FarmPolicy

December 6, 2019

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?’”

Yesterday’s AP article noted that, “Whatever Congress starts but does not finish this year will die. A new Congress will need to start fresh in 2011.

“If history is a guide, Democrats will see their majorities shrink in the House and Senate after the midterm vote in November. That gives Obama even more impetus to push hard now.”

A news update released on Friday by the National Association of Wheat Growers (NAWG) noted that, “Grower-leaders from NAWG and organizations representing corn, soybean, rice, cotton and sorghum growers met with Environmental Protection Agency Administrator Lisa Jackson and Secretary of Agriculture Tom Vilsack this week for an unprecedented dialogue about farmers’ relationship with EPA and their concerns about pending environmental regulations.”

The update added that, “The group also briefly discussed climate change legislation, which could be considered by the Senate this summer as part of a sector-by-sector approach that would use a proposal from Sen. Debbie Stabenow (D-Mich.) as its agriculture piece.”

With respect to the Stabenow proposal, DTN Ag Policy Editor Chris Clayton recently pointed out that, “Stabenow’s plan last fall [text of proposal] called for the EPA administrator and the agriculture secretary to ‘establish a program to govern the creation of credits from emission reductions from uncapped domestic sources and sinks’ within one year of enactment of the bill. The draft also calls on EPA and USDA to jointly protect the integrity of the program, prioritize rulemaking for activities ‘that present the fewest technical challenges and greatest certainty of net atmospheric benefits’ and make sure that requirements between the two agencies are consistent.

The Stabenow proposal also set USDA to ‘administer as the lead agency’ the role of creating a list of eligible methodologies that can be used to reduce emissions, approving petitions and verifying emission reductions under practices going back to Jan. 1, 2001.

“Stabenow’s bill also stated that ‘lifecycle greenhouse gas emissions associated with the production and use of biofuels, bioproducts and bioenergy are significantly lower than the emissions associated with the production and use of fossils.’”

Meanwhile, Darren Samuelsohn of ClimateWire reported on Friday at The New York Times Online that, “Sens. Joe Lieberman (I-Conn.) and Lindsey Graham (R-S.C.) said yesterday they were getting closer to unveiling their ‘breakthrough’ proposal on allocations with Sen. John Kerry (D-Mass.), promising a bill that would be both business and consumer-friendly. Graham and Lieberman said about 60 percent of the revenue raised by the government would immediately go directly back to the public as soon as the climate program starts.

“Sources briefed on the senators’ proposal say it has been dubbedreduction and refund’ instead of the ‘cap and trade’ term that has been demonized by opponents.

“The senators said that each industrial sector — electric utilities, petroleum refiners, manufacturers — will face different emission limits and startup dates. As such, the allocation plan for each also will be different.”

Despite the name change, on Friday, the Government Accountability Office (GAO) released a report regarding climate change (“Observations on Options for Selling Emissions Allowances in a Cap-and-Trade Program”- highlights, full report) which stated in part that, “Congress is considering proposals for market-based programs to limit greenhouse gas emissions. Many proposals involve creating a cap-and- trade program, in which an overall emissions cap is set and entities covered by the program must hold tradable permits—or ‘allowances’— to cover their emissions. According to the Congressional Budget Office (CBO), the value of these allowances could total $300 billion annually by 2020. The government could either sell the allowances, give them away for free, or some combination of the two.”

The GAO report, which was addressed to Senate Finance Committee Chairman Max Baucus, stated that, “This report is one of four responding to your request for information on climate change policy options. Our objective was to describe the implications of different options for selling emissions allowances in a cap- and-trade program, given available information and the experiences of selected programs.”

And Ben Geman reported on Friday at The Hill’s Energy and Environment Blog that, “Senators writing climate and energy legislation are vigorously courting business groups like the U.S. Chamber of Commerce. But they might lose support on the left if they go too far.

“Case in point: The Sierra Club’s new executive director is warning that the powerful environmental group will fight the legislation if the concessions to industry pile up too high.”

Farm Bill

DTN Political Correspondent Jerry Hagstrom reported on Friday (link requires subscription) that, “Congress could speed up payments under the new permanent farm disaster program by changing the rules, but it would cost more money, Agriculture Undersecretary for Farm and Foreign Agricultural Services Jim Miller said Thursday.

“Congress established the Supplemental Revenue Assistance Payments program, known as SURE, in the 2008 farm bill so USDA’s Farm Service Agency could make farm disaster payments without asking Congress for a supplemental appropriation. But the program rules say that USDA cannot distribute the money until after the end of the crop marketing year when the agency has income and price data to determine losses.

“Farmers have complained the money will come too late to save them from bankruptcy. The slowness in payments was one factor that led Senate Agriculture Committee Chairman Blanche Lincoln, D-Ark., to propose a special farm disaster package this year.”

Friday’s DTN article added that, “Miller and his staff testified before the House Agriculture Appropriations Subcommittee on operations of the Farm Service Agency, which distributes farm subsidies; the Foreign Agricultural Service, which runs trade promotion and food aid programs; and the Risk Management Agency, which runs the crop insurance program.

“Under questioning from House Agriculture Appropriations Subcommittee Chairman Rosa DeLauro, D-Conn., Miller said Congress could ‘accelerate the process’ by changing the 2008 farm bill to provide for advance payments and by reconsidering what data is used to determine the commodity prices used in the calculations. ‘This would come at some costs,’ Miller said, adding that he was only providing technical information to the subcommittee, not making an administration proposal.”

And as the House Agriculture Committee gets set to begin hearings for the next Farm Bill at the end of next month, focus in some quarters has turned to the federal crop insurance program.

Sara Wyant, the President of Agri-Pulse, penned an item that was posted recently at the High Plains Journal Online (“For the 2012 Farm Bill, crop insurance moves to center stage”), which stated that, “For the last several years, U.S. wheat growers have been some of the staunchest supporters of direct payments, which are issued by USDA every year to producers with qualified base acres, regardless of what they planted or if they planted. Given the uncertainty of prices and production, it was one part of the federal farm program ‘safety net’ that producers, and perhaps more importantly, their lenders, could count on year in and year out.

“But a year ago, I started asking wheat industry leaders about future farm program options and what they would want to see for a safety net in the future–especially if push comes to shove and there is a need to choose between some of the current options like direct payments, counter-cyclical payments and crop insurance. What if you had to pick just one? The answer was almost unanimous: Crop insurance won hands down.

“Why? It’s not that there is any less love for direct payments, which are projected to be a major source of revenue for wheat growers over the life of the current farm bill. The Congressional Budget Office projects that if the current farm bill were extended to 2020, about 94 percent of the farm program payments made to wheat growers would be in the form of direct payments.”

The article indicated that, “But more and more growers have also benefited from the predictability of crop insurance, especially revenue-based products. Last year, wheat growers purchased over 136,000 policies for crop revenue coverage insurance, paying over $1 billion in premiums. That’s up from 117,708 policies the previous year, with premiums of over $570 million.”

Ms. Wyant also pointed out that, “‘Crop insurance is an important part of our safety net, and it is one reason we are watching the negotiations over the Standard Reinsurance Agreement so closely,’ says Jeff Newtson, chair of the NAWG Domestic and Trade Policy planning committee.”

With respect to the standard reinsurance agreement, Agr-Pulse Senior Editor Stewart Doan, interviewed Bill Murphy, administrator of USDA’s Risk Management Agency (RMA) on this week’s Agri-Pulsue “Open Mic” program.

The interview can be heard here, while a summary of the discussion noted that, “Bill Murphy joins us this week on Open Mic to update the status of RMA’s standard reinsurance agreement (SRA) negotiation with the crop insurance industry. Murphy is confident a new SRA will be finalized by the end of next month that will include a lower policy commission rate to agents. He talks about RMA’s efforts to make crop insurance a more attractive option for producers in the southern U.S. and he also offers some thoughts on what risk management changes need to be written into the next farm bill.”

Ag Econ Issues

On Friday, the USDA’s National Agricultural Statistics Service released its Quarterly Hogs and Pigs report, which stated that, “U.S. inventory of all hogs and pigs on March 1, 2010 was 64.0 million head. This was down 3 percent from March 1, 2009 and down 2 percent from December 1, 2009 [related graph].”

A one-minute audio recap of Friday’s report from USDA’s Daily Radio Newsline is available here. The Newsline recap noted that, “Analysts expected hog producers to continue cutting herd size and production, but not by as much as a new report indicates.”

In other news, Katie Zezima reported on Friday at The New York Times Online that, “In what could be a major setback for America’s local-food movement, championed by so-called locavores, independent farmers around the country say they are forced to make slaughter appointments before animals are born and to drive hundreds of miles to facilities, adding to their costs and causing stress to livestock.

As a result, they are scaling back on plans to expand their farms because local processors cannot handle any more animals.

“‘It’s pretty clear there needs to be attention paid to this,’ Agriculture Secretary Tom Vilsack said in an interview. ‘Particularly in the Northeast, where there is indeed a backlog and lengthy wait for slaughter facilities.’”

Meanwhile, Stephanie Simon reported in today’s Wall Street Journal that, “Farmers and ranchers across the West are bracing for a grasshopper infestation that could devastate millions of acres of crops and grazing land.

“Over the coming weeks, federal officials say, grasshoppers will likely hatch in bigger numbers than any year since 1985. Hungry swarms caused hundreds of millions of dollars in damage that year when they devoured corn, barley, alfalfa, beets—even fence posts and the paint off the sides of barns.”

And in news regarding corn and sugar, Jennifer LaRue Huget took a closer look at recent research regarding the impacts of high fructose corn syrup (HFCS) versus sugar on lab rats in an update posted on Friday at The Washington Post Online. The piece includes several helpful links and additional information about the growing issue regarding the use of HFCS or sugar.

Reuters news reported on Friday that, “Agriculture ministers from Brazil, Russia, India and China, which together have a third of the world’s arable land, agreed on Friday to pool resources to combat famine that affects more than 1 billion people globally. The ministers from the countries collectively known as BRIC signed a pact to create a joint agricultural information base that will help each country to calculate production and consumption balances and establish national grain reserves.”

With respect to agriculture competition issues, The Wall Street Journal editorial board weighed in today with an item (“Seeds of Antitrust Destruction”) that stated, “When you can’t beat ’em, scream monopoly. That’s the vintage gambit now playing out in the farm business, with the encouragement of the Department of Justice.

At the first of a series of workshops this month, Attorney General Eric Holder, antitrust chief Christine Varney and Agriculture Secretary Tom Vilsack presided over a ‘forum’ for farmers, activists and others to discuss competition in the agriculture industry. The occasion looked more like the Obama Administration’s latest dunk tank for business. ‘Recessions and long periods of reckless deregulation can foster practices that are anti-competitive and even illegal,’ Mr. Holder warned in his speech.”

The Journal editorial concluded by saying, “An antitrust assault against Monsanto and the broader farm industry will do nothing to advance the competition that Mr. Holder claims to protect. Federal interventions against market leaders typically target companies most likely to innovate and create products that drive progress. Those who invest in research and development have a right to reap what they sow.”

Trade

Sewell Chan reported on Friday at The New York Times Online that, “Led by economic growth in China and India, world trade is projected to expand by 9.5 percent this year after shrinking by 12.2 percent last year in the sharpest contraction since World War II, the World Trade Organization said on Friday.

“‘We see the light at the end of the tunnel, and trade promises to be an important part of the recovery,’ the organization’s director-general, Pascal Lamy, said. ‘But we must avoid derailing any economic revival through protectionism.’”

However, John W. Miller reported in Saturday’s Wall Street Journal that, “But these figures don’t tell the whole truth about trade.

“According to some economists, trade in finished products—the things consumers actually buy, such as cars, computers and iPods—declined by much less than 12.2% last year. That is because as much as two-thirds of the value of goods that go into trade statistics represent intermediate parts, which are imported from other countries and used to make finished products that then get re-exported. Economists call this the ‘valued-added effect.’ If the value of imported parts were stripped out, however, global trade would have declined by between 4% and around 8% last year, economists say.”

And Xinhua news reported on Friday that, “The Doha Round of global trade negotiations is not in its ‘final game’ yet despite renewed determination by World Trade Organization (WTO) members to push for its conclusion, director general of the body Pascal Lamy said on Friday.

“‘The outcome is that we are not where we wanted to be … we made some limited progress since 2008 but obviously not enough to enter into the final game, which will take some time,’ Lamy told reporters following a week of so-called stocktaking of the Doha Round situation by WTO members.”

Recess Appointments

On Saturday afternoon, the Obama administration announced 15 executive branch recess appointments.

Included in the appointment announcement were Michael Punke: Nominee for Deputy Trade Representative – Geneva, Office of the United States Trade Representative, Islam A. Siddiqui: Nominee for Chief Agricultural Negotiator, Office of the U.S. Trade Representative, and Jill Long Thompson: Nominee for Member, Farm Credit Administration Board.

Keith Good

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