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Farm Bill; Climate Change; Animal Agriculture; Biofuels; and Financial Regulation

Farm Bill

Reuters writer Charles Abbott reported yesterday that, “The long march to a new farm bill begins this week in what promises to be a contentious process that could have a big impact on what farmers grow and how they are paid.”

“‘I’ve told people we should put everything on the table,’ said Agriculture Committee chairman Collin Peterson. ‘My interest is in providing the best, most rational, safety net for the average commercial farmer in this country.’”

Mr. Abbott indicated that, “A number of political headaches from farm supports to trade issues, should be treated in the new bill.

“Cotton subsidies must be revised to settle a trade dispute with Brazil. Dairy farmers say milk supports failed to stop a ruinous price plunge. Crop insurance costs are exploding. The Obama administration wants to cut subsidies to big farms.

“To get there, Peterson invited a debate whether crop supports should be remolded, perhaps into a system that assures overall revenue for a farm. Supports now are paid mostly on the basis of past production of subsidized crops and whether farm-gate prices for them are below targets set by Congress.”

Yesterday’s article explained that, “While the next farm bill is due in fall 2012, it is unclear how much appetite for change there is among lawmakers and farm groups. Farm-state lawmakers, from both sides of the aisle, are a powerful voting bloc and are not known for radical reform.”

The Reuters article added that, “Agricultural economist Pat Westhoff said lawmakers face questions that include, ‘Is it better to tinker with current programs or invent something new?’ Westhoff, co-director of a farm-policy think tank, listed six types of farm-income supports including crop insurance and an equal number of land stewardship programs.

Revenue assurance is viewed as possible new path for U.S. farm supports in an era of high market prices and production costs. It could be costly if prices slump, skeptics say.”

Note that a separate Reuters article from yesterday included “Profiles of key players shaping the 2012 Farm Bill.”

An update posted yesterday at the AgMag Blog (Environmental Working Group) stated that, “For years the Environmental Working Group has advocated for a more rational farm policy that would provide a better safety net for more American farmers. We’ve done this while also seeking to promote ecological sustainability and reduce perverse incentives that lead to environmental degradation. That’s why we’ve been encouraged by the initial statements by House Agriculture Committee Chairman Collin Peterson on what might be possible in the next Farm Bill. He has opened the door to new ideas, and we sincerely hope he will continue to welcome the kind of updated policies needed to bring America’s farm and food policies into the 21st century.”

The update went on to include several recent statements by Chairman Peterson regarding federal farm policy.

The Washington Insider section of DTN noted yesterday (link requires subscription) that, “House Agriculture Committee Chairman Collin Peterson (D-Minn.) has begun holding hearings to help him build the outline of a new farm bill, a process that will play out over at least the next 18 months. Some observers believe the next farm legislation likely will make a number of changes to federal farm programs, but this is a view that has been voiced frequently over the decades and just as frequently has proven to be wrong.”

One program that is likely candidate for change is the U.S. cotton program, given the recent agreement between the United States and Brazil that averted sanctions being imposed on a host of U.S. products. Peterson previously said commodity programs as designed in the past may not work in the future. During a news conference last week, he raised the issue of whether it would be better to continue the commodity-by-commodity approach to federal farm supports or to move to a whole-farm approach.”

With respect to the Brazilian cotton case, a news release issued yesterday by USDA stated in part that, “Today, the United States and the Government of Brazil signed a Memorandum of Understanding (MOU) establishing a fund for technical assistance and capacity building related to the cotton sector in Brazil.

“Under the MOU, the fund may also be used for activities related to international cooperation in the cotton sector in countries in sub-Saharan Africa, in Mercosur member and associate member members, in Haiti, or any other developing country as the parties may agree upon. The MOU also includes procedures to ensure transparency and auditing of the expenditures made from the fund.

“This MOU is part of the path forward for the Cotton dispute that the United States and Brazil reached earlier this month. With the conclusion of the MOU, Brazil has announced that countermeasures will not be imposed in the Cotton dispute for at least 60 days. The fund is scheduled to continue until the next Farm Bill or a mutually agreed solution to the Cotton dispute is reached. The MOU also provides that the United States also may end the fund if Brazil imposes countermeasures.”

Also on the Brazil cotton issue, columnist Jim Landers noted yesterday at the Dallas Morning News Online that, “Since the case started, the biggest of cotton’s federal subsidies has lapsed. [Texas Tech agriculture economist Darren Hudson] says Brazil’s cotton subsidies are higher than what remains for U.S. growers.”

Yesterday’s column noted too that, “Cotton growers know change is coming.

“‘Most recognize the fact that subsidies are going to decline,’ Hudson said. ‘But by how much, and when – we don’t know.’

The truce anticipates that Congress will fix this dispute in the 2012 farm bill.”

Dan Piller reported yesterday at the Green Fields Blog (The Des Moines Register) that, “Milk prices just can’t get off the floor.

“They fell from 23 cents per pound in 2008 to less than 12 cents last year. A rally in late 2009 sent prices up briefly to 15.5 cents per pound, but the market has wavered and near-month milk prices closed at 12.86 cents per pound Tuesday on the Chicago Board of Trade.”

On the issue of dairy policy, a news release issued yesterday by the House Ag Committee stated that, “Today, House Agriculture Committee Chairman Collin C. Peterson of Minnesota held a hearing in Harrisburg, Pennsylvania to review dairy policy challenges and opportunities.

“The Committee heard testimony from the Pennsylvania Secretary of Agriculture, a professor of agriculture economics, and a panel of witnesses representing dairy farmers and processors in Pennsylvania.”

An audio replay of yesterday’s hearing has been posted at the FarmPolicy.com twitter page.

In his opening statement before the Committee yesterday, Pennsylvania’s Sec. of Agriculture Russell Redding discussed the risk management principles of crop insurance and suggested that this type of approach could potentially be applied to the dairy sector more broadly. To listen to his remarks on this matter, just click here (MP3-2:55)

During the “Q and A” portion of yesterday’s Panel One discussion, Rep. Tim Holden (D-Pennsylvania) asked for some more specifics regarding the potential of crop insurance risk management programs and the dairy sector. To listen to this discussion between Rep. Holden and Pennsylvania Sec. of Ag. Redding, just click here (MP3-3:43).

After additional questions and discussion, House Ag Committee Chairman Collin Peterson (D-Minn.) weighed in with some of his thoughts and perspective on the risk management – crop insurance issue as potentially applied to the dairy sector, as well as to other aspects of agricultural production; to listen to his interesting remarks from yesterday, just click here (MP3- 0:45).

The House Ag Committee convenes another hearing later this morning in Washington, D.C. to review U.S. agriculture policy in advance of the 2012 Farm Bill- Secretary of Agriculture Tom Vilsack is set to testify at today’s meeting.

Climate Change

Amy Harder reported yesterday at the NationalJournal Online that, “Moderate Sens. Susan Collins, R-Maine, and Mark Udall, D-Colo., signaled their support today to bring an energy-only bill to the Senate floor and then hold a debate on legislation that prices carbon emissions. But Carol Browner, President Obama’s top adviser on climate and energy, indicated that may not the administration’s preferred way forward.

“‘It makes sense perhaps to start with the bill that has the most support, and that may well be the legislation reported by the Energy Committee,’ Collins said at a National Journal Group event this morning. ‘If that were brought to the floor, it could then be a platform to debate’ other bills, such as the package Sens. John Kerry, D-Mass., Lindsey Graham, R-S.C., and Joe Lieberman, I/D-Conn., are expected to release next week, and the bill already introduced by Collins and Sen. Maria Cantwell, D-Wash.”

Alexander Bolton reported yesterday at The Hill’s Energy and Environment Blog that, “Centrist Democratic senators are wrestling with liberal colleagues over whether to vote on an energy reform bill if it does not include measures to address global warming.

“A group of Democratic senators led by Sen. Byron Dorgan (N.D.) support bringing an energy-only bill to the Senate floor, and centrist colleagues such as Kent Conrad (D-N.D.), Blanche Lincoln (D-Ark.) and Ben Nelson (D-Neb.) are sympathetic.

But liberal Democrats led by Sens. John Kerry (Mass.) and Barbara Boxer (Calif.) have blocked the effort because environmentalists believe it will be virtually impossible to pass global warming legislation in the near future without hitching it to incentives in the energy bill.”

In a related article, Jeanne Cummings reported yesterday at Politico that, “The energy reform bill to be released next week will include $54 billion in government-backed loan guarantees for the nuclear industry, roughly a threefold increase, as well as regulatory reforms to ease legal and permit issues that slow new plant construction, Sen. Lindsey Graham (R-S.C.) said Tuesday.

The measure will put a price on carbon emissions through penalties tailored to specific economic sectors, which is ‘far more business friendly’ than a nationwide emissions cap-and-trade system that was in the energy bill passed by the House, Graham, a co-sponsor of the legislation, told POLITICO in an interview for the video series ‘The Green Divide.’

“The bill would also expand offshore drilling and — for the first time — permit states to share revenue from it, offer tax breaks for big manufacturers to make their facilities more energy efficient and encourage development of more hybrid automobiles and trucks fueled by natural gas.

Finally, the proposal would remove the Environmental Protection Agency’s authority to regulate carbon, choking off an emerging debate between the White House and Congress.”

And in a separate variable regarding potential climate legislation, Darren Samuelsohn of Greenwire reported yesterday at The New York Times Online that, “A top White House adviser confirmed today that President Obama is open to helping energy-intensive industries cope with the costs of climate legislation, including use of controversial border tariffs he had previously warned could spark a global trade war.

“Energy and climate adviser Carol Browner said the administration recognizes Congress’ interest in using trade language as it works on climate legislation that addresses concerns from some of the country’s industries that are most vulnerable to cheap foreign imports, including steel, cement, glass, pulp and paper.

“‘There’s going to have to be mechanisms that recognize they compete in a global market,’ Browner said during an event hosted by National Journal. ‘I think it’s fair to say a final bill will be very mindful of the needs of these particular sectors of the economy.’”

And Noelle Straub of Greenwire reported yesterday at The New York Times Online that, “Republican senators introduced legislation today that would block White House efforts to require federal agencies to consider climate change in environmental analyses of proposed projects.

The bill says the National Environmental Policy Act should not be used to document, predict or mitigate the climate effects of specific federal actions. Under the measure, NEPA reviews could not consider the greenhouse gas emissions of a proposed federal project nor climate change effects as related to the proposal’s design, environmental impacts, or mitigation or adaptation measures.

“The measure comes after the White House in February issued draft guidance (pdf) that will require federal agencies to consider greenhouse gas emissions and climate change when carrying out NEPA reviews. The White House Council on Environmental Quality, or CEQ, is accepting public comment on the proposal through May 24.”

(FarmPolicy.com Note on NEPA: Recall that some have argued that NEPA should also be applied to the Farm Bill).

Meanwhile, Darren Samuelsohn of ClimateWire reported yesterday at The New York Times Online that, “A carefully crafted compromise on climate change that narrowly passed in the House last June has been stuck for almost a year in the Senate. Now, with three senators set to unveil their own bill Monday and a floor vote possible this spring or early summer, House lawmakers are wondering whether there will be a significant effort to negotiate major differences between the two proposals or if they will be asked to simply approve the Senate version.

“There is no guarantee that Senate Majority Leader Harry Reid (D-Nev.) can even notch 60 votes to pass such a sweeping measure during a midterm election year. But if he does, some House Democrats say they would not be surprised if they were asked to buckle in conference negotiations.”

With respect to potential costs of the House passed climate bill, Michael O’Brien reported yesterday at The Hill’s Energy and Environment Blog that, “U.S. households would lose about $90 the first year under the House’s cap-and-trade bill if it became law, the Congressional Budget Office (CBO) said Tuesday.

“The nonpartisan budget office said households would experience a ‘modest’ loss in purchasing power under the House-passed bill, according to estimates requested by a House Republican lawmaker.”

And more specifically with respect to agriculture, a news release issued yesterday by the UN’s Food and Agriculture Organization stated that, “The dairy sector accounts for around four percent of all global anthropogenic greenhouse gas emissions (GHG) according to a new FAO report. This figure includes both emissions associated with the production, processing and transportation of milk products as well as emissions related to meat produced from animals originating from the dairy system.”

Animal Agriculture

Philip Brasher reported yesterday at the Green Fields Blog (The Des Moines Register) that, “A post on the EPA’s official blog is ricocheting its way around the ag-osphere. In the post, titled ‘Living without Meat,’ intern Nicole Reising says she quit eating meat as a child because she was disgusted by the ‘graphic showing of a pig slaughter.’ But later, she says, she discovered that eating meat was bad for the environment.”

Biofuels

Cindy Zimmerman reported yesterday at the DomesticFuel Blog that, “A bill has been introduced in the Senate to extend tax incentives for ethanol set to expire at the end of this year.

“Senators Charles Grassley (R-IA) and Kent Conrad (D-ND) introduced the bipartisan GREEN Jobs Act of 2010 that extends through 2015 the Volumetric Ethanol Excise Tax Credit (VEETC), the offsetting tariff on foreign ethanol, the Small Producers Tax Credit, and the Cellulosic Ethanol Producer Tax Credit.”

“The Senate bill mirrors bipartisan legislation that was introduced in the House in March by Reps. Earl Pomeroy, D-N.D., and John Shimkus, R-Ill.”

Separately, Dan Looker reported yesterday at AgricltureOnline that, “There doesn’t seem to be much organized opposition to renewing the biodiesel tax credit, but under new pay-as-you-go rules intended to keep the federal deficit from growing even more, Congress has to find offsetting budget savings or higher taxes to pay for the biodiesel credit.

“[Sen.] Grassley said Tuesday that the House Ways and Means Committee is looking for ways to offset the biodiesel credit.

The new 5-year tax credit extension for ethanol might also need offsets. Grassley said Tuesday that he doesn’t know where they would come from.

Unlike biodiesel, the ethanol industry does face opposition to extending VEETC and the tariff.”

With respect to some of this opposition, see this news release that was issued yesterday by UNICA, the largest organization in Brazil representing sugar, ethanol and bioelectricity producers.

Financial Regulation

Reuters writers Christopher Doering and Charles Abbott reported yesterday that, “A sweeping regulatory reform bill introduced by Senator Blanche Lincoln received solid backing from fellow Democrats on Tuesday despite intense opposition from a top Republican, one day before the measure faces a vote by the Senate Agriculture Committee.”

The article noted that, “Lincoln, who spent much of Tuesday joining other Democrats drumming up support on Capitol Hill, said she was confident the legislation would pass her committee despite objections by its top Republican, Saxby Chambliss.”

The article explained that, “If it does pass the Senate Agriculture Committee, the measure will be included in a broader regulatory reform plan from Christopher Dodd, the Democratic chairman of the Senate Banking Committee.”

“Chambliss said he was optimistic Democratic amendments or changes by Lincoln herself would transform the bill into something they could support.

“But a Democratic staffer said that Lincoln was unlikely to make any major changes before the mark-up,” the article said.

A news release issued yesterday by the National Farmers Union stated that, “Today National Farmers Union (NFU) President Roger Johnson commended Senate Agriculture Committee Chairwoman Blanche Lincoln (D-Ark.) on her financial market reform legislation, The Wall Street Transparency and Accountability Act of 2010.”

And CFTC Chairman Gary Gensler opined in today’s Wall Street Journal that, “A key measure included in the financial reform bill currently being debated in the Senate would require standard over-the-counter derivatives to be cleared by central clearinghouses. This will greatly reduce risk, interconnectedness and the need for future bailouts. Financial institutions would be freer to fail with limited effects on the broader economy.”

Brady Dennis and Shailagh Murray reported in today’s Washington Post that, “Key Senate Republicans on Tuesday began to back away from their sharp criticism of proposed new financial regulations and expressed optimism that a bipartisan deal on a bill that would drastically change the way Wall Street operates could emerge in the coming days.

“After a week of attacking the proposals as paving the way for new taxpayer ‘bailouts,’ Minority Leader Mitch McConnell (R-Ky.) said on the Senate floor that he was ‘heartened to hear that bipartisan talks have resumed in earnest.’ Later, after a meeting with fellow Republicans, he told reporters that while he believes that there are still serious flaws in the legislation, ‘I’m convinced now there is a new element of seriousness attached to this, rather than just trying to score political points. . . . I think that’s a good sign.’”

The Post article added that, “[Chairman] Lincoln said she plans to pass the bill out of her committee — which has 12 Democrats and nine Republicans — on Wednesday. She said Democratic leaders assured her that her bill would be made part of the broader Dodd legislation. Because the fine print in her bill could affect billions of dollars across multiple industries, the measure has become a magnet for lobbyists and a key focus of lawmakers from both parties and the Obama administration.”

Keith Good