure concluded costs would rise 20 percent, including equipment investments and use of more feed, and result in virtually all egg production leaving after six years. Only 5 percent of U.S. egg production comes from non-caged hens.

“California is the nation’s fifth-largest egg producer, with 5 billion eggs annually. Iowa is tops, with 14.3 billion. Idaho and Nevada aren’t even close.”

Last month, Idaho Sen. Tim Corder was a guest on the AgriTalk Radio Program with Mike Adams, to listen to that interview, which featured more in-depth analysis on potential production shifts to Idaho and other issues, just click here.

Ken Anderson reported last week at Brownfield that, “A number of livestock and other groups have sent a letter to President Obama urging him not to appoint an ‘animal protection liaison’ in the White House.

“The concept has been proposed by the Humane Society of the United States.”

“The vice president for government affairs with the National Cattlemen’s Beef Association, Colin Woodall says HSUS already has a lot of access in both the Obama administration and in Congress,” the Brownfield article said.

Meanwhile, a University of Missouri-FAPRI news item from yesterday stated in part that, “‘Tough times across the livestock sector can get better this year, but it will take demand, demand, demand,’ said Scott Brown, economist with the Food and Agricultural Policy Research Institute (FAPRI).

“‘Supply is not the problem. We need a return of consumer confidence,’ Brown told University of Missouri Extension livestock specialists at a meeting on campus. ‘When consumer confidence was chopped in half, we went into uncharted territory. There will be recovery when consumers are ready to spend, but it will require people getting jobs.’

“There are bright spots in the economy. ‘Economic growth was up 5.7 percent in the fourth quarter of 2009. That was unexpected,’ Brown said.”

Bloomberg writer Elizabeth Campbell reported yesterday that, “Florida growers may have lost as much as $458 million in crops to a January cold snap, according to a state spokesman.”

And, Liam Pleven reported in today’s Wall Street Journal that, “A government report last month of record crops startled agriculture markets. Tuesday could bring the first in a series of aftershocks.

“Corn prices have plummeted 16% and soybeans by 7% since the Department of Agriculture said Jan. 12 that American farmers produced more of each than ever before. Many observers expected a lower forecast because they thought the crop would suffer due to bad weather, but instead the market faced a surprise glut.

There may be more on the way. The USDA is due to release its estimate of world supply and demand Tuesday morning. Analysts already anticipate a bumper crop from Argentina and Brazil, including at least 65 million tons of soybeans from Brazil. That would be about 14% larger than the prior year’s production.”

With respect to the price outlook for some agricultural commodities, University of Illinois Agricultural Economist Darrel Good noted in part yesterday that, “As is always the case, a number of factors will determine corn and soybean prices into the spring planting season. In the big picture, the anemic U.S. economic recovery and continued high unemployment rate are not encouraging for the demand side of agricultural markets. However, the rate of the domestic soybean crush remains large due to strong export demand for both soybean meal and oil. The rate of soybean exports and export sales remain large and the pace of new corn export sales is well above that needed to reach the USDA’s marketing year projection. Domestic use of corn for ethanol production will continue to be supported by larger biofuel mandates and generally favorable returns for producing and blending ethanol. Consumption of U.S. corn and soybeans should reach, or perhaps exceed, USDA projections even as the domestic economy struggles.

On the domestic supply side, there is general anticipation that both corn and soybean acreage will increase in 2010 due to the large decline in winter wheat seedings and maturity of some Conservation Reserve Program contracts. Planting intentions along with spring weather conditions will shape the market’s expectations for production in 2010.

One of the more important price factors is the likely size of the South American harvest in 2010. Brazil exports large quantities of soybeans and soybean products. Argentina exports modest quantities of soybeans and large quantities of soybean products. The size of those crops has a large influence on the demand for U.S. soybeans and soybean products beginning in April and continuing through March of the following year. The small harvest of a year ago is one of the factors that has supported the large increase in U.S. exports of soybeans and soybean products over the past year.”

Yesterday’s analysis indicated that, “After the sharp decline of recent weeks, a modest recovery in corn and soybean prices is expected. The recovery, however, is not expected to push prices back to the early January level. That magnitude of increase would likely require some spring weather issues.”

Biofuels

Philip Brasher reported yesterday at the Green Fields Blog (The Des Moines Register) that, “The fate of the lapsed tax subsidy for biodiesel may well lie with what happens to a jobs bill that Democrats want to get through Congress soon. Beth Pellett Levine, a spokeswoman for Sen. Charles Grassley, the senior Republican for the Senate Finance Committee, says he ‘has insisted that the biodiesel tax credit be a part of any discussions’ on a jobs bill with the panel’s chairman, Montana Democrat Max Baucus. The $1-a-gallon tax credit for biodiesel ‘remains a top priority for Senator Grassley to extend the credit at the first available opportunity,’ she added. Soybean growers are looking to Grassley to ensure that the biodiesel credit is part of any jobs bill to come out of the senate, according to John Gordley, a lobbyist for the American Soybean Association.”

Trade

John Harwood reported in yesterday’s New York Times that, “Like every president of the last generation, [Pres. Obama] has maintained the rhetorical embrace of free trade. But even as he insists that Washington cannot afford to wait for a new health care system, energy policy or set of Wall Street regulations, Mr. Obama has been willing to wait on asking Congress to approve pending trade deals.”

The article noted that, “The last Democrat in the Oval Office before Mr. Obama made trade the center of his economic agenda: Bill Clinton, in his first year in office, bucked union opposition to win passage of the North American Free Trade Agreement, with help from Congressional Republicans.

Mr. Obama, by contrast, has sent mixed signals since the 2008 Democratic primaries.”

Mr. Harwood stated that, “And in his State of the Union address, Mr. Obama embraced a goal espoused by the U.S. Chamber of Commerce: doubling American exports in the next five years, which the administration says would create two million jobs.

“Commerce Secretary Gary Locke last week laid out details of the initiative, including promotional, logistical and financing help for small and medium businesses. ‘A positive sign,’ said Myron Brilliant, a trade analyst at the chamber.

Yet the administration has still not resolved the longstanding dispute that is keeping long-haul Mexican trucks out of the United States, despite what is called for by Nafta. The Teamsters union has resisted that step, on safety grounds.

Nor has Mr. Obama asked Congress to ratify three trade agreements negotiated during the Bush administration, with Colombia, Panama and South Korea. His negotiators continue to seek more concessions — in the case of South Korea, better terms for American auto companies.”

In other trade news, Reuters writer James Grubel reported yesterday that, “A successful conclusion to the Doha round of global trade talks is still possible in 2010, but would need an injection of political energy, World Trade Organisation (WTO) head Pascal Lamy said on Tuesday.

“A summit of leaders from the Group of 20 major economies in Canada in June would be a key test of political will for the Doha round of negotiations, he said.”

Keith Good

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