FarmPolicy

August 17, 2019

House Passes Bill: Biodiesel Credit, Disaster Aid; Biofuels; Trade; Climate Issues; and Ag Prices

House Passes The American Jobs and Closing Tax Loopholes Act: Background

DTN Ag Policy Editor Chris Clayton reported on Friday (link requires subscription) that, “A jobs and tax-extenders bill that resuscitates the biodiesel tax credit passed the House of Representatives on Friday, but biodiesel producers will still go into June waiting for final action on the credit.

The American Jobs and Closing Tax Loopholes Act has several provisions directly related to agriculture beyond biodiesel, including more than $1.5 billion in disaster aid, the settlement of a long-running USDA discrimination case and the extension of a subsidy for American cotton shirt manufacturers.

The bill extends the $1 biodiesel and renewable fuel credit to the end of 2010, and makes it retroactive to the beginning of this year. The credit expired last December, and industry officials have said the loss of the credit has caused biodiesel plants to idle across the nation and has led to as many as 20,000 people losing their jobs. The tax credit is expected to cost about $624 million this year and another $231 million in 2011, according to Congress’ Joint Committee on Taxation.”

Mr. Clayton explained that, “Despite starting in the House last December, passing the Senate in March, the bill will again go back to the Senate because of changes. So a final vote will not come until after the Senate returns June 7.

“Along with the tax credits, the bill also includes more than $1.5 billion in disaster aid for agriculture, a provision added earlier this spring by Senate Agriculture Committee Chairman Blanche Lincoln, D-Ark., whose state suffered extensive crop losses last year. The bill provides $1 billion in supplemental direct payments to farmers who suffered a 5 percent production loss in 2009. Along with that, the bill earmarks $300 million for fruit and vegetable farmers, $75 million for poultry producers, $50 million for livestock producers, $42 million for cottonseed disaster assistance, $25 million for fish farmers and $21 million for a Hawaiian sugar-cane cooperative.”

Disaster Aid Issues

With respect to the disaster aid provision, a news release issued on Friday by Senator Lincoln stated that, “‘I am proud to use my Agriculture Committee Chairmanship to fight for this relief that will protect the 270,000 Arkansas jobs agriculture provides and will give farmers the certainty they need to stay in business,’ Lincoln said. ‘House passage of this legislation is a positive step forward and this disaster assistance package is now one step away from becoming law. I am disappointed that my Republican colleagues in the Senate blocked passing this legislation quickly before the Memorial Day recess, but Arkansas farmers should rest assured that I will keep up my fight to get this relief into their hands as quickly as possible.’”

Interestingly, Chris Clayton noted on Friday at the DTN Ag Policy Blog that, “The main champion for the $1.5 billion agricultural disaster provision added to the tax-extender package has been Senate Agriculture Chairman Blanche Lincoln, D-Ark., now in a runoff tussle with Lt. Gov. Bill Halter. The winner will face [Rep. John Boozman, R-Ark.]. I’ll be curious to see if Boozman’s vote against the tax-extenders bill will become an issue if he faces Lincoln in the runoff. The rest of Arkansas’ congressional delegation, all Democrats, backed the bill.”

In related news, Former President Bill Clinton was in Arkansas on Friday to campaign for Senator Lincoln; C-SPAN noted on Friday that, “With polls showing a dead heat in the Arkansas Senate Democratic primary runoff between Senator Blanche Lincoln and Lt. Gov. Bill Halter, the incumbent senator called on a familiar Arkansas face for help. Former President Bill Clinton joined Sen. Lincoln at a campaign rally in Little Rock to kick off her statewide ‘Countdown to Victory’ tour.”

The C-SPAN link included a video replay of Friday’s campaign event, and in part, Pres. Clinton highlighted Sen. Lincoln’s Chairmanship of the Ag Committee in his remarks. To listen to a brief audio clip on this issue, just click here (MP3- 2:30).

However, in a more detailed article on the Arkansas Senate race, Jonathan Martin reported on Saturday at Politico that, “And while some Farm Bureau types or agribusiness leaders appreciate it, Lincoln’s commercial noting her Agriculture Committee chairmanship failed to resonate broadly, said Roby Brock, the host of a statewide public affairs show, ‘Talk Business.’”

Meanwhile, House Ag Committee Chairman Collin Peterson (D-Minn.) voted for the American Workers, State, and Business Relief Act of 2010 on Friday.

Recall that during the House Ag Committee field hearing in Alabama back on May 15, Chairman Peterson expressed some concern regarding the five percent loss threshold that would enable producers to qualify for the disaster aid.

Specifically, Chairman Peterson indicated that, “One on the disaster program that’s being considered. The Senate has put this language in, and I assume you’re aware of that, and you’re only going to have to have a 5% loss in order to qualify. Did that come out of you guys? Where did that come from?”

After a somewhat unclear answer, Chairman Peterson noted that, “Well, I’m very concerned about the precedent we’re setting here. If you only have a 5% reduction in income, and you’re going to trigger another payment, I mean, the precedent we’re setting, you know, I just…I’m sympathetic, and I think they need some help, and we’re trying to work through this. But it just seems like this is a little overkill.”

Chairman Peterson added that, “[P]art of this discussion we’ve had, if we’re going to come up with some new system, we’ve got to make it work so that we don’t have these ad hoc disasters. We can’t keep doing this. And we’ve said over and over again we’re never going to have another one, and then we always do, so that’s going to be part of the solution.”

Biodiesel Tax Credit

Philip Brasher reported on Friday at The Green Fields Blog that, “The struggling biodiesel industry will have to keep waiting for Congress to revive the $1-a-gallon subsidy that lapsed at the end of 2009. Producers were counting on lawmakers to pass legislation reactivating the biodiesel subsidy before they left town for the week-long Memorial Day recess. The House narrowly approved the bill this afternoon, 215-204, but that was too late to get final approval from the Senate, which had already stopped work for the recess.

“The biodiesel subsidy isn’t controversial. But the legislation, which includes an extension of unemployment benefits and a variety of tax provisions has been stalled because of concerns about increasing the federal budget deficit.

“Sen. Charles Grassley, R-Ia., highlighted the inaction on the measure by trying to get a vote last night on a standalone bill for a one-year extension of the biodiesel provision. But Democrats objected, with assurances that the biodiesel measure would get passed eventually. Jobs in the biodiesel industry ‘have fallen victim to a tactic used by the Democratic leadership to hold this popular and noncontroversial tax provision hostage to out-of-control deficit spending here in Washington,’ Grassley said.”

“National Biodiesel Board spokesman Michael Frohlich said the industry was optimistic that the Senate would pass the legislation as soon as possible after the recess,” Mr. Brasher noted.

And a news release issued on Friday by the American Soybean Association stated that, “The American Soybean Association (ASA) expresses appreciation to the U.S. House of Representatives for passage today of H.R. 4213, by a 215-204 margin. ASA supports the provisions in H.R. 4213 that extend the biodiesel tax incentive through December 31, 2010, retroactive to January 1, 2010. The cost of the biodiesel tax credit extension is fully offset in the bill. Extension of the biodiesel tax credit is a top priority for ASA.”

“To press the issue with Members of the U.S. Senate, ASA has renewed the nationwide Action Alert to its members and supporters asking them to contact their Senators to urge them to pass the biodiesel tax credit extension immediately upon their return from the Memorial Day recess.”

USDA Lawsuit Settlement

In his DTN article from Friday, Chris Clayton also pointed out that, “[The American Jobs and Closing Tax Loopholes Act] also contains $4.6 billion to settle both a lawsuit by black farmers against USDA, commonly known as the Pigford case, and a lawsuit by native American tribes against the U.S. Department of Interior over mismanagement of tribal accounts. The Pigford case is expected to take about $1.4 billion to settle claims. Congress put in the 2008 farm bill language that authorized a second Pigford settlement because many farmers did not meet a filing deadline for their claim several years ago. The Obama administration announced a settlement of Pigford in February, pending Congress setting aside funding for it. Secretary of Agriculture Tom Vilsack said last week it’s important that USDA close the Pigford case and move ahead.”

And Nathan Koppel reported on Thursday at The Wall Street Journal’s Law Blog that, “The federal government has offered another huge payout to minority farmers.

“The Obama administration on Tuesday offered $1.3 billion to female and Latino farmers to settle allegations that the Agriculture Department discriminated against them, the AP reports, citing a Justice Department official.

“But Stephen Hill, an attorney representing Hispanic farmers, told the AP that the discrimination cases remain far from resolved.”

Biofuels

Philip Brasher reported in yesterday’s Des Moines Register that, “The worries about antibiotic resistance and the rise of superbugs have reached into the ethanol industry.

“Ethanol producers have long used antibiotics to control bacteria that can contaminate the fermentation process. But now, the Food and Drug Administration is developing a policy to regulate the use of the drugs and is conducting tests in Iowa and nationwide to determine the extent to which the antibiotics are getting into livestock feed produced by the plants.

“In the meantime, some ethanol producers, including industry leader Poet LLC, are switching to or testing alternative antimicrobial products. Poet wants to be ready in case the agency restricts antibiotics.”

Mr. Brasher added that, “The feed product, known as distillers grains, is a lucrative byproduct of the industry and a major source of feed for beef cattle and dairy farms, helping to keep down their production costs even as the price of corn has risen in recent years.

“The FDA’s concern is with the potential human health hazards from using antibiotics such as penicillin and viriginiamycin that many plants use to prevent bacteria from contaminating the fermentation tanks. Overuse of antibiotics has been linked to the rise of drug-resistant bacteria.

An agency spokesman, Ira Allen, said the testing would go through the end of the year. He said the agency is trying ‘to determine the extent and level of antibiotic residues’ in distillers grains and also is sampling imported product.”

Trade

A news release issued on Friday by GOP Sen. Mike Johanns (Nebraska) stated that, “Sen. Mike Johanns (R-Neb.), along with Senate Finance Committee Chairman Max Baucus (D-Mont.) and Senate Agriculture Committee Chairman Blanche Lincoln (D-Ark.) hailed unanimous Senate passage last night of their resolution urging China, Japan, South Korea, Hong Kong, Taiwan, Mexico and Vietnam to follow international guidelines and provide full market access to all U.S. beef products.

“‘I am pleased the Senate unanimously passed this resolution urging Japan and six other countries – China, Hong Kong, Korea, Mexico, Taiwan, and Vietnam – to completely remove their baseless bans on U.S. beef and beef products. This sends a clear, bipartisan message to these countries that six years is too long for beef producers to wait for fair treatment. We expect our trading partners to live by internationally-accepted standards and that means opening their markets to U.S. beef,’ said Johanns.”

Meanwhile, Reuters writer Jonathan Lynn reported yesterday that, “World Trade Organization members agree they must push on with difficult talks on a global trade deal, but November’s U.S. mid-term elections mean they are unlikely to bear fruit before next year.

“The United States, ultimately the key to any pact, says that what is on the table after 8 years of talks on the Doha round is simply not compelling enough to attract support back home.”

And Dow Jones news reported on Friday that, “World Trade Organization Director-General said Friday he doubts there will be a deal in the long-running Doha round of trade liberalization talks before November’s mid-term elections in the U.S.

“In an interview with the broadcaster France 24, Pascal Lamy said it would be technically feasible for negotiators to reach an agreement in 2010, before adding that ‘politically’ he doubts it will happen before the U.S. elections.”

Climate Issues

John M. Broder reported on Friday at the Green Blog (New York Times) that, “A popular parlor game in Washington is trying to figure out whether the Deepwater Horizon oil spill has helped or hurt chances for passage of comprehensive energy and climate change legislation. President Obama tried to bolster its prospects in his news conference on Thursday, saying the crisis highlights the need to find alternatives to the deadly and dirty fossil fuels oil and coal.”

“Mr. Obama noted that the House had already passed a broad bill putting a price on greenhouse gas emissions and providing large incentives for conservation and new forms of energy. He said the Senate should act on a measure that was introduced earlier this month by Senators John F. Kerry, Democrat of Massachusetts, and Joseph I. Lieberman, independent of Connecticut.”

Mr. Broder noted that, “Mr. Kerry and Mr. Lieberman have used the last several weeks, when all eyes were fixed on the catastrophe in the gulf, to quietly begin rounding up support for their measure from corporations that have been supportive of climate legislation and from environmental groups that are financing advertising and grass-roots efforts.

“As part of that campaign, 60 corporations sent Mr. Obama and senators a letter urging them to act quickly on legislation.”

More specifically with respect to agriculture, Ron Smith reported on Friday at the Southwest Farm Press Online that, “Most farmers in the Southwest would prefer to see climate change legislation disappear but few believe that will happen, based on comments during the recent House Agriculture Committee farm bill hearing in Lubbock.

L.G. Raun, an el Campo, Texas, rice producer, told Texas Representative Mike Conaway, that passing the climate change bill, as it currently stands, would put Texas out of the rice business.

“‘That legislation would add $150 per acre to the cost of production,’ Raun said. He figured energy costs would jump 20 percent to 50 percent. ‘With that big an increase (ranging from $88 to $200 per acre) we would not have rice acreage left in Texas. We have no way of passing on that cost.’”

The article added that, “Raun said rice, unlike other commodities with potential to reap some benefits from climate legislation through bioenergy production, is ‘confronted with no upside potential…but plenty of economic downside.’

“He cited a recent analysis from the Agricultural and food Policy Center at Texas A&M University that estimates increases in input costs for rice, combined with the inability to participate in any offset program would mean all 14 of the rice farms in the study ‘would experience lower average annual net cash farm income.’

“He said the American Farm Bureau estimates an increase in rice production costs as high as $153, per acre.”

Ag Prices

On Friday, USDA’s National Agricultural Statistics Service (NASS) released its monthly Agricultural Prices report.

In part, the NASS report stated that, “The corn price, at $3.41 per bushel, is unchanged from last month but down 55 cents from May 2009 [related graph]… The soybean price, at $9.28 per bushel, decreased 19 cents from April and is $1.42 below May 2009 [related graph]…The May all wheat price, at $4.39 per bushel, is down 3 cents from April and $1.45 below May 2009 [related graph]…and… The May all milk price of $15.00 per cwt is up 40 cents from last month and $3.40 from May 2009 [related graph].”

Keith Good

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