FarmPolicy

April 24, 2019

Ag Economy; Regulation and the Farm Bill; Climate Issues; Biofuels; Water; and Animal Agriculture

Agricultural Economy

Angie Pointer reported on Saturday at The Wall Street Journal Online that, “The gradual economic recovery is strengthening the 2010 outlook for U.S. agriculture.

“Commodities from corn to beef spent much of last year trying to recover from the commodity-price collapse that accompanied the global credit crisis. The expectation for the agricultural sector’s continued slow and steady recovery was evident in crop and trade forecasts issued this week by the U.S. Agriculture Department at its annual Outlook Forum.

Earlier in the month, the USDA estimated farm income to rise nearly 12% to $63 billion in 2010. On Friday, the USDA forecast a 9% increase in U.S. beef exports to 2.04 billion pounds this year. Pork exports are also projected to rise 9%, to 4.5 billion pounds, USDA livestock analyst Joel Greene wrote in an outlook report also released Friday.”

The Journal article added that, “Cotton is expected to benefit from a continued economic uptick, too. Land planted to cotton is expected to jump 15% to 10.5 million acres, ending three consecutive years of declines. U.S. cotton exports are expected to rise 5% to 12.6 million bales, and global cotton consumption will expand 2.6% this year, the USDA said.”

Nonetheless, Steve Jordon reported on Friday at the Omaha World Herald Online that, “An index of rural economic activity moved in the wrong direction this month as bankers in the survey tempered their view that things will improve in the next six months. It was the first decline in the index since last August.

The Rural Mainstreet Index for a 10-state Midwestern region was 36.6 in February, down from 41 in January but still much ahead of the 16.9 index of February 2009, Creighton University economist Ernie Goss said.”

“‘The softer farm economy for 2009 continues to weigh on rural mainstreet businesses in the region. Agriculture producers have been taking a conservative approach to their buying and this is showing up in our survey,’ [Goss] said.”

DTN Executive Editor Marcia Zarley Taylor noted on Thursday at The Minding Ag’s Business Blog that, “Livestock losses were top of mind with farm lenders attending the USDA Outlook conference this week. Expect provisions for loan losses to soar at some Farm Credit System institutions when year-end results are released within the next few days, even though bad loans aren’t as steep as regulators had been expecting. Farm Credit’s Lending Corporation won’t release full results until March.

“‘Farm lenders own a lot of cows and sows’ after the deep downturns in dairy and pork industry the past several years, one Farm Credit System lender told me. By that he means that farm lenders hesitated to pull credit on troubled borrowers as quickly as they did in the 1980s, hoping markets would turnaround. After the pork industry’s 2-1/2 year profit crisis, however, some borrowers are so far in the red, it’s hard to fathom how they will come up with the equity to farm in the future, he adds.

It’s not that the value of their collateral collapsed, it’s that their operating losses wiped out a lifetime of equity, he adds.”

In related news, Darrin Youker reported yesterday at the Reading Eagle Press Online (PA) that, “Dairy farmers will be unable to survive the next few years without action by the federal government.

“That is the message a group of dairy farmers from across southeastern Pennsylvania gave to U.S. Rep. Tim Holden during a meeting with dairy farmers last week.”

“‘We need to get our arms around this issue,’ Holden said. ‘The peaks and valleys are getting too steep.’”

Also with respect to dairy, USDA released its Milk Production report on Friday, which noted in part that, “The annual production of milk for the U.S. during 2009 was 189 billion pounds, 0.3 percent below 2008 [related graph].”

The report added that, “The average number of milk cows on farms in the U.S. during 2009 was 9.20 million head, down 1.2 percent from 2008 [related graph].”

In livestock news, a Daily Radio News Line item from USDA on Friday (one-minute audio report) noted that, “The beef cattle herd is expected to continue getting smaller with prospects for steer prices getting better.”

The audio summary referred to Friday’s Cattle on Feed report from USDA, which stated that, “Cattle and calves on feed for slaughter market in the United States for feedlots with capacity of 1,000 or more head totaled 11.0 million head on February 1, 2010. The inventory was 3 percent below February 1, 2009 [related graph].”

Meanwhile, Bloomberg writer Alan Bjerga reported on Friday that, “U.S. crop values fell 6.3 percent last year as the global recession reduced demand and record output boosted supplies.

The value of all crops was $157.5 billion, down from $168.2 billion in 2008 and the lowest since 2006, the U.S. Department of Agriculture said today in a report. Field crops fell to $128 billion, down 7 percent, with wheat and hay plummeting, while fruits and nuts dropped 6.6 percent to $17.1 billion.” (A summary table from Friday’s report highlighting the crop values of several commodities can be viewed here).

On the issue of agricultural land values, Chuck Zimmerman reported on Friday at AgWired.com that, “Farmland values was a very important topic of discussion at the Farmland Investment Fair put on by the Chicago Farmers. One of the educational sessions on the topic was conducted by Mike Shane, First Farm Credit Services.

“Mike told me they focused on what land values are now and what drives them. They can’t predict them of course. He says they’ve see a leveling off of values in recent years and decline in certain areas like the Dekalb, Kane and McHenry county areas around Chicago but if you go further south in the state they’re more flat or even higher. Land is still available and they’ve seen some land sell for as much as $8K in those areas.”

The AgWired link includes a three-minute audio replay of Chuck’s discussion on land values with Mike Shane.”

In news regarding trade and ag exports, Reuters writer Roberta Rampton reported on Friday that, “Chinese farm exports are set to become a greater source of trade tension as China boosts its production and becomes a bigger player in world markets for labor-intensive crops, a U.S. agricultural economist said on Friday.”

The article noted that, “The political and trade strains between the two nations are unlikely to spill over into soybean trade, [Colin Carter of University of California-Davis] said.

“Soybeans are the top U.S. export to China, which the USDA forecast will become the top overall foreign market for U.S. farm goods in a few years.”

If China had to produce its own soybeans, it would need 30 percent more farmland, Carter said.”

Environmental Regulation (NEPA) and the Farm Bill

Noelle Straub of Greenwire reported on Friday at The New York Times Online that, “A top Obama administration official yesterday defended a new draft proposal that will require federal agencies to consider climate change during environmental analyses of proposed projects as ‘straightforward, common-sense guidance.’

“Under the draft guidance released yesterday by the White House Council on Environmental Quality, agencies will have to consider greenhouse gas emissions and climate change effects when carrying out National Environmental Policy Act reviews. CEQ will take public comment for 90 days on the proposal.”

Friday’s article added that, “‘I think there was really no question that there are environmental effects associated with climate change, and how could we not have that as part of agencies’ thinking as they look at their NEPA obligations and looking at environmental impacts?’ Sutley told E&E. ‘I think what we’ve tried to craft is some very straightforward, common-sense guidance.’

“Agencies will need to look at emissions that may be produced by projects such as a landfill or coal-fired power plant. They also must consider climate change effects on projects — for example, whether plans for infrastructure along the coast would need to change due to projected sea level rise.”

Washington Post writer Juliet Eilperin added additional perspective on the CEQ development in an update posted on Thursday at the Post Carbon Blog: “NEPA, a 40-year old law, requires the federal government to evaluate the environmental impact of any activity it takes part in or sanctions, whether it’s providing funds for a highway or allowing snowmobile riders into Yellowstone National Park.”

Ms. Eilperin noted that, “Nancy Sutley, Chair of the White House Council on Environmental Quality, said the move represented an attempt to modernize the landmark federal law. ‘Our country has been strengthened by the open, accountable, informed and citizen-involved decision-making structure created by NEPA,’ Sutley said. ‘We are committed to making NEPA workable and effective, and believe that these changes will contribute significantly to both goals.’”

As the executive branch fosters NEPA application with respect to climate change issues, some have openly speculated and suggested that the law should be applied to the Farm Bill.

On Friday, an article published at the Harvard Law & Policy Review Online, titled, “Forty Years After NEPA’s Enactment, It Is Time for a Comprehensive Farm Bill Environmental Impact Statement,” indicated that, “Also among the losers are the industries and individuals that experience the negative environmental impacts of U.S. farm policy, including diminished water and soil quality, decreased biodiversity, dwindling freshwater resources, and increased greenhouse gas (GHG) emissions. This article addresses these damages and the failure of federal agencies to observe a law that might provide some measure of transparency, level-headed comparative analysis, and perhaps even mitigation: the National Environmental Policy Act of 1969 (NEPA).”

The law journal article (full copy available here) stated that, “This article describes how and why federal agencies should subject the Farm Bills to the EIS [environmental impact statement] process by focusing, as an illustration, on the impacts best analyzed by existing research: those caused by corn overproduction and perpetuated by recent corn and ethanol subsidies. Part I describes current Farm Bill programs with demonstrated causal links to environmental and socioeconomic damages. Part II lays out the applicable standards for a NEPA challenge to a legislative enactment. The authors prefer and advocate for a voluntary EIS but acknowledge that applying NEPA to the next Farm Bill may take more than persuasion. Part III, therefore, develops a litigation strategy and concludes that the 2012 Farm Bill represents a ripe opportunity to turn to NEPA for science-based reform.”

However, at the conclusion of the article, the authors stated that, “The legal principles articulated here make clear that litigation is a viable option with a reasonable chance of success. Of course, plaintiffs must be selected, legal arguments crafted, and target programs of NEPA litigation chosen with care given the parties that may perceive a threat from the EIS process, such as corporations that profit from the cheap inputs provided by current farm policy. The authors present these arguments in the hope that litigation will prove unnecessary. Relevant agencies in the Obama Administration may voluntarily initiate an EIS for the next Farm Bill.”

Chris Clayton provided additional perspective and analysis of the law journal article, the NEPA issue, and the Farm Bill in an update posted yesterday at the DTN Ag Policy Blog: “Still, the point of the article is critical. NEPA requires that federal agencies conduct environmental impact statements before enacting any legislation that could significantly impact the environment. Citing subsidies for commodity crops that aid to increase production, and subsidies for ethanol in the farm bill that have the same effect, the article maintains there is a strong legal case to be made in federal court against USDA on the 2008 farm bill because USDA does not conduct environmental impact statements on rules coming out of the farm bill.”

Mr. Clayton added that, “USDA actually did get into trouble in 2008 by attempting to loosen the rules on haying and grazing Conservation Reserve Program land without conducting an environmental impact statement. Wildlife groups took USDA to federal court in Seattle and won an injunction stopping USDA from continuing the program. The Harvard L&PR article makes the case that an environmental impact statement should have been conducted because of a reduction in CRP acreage in the farm bill and the environmental impact because, according to the article, most of that acreage goes into corn, which then turns into ethanol. Such changes, the article states, lead to more hypoxia and soil erosion, as well as impacts on increased greenhouse gas emissions. The argument is made that NEPA requires a comprehensive review of the 2008 farm bill. Further, the article states who could be potential litigants in a case against USDA over the farm bill. While such a court case likely would not translate into significant changes of policy for the 2008 farm bill, the article states that such legal action could shape the outcomes of the 2012 farm bill.”

Climate Issues

Reuters writer Richard Cowan reported yesterday that, “A last-ditch attempt at passing a climate change bill begins in the Senate this week with senators mindful that time is running short and that approaches to the legislation still vary widely, according to sources.

“‘We will present senators with a number of options when they get back from recess,’ said one Senate aide knowledgeable of the compromise legislation that is being developed. The goal is to reduce emissions of carbon dioxide and other greenhouse gases that scientists say threaten Earth.

The options will be presented to three senators — Democrat John Kerry, independent Joseph Lieberman and Republican Lindsey Graham — who are leading the fight for a bill to battle global warming domestically.”

A news release issued on Friday by the American Farm Bureau Federation stated that, “American Farm Bureau Federation President Bob Stallman called on Congress to adopt a resolution of disapproval of the Environmental Protection Agency’s ‘endangerment finding’ and the proposed regulation of greenhouse gases under the Clean Air Act.

“In a strongly worded letter sent today to all members of Congress, Stallman said the choice is clear. ‘The real opportunity to stop EPA’s onerous regulations is to adopt a resolution of disapproval. Farm Bureaus across the country are well aware that the true measure of a [congressional] member’s support for agriculture will be his or her introduction of a resolution of disapproval and adding his or her name to a discharge petition bringing that resolution to the floor for a vote.’”

Jim Tankersley reported in today’s Los Angeles Times that, “At a time when the U.S. economy is desperate for jobs and investment in future growth, a slew of clean-energy projects are on hold largely because of political stalemate in Washington.

“With President Obama’s energy and climate proposals bottled up in Congress, business leaders say they cannot tell what direction government policy will take on a variety of issues, including new energy taxes, tougher emissions standards for factories and vehicles, and guaranteed markets for start-up wind and solar power plants.

That has companies reluctant to pull the trigger on green-energy investments that could create employment and combat climate change.”

The editorial boards at The New York Times, The Wall Street Journal, and The Washington Post all provided opinion items on climate issues in today’s papers.

The Times noted that, “The underlying thought is that the ultimate goal is a safe planet, and that absent a top-down global treaty, that goal is probably best achieved by aggressive, bottom-up national strategies to reduce emissions. Not that these are a sure thing; the United States, embarrassingly, has no national strategy. Until it gets one, it can hardly lecture anyone else. Nor will the world stand a ghost of a chance of bringing emissions under control.”

The Post stated that, “A gradually rising carbon tax made sense even before ‘global warming’ entered most people’s vocabulary. Almost as useful would be a simple cap-and-rebate system that required industry to pay for greenhouse-gas emissions. Either would reduce American dependence on dictators in Saudi Arabia and Venezuela while lowering air pollution of all kinds. Neither would require a complicated government bureaucracy of the kind that has understandably alarmed some people while giving others a pretext for opposition. And if politicians can’t bear to stand behind an increased tax, the revenue from either proposal could all be returned in a fair and progressive way.”

The Journal stated that, “We need scientists who apply scientific objectivity, or the closest approximation of it, and then present their information with enough transparency that people can weigh the evidence. Instead of a group of scientists anointed by the U.N. telling us what to think, the spirit of the age is that scientists need to provide open access to information on which others can make policy decisions.

“The lesson of the chill of the global-warming consensus is this: Those who want to persuade others of the truth as they see it need to make their case as transparently as possible. Technology enables access to information and leads us to expect open debates, conducted honestly and in full view. This is inconvenient for those who want to claim unequivocal truth without having the evidence. But that’s the way it is.”

Biofuels

Philip Brasher reported in yesterday’s Des Moines Register that, “The law that guarantees Iowa’s ethanol producers a growing demand for their product also is creating a market for a foreign rival: Brazilian companies that make the fuel from sugar cane.

“Brazilian ethanol already is coming into the United States. Like corn ethanol, the Brazilian product counts toward meeting the nation’s annual mandates for conventional ethanol.

“But Congress in 2007 also required refiners to start using more environmentally friendly alternatives, known as advanced biofuels, that would result in lower greenhouse gas emissions than conventional ethanol. For now, Brazil’s sugar cane ethanol is the most widely available fuel that qualifies for mandates that will rise to 5 billion gallons by 2022.”

Mr. Brasher explained that, “U.S. producers, worried about the competition from Brazil, are gearing up for a fight in Congress to maintain a 54-cent-per-gallon tariff on imported ethanol that is set to expire at the end of the year.

Brazil has been pushing to eliminate the tariff, and there are bills pending in Congress to reduce or end the tariff. The bills are sponsored by lawmakers from California and other states whose consumers stand to benefit from importing cheaper Brazil ethanol rather than using corn ethanol from the Midwest.”

California Water

Bettina Boxall reported in today’s Los Angeles Times that, “When California Sen. Dianne Feinstein drafted legislation that would weaken endangered species protections to deliver more water to San Joaquin Valley farms, her rationale was jobs.

“‘People in California’s breadbasket face complete economic ruin,’ the Democrat said in a recent statement.

“She was joining a chorus of Central Valley politicians and farm groups that during the last year have painted the region as a dust bowl, beset by drought and environmental protections that are cutting vital water deliveries and the jobs that depend on them.”

The article noted that, “But crop and labor statistics for 2009 belie the image of a withering farm economy teetering on the edge of collapse.

“‘People make a lot of claims, but the data you see is showing growth,’ said Paul Wessen, an economist with the California Employment Development Department. ‘We’re just not seeing the job loss.’”

Reuters writer Dan Whitcomb reported yesterday that, “Senator Dianne Feinstein, who angered environmentalists, fishing groups and other Democratic lawmakers by proposing to divert more water to California’s farmers, said on Friday she was working to avoid controversial legislation.”

Animal Agriculture

Jess McKinley reported in today’s New York Times that, “California may soon place animal abusers on the same level as sex offenders by listing them in an online registry, complete with their home addresses and places of employment.

“The proposal, made in a bill introduced Friday by the State Senate’s majority leader, Dean Florez, would be the first of its kind in the country and is just the latest law geared toward animal rights in a state that has recently given new protections to chickens, pigs and cattle.

“Mr. Florez, a Democrat who is chairman of the Food and Agriculture Committee, said the law would provide information for those who ‘have animals and want to take care of them,’ a broad contingent in California, with its large farming interests and millions of pet owners. Animal protection is also, he said, a rare bipartisan issue in the state, which has suffered bitter partisan finger-pointing in the wake of protracted budget woes.”

Keith Good

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