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Crop Insurance (SRA); Conservation Issues; Hearings; Climate Issues; Biofuels; and Ag Economy

Crop Insurance-Standard Reinsurance Agreement (SRA)

Yesterday on the AgriTalk Radio Program with Mike Adams, Risk Management Agency Administrator Bill Murphy and National Crop Insurance Services President Bob Parkerson, presented different perspectives on USDA’s release of the final draft of the 2011 Standard Reinsurance Agreement (SRA).

To listen to some of the remarks and comments made yesterday on AgriTalk by Bill Murphy regarding the SRA final draft, just click here (MP3- 5:32) and here (MP3-2:34).

Some observations on the SRA from Bob Parkerson can be heard here (MP3-5:44) and here (MP3-2:36).

A replay of yesterday’s entire AgriTalk program, which includes additional discussion on the SRA, is available here.

Meanwhile, an opinion item published in today’s Omaha World-Herald by Ruth Gerdes, a crop insurance agent from Auburn, Nebraska, indicated that, “Today, the farm safety net has turned into an ATM that some politicians visit when they need money to fund a pet project.

Most recently, the U.S. Department of Agriculture attempted to raid $8.4 billion from crop insurance. The agricultural community and responsible lawmakers quickly beat back this effort to use farmers’ money to fund nonfarm projects.

“Weeks later, the USDA came back with a $6.9 billion offering but was again rebuffed. Now, it has proposed to carve out $6 billion from the infrastructure used to deliver and service farmers’ insurance policies.”

The opinion column noted that, “Details of ‘strike three’ are still being learned because several new concepts were introduced at the last minute without feedback from industry. But no matter how the USDA spins it, we know that $6 billion is a big bite out of the farm safety net, and this raid would hurt economies and jobs in rural America.

“Growers depend on crop insurance to hedge risk and obtain operating loans. Weakening that system makes America’s food supply more susceptible to unpredictable weather and market conditions.

“Considering that the USDA had less contentious alternatives, its insistence on mining money out of crop insurance is puzzling.”

Today’s item added that, “Rejecting the USDA plan won’t be easy. Insurers are being pressured to embrace it, and if they don’t, they will be unable to participate in the crop insurance business.”

On the other hand, in related developments, a news release issued on Tuesday by Sen. Russ Feingold, D-Wis., stated in part that, “U.S. Senator Russ Feingold’s effort to reform crop insurance subsidies and save billions in taxpayer dollars is reflected in a draft of a new crop insurance plan recently released by the U.S. Department of Agriculture. Feingold included a provision to reform crop insurance subsidies in his Control Spending Now Act, legislation made up of more than 40 specific proposals to cut roughly one half trillion dollars in government spending. Feingold’s bill would reduce federal subsidies for crop insurance companies’ administrative and operating expenses and increase the taxpayers’ share of underwriting gains or losses. The plan released by USDA would take aim at these same areas and cap the administrative and overhead expenses crop insurance companies can collect and increase the taxpayers’ share of underwriting gains and losses from five percent to 6.5 percent. The plan would cut the deficit by $4 billion over the next ten years.

“‘The plan laid out by USDA is a great example of what government should be doing across the board – looking at how it is spending money and coming up with ways to save,’ Feingold said. ‘Over the last few years, spikes in crop values have driven government crop insurance subsidies sharply higher and provided a windfall for insurance companies. We can and should maintain this important safety net for farmers while also protecting the interests of taxpayers. Reforming these subsidies will save taxpayers billions, while still providing farmers with fair premiums and insurance options.’”

Conservation Issues

A news release issued yesterday by USDA stated that, “Conservation practices installed and applied by agricultural producers on cropland are reducing sediment, nutrient and pesticide losses from farm fields, Agriculture Secretary Tom Vilsack said today as he announced the release of a comprehensive study on the effects of conservation practices on environmental quality in the Upper Mississippi River Basin (UMRB).

“‘This important new report confirms that farmers and ranchers are stepping up and implementing conservation practices that can and do have a significant impact on the health of America’s soil and water,’ Vilsack said. ‘The information gathered for this study will make it possible to quantify the effectiveness of conservation practices for the first time and enable USDA to design and implement conservation programs that will not only better meet the needs of farmers and ranchers, but also help ensure that taxpayers’ conservation dollars are used as effectively as possible.’”

In a separate issue regarding agriculture and the environment, Robert McCartney indicated in today’s Washington Post that, “The potent national farm lobby is poised to block a pair of bills that would set a firm deadline of 2025 for cutting the flow of pollutants by enough to restore the [Chesapeake] bay’s health, according to both supporters and opponents of the measures.

“Two Maryland Democrats, Sen. Ben Cardin and Rep. Elijah Cummings, are the leading sponsors of the similar bills. They would give federal and state governments genuine authority for the first time over all kinds of polluters — including farmers — in the six-state Chesapeake watershed.”

The Post item noted that, “Some farmers ‘are doing the right thing, helping to preserve the bay for future generations, but there are a lot of farmers who haven’t done that,’ Cardin said. ‘What’s fair about this is all farmers [would] have to meet certain standards.’

“The American Farm Bureau doesn’t see it that way. It says the legislation is technically unfeasible, would discourage development and raise farmers’ costs. The bureau spent $5 million on lobbying last year, according to the Center for Responsive Politics.

“‘It’s going to do nothing except cut into profits of agriculture. The way that Mr. Cardin’s bill goes about doing things could pretty much squeeze farmers to the point where they would have to go out of business,’ said Don Parrish, the bureau’s senior director of regulatory relations.”

Mr. McCartney added in his Post column that, “Cardin’s bill is scheduled to go before the Senate Environment and Public Works Committee next week, and the panel is expected to approve it. However, the bill faces an uphill battle in the full Senate.

“The farm lobby thinks Cardin and company are in too much of a hurry.

“‘We’ve had an effect on the Chesapeake Bay for 400 years. The Clean Water Act has been in place for 30 years. We’re not gong to change things back, or make any dramatic effect, in 10 to 15 years,’ said Wilmer Stoneman, associate director of governmental relations for the Virginia Farm Bureau.”

Earlier this week, a news update from the House Ag Committee Republicans indicated that, “This week during The Ag Minute [MP3], guest host Rep. Bob Goodlatte of Virginia discusses H.R. 5509, the Chesapeake Bay Program Reauthorization and Improvement Act [related news release]. It is a bill he recently introduced that will protect the health of the Chesapeake Bay while also ensuring the strength and vitality of our family farms and rural communities within the Bay Watershed. The bill calls for a review of the Environmental Protection Agency’s (EPA) Bay model and would require improvements to the model so that all efforts to preserve and protect the Bay are recognized. The bill has been referred to the House Agriculture Committee on which Rep. Goodlatte serves as Ranking Member of the Conservation, Credit, Energy and Research Subcommittee.”

Hearings

Today the Senate Ag Subcommittee on Energy, Science, and Technology will hold a hearing to receive testimony on S. 3102, The Rural Energy Savings Program Act; and, the House Ag Subcommittee on General Farm Commodities and Risk Management will hold a hearing to review U.S. farm safety net programs in advance of the 2012 Farm Bill.

To view a FarmPolicy.com recap and overview of the House Ag Committee 2012 Farm Bill hearings to date, just click here.

Climate Issues

Robin Bravender of ClimateWire reported yesterday at The New York Times Online that, “President Obama used his first primetime Oval Office address to tout the need for a climate and energy bill, but he skimped on details about what the White House wants in Senate legislation.

“Backers of a comprehensive energy and climate bill hoped the president would lay out a road map as the Senate prepares for a summer floor debate, but Obama offered few specifics and may have lent credence to a ‘smorgasbord’ measure combining aspects of various bills — including a renewable electricity standard and increasing energy efficiency but not necessarily including a cap on greenhouse gas emissions.”

Laura Meckler and Neil King Jr. reported in today’s Wall Street Journal that, “Mr. Obama ticked off a list of ideas for ‘moving our country toward energy independence,’ but he was vague on which he supported. Environmental activists were frustrated that the president did not call on the Senate to pass legislation putting a price on carbon emissions, as the House has.”

Reuters writers John Whitesides and Richard Cowan reported today that, “But [Pres. Obama] offered no specifics [on climate change], and the lack of guidance frustrated some supporters and lent little urgency to an issue that has fallen down a crowded list of congressional priorities less than five months before the congressional election.

“‘Some say you’ve got to bring climate change to the floor of the Senate right now. I don’t think there’s 60 votes for a climate change bill,’ said Senator Byron Dorgan, a member of the Democratic leadership, referring to the number of votes needed to overcome Senate procedural hurdles.

Dorgan instead favors quick passage of a less ambitious bill approved by the Senate Energy Committee last year encouraging broader use of alternative energy.”

The Washington Post editorial board noted today that, “From the Oval Office on Tuesday, President Obama argued that the catastrophic oil spill in the Gulf of Mexico underscores the need for America to transition from fossil fuels. But even as he attempted to rally Americans by invoking heroic American achievement in World War II and in space, the president didn’t talk much about what could make such a transition happen.”

“Passing comprehensive climate legislation isn’t likely to be easier in the next Congress. As the president begins to push on crafting a compromise energy proposal next week, he’ll have to be more forthright on what true change will require,” the Post said.

Lisa Lerer and Simon Lomax reported yesterday at Bloomberg that, “The BP Plc oil spill in the Gulf of Mexico is unlikely to create enough momentum to pass a comprehensive climate bill sought by President Barack Obama, say leading Senate Democrats.

“Many Democrats don’t want to vote in this election year on whether to cap the greenhouse-gas emissions linked to climate change, saying they prefer to work in the coming months on legislation directly responding to the spill.”

The article noted that, “Senator Jeff Bingaman, a New Mexico Democrat and chairman of the Senate Energy and Commerce committee, said yesterday he plans to advocate for an energy-only bill that passed his panel last June. The measure would require utilities to get as much as 15 percent of their power from renewable sources by 2021.

The Senate ‘should definitely do an energy bill’ that doesn’t include a carbon cap-and-trade program, said Senator Kent Conrad, a North Dakota Democrat. Kerry and Lieberman could be given a chance to add their climate plan as an amendment, he said.”

Alexander Bolton reported yesterday at The Hill Online that, “Climate change legislation appears dead after two setbacks in quick succession — first from the Oval Office and then from Congress.

Sen. Scott Brown (Mass.), a crucial Republican swing vote, met with President Barack Obama on Wednesday and told him he would not support a cap-and-trade plan or carbon fee to limit greenhouse gas emissions.

“But this blow came after Obama delivered the first setback Tuesday night. In his primetimes speech, he called for comprehensive energy reform but did not propose an emissions cap.”

Washington Post writer Juliet Eilperin reported yesterday at The Post Carbon Blog that, “While President Obama made the pitch for climate and energy legislation yet again Tuesday in his Oval Office address, he did not disclose the White House’s new strategy: push for a scaled-back bill in the Senate, and drag out the conference long enough to ensure a floor vote after the negotiations.”

Ms. Eilperin explained that, “But several sources familiar with the administration’s thinking confirmed it has started pressing Senate Majority Leader Harry Reid (D-Nev.) to bring up a slimmed-down energy and climate bill next month. Such a measure would pass more easily than a comprehensive climate bill, and could still be negotiated with the broader bill the House passed a year ago.

“Under this scenario, the final product of any House-Senate conference could come up for a final vote in a lame-duck session after lawmakers have faced voters in November, thereby cushioning the vote’s political impact.

“Reid spokesman Jim Manley said the majority leader was still consulting with his Democratic colleagues, who plan to discuss climate legislation during a caucus meeting Thursday.”

Ben Geman reported yesterday at The Hill’s Energy Blog that, “White House press secretary Robert Gibbs said Wednesday that President Barack Obama’s views on energy largely reflect the sweeping climate change and energy bill authored by Sens. John Kerry (D-Mass.) and Joe Lieberman (I-Conn.).

“‘It is safe to say that the president’s direction on energy is very similar to the direction that is in the Kerry-Lieberman bill,’ Gibbs said at a White House press briefing. ‘And the president feels strongly that including a component to deal with climate is important in comprehensive energy [legislation].’”

Yesterday’s update indicated that, “The comment comes a day after Obama gave an Oval Office speech that called for a transition away from fossil fuels, but omitted mention of capping greenhouse gases beyond stating that climate legislation the House passed in 2009 reflects his ‘principles.’

The speech quickly prompted speculation that Obama is leaving himself space to accept legislation that does not include his goal of putting a price on carbon dioxide emissions. Greenhouse gas limits face resistance among many Republicans and some centrist Democrats.”

And Eric Zimmerman reported yesterday at The Hill’s Energy Blog that, “President Barack Obama will gather a bipartisan group of senators at the White House next week to discuss comprehensive climate change and energy legislation, Rahm Emanuel said Tuesday night.

The White House Chief of Staff told Charlie Rose that Obama would bring in ‘bipartisan members who worked on this in the Senate to the White House to get the best ideas from all the legislation to address it on a comprehensive basis.’”

More specifically, Mr. Emanuel stated that, “[H]e’s [Pres. Obama] going to be meeting next week, calling for a meeting with bipartisan leaders in the Senate, who all like Senator Lugar who has an energy bill he just introduced. Others, Democrats like Senator Bingaman and Senator Kerry and Senator Cantwell, all who have different ideas, and meld that into a comprehensive piece of legislation.”

Biofuels

Dow Jones writer Bill Tomson reported yesterday that, “U.S. producers of soyoil-based biodiesel hoping Congress will revive a $1-per-gallon government tax incentive suffered a setback Wednesday when the Senate rejected a spending bill that contained the biodiesel subsidy.

“Sen. Max Baucus (D-Mont.) called for Senate consideration of the bill that includes a wide-range of spending on things such as extending tax breaks and unemployment benefits as well as the biodiesel tax incentive, Sen. Judd Gregg (R-N.H.) said the bill violated Senate budget rules.

“Baucus then asked the Senate to waive those budget rules and allow a vote on the spending bill. The Senate voted 52 to 45 not to allow the waiver, halting progress on the spending bill containing the biodiesel tax incentive.”

Ag Economy

Ken Anderson reported yesterday at Brownfield that, “Critics of the trend towards large-scale agriculture argue that the quality of life in rural communities has suffered as farms—and especially livestock farms—have grown in size.

However, recent studies by Iowa State University sociologists suggest that large-scale farming has actually improved the overall social fabric of small towns in Iowa. ISU professor of sociology Steve Sapp coordinated the studies.”

AP writer Steve Karnowski reported yesterday that, “The economy in the Upper Midwest is strengthening at a moderate pace, with gradual improvement expected to continue into next year, economists with the Federal Reserve Bank of Minneapolis said Wednesday.

“In their midyear update, economists Toby Madden and Rob Grunewald said employment, consumer spending, manufacturing and home construction are up in the region, and that the Fed’s forecast models predict the trends will continue into 2011.

They also said things are looking up for livestock and dairy producers after a difficult 2009, thanks to higher meat and dairy prices coupled with lower feed costs. And they said the region’s major crops are off to a good start, with prices expected to hold relatively level.”

And a news release issued yesterday by the Chairman and Ranking Member of the Senate Ag Committee stated that, “U.S. Senate Agriculture, Nutrition and Forestry Committee Chairman Blanche Lincoln, (D-Ark.), and Ranking Member Saxby Chambliss, (R-Ga.), today sent a letter to Richard A. Lidinsky, Jr., Chairman of the Federal Maritime Commission, expressing concern with reports that U.S. agricultural exporters are experiencing serious service issues with the foreign-flagged ocean carrier industry. The Senators noted that while the administration has outlined admirable goals to increase U.S. exports, the chain of trade must function fairly and efficiently for American shippers to get agricultural products to key overseas markets.

“‘According to constituent reports and recent media stories, U.S. exporters may be forced to wait as long as a month to secure space on an ocean carrier compared to earlier wait times of about a week,’ the Senators said in the letter. ‘These service interruptions, along with frequent rate hikes, are occurring despite the fact that most U.S. shippers enter into 12-month service contracts with the ocean carriers for fixed rates during the period. These contracts are supposed to ensure that the carriers will provide the necessary weekly equipment and vessel space consistent with each individual agreement. Unfortunately, it has come to our attention that carriers are now routinely failing to honor these contracts. Such breaches lead to increased costs for U.S. agricultural exporters and, in some cases, lost export opportunities.’”

Keith Good