FarmPolicy

October 22, 2017

Biofuels; Ag Economy; Trade; and Climate Issues

Biofuels

Dow Jones news reported yesterday that, “A federal mandate on use of biodiesel and the likely extension of a tax credit for the fuel are resurrecting hopes for the industry in the U.S.

Production of the fuel–which is similar to crude-oil-based diesel but made from vegetable or animal oils–essentially came to a halt over the past several months due to the economic downturn and the expiration of the $1-a-gallon tax credit at the end of 2009.

“Signs of a tentative turnaround point to how government action remains vital for renewable fuels, which proponents say can help mitigate climate change and foster domestic energy security.”

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Biofuels; Crop Insurance; Climate Issues; Ag Economy; and FSA Update

Biofuels

The “Washington Insider” section of DTN indicated yesterday (link requires subscription) that, “Last week, the Environmental Protection Agency published its final criteria for federal renewable fuel standards established by the 2007 Energy Independence and Security Act. Those targets total 36 billion gallons of renewable fuels by 2022, including 21 billion gallons from cellulosic sources such as switchgrass or crop residues. The targets ratchet up annually, but require that 12.95 billion gallons, or 8.25 percent of the fuel supply come from renewable sources by 2010.

“The law also requires EPA to define what fuels qualify as ‘renewable,’ and there has been some nail-biting in the biofuels industries on this score. Already existing ethanol plants or those under construction on Dec. 19, 2007 — the day the law took effect — were grandfathered, so their products automatically qualify. However, corn-based ethanol from new plants must emit at least 20 percent less greenhouse gas than gasoline over its life cycle to qualify. The rule EPA published Friday says corn-based ethanol produced in modern plants powered by natural gas are ‘renewable’ under that standard, while that produced in new coal-fired facilities would not.

The main concern of ethanol proponents was the requirement in the law that EPA’s analysis consider ‘indirect emissions’ — those from land-use changes resulting from using corn and other food grains for energy.”

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Climate Issues; Farm Bill; Ag Econ Issues; Trade; and Recess Appointments

Climate Issues

As a general political background to the climate debate, the AP reported yesterday that, “Obama has a choice to make about the next phase of his presidency, said William Galston, a former domestic policy aide in Bill Clinton’s White House and now a senior fellow at the Brookings Institution. That phase runs between now and about August, when the campaign season for November’s congressional elections will consume even more of lawmakers’ time.

“Obama can follow through on his promised shift back to the economy – pursuing more jobs bills and a revamp of Wall Street regulations – and then hone in on helping Democrats win election. Or he can add in aggressive campaigns to pass immigration and climate-change legislation this year.

“The Obama White House ‘had a political near-death experience over health care the past few months. It turned out OK in the end, but it was a close call,’ Galston said. ‘So I think they have to ask themselves: Do they think Democratic elected officials and the electorate have the stomach for a lot more controversy?’”

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Biofuels; EPA Issues; Climate Change; Food Security; Trade; and CFTC Issues

Biofuels

A news release issued yesterday by the Renewable Fuels Association (RFA) stated that, “[RFA] today praised the bipartisan Renewable Fuels Reinvestment Act (RFRA) introduced by Representatives Earl Pomeroy (D-ND) and John Shimkus (R-IL). The bill, HR 4940, would extend the $0.45 Volumetric Ethanol Excise Tax Credit (VEETC), commonly called the blenders’ credit, and the secondary tariff on imported ethanol until December 31, 2015. It would also extend the Small Producers Tax Credit and the Cellulosic Ethanol Production Tax Credit to January 1, 2016.

“‘Allowing the tax incentives for ethanol to expire is simply not an option,’ said Renewable Fuels Association President Bob Dinneen. ‘Failure to extend these incentives would force 112,000 Americans out of their jobs and shutter nearly 2 out of every 5 ethanol plants operating today. Long term extensions of these important incentives are good policy that encourages investment in current and next generation ethanol technologies.’”

Yesterday, Chuck Zimmerman interviewed Bob Dinneen, who participated in a press conference where the bill was introduced. To listen to this brief interview, just click here.

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Budget Issues (Nutrition); Climate Developments; Credit; and CFTC Issues

Budget Issues (Nutrition)

DTN Political Correspondent Jerry Hagstrom reported yesterday (link requires subscription) that, “The Senate Agriculture Committee on Wednesday passed the Healthy, Hunger-Free Kids Act, a bill to reauthorize the child-nutrition programs, with a $4.5 billion increase in funding over 10 years to increase funding for school, after-school and summer meal programs and to improve the nutritional quality of the meals.

“The committee unanimously supported the bill by a bipartisan voice vote, but it defeated a Republican amendment to change the bill’s funding offsets. There were also signs of battles to come on the Senate floor over amendments.”

(Note: Opening statements at yesterday’s meeting by Chairman Lincoln and Ranking Member Saxby Chambliss (R-GA) can be viewed here and here).

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Budget; Climate Issues; Biofuels; and the Ag Economy

Budget

An article posted yesterday at Agriculture Online stated that, “Fifteen conservation groups oppose cutting more than $2 billion dollars from the largest of USDA’s working lands conservation programs, the Environmental Quality Incentives Program (EQIP), to pay for a child nutrition reauthorization bill drafted by Senate Agriculture Committee Chairwoman Blanche Lincoln (D-AR). The Senate Agriculture Committee is scheduled to mark up the bill and vote on it Wednesday.

“‘This current proposal would not only rob farmers, ranchers, and forest landowners of conservation and environmental stewardship assistance in the next decade, but would take away well over $2 billion from the farm bill conservation baseline, or nearly half of the widely-lauded conservation increase in the 2008 Farm Bill,’ the groups says in a letter addressed to Lincoln and the other Senate Agriculture Committee members. ‘This cut clearly violates the carefully negotiated compromise that you supported in the 2008 Farm Bill.’

“‘We understand and appreciate the critical need to provide additional funding for the child nutrition school meal programs,’ the letter adds. ‘There are other sources for this funding outside of the Farm Bill conservation programs that could be tapped to pay for these needs without taking away from the programs that support farmers and forest landowners in their efforts to provide conservation benefits in addition to food, forest products, and fiber. However, if Farm Bill resources are determined to be the only resort, then fairness demands that the conservation title should not bear the full burden of providing the solution.’”

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Climate Issues; Biofuels; Ag Economy Issues; and Trade

Climate Issues

Lisa Lerer reported yesterday at Politico that, “Disagreement among Senate Democrats is slowing progress on the climate bill – even as supporters push to move forward with a proposal this week.

“Sens. John Kerry (D-Mass.), Lindsey Graham (R-S.C.) and Joe Lieberman (I-Conn.) have been working overtime to move a draft of their climate bill forward before the Senate leaves for recess at the end of the week.”

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Climate Change; Ag Economy Issues; Trade; and Food Assistance

Climate Change

The “Washington Insider” section of DTN indicated on Friday (link requires subscription) that, “Throughout much of last year, Agriculture Secretary Tom Vilsack unequivocally stated and restated that cap and trade programs, such as those in the House climate change bill, would mean significant positive net benefits for agriculture. USDA staff worked under pressure to use its massive economic models, together with those from universities and elsewhere, to measure the effects of such a program — and, frankly, to build support for the legislation.

“However, when the details of these studies began to emerge and be examined critically by congressional staff and others, questions began to emerge. It appeared that the models used were based on a number of critical assumptions and focused narrowly. They appeared to say that cap and trade programs were indeed capable of raising agricultural prices and returns — but that in the cases examined, many of those benefits took place in a much reduced sector, with millions of acres diverted into ‘sequestration’ projects and planted to grasses or trees.”

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Climate Issues; Budget; Trade; Biofuels; School Nutrition Standards; and Ag Legislation Passes

Climate Issues: Compromise Bill by Senate Trio Taking Shape

Reuters writers Richard Cowan and Timothy Gardner reported yesterday that, “The Senate is close to wrapping up talks ahead of introducing a compromise climate change bill, said a top Democratic lawmaker who discussed ideas with industry groups on Wednesday.

“‘We’re planning to button up our efforts somewhere I hope next week,’ Senator John Kerry told reporters after meeting with a coalition that represents automakers, forestry and paper companies, Big Oil, steel, mining, electricity and others.

“Kerry is working with Republican Senator Lindsey Graham and independent Senator Joseph Lieberman on a bill to require U.S. industry to cut emissions of carbon dioxide and other greenhouse gases associated with global warming.”

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Budget; Climate Issues; Biofuels; Ag Economy; Food Safety; and Animal Agriculture

Budget

DTN Political Correspondent Jerry Hagstrom reported yesterday (link requires subscription) that, “Senate Agriculture Committee Chairman Blanche Lincoln on Wednesday unveiled a bill to reauthorize the child nutrition programs that would increase funding for school lunch and other programs by $4.5 billion over 10 years, with some of the money coming from the budget for the Environmental Quality Incentives Program.

“The bill covers a five-year reauthorization of the National School Lunch Program; School Breakfast Program; Special Supplemental Program for Women, Infants, and Children (WIC); and the Child and Adult Care Food Program. Although USDA operates these programs, this bill is separate from the farm bill, which authorizes the food stamp program as well as farm and conservation programs.

Lincoln, D-Ark., said the bill would pay for the increased funding for the meals programs through a $2.2 billion shift in the Environmental Quality Incentives Program (EQIP), which would slow immediate spending but index it to inflation in the future, a $1 billion reduction in USDA purchases of commodities for school meal programs, and a $1.2 billion reduction in the food stamp nutrition education program.”

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Budget; Climate Issues; Ag Economy; Trade; Biofuels; and Crop Insurance

Budget

A news release issued yesterday by Senate Agriculture Committee Ranking Member Saxby Chambliss (R-Georgia) indicated that, “U.S. Senator Saxby Chambliss (R-GA), Ranking Member of the Senate Agriculture Committee, and U.S. Senator Pat Roberts (R-KS), a senior member of the Committee, today announced they sent a letter to the President opposing budget cuts to farm programs in a tough economy. The letter was also signed by Senators Thad Cochran (R-MS), John Thune (R-SD), James Risch (R-ID), Lindsey Graham (R-SC), Mike Crapo (R-ID), Kay Bailey Hutchison (R-TX) and David Vitter (R-LA).”

In part, the letter stated that, “As Congress directs its attention to the fiscal year 2011 budget, we write to voice our opposition to cuts in the farm safety net. Cutting farm programs in the midst of an economic downturn sends the wrong signal to rural America. While we agree that fiscal restraint is necessary and spending in the Federal budget should be reduced, doing so in this manner places a disproportionate burden on the backs of farmers, ranchers and rural communities and fails to recognize the recent sacrifices these constituencies made to expand nutrition programs during the reauthorization of the 2008 farm bill.

“In 2008, the Congress passed a fiscally responsible farm bill that did not add to the deficit and included more than $7 billion worth of cuts to farm and the crop insurance programs to increase spending in nutrition assistance for needy Americans. The farm bill represents a commitment to our rural communities, and we have an obligation to fulfill our obligations to our farmers and ranchers who depend on this legislation to make business decisions. Reducing our level of commitment with the proposed budget cuts to the farm safety net jeopardizes their economic sustainability and would cost jobs in rural America.”

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Climate Issues; Trade; Ag Economy; and Corn Production Implications

Climate Issues

A news release issued yesterday by USDA stated that, “Agriculture Secretary Tom Vilsack today discussed how properly structured climate change and energy legislation will benefit America’s farmers and ranchers in a speech at the National Farmers Union 2010 convention in Rapid City, S.D. USDA also released a memo looking at assumptions in the FASOM model – developed by researchers at Texas A & M University that the Environmental Protection Agency – to study the impacts of climate legislation.

“‘USDA is committed to helping Congress design and implement a carbon offsets market that will provide significant income opportunities to America’s farmers and ranchers,’ said Vilsack. ‘USDA and third-party analyses, as well as our experience in implementing conservation techniques, make it absolutely clear that properly structured legislation will avoid unintended consequences and provide enormous benefits to our agricultural economy, and our environment.’”

The release pointed to the complete text of USDA Chief Economist Joe Glauber’s memo to Secretary Vilsack on the FASOM model, which is available here.

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USDA-DOJ Ag Competition Workshop; Climate Change; Trade; Budget-Crop Insurance; and Animal Agriculture

USDA-DOJ Ag Competition Workshop

William Neuman reported on Friday at The New York Times Online that, “The attorney general, Eric H. Holder Jr., traveled to the heart of Midwestern farm country on Friday to declare that the Obama administration was serious about rooting out anticompetitive practices in agriculture.

“‘Is today’s agricultural industry suffering from a lack of free and fair competition in the marketplace? That’s the central question,’ Mr. Holder said.

“He spoke at an unusual public meeting called to discuss the concerns of some farmers and ranchers that a few large companies had come to dominate many agricultural markets, controlling the seed that farmers plant and the milk they sell and the livestock ranchers raise.”

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Trade; Climate Issues; Ag Competition Issues; and Animal Agriculture

Editor’s Note: The third section of the March 10, 2010, FarmPolicy.com Report entitled “Disaster Payments, SURE, and Crop Insurance Issues” includes a quotation from an outside report that contains an inaccurate statement. The relevant quotation reads, in part, as follows:

“A major reason, according to USDA and academic studies, is that the private crop insurance companies set southern premiums relatively high…”

It is commonly known by individuals who are familiar with Federal crop insurance that crop insurance companies do not set premiums for any of the program’s policies. USDA determines all Federal crop insurance program premiums. This important program characteristic is a plain, simple and historical fact. However, for program clarification purposes, it would be helpful to report this fact.

Trade: Agriculture and Cuba- House Ag Committee Hearing

Derek Wallbank reported yesterday at the MinnPost.com that, “The latest effort to bridge the 90-mile gap from Key West to Cuba is being led here by a pair of Minnesota lawmakers who contend that easing restrictions on the island nation could mean millions for Minnesota’s agriculture industry.

“‘America’s current policies have failed to achieve their stated goal and instead they have hand-delivered an export market in our own backyard to the Brazilians, the Europeans and our other competitors around the world,’ said Rep. Collin Peterson. ‘It’s time we ask ourselves why we have in place policies that simply do not work and that only harm U.S. interests.’

“Peterson’s remarks came at the start of a House Agriculture Committee hearing he called to discuss his own legislation to lift the travel ban to Cuba and ease rules on agricultural exports to the island nation. Earlier today, Sen. Amy Klobuchar introduced a companion measure in the Senate. Both the House and Senate bills have Republican co-sponsors.

“‘The bill we have introduced would eliminate the requirement that our farmers have to go through a third country bank to do business in Cuba and would place agricultural exports to Cuba on the same terms for cash payment as other countries, requiring payment when the shipment changes hands,’ Peterson said. ‘It would also make it easier for U.S. citizens to travel to Cuba, allowing American agricultural producers to more easily conduct business with Cuba and boosting demand for U.S. products in Cuba.’”

At yesterday’s hearing, Rep. Jerry Moran (R-Kansas), a co-sponsor of the bill, provided an interesting historic and analytical background with respect to the issue of U.S. agricultural exports to Cuba. To listen to a portion of his comments from yesterday’s hearing, just click here (MP3-7:42).

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Jobs Bill; Crop Insurance- SURE; Competition Issues; Climate Issues; and Trade

Jobs Bill- Biodiesel, Ag Disaster Payments

Ben Pershing reported in today’s Washington Post that, “The Senate approved a $140 billion package of tax breaks and aid to the unemployed Wednesday, the most substantial effort by the chamber to boost the nation’s economy since it passed the stimulus bill last year.

Six Republicans joined 56 Democrats to pass the measure, 62 to 36. The package faces an uncertain future in the House, where Democrats have taken a markedly different approach to the ‘jobs agenda,’ as current efforts to pass jobs legislation are known, than have their Senate colleagues.”

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FAPRI Baseline; Biofuels; Disaster Payment Issues; Climate Change; the Farm Bill; and Trade

FAPRI Baseline Update

A University of Missouri news release from yesterday stated that, “The livestock sector can lead the agricultural economy to higher net farm income, assuming the farm economy benefits from a recovering general U.S. economy.

“That analysis tops a 2010 baseline report prepared by the University of Missouri Food and Agricultural Policy Research Institute (FAPRI). The 66-page report will be delivered to the U.S. Congress, Tuesday (Mar. 9). The 10-year baseline shows economic possibilities for livestock, crop and biofuels under certain assumptions.

“‘If jobs–and consumers–return, the agricultural sector will benefit,’ said Pat Westhoff, co-director of MU FAPRI. ‘Higher incomes increase the demand for food, feed, fiber and fuel, supporting farm commodity prices.’”

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