FarmPolicy

January 22, 2020

Climate Issues; Jobs Bill-Biofuels; Trade; and Farmland Values

Climate Issues

Alexander Bolton reported yesterday at The Hill’s Energy and Environment Blog that, “Sen. John Kerry (D-Mass.) says those who think climate change legislation is dead for the year are ‘dead wrong.’

“Those who think blizzards and record snow falls in Washington will make it tough to move a global warming bill are guilty of ‘inside the beltway’ thinking, Kerry said.

“‘The inside-the-Beltway conventional wisdom that this issue has stalled is dead wrong,’ Kerry said in a statement e-mailed to The Hill. ‘This is not and never has been a partisan issue, and Senators Graham, Lieberman, and I will continue building consensus on both sides of the aisle with all those willing to engage to create jobs, advance our security interests, reduce pollution, and make America more competitive,’ said Kerry, a key advocate of a climate change legislation.”

With respect to partisanship and climate legislation, Darren Samuelsohn of Climatwire reported yesterday at The New York Times Online that, “Sen. John McCain once led the global warming debate on Capitol Hill, pledging to force repeated floor votes on cap-and-trade legislation until it passed.

“‘Over time we will not be elected Miss Congeniality in the Senate, but we will win,’ the Arizona Republican said in April 2006.

But McCain has gone on hiatus from the issue since losing the presidential election to Barack Obama. And he is likely to keep his distance even more over the next six months due to a primary challenge from a conservative former congressman that threatens to end his Senate career after four terms.”

Mr. Samuelsohn pointed out that, “McCain is not the only one-time cap-and-trade supporter facing conservative pressures this election year. Florida Gov. Charlie Crist (R) has been distancing himself from past global warming efforts during his Senate primary campaign against former state House Speaker Marco Rubio. And Rep. Mark Kirk (R-Ill.) walked away from his vote last June on the House-passed climate bill to help sew up the GOP nomination for Obama’s old Senate seat.”

Yesterday’s article noted that, “Sen. John Kerry (D-Mass.), the lead author with Graham and Lieberman on a combined climate and energy bill, said McCain is ‘engaged’ on the legislative debate. But Kerry added, ‘I just think he’s got a set of priorities.’”

John M. Broder reported in today’s New York Times that, “As millions of people along the East Coast hole up in their snowbound homes, the two sides in the climate-change debate are seizing on the mounting drifts to bolster their arguments.

“Skeptics of global warming are using the record-setting snows to mock those who warn of dangerous human-driven climate change — this looks more like global cooling, they taunt.

“Most climate scientists respond that the ferocious storms are consistent with forecasts that a heating planet will produce more frequent and more intense weather events.”

Meanwhile, Christa Marshall of ClimateWire reported yesterday at The New York Times Online that, “The number of companies and organizations hiring energy lobbyists reached record levels last year as major climate legislation worked its way through Congress.

“More than 1,700 groups and businesses turned to K Street in 2009 for help on energy, climate and nuclear issues, a jump from 1,331 in 2008, according to new data compiled by the Center for Responsive Politics.”

In other developments on the climate issue, the “Washington Insider” section of DTN reported yesterday (link requires subscription) that, “If the Environmental Protection Agency decides to issue regulations to reduce greenhouse gas emission, it will do so ‘thoughtfully and carefully,’ and any regulatory efforts should not be viewed as pressure on Congress to act on climate-change legislation, says EPA Assistant Administrator Gina McCarthy. Speaking at a recent university-sponsored forum, McCarthy said any regulatory action the agency takes should not be seen ‘as a method of forcing legislation to move forward that isn’t deliberate, that doesn’t allow Congress to act as Congress wants to act.’

“McCarthy also said EPA should be given credit for its history relative to the Clean Air Act and said the agency wouldn’t pursue regulations that are ‘not workable … that would be a significant burden to the economy.’

“Legislation to block EPA from regulating on greenhouse gas emissions has been introduced in both the House and Senate, although at least the Senate plan, even if approved, would almost certainly be vetoed by President Obama.”

Bloomberg writer Simon Lomax reported yesterday that, “Carbon dioxide emissions fell further in 2009 than first thought and may not rise as quickly as the economy grows, according to the Energy Information Administration’s monthly Short-term Energy Outlook.

“Emissions from burning coal, oil and natural gas fell 6.3 percent in 2009, the EIA said, a revision from last month’s estimate of 6.1 percent. The EIA’s prediction of a 1.5 percent increase in emissions this year was unchanged. Today’s prediction of a further 1.3 percent emissions increase in 2011 was lower than last month’s estimate of 1.7 percent.

“President Barack Obama’s administration has told the United Nations that the U.S. is prepared to cut its emissions roughly 17 percent below 2005 levels by 2020. Last year’s drop in emissions, the result of the weak economy, cut carbon dioxide more than half as much as needed to meet the 2020 goal.”

Jobs Bill-Biofuels

Ben Geman reported earlier this week at The Hill’s Energy and Environment Blog that, “Draft Senate jobs legislation would provide a one-year extension of lapsed tax credits that are vital to the battered biodiesel industry.”

And Shailagh Murray and Paul Kane reported in yesterday’s Washington Post that, “The [jobs] package also is expected to include $1.5 billion in agriculture assistance sought by Sen. Blanche Lincoln (Ark.), one of the most endangered Democrats facing reelection in November.”

The Hill’s Ian Swanson provided an update on the jobs bill on C-SPAN’s Washington Journal program yesterday, to listen to a brief clip and explanation of the status of the bill from Mr. Swanson, just click here (MP3-1:48).

Martin Vaughan, Patrick Yoest and Corey Boles reported yesterday at The Wall Street Journal Online that, “U.S. Senate Republicans on Tuesday balked at Democratic efforts to push an economic stimulus measure through the chamber by the end of the week, making it likely that the Senate will wait at least until the week of Feb. 22 to vote on the roughly $80 billion package.”

The Journal article added that, “Senators are also folding in provisions to partly offset the bill’s cost. Those include closing a loophole that could allow pulp and paper firms to claim a tax credit for cellulosic ethanol, anti-tax-evasion measures targeting offshore accounts, and a measure to allow some firms to delay payments to defined-benefit pension plans.”

J. Taylor Rushing reported yesterday at The Hill Online that, “Senate Democratic leaders ended Wednesday still planning to plow ahead with a session on Thursday despite a blizzard blanketing the Washington area.

“No votes are scheduled on Thursday, but Democrats still plan to hold their weekly caucus lunch, which was rescheduled from Tuesday.”

Democrats at the lunch are expected to talk about a jobs package being pushed by Senate Majority Leader Harry Reid (D-Nev.),” the article said.

In more specific developments regarding biofuels, Dow Jones writer Brian Baskin penned an article earlier this week (“U.S. Renewable Fuel Standards Upend Ethanol Tariff Fight”) that was posted at the Sugar Cane Blog.

In part, the Dow Jones article stated that, “U.S. ethanol producers are facing their toughest fight yet to keep long-standing trade protections intact. Producers of ethanol, which in the U.S. is usually distilled from corn and then blended to make gasoline, have for three decades enjoyed a tariff that has discouraged imports. The big loser has been the second-largest producer, Brazil, which can usually undercut U.S. ethanol prices by refining sugarcane instead of corn. While corn ethanol’s allies in the U.S. Congress managed to strengthen import barriers as recently as 2008, the 54-cent-a-gallon levy faces a tough battle for renewal this year.

“The power shift comes as Brazilian ethanol is seen bridging a gap that could form if domestic ethanol production falls short. California will require a 10% cut in greenhouse-gas emissions from vehicles over the next 10 years– with cane ethanol counting as having a lower carbon footprint than corn ethanol. The U.S. Environmental Protection Agency took a similar step last week, designating cane–but not corn–ethanol as an ‘advanced biofuel,’ which will make up nearly 60% of the 36 billion gallons of the total renewable fuel requirement in 2022.

Cane ethanol’s new low-carbon status drafts oil refiners and, potentially, individual fuel consumers into the tariff fight for the first time. Large-scale production of low-carbon biofuels in the U.S., the world’s No. 1 ethanol producer, won’t be possible until the middle of the decade at the earliest. In the meantime, Brazil’s share of the U.S. ethanol market would need to grow quickly, whatever the import cost, for blenders to meet their mandate.”

Meanwhile, Philip Brasher noted yesterday at the Green Fields Blog (The Des Moines Register) that, “One thing a blizzard will do is give you a chance to catch up on some reading, in this case the 1,120-page regulatory impact analysis that the EPA issued recently for the nation’s biofuel mandate. This tome isn’t to be confused with the 418-page preamble, which explains in great detail how the agency arrived at its final conclusions about issues such as the impact of biofuels on international land use.

“A few highlights:

“One of the arguments made most often for increasing the use of ethanol and biodiesel is to reduce U.S. imports of foreign oil. Now, we have an idea of how much difference the 2007 energy law would make, with its mandate that motorists use 36 billion gallons of biofuels by 2022. Oil imports would fall by 9.5 percent by 2022, or 900,000 barrels a day. Put another way, the country would spent $41.5 billion less on imported oil and petroleum products, or 9.1 percent less.”

Net farm income will rise 36 percent, or $13 billion by 2022 as a result of the increase in biofuel production. There is no breakdown of that estimate according to income for crops and livestock,” Mr. Brasher said.

And The New York Times editorial board noted today that, “Despite pressure from farm state politicians, the Environmental Protection Agency has taken an important step to ensure that biofuels help rather than hurt the environment. Under new guidelines, biofuels produced at new facilities — including ethanol from corn, sugar, plants and other sources — must achieve at least a 20 percent reduction in greenhouse gas emissions compared with conventional gasoline.

“In 2007, Congress mandated a big increase in biofuel production (then 7 billion gallons, now closer to 12 billion) to 36 billion gallons in 2022, mainly to lessen the country’s dependence on foreign oil. It also stipulated that the fuels be cleaner than gasoline, and handed the job of measuring emissions from various kinds of ethanol, and setting standards, to the E.P.A.

“The agency promptly found itself under ferocious pressure from the corn lobby, which wanted its product shown in the best possible light, and environmental groups, which insisted on an accurate accounting. The most contentious issue was whether the agency should take into account not only direct emissions from ethanol — those associated with planting, refining and burning ethanol from corn or other feedstocks — but indirect emissions from land use changes.”

The Times added that, “The guidelines will not have an immediate impact on corn ethanol production since existing refineries and those under construction were grandfathered under the 2007 law. Going forward, however, the rules will almost certainly encourage less energy-intensive ways of making corn ethanol and, more important, advanced and next-generation biofuels from sources that do not displace food, including perennial grasses, crop wastes, and the cellulose in shrubs and plants.

The corn ethanol industry, which already enjoys generous and unnecessary subsidies, says, for the record, that it can live with the new rules. Even so, its Congressional allies threaten to deny the E.P.A. the money to carry them out. These efforts should be resisted.”

In other developments, an update posted yesterday at the National Sustainable Agriculture Coalition Blog indicated that, “This week USDA issued a proposed rule for the increasingly controversial Biomass Crop Assistance Program (BCAP). The department will take public comments on the proposed rule until April 9, 2010.

“The 2008 Farm Bill and the accompanying Manager’s Statement clearly spells out BCAP’s primary focus: to promote the cultivation of perennial bioenergy crops that show exceptional promise for producing highly energy-efficient bioenergy or biofuels, preserve natural resources, and are not primarily grown for food or animal feed. BCAP may also be used to promote annual bioenergy crops when inclusion in resource-conserving crop rotations can improve existing row crop systems.

“It was on this basis that NSAC was supported BCAP. USDA’s current proposal for BCAP, however, falls far short of these goals.”

And a news release issued yesterday by USDA stated that, “U.S. Department of Agriculture (USDA) scientists and their colleagues at the Department of Energy (DOE) Joint Genome Institute today announced that they have completed sequencing the genome of a kind of wild grass that will enable researchers to shed light on the genetics behind hardier varieties of wheat and improved varieties of biofuel crops. The research is published today in the journal Nature.

“‘Energy security looms as one of the most important scientific challenges of this century,’ said Molly Jahn, USDA Acting Under Secretary for Research, Education and Economics. ‘This critical research will help scientists develop switchgrass varieties that are more suitable for bioenergy production by identifying the genetic basis for traits such as disease resistance, drought tolerance and the composition of cells.’”

Trade

Xinhua News reported yesterday that, “Brazil threatened on Tuesday to impose up to 112 percent of tariffs on U.S. products to retaliate against the U.S. subsidies to its cotton farmers.

“According to the Foreign Trade Chamber (CAMEX), the deliberative body of the Brazilian government on foreign trade, the value of retaliation could amount to 560 million U.S. dollars. Moreover, the list of targeted products would be released on March 1.

But the date for the trade sanctions’ going into effect has not been decided yet.”

Reuters news reported yesterday (article posted at DTN, link requires subscription) that, “U.S. poultry producers have put forward a potential solution to a dispute with Russia that had effectively stopped imports from its top supplier, the USA Poultry and Egg Export Council (USAPEEC) said on Wednesday.

“It did not disclose the actual proposal.

“Russia effectively halted U.S. poultry imports when it banned meat treated with chlorine from Jan. 19. Moscow insists the United States should observe its food safety rules, and has already moved to secure alternative supplies.”

Yesterday’s article added that, “‘Our industry has provided input to the U.S. government which, we feel, can be a primary basis for a mutually acceptable solution,’ Jim Sumner, President of USAPEEC said in a statement e-mailed to Reuters.”

Also on the trade front, the AP reported yesterday that, “Cuba has slashed food and agriculture imports from the United States — its largest food supplier despite decades of sour relations — as the communist government tightens its belt in the face of a crippling economic malaise.

“Imports fell 26 percent in 2009 to $528 million, after peaking at $710 million the year before, according to a report Wednesday by the New York-based U.S.-Cuba Economic Trade Council, which provides nonpartisan commercial and economic information about the island and claims to have no position on policy.

“‘The decrease has nothing to do with U.S. regulations, U.S. law or U.S. policy,’ said John Kavulich, a senior policy analyst at the council. ‘It is a function of Cuba not having the resources.’”

Recall that a House Agriculture Committee hearing this week that was set to review U.S. agricultural sales to Cuba had to be postponed due to the bad weather in Washington, D.C.

Farmland Values

Yesterday’s edition of Commodity News For Tomorrow, a complimentary daily commodities newsletter provided by the CME Group in partnership with Dow Jones & Company reported that, “Farmland values continued to rise last year and are still reaching unprecedented levels in some sections of the U.S., despite accruing much smaller gains than in 2008.

“A farmland index maintained by the National Council of Real Estate Investment Fiduciaries appreciated by 6.19% in 2009, a rate that was well below the 2008 return of 15.09% and in fact represented the indexes smallest annual gain in seven years.”

The article noted that, “Agricultural land prices also hit record levels in Minnesota during 2009, although University of Minnesota extension agricultural economist David Bau notes that average values rose by only 0.8%, compared with 30% in 2008.

“‘Farm profits continued to be good in 2009, although down slightly from the year before,’ Bau said. ‘Many livestock producers experienced a tough year in 2009, with losses instead of profits, due to poor prices for their commodities and high feed costs.’ Omaha, Neb.-based Farmers National Co., a professional farm management and auction firm, said top quality cropland now sells for about $650 to $1,000 per acre in South Dakota; $800 to $2,500 in western Kansas and Nebraska; $2,000 to $4,000 in eastern Kansas; $3,500-$6,500 in Iowa, Minnesota and eastern Nebraska; and $5,500-$7,500 in Indiana, Illinois, Missouri and Ohio.”

Yesterday’s item pointed out that, “Land values, however, actually declined in some areas in 2009, including in Iowa, where prices fell for the first time in a decade.

“Iowa State University extension farm economist Mike Duffy said his annual survey discovered that Iowa farmland is now worth an average of $4,371 per acre, $97, or 2.2%, less than it was at the end of 2008. The last time Iowa farmland depreciated was 1999.”

Keith Good

Comments are closed.