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Farm Bill; Ag Economy; Biofuels; and EPA Issues

Farm Bill

Dan Feldner reported yesterday at the Minot Daily News Online (North Dakota) that, “The first hearing on the 2012 Farm Bill to be held in North Dakota happened Monday afternoon in Mohall, as six area producers gave testimony to Sen. Kent Conrad, D-N.D., chairman of the Senate Budget Committee, on what they would like to see included.”

The article noted that, “‘Agriculture is still the number one part of our economy,’ Conrad said. ‘The farm bill plays a big role in how effective the agricultural economy is for our state, and I’m pleased to report to you that North Dakota came out number one in terms of per capita payments under the farm bill. And we are number one by a big margin.’

“Conrad said $700 million a year flows to North Dakota producers through the farm bill, equating to per capita payments of $2,628 per person. He noted the next state, South Dakota, got about half as much per capita as North Dakota did.”

Mr. Feldner pointed out that, “With the budget crunch the country is currently in, Conrad said there will be some challenging fights ahead as the new farm bill is written, something he would like to see done sooner rather than later.”

The article stated that, “Six witnesses were invited to testify during the hearing;” and added that, “Keeping the safety nets in place so farmers aren’t financially ruined by one bad year was a common theme all six witnesses touched upon during their testimony, and did not go unnoticed by Conrad.

“‘The testimony has been very consistent here today, I think it’s about as clear as it can be. One after another of you have testified risk management’s at the top of your list,’ Conrad said. ‘Witness after witness, risk management’s at the top of your list.’”

An article posted on Monday at KXMCTV Minot Online reported that, “Today Senator Kent Conrad convened an official field hearing of the Budget Committee to hear from North Dakota producers.

Some of the top priorities out of today’s testimony were crop insurance and risk management.”

An update posted on earlier this week at the Red River Farm Network Online indicated that, “The Senate Budget Committee hosted a field hearing on the 2012 Farm Bill in Mohall, North Dakota this past week. Budget Committee Chairman Kent Conrad said budgets would be first hurdle when writing the new Farm Bill. ‘We’re already going to be down $4 to $6 billion from what we had available to write the last Farm Bill because of changes that have been made in crop insurance. Deficit reduction efforts are going to have to be made because we’ve got to get the country back on a more sustainable course and we’ll, no doubt, take an additional bite out of Farm Bill funding.’”

Related audio from Monday’s “Agriculture Today” (Red River Farm Network) Radio Program is available here, (MP3- 1:13).

A news release yesterday from Sen. Conrad stated that, “‘Though it seems like we just wrapped up the last Farm Bill, meetings and negotiations are already underway in preparation for the next one,’ Senator Conrad said. ‘Establishing common objectives and priorities early on will give us an advantage once formal negotiations begin. That is why today’s hearing is a critically important step to what we hope will be another Farm Bill that benefits North Dakota’s families and producers.’”

“Senator Conrad noted that the 2008 Farm Bill is widely viewed as a significant success for the state due largely to the fact that North Dakota was well represented when the final decisions were made. North Dakota receives more per capita from agriculture programs in the Farm Bill than any other state as a direct result of the committee assignments and seniority of Congressman Pomeroy and Senator Conrad.

“‘From securing permanent disaster assistance to improved commodity support and an energy title that benefits North Dakota’s producers, the 2008 Farm Bill was a huge victory for our state in part because Congressman Pomeroy, Senator Dorgan and I were at the table,’ Senator Conrad said.”

In a related article, the AP reported on Monday that, “North Dakota’s agricultural and energy interests would lose influence if he’s beaten in his race for a 10th term in the U.S. House, Democratic Rep. Earl Pomeroy said Monday in a debate with Republican challenger Rick Berg.

“House Speaker Nancy Pelosi, D-Calif., has supported farm legislation that is favorable to North Dakota, while the House GOP leader, Ohio Republican John Boehner, has fought it, Pomeroy said.

“Pomeroy said he has used his spot on the tax-writing House Ways and Means Committee to support tax breaks for ethanol production.”

Agricultural Economy

Tom Polansek reported yesterday at The Wall Street Journal Online that, “U.S. corn prices reached their highest level in more than two years Tuesday as supply concerns fueled buying by industries that use the crop [related graph].”

The Journal article added that, “Several analysts project corn will soar to $6 a bushel or higher.”

Bloomberg writer Jeff Wilson reported yesterday that, “Corn jumped to a two-year high and soybeans rose for a fourth session as processors buy more inventory amid signs that the U.S. will produce smaller crops than forecast in September.”

Bloomberg writer Elizabeth Campbell reported yesterday that, “Hog futures rose as corn costs at the highest level in two years may spur farmers to feed livestock less and slow herd expansion. Cattle futures jumped to a one-week high.”

In related news, DTN Ag Policy Editor Chris Clayton reported yesterday (link requires subscription) that, “Secretary of Agriculture Tom Vilsack defended the work of USDA forecasters Tuesday, despite major shifts in estimates such as last week’s projection dropping corn production 446 million bushels from September’s estimate.”

The DTN article noted that, “Vilsack disputed that the dramatic number changes from one month to the next were due to either an agenda or problems with USDA’s methodology.

“‘I don’t think that’s accurate or fair,’ Vilsack said after speaking at a CropLife biodiversity event in Ames. ‘I think we struggle to make sure our estimates are as accurate as they can be. Obviously the last 30 days has reflected a change because of weather conditions. Having said that, we are in a much better position than we were several years ago when there was concern about prices and the impact on food generally. I think worldwide we’re in a much better position.’”

William Neuman reported in today’s New York Times that, “The sudden movements in commodities markets are expected to have little immediate effect on the prices of corn flakes and bread in the grocery store, although American consumers are likely to see some modest price increases for meat, poultry and dairy products.

“But experts warn that the impact could be much greater if next year’s harvest disappoints and if 2011 grain harvests in the Southern Hemisphere also fall short of the current robust expectations.

“‘We can live with high commodity prices for a period without seeing much impact at the retail level, but if that persists for several months or a couple of years, then it eventually has to get passed on’ to consumers, said Darrel Good, an emeritus professor of agricultural economics at the University of Illinois.”

The Times article added that, “The price increases are good news for American grain farmers, who stand to get far more for their crops than they anticipated when they planted them in the spring.

“But they mean hard decisions for livestock and dairy farmers, who were hard hit during the recession and have only recently begun to recover.

Those farmers are likely to respond to higher feed prices by cutting the size of herds, or at least not increasing the number of animals they raise, say farm economists and industry executives. Many farmers will also sell animals at a slightly lower weight. Both those factors will cut supplies of meat and dairy products, eventually pushing prices up.”


Philip Brasher reported yesterday at The Des Moines Register Online that, “Opponents of the ethanol industry are seizing on the recent increases in corn prices to argue that Congress should roll back government support for the biofuel.

“The 45-cent-per-gallon tax credit is due to expire at the end of the year and the ethanol industry is lobbying to get it extended for at least a year when Congress returns for a lame-duck session after the election.”

DTN writer Todd Neeley reported yesterday (link requires subscription) that, “Environmental, tax-reform and food-industry groups joined forces Tuesday to oppose a proposal from the U.S. ethanol industry to change the way the industry is subsidized by the federal government.

“Representatives from groups that included Taxpayers for Common Sense, American Meat Institute, Environmental Working Group, Grocery Manufacturers Association and Friends of the Earth, said during a press conference that recently rising corn prices are a major reason why the 45-cent volumetric ethanol excise tax credit, known as the blenders credit or VEETC, the 54-cent ethanol import tariff and the small producers tax credit should be allowed to expire Dec. 31.

“‘America’s vast fuel needs cannot be met with food resources,’ said J. Patrick Boyle, president of the American Meat Institute. ‘Corn prices hit a two-year high Monday and have increased by 15 percent in the past two days. Our current ethanol subsidies need to expire.’”

The DTN article added that, “Boyle said consumers are likely to see an increase in food prices by as much as 5 percent by 2011, by some estimates. Though some studies have concluded that increased ethanol production was a relatively small factor in higher food prices in recent years, Boyle argued that continued ethanol support could play a role in future food price spikes.”

Mr. Neeley pointed out that, “The American Coalition for Ethanol, Growth Energy, the National Corn Growers Association, and the Renewable Fuels Association released a joint statement regarding the concerns raised by the environmental, tax and food groups.”

In part, the joint statement indicated that, “Anticipating that these groups will once again seek to raise the red herring of the food versus fuel debate, the groups noted, ‘It’s not surprising that the corporate interests which have profited by hiking the grocery bills of everyday American families would continue to promote the widely-disproven ‘food versus fuel’ fiction. It is sadder to see the other groups be so misled as to think that domestic ethanol is anything but a job-creating, renewable, clean-burning fuel.’”

Reuters writer Charles Abbott reported yesterday that, “With expiration of the tax breaks looming at the end of the year, U.S. ethanol groups broached a redesign of federal biofuels subsidies worth $6 billion a year with no clear path to success.

“Their ideas, circulated among congressional offices as a one-page memo, drew strong criticism from foodmakers, environmentalists and deficit hawks on Tuesday.

Congress has a huge workload for a post-election session in November. Ethanol backers pressed for a straightforward extension of tax breaks during the regular season but made no headway as Congress focused increasingly on deficit control.”

The Reuters article added that, “The ethanol outline suggested conversion of the current 45-cent a gallon fuel tax break into a tax credit for domestic producers or a similar approach, but at lower cost. It also said corn-based ethanol could qualify as an advanced biofuel, which would more than double the potential market for it.

“Two ethanol trade groups declined to discuss the document, calling it a work in progress.

White House spokesman Shin Inouye said the administration looked forward ‘to continuing to work with interested parties’ and hoped to make ‘solid progress in the near future’ to promote biofuels.’”

Darren Goode reported yesterday at The Hill’s Energy Blog that, “Ethanol groups are seeking a unified front as they push lawmakers for quick action on issues that could decide the future of the industry.

“‘I think unfortunately there have been times that our industry has not been as unified as we could have or should have been,’ said Brian Jennings, executive vice president of the American Coalition for Ethanol (ACE). ‘Especially with so many critical issues on the table.’”

Mr. Goode added that, “In recent meetings on Capitol Hill and in the White House, representatives of the four main ethanol industry groups — ACE, Renewable Fuels Association (RFA), Growth Energy and the National Corn Growers Association (NCGA) — have offered an evolving blueprint for what the industry says it needs, at least legislatively, for long-term survival.”

“The legislative blueprint includes an extension of a volumetric ethanol excise tax credit that is expiring this year, along with a move towards a new four-year production tax credit based on the greenhouse-gas emissions needed to produce ethanol-blended fuel.

“The credit would be only available to domestic producers, eliminating the need for the current per-gallon import tariff on ethanol — most notably from the sugarcane ethanol from Brazil. The tariff next year would be reduced from the current 54 cents to 36 cents before being eliminated outright in 2012.

The blueprint also highlights the need to expand flex-fuel vehicles and pumps,” The Hill article said.

Meanwhile, Stephen Power reported in today’s Wall Street Journal that, “The Obama administration plans to allow higher levels of ethanol for gasoline used by newer cars, a step that would benefit corn growers but which has been strongly opposed by auto makers, livestock ranchers, oil refiners and some public-health advocates.

“As early as Wednesday, the Environmental Protection Agency plans to announce it will allow ethanol levels in gasoline blends to be as high as 15% for vehicles made since 2007, up from 10% currently, according to two people familiar with the matter.

For cars made between 2001 and 2006, the agency will say it is awaiting the outcome of additional research and not ready to announce a decision.”

The Journal article added that, “The EPA’s decision comes as the Obama administration is under criticism by some Farm Belt lawmakers for what they say are overly burdensome regulations from the agency. In South Dakota, Republican Kristi Noem has called for EPA Administrator Lisa Jackson’s resignation, citing the agency’s inaction on the issue some 18 months after an ethanol industry trade group formally petitioned the agency for such a step.”

EPA Issues

A news update yesterday from the House Committee on Agriculture Republicans indicated that, “This week during The Ag Minute [MP3], guest host Rep. Phil Roe, discusses proposed regulations by the Environmental Protection Agency (EPA) and how they will negatively impact everyone who lives, works, and farms in rural America. Rep. Roe recently participated in a forum hosted by the Rural America Solutions Group, which examined the unprecedented, overreaching, and burdensome regulations EPA is trying to impose on farmers, ranchers, and small businesses.”

A transcript of The Ag Minute indicated that, “Since the Senate will not pass the flawed cap and trade legislation, the administration is taking matters into its own hands, using the Environmental Protection Agency (EPA) as its lead enforcement agency. New regulations planned by the EPA could have detrimental effects on our economy – particularly causing a loss of jobs, impeding economic recovery, and harming livelihoods… The centerpiece of the EPA’s planned regulations is a backdoor national energy tax that will ultimately kill jobs, stop economic growth and raise the cost of energy, food and transportation.”

Robin Bravender reported yesterday at Politico that, “The Environmental Protection Agency is on track to begin regulating greenhouse gases for the first time in less than three months, but it could be a messy process.

“The Obama administration promises a smooth transition as the EPA begins to require cuts in emissions from large industrial sources like power plants and oil refineries, but uncertainties abound as the agency hustles to bring states into line and climate polices remain entangled in federal court cases.”

Yesterday’s article added that, “[Howard Feldman, director of regulatory and scientific affairs at the American Petroleum Institute] and other industry officials argue that the EPA hasn’t afforded enough time for legal fights over climate rules to play out or for states to understand how they’ll be expected to curb emissions from large industrial sources. As a result, they warn, when climate rules officially kick in Jan. 2, businesses will encounter a patchwork of regulations across states, and construction will grind to a halt.

“EPA Administrator Lisa Jackson has deflected claims by industry officials and Republican lawmakers that climate rules will spark a regulatory nightmare and cripple businesses.”

The Politico item explained that, “The Obama administration has said it will limit its regulations to only the biggest sources at first, but it’s still unclear exactly what pollution controls will be required.

“The EPA is planning to release guidelines for state regulators by the end of the year detailing how industries should be required to limit their output of heat-trapping gases. That guidance has been stalled indefinitely at the White House, where officials are sparring over the costs of installing pollution controls, said [Bill Becker, executive director of the National Association of Clean Air Agencies].

Keith Good