FarmPolicy

November 28, 2014

Crop Insurance: USDA-SRA; Climate Issues; Farm Bill; Biofuels; and Trade

Crop Insurance: USDA-SRA

Bloomberg writer Alan Bjerga reported yesterday that, “Wells Fargo & Co., Ace Ltd. and other companies that provide crop insurance to farmers will receive $6 billion less in federal funding over 10 years under a proposal by the U.S. Department of Agriculture.

“Payments for administrative costs subsidized by the government would be capped at $1.3 billion next year with the limit rising to $1.37 billion in 2015, according to the final draft of the USDA’s offer to companies. Insurers have 30 days to negotiate technical details before the plan is adopted, said Bill Murphy, head of the department’s Risk Management Agency.

“The plan, the result of negotiations that began in December, ensures ‘a fair and reasonable return’ for companies while reducing profits the USDA considers excessive, Agriculture Secretary Tom Vilsack told reporters today in Washington. ‘We have the framework for a stronger program.’”

Yesterday’s article added that, “Using money previously set aside for farmers for general deficit reduction is disappointing, said David Graves, manager and secretary of the American Association of Crop Insurers, an industry group based in Washington. Graves would not comment on whether companies would accept the plan.

“‘We’re extremely concerned that agriculture spending is going to take a hit,’ he said.

“Vilsack said he expects companies to accept the proposal, in order to be eligible to offer government-supported policies for 2011 crops. Companies ‘were willing to accept that there needed to be changes’ in response to concerns about excessive profits, he said.”

AP writer Steve Karnowski reported yesterday that, “The U.S. Department of Agriculture released the final draft of a new crop insurance plan Thursday that it said will save the federal government about $6 billion over 10 years.

Agriculture Secretary Tom Vilsack said $4 billion of the savings would go toward deficit reduction, while $2 billion would be used to expand farm risk management programs and the popular Conservation Reserve Program, which pays landowners to take environmentally sensitive land out of production and convert it into wildlife habitat.”

Philip Brasher reported yesterday at the Green Fields Blog (Des Moines Register) that, “Although crop insurance companies and agents have strongly criticized some of the proposals, USDA officials said they expect to make only small changes to the plan being submitted to the companies Thursday. Industry officials and congressional staffs were getting their first look at the plan this afternoon. Key farm-state lawmakers, including Sen. Charles Grassley, R-Ia., have expressed opposition to earlier drafts, citing its impact on agents and impact on spending levels for the next farm bill.”

Mr. Brasher explained that, “Iowa has more at stake than any other state. Iowa farmers took out nearly 159,000 policies in 2009 worth $9.2 billion in total liabilities, the most of any state. There are more than 7,000 agents in the state licensed to sell the policies, and another 700 people are employed by the companies in underwriting, billing and other jobs. Four of the 16 companies that handle the insurance nationwide are based in Iowa: John Deere Risk Protection Inc. and Rain and Hail LLC in Johnston, Farmers Mutual Hail Insurance Co. in West Des Moines, and Agro National LLC of Council Bluffs.”

And Dow Jones news reported yesterday (article posted at DTN, link requires subscription) that, “The Crop Insurance Professionals Association, a group representing agents, called the cuts too deep and warned they would threaten agents’ ability to provide service to farmers.

“USDA Under Secretary Jim Miller dismissed the criticism and stressed that companies often ‘undermine their own financial stability’ by paying out excessive commissions to agents.

Bill Murphy, administrator for USDA’s Risk Management Agency, said that agent commissions have risen to ‘ridiculous’ levels in big farming states like Iowa and Indiana.”

Climate Issues: Senate Votes on EPA Climate Measure

Reuters writers Timothy Gardner and Richard Cowan reported yesterday that, “The U.S. Senate on Thursday killed legislation that would have stripped the Environmental Protection Agency’s power to regulate greenhouse gas emissions from large factories, electric power companies and automobiles.

“The defeat of the Republican-inspired measure knocked down the most serious legislative challenge the EPA faced on regulating planet-warming gases, although it may have to contend with lawsuits from companies and industry groups.

“In a procedural move, the Senate voted 53-47 to block the bill offered by Alaska Republican Senator Lisa Murkowski.”

The article added that, “‘Today’s vote is yet another reminder of the urgent need to pass legislation that would help America transition to a 21st century clean energy economy that would create jobs, strengthen our national security, and protect our environment for our children,’ [Pres.] Obama said in a statement.

“Had Murkowski’s move succeeded, it would have been another setback in the global climate change fight before the next U.N. talks in Mexico later this year.

Obama has always said he prefers that Congress deals with climate, but that the EPA would act if a bill failed.”

Meanwhile, Siobhan Hughes and Corey Boles explained yesterday at the Wall Street Journal Online that, “Under the EPA rules, starting in January 2011, large facilities that undergo modifications will have to prove they are using the best available technologies to control greenhouse gases in order to receive needed regulatory permits. By July 2011, any new, large facilities will be subject to greenhouse-gas permitting requirements. Motor vehicles face separate fuel-efficiency requirements, though the rules are also the subject of a separate pact between the Obama administration and the auto industry reached last year.”

“A 2007 Supreme Court decision had ordered the EPA to determine whether rising concentrations of carbon dioxide in the atmosphere posed a threat to the public. The EPA chief issued an endangerment finding last year, saying higher gas concentrations create a risk of more flooding, more frequent and intense heat waves, and rising sea levels. The finding was the basis for the first-ever federal greenhouse-gas regulations for both cars and industrial sources such as power plants.”

Bloomberg writer Simon Lomax reported yesterday that, “Yesterday all 41 Republicans voted against the EPA’s proposed carbon regulations.

The six Democrats to join them were Evan Bayh of Indiana, Ben Nelson of Nebraska, Jay Rockefeller of West Virginia, Mary Landrieu of Louisiana and Mark Pryor and Blanche Lincoln of Arkansas.”

The Oklahoma Farm Report Online included an update (with related audio) yesterday which indicated that, “Washington Lobbyist for the National Cattlemen’s Beef Association, Colin Woodall, told us in a telephone interview that his organization is very disappointed and ‘feels abandoned by several farm state Democrats’ as a result of this vote. He did note that a couple of unexpected Democrats voted with Senator Murkowski on this measure, ‘such as Evan Bayh of Indiana.’”

Meredith Shiner reported yesterday at Politico that, “Sen. John Kerry (D-Mass.) — a chief negotiator on one of the sweeping energy and climate change bills currently being considered — took to the floor Thursday afternoon to dispute charges that the EPA is incapable of effectively regulating carbon emissions.

“‘It’s astonishing to me that this has become a partisan issue,’ Kerry said. ‘A lot of people have come here to the floor to eviscerate the EPA … when that agency is taking a thoughtful, measured and stepwise approach to regulated greenhouse gas emissions.’”

Lawmakers and others provided different perspectives on yesterday’s Senate vote.

Sen Murkowski- “I had hopes, for the security of our economy, that we would prevail today,’ Murkowski said. ‘But regardless of the outcome, I believe it’s important that every member of the Senate is on the record on whether they think the EPA regulation is the appropriate way to address climate issues.’ Murkowski, a strong proponent of moving the nation toward a cleaner energy future, said the disapproval resolution would have avoided the coming ‘economic train wreck’ EPA regulation of greenhouse gases is expected to cause.”

– Senate GOP Leader Mitch McConnell (Kentucky)- “But now that it’s clear Congress won’t pass this new national energy tax this year, the administration has shifted course and is now trying to get done through the back door what they haven’t been able to get through the front door.

“Just like the cap-and-trade legislation they would replace, these EPA regulations would raise the price of everything from electricity, to gasoline, to fertilizer, to food on our supermarket shelves.”

– Sen. Ag Committee Chairman Blanche Lincoln- “According to a recent 25 x 25 / University of Tennessee economic analysis, EPA regulation will result in billions of dollars in losses in net returns for agriculture from 2010 to 2015, with the largest declines occurring in crops grown in Arkansas, such as soybeans, cotton and rice. These figures are frightening for agriculture in our state, particularly during a time of recession.

“Furthermore, over 100 agriculture groups have expressed their concerns with EPA regulation of carbon, and expressed their support of the Murkowski Resolution. These groups include national associations for wheat, dairy, corn, cotton, rice, chicken, beef, pork, and eggs. The groups also include many specialty crop growers as well.”

– Sen. Ag Committee Ranking Member Saxby Chambliss (R-Georgia)- “Sen. Chambliss noted EPA’s actions will make the future for U.S. agriculture far less bright than it should be. On their own, the endangerment finding and related regulations will cause producers to face significantly higher energy and input costs and take millions of farmland out of production, just like the House and Senate cap and trade bills.”

– Neb. GOP Senator Mike Johanns- “EPA Administrator Lisa Jackson admitted that without reductions in countries like China, India, and Brazil, U.S. policy will have virtually no impact on temperatures. During these challenging economic times, we need to encourage economic growth. EPA’s endangerment finding does the opposite by placing additional burdens on small businesses, farmers, and families, with no meaningful environmental benefit.”

– Sen. Pat Roberts (R-Kansas)- “The EPA’s efforts to sidestep the Congress and burden our fragile economy with regulations will mean that Kansans, and all Americans, are likely to see an increase in their utility bills, transportation costs, basic consumer goods and food. I am particularly concerned about the consequences for our farmers and ranchers.”

– Sen. John Thune (R-South Dakota)- “This vote is very clear: either Senators stand with the EPA and support new energy taxes or they will vote in support of the Murkowski resolution, which will protect the pocketbooks of families and small businesses.”

– Sen. Chuck Grassley (R-Iowa)- “EPA’s go it alone policy is a big problem for Iowa families and businesses who will be hit particularly hard because of Iowa’s energy intensive economy, especially in agriculture and manufacturing.”

– Sen. Jim Inhofe (R-Oklahoma)- “No matter how one interprets today’s vote on the Murkowski resolution, one thing is absolutely clear: there is a bipartisan majority in the US Senate that supports either a delay of, or an outright ban on, the Obama EPA’s job-killing global warming agenda.”

– Sen. Ben Nelson (D-Nebraska)- “I want to send a clear message: Nebraska’s farmers, ranchers, business owners, cities, towns and hundreds of thousands of electricity consumers should not have their economic fortunes determined by unelected bureaucrats in Washington.”

– Sen. Barbara Boxer (D-California)- “Senators held firm against Big Oil and refused to overturn the scientific and health finding that is the foundation of a brighter future for America.”

– Sen. Kent Conrad (D-North Dakota)- “I cannot support a resolution that overturns scientific findings that greenhouse gasses endanger public health. That is what the Murkowski resolution tries to do. But I also do not want EPA to make the decisions on regulating greenhouse gasses. That should be the responsibility of Congress.”

Bob Stallman, President American Farm Bureau- “Additional EPA regulation for farmers will likely mean higher food costs for consumers because of higher input and energy costs to grow our food and result in negative economic impacts on the agriculture sector.”

Jon Scholl, President of American Farmland Trust- “As the single largest user of land and water resources in the United States, agriculture has a significant impact on the nation’s environment. Agriculture also is one of the most cost effective ways to improve two of our nation’s most pressing environmental challenges—water quality and climate change. And, it is possible for agriculture to remain profitable while addressing these challenges.”

Climate Issues: Senate Seeks Way Forward on Legislation

Ben Geman reported yesterday at The Hill’s Energy Blog that, “Senate Majority Leader Harry Reid (D-Nev.) called his Thursday meeting with committee chairmen and other senior Democrats on energy legislation a ‘productive step’ toward action on a broad energy package this year.

“But lawmakers said after the meeting no clear decisions were made on the scope of Senate plans, and Reid – who hopes to bring legislation to the floor this summer – acknowledged the diversity of views.”

The update added that, “A key question is whether Kerry and Sen. Joe Lieberman (I-Conn.) – who also attended – can win traction for their sweeping climate change bill that includes a modified version of cap-and-trade and new support for building nuclear power plants and alternative energy.

Democratic leaders could also try to advance a narrower energy package that omits carbon caps.”

Meredith Shiner reported yesterday at Politico that, “Majority Whip Dick Durbin (D-Ill.) said that no final decisions were made in the meeting. Reid said in a statement that there are ‘a variety of opinions within our caucus’ and that he is committed to passing a bill this year.”

The Politico article added that, “[Sen. GOP Leader Mitch McConnell] told POLITICO that he discussed over lunch Thursday a GOP alternative bill proposed Wednesday by Sen. Dick Lugar (R-Ind.) and that he was ‘learning more about it.’ A GOP leadership aide added that Republicans would not make an official move on the scaled-back energy proposal — which has won the endorsement of Sen. Lindsey Graham (R-S.C.) — until Democrats decide which legislative channel they would like to pursue.”

Separately, Sam Youngman reported yesterday at The Hill that, “Senate Minority Leader Mitch McConnell has ‘total confidence’ he can defeat the Senate energy bill with bipartisan support.”

Climate Issues: House of Representatives

Robin Bravender of ClimateWire reported yesterday at The New York Times Online that, “The House is often overlooked in the battle over federal climate rules, but some members intend to rally behind efforts to stop U.S. EPA regulations until something sticks.

“With an eye on the Senate as the chamber votes today on a resolution from Sen. Lisa Murkowski (R-Alaska) to nullify EPA’s authority to regulate greenhouse gas emissions, House lawmakers are plotting their next steps to handcuff the agency.

“‘This is going to continue to roll around both chambers, both parties as to whether or not EPA should regulate greenhouse gases until a statute on greenhouse gases has been enacted,’ said Rep. Earl Pomeroy (D-N.D.) who has introduced a bill to strip EPA of its authority to regulate greenhouse gases.”

Farm Bill

A news release from earlier this week by the National Milk Producers Federation stated that, “The National Milk Producers Federation’s Board of Directors overwhelmingly agreed today move forward with a variety of changes in federal dairy policies that will better protect dairy producers, and position them more favorably in an increasingly volatile global marketplace.

“The NMPF Board voted Wednesday to support the package of concepts contained in the Federation’s approach to reforming dairy policy entitled ‘Foundation for the Future.’ NMPF President and CEO Jerry Kozak said that package will be used as the basis for the future direction of the dairy provisions in the next Farm Bill, or in some other form of federal legislation that Congress may consider in the future.”

In part, the release added that, “The Federation’s proposal to revamp the federal safety net involves creating an insurance program tied to the margin between the national average cost of feed, and the national average all‐milk price. After farmers choose to enroll in the base level of the Dairy Producer Margin Protection Program at no cost to them, they would receive indemnity payments during periods when their margins are severely compressed, as they were for most of 2009. In addition, farmers would have the option of purchasing supplemental coverage to protect a higher margin level between feed costs and milk prices.”

In other Farm Bill related developments, Jane Black reported yesterday at The All We Can Eat Blog (Washington Post) that, “With Food Network star Rachael Ray at his side, Rep. George Miller (D-Calif.) unveiled a bill on Thursday that proposes about $8 billion in additional funding over 10 years for child nutrition programs, including school breakfast and lunch.

“The programs have been the main focus of Michelle Obama’s high-profile Let’s Move campaign, which aims to end childhood obesity within a generation. About one-third of American children are overweight or obese, and, in difficult economic times, a growing number of children depend on school meals as a key source of healthful food.

“The bill, dubbed the Improving Nutrition for America’s Children Act of 2010, (pdf) is similar to a Senate bill that is awaiting a floor vote. It mandates that the Department of Agriculture develop strict nutrition standards for foods sold in vending machines and in so-called a la carte lines. It also requires that only low-fat milk be sold in the lunch line.”

Both Sec. of Ag. Tom Vilsack and Sen. Ag. Committee Chairman Blanche Lincoln issued statements yesterday on this development.

Biofuels

Reuters writer Charles Abbott reported yesterday that, “The rebounding U.S. fuel ethanol industry will use an additional 250 million bushels of corn through the next 15 months, the government said on Thursday, reducing the corn surplus far beyond trade expectations.”

“‘Corn use for ethanol is raised 150 million bushels reflecting the continued record pace of ethanol production and usage through March,’ said USDA, raising its corn-for-ethanol forecast for 2009/10 to 4.55 billion bushels. It raised its 2010/11 forecast by 100 million bushels, to 4.7 billion bushels, or 36 percent of a record 13.37 billion-bushel crop.”

Meanwhile, a news release issued recently by the U.S. Energy Information Administration stated that, “Beginning today, the U.S. Energy Information Administration (EIA) is publishing weekly fuel ethanol production, inventory, and import data in its Weekly Petroleum Status Report (WPSR), one of EIA’s most closely followed petroleum data publications.

“The weekly ethanol data, along with other changes to the WPSR, will provide more information about the growing use of ethanol in gasoline, improve the accuracy of weekly petroleum supply and disposition statistics by reducing the amount of data that is estimated, and improve estimation methodologies for those data that must still be estimated.”

Trade

A news release issued yesterday by the House Ag Committee stated that, “Today, House Agriculture Committee Chairman Collin Peterson released a letter signed by more than 70 pro-democracy Cuban leaders that strongly encouraged passage of H.R. 4645, the Travel Restriction Reform and Export Enhancement Act introduced by House Agriculture Committee Collin Peterson (D-MN).

“‘When the strongest pro-democracy activists in Cuba say that the current travel and agriculture trade restrictions only support the Castro regime, you have to ask yourself why we would keep these restrictions in place,’ Chairman Peterson said. ‘The statement of these pro-democracy, anti-Castro dissidents supporting H.R 4645 is a strong indication that people who oppose this bill are not speaking on behalf of the Cuban people, regardless of what they say. Who are we helping by continuing a policy that has been in place for 50 years and has yet to change anything?”

Keith Good

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