- FarmPolicy - http://farmpolicy.com -

Climate Issues; Brazil Cotton Case; Crop Insurance; Animal Agriculture; Biofuels; and the Ag Economy

Climate Issues- Senate Agenda

J. Taylor Rushing reported yesterday at The Hill Online that, “Senate Democratic leaders will push an agenda topped by a banking reform bill over the seven-week work period before Memorial Day.

“Supreme Court Justice John Paul Stevens’ retirement announcement Friday isn’t likely to derail the Democratic agenda in the upper chamber, since President Barack Obama’s nominee will be sent first to the Judiciary Committee. Obama has said he will select a nominee within weeks.

That leaves Banking Committee Chairman Chris Dodd’s banking reform bill as the majority party’s top priority before lawmakers next leave town for the first week of June.”

The Hill article added that, “Besides Dodd’s banking reform bill, a senior Democratic aide said the party also plans to pursue a job-growth bill focused on benefits for small businesses, as well as tax-extenders legislation.”

Similarly, CQPolitics reported yesterday that, “The debate over the future of financial oversight will consume more of the Senate’s agenda in the coming weeks…

Janet Hook, writing yesterday at the Los Angeles Times Online, indicated that, “The retirement of Supreme Court Justice John Paul Stevens puts pressure on the Senate to speed up action on top priority legislation before the court debate opens on the floor, likely this summer. The time crunch reduces the prospects for climate and immigration overhaul bills.”

Darren Goode and Christopher Snow Hopkins reported yesterday at the NationalJournal Online that, “The three senators trying to put together a deal on climate and energy legislation will continue their efforts this week amid a dwindling availability of floor time and new potential barriers to bringing a measure to the floor this election year.

“Senate Foreign Relations Chairman John Kerry, D-Mass., and Sens. Lindsey Graham, R-S.C., and Joe Lieberman, I/D-Conn., are expected to introduce a draft bill next week that they hope will serve as the basis for a compromise that will earn at least a filibuster-proof 60 votes. They are likely to meet again with major industry, business and possibly environmental groups by then. A coalition of industry and business trade associations is meeting Tuesday at the U.S. Chamber of Commerce to discuss the evolving draft.

“But like other major policy issues, it is unclear how the upcoming confirmation process for a replacement for retiring Supreme Court Justice John Paul Stevens will affect the climate and energy debate. A polarizing process could further diminish bipartisan chances for a bill, especially with some Republicans still steaming over the use of the reconciliation budget process to pass health care legislation.”

Evan Lehmann and Christa Marshall of ClimateWire reported yesterday at the The New York Times Online that, “The climate bill being drafted by Sens. John Kerry (D-Mass.), Lindsey Graham (R-S.C.) and Joseph Lieberman (I-Conn.) would need to gain swift support to outpace the encompassing confirmation of a life-serving justice, according to some observers.

There’s a stretch of time between two congressional recesses, Memorial Day and the Fourth of July, that provides an optimal window for movement of a bill, said Chelsea Maxwell, a former climate adviser to retired Sen. John Warner (R-Va.). That gives lawmakers an opportunity to bring legislation to the Senate floor before the height of the election season and any political maneuvering over a Supreme Court nominee.

“‘The climate bill will either come first or die,’ Maxwell said.

The three senators must first release the complex bill. Moderate lawmakers like Sens. Scott Brown (R-Mass.) and Jay Rockefeller (D-W.Va.) will likely decide if the legislation has life, but some aides of fence-sitting senators are expressing increased frustration with the lack of text, a source says. Efforts to find wider support for the bill have delayed its development.”

However, Darren Samuelsohn of Greenwire reported yesterday at The New York Times Online that, “With the bruising health care debate over, President Obama’s top economic adviser left little doubt last week that energy and climate has taken its place atop the administration’s agenda.

“During a 30-minute speech at a Washington energy conference, Larry Summers, the head of the White House’s National Economic Council, used lofty rhetoric to warn of the long-term consequences if Congress fails to follow through this year on a sweeping overhaul of how the nation generates and uses energy.”

And Ben Geman reported yesterday at The Hill’s Energy and Environment Blog that, “Senate Majority Leader Harry Reid (D-Nev.) said Monday that he’s pushing the architects of upcoming Senate climate and energy legislation to produce the measure quickly.

Asked if he hoped to bring the bill to the floor before July 4, Reid said ‘I hope so. We’re going to try very hard.’”

In a separate aspect of the Senate agenda, DTN Ag Policy Editor Chris Clayton pointed out yesterday (link requires subscription) that, “The Senate is expected to be wrapped up in debate on financial reform until the end of May, while the Senate Judiciary Committee’s calendar now will be filled with another U.S. Supreme Court nomination. Other senators also are pushing to pass either an energy bill or comprehensive climate bill this year. This raises doubts that the Senate could tackle a comprehensive immigration bill, particularly before the mid-term elections in November.”

Climate Issues- CLEAR Bill

Washington Post writer Juliet Eilperin reported yesterday at the Post Carbon Blog that, “The cap-and-dividend law drafted by Sens. Maria Cantwell (D-Wash) and Susan Collins (R-Maine) will spur green energy investment while avoiding regional disparities, according to a new study by the Institute for Policy Integrity at New York University School of Law.

“The senators’ CLEAR Act would cap the nation’s overall level of greenhouse gas emissions, auction off all the allowances for emitting greenhouse gases and then return 75 percent of the federal revenues to taxpayers, while investing 25 percent of the take into green technology. A CLEAR Act analysis by NYU Law School’s Institute for Policy Integrity found the measure would create new economic opportunities in the U.S. job market and would not have the same regional disparities as other climate proposals.”

Climate Issues- International Focus

In an article published in today’s Washington Post, Juliet Eilperin reported that, “As prospects for a binding global climate treaty this year have evaporated, leaders and environmental advocates have focused their efforts on reaching agreement on a few top priorities, including preserving tropical forests and helping developing countries cope with climate change.

The U.N.-sponsored climate talks in Cancun, Mexico, in December are increasingly viewed as an interim step to a final deal. Many heads of state and activists had hoped that they could produce a successor agreement to the 1997 Kyoto Protocol. The climate pact’s first period ends in 2012.

“Instead, negotiators have begun to focus on what U.N. Foundation President Timothy E. Wirth calls ‘the building blocks’ of a global climate strategy.”

Brazil Cotton Case

With respect to the U.S. – Brazil cotton case announcement earlier this month, the “Washington Insider” section of DTN reported yesterday (link requires subscription) that, “U.S. officials last week managed to buy off Brazilian sanctions of nearly $1 billion — some of which could have had even heavier economic repercussions — by providing $147.3 million per year in ‘technical assistance and capacity building’ for the Brazilian cotton industry, according to USDA.”

After more detailed analysis, the DTN item indicated that, “Brazil can use its threat of broad sanctions again in the future if they are not assured of total elimination of U.S. cotton programs — likely an impossibility without making similar changes in other commodity programs. Thus, the relief now being expressed appears to have an expiration date a year or two down the road.

“Observers suggest the threat of WTO litigation that the United States could not defend against has been building since about 2004, and was the subject of repeated warnings by several secretaries of agriculture — especially former Secretary Mike Johanns — but was not taken seriously by Congress in the 2007-08 debate. It is being taken seriously now, it seems, even though there is a temporary reprieve.”

And the IDEAS Centre, an independent, non-profit organization located in Geneva that is dedicated to helping low-income countries integrate into the world trading system, posted an updated analysis of the U.S. – Brazil Cotton conflict on Friday titled, “US-Brazil Cotton Case Deal of the 5th of April: What does it mean for Brazil, the US, the multilateral trading system and the African countries.”

Crop Insurance

DTN Political Correspondent Jerry Hagstrom reported yesterday (link requires subscription) that, “A spokesman for Agriculture Secretary Tom Vilsack said Monday that the Obama administration is willing to work with Congress on the budget challenges that might arise in creating the 2012 farm bill, because of potential budget savings from a proposed contract with crop-insurance companies.

“A coalition of farm groups has urged Vilsack to stop the negotiations and let Congress handle the issue. Reacting to their letter, Justin DeJong, a Vilsack spokesman wrote in an email, ‘USDA remains open and willing to engage with the relevant congressional committees to achieve crop insurance reform in a way that addresses the baseline concerns expressed by the signatories of the letter.’”

Mr. Hagstrom explained that, “In his proposed 2011 budget, President Barack Obama proposed an $8 billion cut in payments to the crop insurance companies over 10 years, but RMA has since released a second proposal that would reduce the cuts to $6.9 billion.

“Both the crop insurance industry and congressional farm leaders said Monday they are concerned about the size of the proposed cuts, but none backed the farm groups’ proposal that the negotiations be stopped.

“‘It is important to state that the industry is negotiating with RMA on the SRA and is not delaying the process,’ said former USDA chief economist Keith Collins in an email. Collins, now a consultant to National Crop Insurance Services, added, ‘Clearly, Congress authorized RMA to negotiate a new SRA, but it a reasonable question whether Congress had in mind the structural changes and the large cuts envisioned by RMA.’”

The DTN article added that, “A spokeswoman for Senate Agriculture Committee Chairman Blanche Lincoln, D-Ark., said Lincoln believes the current draft of the agreement ‘goes too far’ and ‘is also concerned about the adverse impact on the farm bill baseline, especially in the current budget environment.’”

A news release issued yesterday by the National Farmers Union stated that, “[NFU] President Roger Johnson today sent a letter to U.S. Department of Agriculture (USDA) Secretary Tom Vilsack on the renegotiation of the Standard Reinsurance Agreement (SRA) for the federal crop insurance program, as mandated by the 2008 Farm Bill.

NFU supports an SRA that will not negatively impact the delivery of crop insurance or decrease the current baseline, but instead strengthens risk management protection while ensuring farmers of all crops, in all rural areas, have access to essential crop insurance products.

“‘It is a very troubling possibility that responsible financial adjustments in the federal crop insurance program may result in unintended consequences,’ said Johnson. ‘The next farm bill will be even more difficult to write if the starting point from which to reduce spending on crop insurance is even lower.’”

Animal Agriculture

Rod Smith reported on Friday at Feedstuffs Online that, “A number of parties — from Bob Evans Farms Inc. and McDonald’s Corp. to the United Egg Producers (UEP) — have organized the Coalition for Sustainable Egg Supply (CSES), which is working to evaluate the extent to which different housing systems for egg-laying hens can provide both hen well-being and an egg supply that is affordable and sustainable.

“Other members of the coalition include commercial egg producer Daybreak Foods Inc., Cargill Inc., Iowa State University, Michigan State University, the University of California-Davis and the American Humane Assn. The American Veterinary Medical Assn. and U.S. Department of Agriculture are member advisers, and the Environmental Defense Fund is a non-member adviser.

CSES anticipates that the participation of these companies and other parties will contribute to ‘a balanced and holistic evaluation of egg production that includes all aspects of sustainability,’ said Terry Fleck, executive director of the Center for Food Integrity, which is facilitating the CSES effort.”

Meanwhile, Philip Brasher reported yesterday at the Green Fields Blog (The Des Moines Register) that, “The Humane Society of the United States is seeking a criminal investigation of price-fixing allegations based on revelations in a class-action lawsuit against several producers.

“The charges stem from an animal-welfare program that has allegedly been used to limit the supply of eggs.

“The collection of restaurants and food companies that brought the lawsuit recently settled with a Minnesota-based producer, Sparboe Farms, and amended the complaint to include new information provided by the company. Sparboe officials allegedly expressed concerns that the welfare program, which set new restrictions on how hens are housed and cared for, had a ‘hidden agenda’ to control egg supplies and increase prices.”


Jeff Bennett reported yesterday at the Driver’s Seat Blog (The Wall Street Journal) that, “The ethanol debate is heating up again. Growth Energy, a coalition of U.S. ethanol supporters, threw down $2.5 million to air commercials over the next six months supporting the use of ethanol.

“The spots began airing Monday with each pushing ethanol as a clean, economical, renewable fuel that could reduce U.S. dependence on foreign energy sources.”

And Philip Brasher reported yesterday at the Green Fields Blog (The Des Moines Register) that, “The Brazilian industry, represented by the trade group UNICA, is billing its product as the Sweeter Alternative in advertisements that will run in print, online and on the radio.

“The Brazilian industry wants to eliminate the 54-cent-per-gallon tariff on imported ethanol. Since Brazilian ethanol is cheaper than U.S. corn ethanol and already qualifies as an ‘advanced biofuels’ because of its relative energy efficiency, eliminating the tariff would give American refiners a significant new incentive to use the product.

“The Brazilian ads are aimed at convincing Americans that Brazil’s sugarcane ethanol ‘is a clean and affordable renwable fuel that could help them save money at the pump, cut U.S. dependence on Middle East oil and improve the environment,’ said UNICA’s chief representative in North America, Joel Velasco.”

An update posted yesterday at the Ag Mag Blog (The Environmental Working Group) stated that, “The surest way to ensure that second-generation advanced biofuels remain in their test tubes and never see the spark of an engine is to pass a piece of legislation recently introduced (Feb. 14) by Rep. Leonard Boswell (D-Iowa).

“Boswell’s reintroduced H.R. 4674 would amend the 2005 Energy Policy Act to provide loan guarantees for a dedicated ethanol pipeline from corn-ethanol producing states in the Midwest to the East Coast. The government would guarantee repayment of 80 percent of the financing for this ‘renewable fuel pipeline.’

“What’s wrong with this little idea?

“First, an immovable, taxpayer-funded ethanol pipeline will take many years to get up and running. But if cellulosic biofuels materialize at the production and price levels hoped for by their proponents, most ethanol production — in a proper capitalist marketplace — would shift to the Southeast and elsewhere, where the cellulosic feedstock grows. This northern pipeline wouldn’t be in the right place.”

In other developments yesterday, National Corn Growers Association (NCGA) CEO Rick Tolman noted at the NCGA Online that, “On Friday, the American Meat Institute posted an aggressive statement on ‘corn ethanol’ on their Web site, apparently in response to our request that they disassociate themselves from radical groups who oppose not only corn and soybean production in the United States but also oppose the meat industry.

“Privately and now publicly, we have told AMI that this is not about ethanol. While we strongly disagree with their statement and commentary on ‘corn ethanol’ and feel that it has more holes in it than the St. Louis Rams Run Defense did last year, that is not the focus of our dismay and issue with them. Our simple request of AMI remains, let’s agree to disagree on ethanol policy and not let our differences of opinion define our relationship. There are too many far bigger and much more important issues in agriculture in general and in the meat and grain production industries in particular to deal with. There are an abundance of outside critics spinning myth and misinformation that threaten all of our livelihoods. We need to work together and not against each other.

“In particular, while we disagree with AMI on their anti-ethanol policy, we have not asked them to change that nor to necessarily quit their efforts in opposition. We respect their right to disagree. Our request is that they get out of the partnership they have formed with radical environmental groups who use reactionary tactics and misinformation to attack corn and soybean production on the basis of environmental devastation.”

Ag Economy

University of Illinois Agricultural Economist Darrel Good indicated yesterday that, “The start of the 2010 growing season for corn and soybeans is fundamentally different than the start for the 2008 and 2009 growing seasons. Differences are on both the supply and consumption sides of the market.

“For corn, the 2008 season started with very high and rising prices, a sharp decline in planted acreage, and projections of 2008-09 marketing year ending stocks barely exceeding pipeline inventories. Supply concerns were magnified by spring flooding in parts of the Corn Belt. In May 2008, the USDA projected the 2008-09 marketing year average farm price in a range of $5.00 to $6.00. Similarly, the 2009 season started with prospects for another modest decline in planted acreage. Early season projections were for declining and relatively tight year-ending stocks for the 2009-10 marketing year. Prices were lower than in the spring of 2008, but rose as planting was delayed by heavy rains in parts of the Midwest. In May 2009, the USDA projected the 2009-10 marketing year average farm price in a range of $3.70 to $4.50.”

Yesterday’s update noted that, “The start of the 2010 season for corn is characterized by expectations for more abundant supplies of old crop corn in the fall, an increase in planted acreage, and a more favorable planting season than experienced in 2008 and 2009. In the monthly report of world supply and consumption prospects released on April 9, the USDA projected September 1, 2010 inventories of old crop corn at 1.899 billion bushels. That is 100 million above the March projection and would be the largest year ending inventory in four years. The March 31st USDA Prospective Plantings report indicated that U.S. producers intend to plant 88.8 million acres of corn in 2010, 2.3 million more than planted last year. There seems to be some expectation that actual acreage will exceed intentions, particularly if favorable weather conditions persist. Those expectations appear to reflect expectations that the total planted acreage of all crops will exceed March intentions and that the recent pattern (5 of the last 6 years) of corn acreage exceeding March intentions will be repeated in 2010. Expectations for the U.S. average corn yield in 2010 are also likely buoyed by prospects for timely planting and the unexpectedly high yield in 2009.”

In conclusion, yesterday’s update explained that, “The USDA will release the first supply and consumption projections for the 2010-11 marketing year on May 11. Expect those projections to reflect prospects for large U.S. corn and soybean crops in 2010, modest year-ending stocks of corn, and more abundant year ending stocks of soybeans.

“Considerable uncertainty about both supply and consumption will persist through the growing season. Corn and soybean yields will be primarily determined by summer weather, not spring weather. Demand and consumption will be influenced by world economic conditions, energy prices, crop production outside the U.S., and import policies of China and other countries. Expect another year of very volatile prices.”

Bloomberg writers Jeff Wilson and Tony C. Dreibus reported yesterday that, “The pace of corn planting in the U.S. is ahead of last year as warm, dry weather firmed Midwest fields for farm machinery, government data show…About 3 percent of the corn crop was planted as of yesterday, compared with 2 percent at the same time last year, the Department of Agriculture said today in a report. The average over the previous five years is 4 percent.”

Keith Good