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Biofuels; Trade; Environmental Issues; Climate; Ag Economy; Farm Bill; and Political Notes

Biofuels

Reuters writer Charles Abbott reported yesterday that, “Pioneers in cellulosic ethanol, tapped to leapfrog corn-based ethanol, say they are studying or plan to use a new U.S. program that pays farmers and forest owners to experiment with energy crops.

“The Biomass Crop Assistance Program, estimated to cost $461 million, took effect on Wednesday. A wide variety of materials are eligible for support, from wood chips and crop residues to switchgrass, woody plants, algae and animal and food waste.

U.S. officials say the program will assure a supply of non-food feedstocks as the infant cellulosic industry grows.”

Mr. Abbott explained that, “The government is providing loan guarantees for construction of a first round of commercial-size bio-refineries.

Found in grasses and woody plants, cellulose could make moot the ‘food vs fuel’ argument over using corn, a livestock feed, to make fuel. Critics complain corn-based fuel drives up prices for food globally.

“The 2007 energy law calls for the use of 21 billion gallons a year by 2022 of advanced biofuels such as cellulosic fuels, compared to 15 billion gallons of corn ethanol.”

Yesterday’s Reuters article noted that, “USDA said the short lifespan of the program will limits its impact. Lawmakers would decide in 2012 whether to renew it.

“Some 5,000 producers of energy crops near 32 biomass plants would receive establishment and production payments and 975 ‘eligible material owners’ who are not affiliated with a plant would qualify for matching payments, estimated USDA.”

Trade

Elizabeth Williams and Bob Davis reported in today’s Wall Street Journal that, “South Korea and the U.S. are ramping up efforts to resuscitate a stalled trade pact that sparked riots in Seoul and political battles in Washington, but is seen by both governments as crucial to U.S.-Asia relations.

“U.S. Trade Representative Ron Kirk met his counterpart, Korean Trade Minister Kim Jong-hoon, in San Francisco on Tuesday and Wednesday, their first face-to-face meeting on the U.S.-South Korea Free Trade Agreement. The deal—the largest U.S. bilateral trade pact since the North American Free Trade Agreement with Mexico and Canada—was negotiated during the Bush administration, but was never submitted to Congress for a vote by President Barack Obama, who criticized it during the 2008 presidential campaign.

The latest talks focus on the two parts of the pact that make it contentious: barriers to U.S. exports of beef and autos. U.S. and Korean officials wouldn’t discuss particulars of the talks.”

The Journal article added that, “Gregg Doud, chief economist of the National Cattlemen’s Beef Association, said the group supports the pact even without additional changes because it would eliminate Korea’s 40% tariff on imported beef over 15 years. The U.S.’s main rival in the South Korean beef market is Australia, which is negotiating its own free-trade pact with Seoul.

“‘We’re scared to death the Australians will beat us to the punch,’ he said.”

Environmental Issues

DTN Ag Policy Editor Chris Clayton reported yesterday (link requires subscription) that, “More intense conservation efforts are needed on farms in the Chesapeake Bay region to reduce nitrogen and phosphorus runoff, according to a USDA draft report released Tuesday.

“The draft report comes as the Environmental Protection Agency is pushing the six states in the Chesapeake Bay watershed to ramp up their efforts to reduce all forms of pollution runoff. EPA has characterized the plan as a ‘pollution diet’ for the bay and has been holding meetings this fall from New York to Virginia to explain the strategy.

“The 161-page report stated that soil-erosion control practices are widespread on farms in the region but about one-quarter of farm acres have lost excessive sediment from fields that require additional or more stringent erosion control practices. The report stated the most critical conservation concern in the Chesapeake region is reducing nitrogen loss. About 81 percent of cropland in the Chesapeake Bay region needs more effective nutrient management practices to reduce the loss of nitrogen or phosphorus from fields.”

Yesterday’s DTN article indicated that, “Yet, as USDA published its draft report, more than 40 national and state agriculture and livestock groups sent a letter to U.S. senators expressing concern that a Chesapeake restoration bill proposed by Sen. Ben Cardin, D-Md., could get attached other must-pass legislation in a lame-duck session. The agricultural groups stated some of the language in Cardin’s bill is ‘unprecedented and represent some of the most fundamental amendments to the Clean Water Act.’ Further, the bill’s consequences would stretch far beyond the Chesapeake Bay watershed, the groups warned.

“The agricultural groups also stated in the letter that EPA is going beyond its authority under the Clean Water Act in pushing more demands on states and agricultural producers in the bay region.”

In addition, the American Farm Bureau Federation issued a news release yesterday, which stated in part that; “Farmers and ranchers would face burdensome federal regulatory control if provisions of a restrictive Senate water bill make it through the ‘lame duck’ session of Congress, according to the American Farm Bureau Federation.

AFBF and a coalition of other groups are vowing to oppose any effort to attach the Chesapeake Clean Water and Ecosystem Restoration Act (S. 1816) to any bill that might be addressed during the lame duck session.

“‘While carrying a title that suggests it is limited in scope, provisions of this bill would have drastic negative impacts on agriculture,’ said AFBF President Bob Stallman. ‘The bill makes sweeping changes to the Clean Water Act and sets adverse water policy precedents that would impact watersheds throughout the nation.’”

Climate Issues

Michael O’Brien reported yesterday at The Hill’s Energy Blog that, “Republicans in Congress should look for opportunities to work with President Obama in the next two years on issues including an energy bill that doesn’t include cap-and-trade, Sen. Lindsey Graham (R-S.C.) suggested Tuesday evening.

“Graham weighed in to the sustained debate within the GOP about how or whether the party, which is poised to make gains in Congress, should work with Democrats.”

The Hill update indicated that, “‘My belief is that, if we get back power in the House, and get close in the Senate, that we ought to really clamp down on spending and reform the government,’ Graham said on WVOC radio in South Carolina [MP3- 16 minutes]. ‘But we ought to not put ourself in a position of being the ‘party of no’ to hard problems. But we ought to sit down with the president and work on Social Security, come up with an energy policy without cap-and-trade.’”

Ag Economy

Chuin-Wei Yap reported yesterday at The Wall Street Journal Online that, “China’s hunger is cascading across global markets, pushing prices of food commodities sharply higher lately. Back home, this boom is becoming a source of worry.

“Over the next decade, China’s annual grain demand is likely to reach 573 million tons, which is above its current production levels. With marginal increases in crop yield shrinking and arable land harder to find, the bet is on that Beijing may swiftly become more reliant than ever on global markets for an essential class of commodities it is desperate to keep mostly home-grown.

“Soybeans traded in Chicago are at their highest price in 14 months, largely because of the strength of Chinese demand.”

Meanwhile, the AP reported yesterday that, “Americans love their beef, but with prices expected to remain high for the next few years and other options plentiful, their loyalities might be challenged.

“Average retail prices of beef have climbed from $4.18 per pound in July 2009 to $4.44 per pound last July, a change largely due to a tight supply of cattle.

“Ranchers and feedlots have reduced supplies in response in large part due to rising prices of corn and soybeans fed to cattle, economists said.”

Farm Bill

An update posted yesterday at The Oklahoma Farm Report Online indicated that, “A resolution declaring the next farm bill should continue direct payments to farmers is among more than 90 proposals passed by the Oklahoma Farm Bureau state resolutions committee Oct. 26-27. The proposal will be voted on during the annual OFB convention Nov. 19-21 in Oklahoma City.

“‘Our top priority is the continuation of direct payments,’ said OFB President Mike Spradling. ‘The payments provide producers flexibility to grow various crops while providing income support.’

“There is concern direct payments may be eliminated since the administration is considering reducing the agriculture department’s budget.”

Recall that back in September, the Iowa Farm Bureau took a different perspective on the continuation of direct payments.

Gary Truitt reported yesterday at Hoosier Ag Today (HAT) Online that, “Next Tuesday‘s election may have a major impact on US farm policy. Indiana Senator Richard Lugar believes that a power shift in both the House and Senate is likely and that such a shift will result in changes to US farm policy, ‘We are likely to have curtailment of farm subsidies and other income support programs.’ He told HAT 70% of the USDA budget goes for food and nutrition programs and that those programs will not be touched, but that savings will be sought from farm programs.

As a result, Lugar believes writing the 2012 Farm Bill will be very contentious, ‘The South will want to protect the subsidy programs for cotton, rice, and sugar. My guess is that at the end of the day the subsidies will be curtailed.’ Lugar questions, however, if, in the end, there will actually be good farm policy.”

Political Notes- House Ag Committee Ranking Member Frank Lucas (OK)

Robert Barron reported yesterday at the Enid News and Eagle Online (OK) that, “This year’s 3rd District Congressional race is a repeat of the 2008 race between incumbent Republican Frank Lucas and Democratic challenger Frankie Robbins.” (The New York Times currently calls the race “Solid Republican”).

Mr. Barron noted that, “Lucas is the ranking member on the House Agriculture Committee and if the Republicans gain control of the House, he expects to be chairman of the Agriculture Committee. That chairmanship would last through 2012, when the new agriculture bill is written.

“‘It’s a good opportunity to put Oklahoma perspective in the farm bill. It’s an unusually the big challenge because of how the budget will be and we will have to maximize every penny spent in the farm bill,’ [Rep. Lucas] said.”

In related news, an update posted yesterday at The Oklahoma Farm Report Online stated that, “By Wednesday of next week, we will have a pretty good idea if Oklahoma Congressman Frank Lucas will be the first House Ag Committee Chairman to ever come from the state of Oklahoma. The Vice President of the Oklahoma Farm Bureau, Bob Drake of Davis, did not wait for the official word as he introduced Congressman Lucas as the next Chairman of the House Ag Committee when Lucas spoke to the Resolutions Committee of the general farm organization on Tuesday.

“After his remarks to the Farm Bureau members- we talked with Congressman Lucas about what the agenda might look like with a Lucas led Committee. Several key points emerged from our conversation.

Congressman Lucas would not push for an early writing of the 2012 Farm Bill as Collin Peterson has been doing. Lucas believes that the fiscal mood in Washington will be better in 2012 and that writing a farm bill that year makes more sense. The Congressman also spoke of his preference to keep Direct Payments as a part of the Farm Bill Safety Net– while Peterson has talked about a better-funded ACRE program or perhaps other programs that could be established if the Direct Payment money was shifted.”

Yesterday’s OK Farm Report update included an audio interview with Radio Oklahoma Network Host Ron Hays and Rep. Lucas; in part of that conversation, Rep. Lucas emphasized the potential oversight roll the House Ag Committee could have on executive branch agencies in the next Congress. To listen to an excerpt from the OK Farm Report interview, just click here (MP3- 2:29).

Political Notes- House Ag Committee Members

In the South Dakota “Toss-Up” race for Congress; The Hill reported on Tuesday that, “Rep. Stephanie Herseth Sandlin (D-S.D.) [who serves on the Ag Comm] leads Republican Kristi Noem 45 percent to 42, with 10 percent of likely voters undecided, according to The Hill 2010 Midterm Election Poll.”

Jonathan Ellis reported yesterday at the Argus Leader Online (SD) that, “The two major-party candidates for South Dakota’s at-large House seat tried to outdo each other Tuesday night over which one has been the biggest victim of negative campaigning and distortions.

“Rep. Stephanie Herseth Sandlin, D-S.D., and state Rep. Kristi Noem, R-Castlewood, each claimed that their positions have been distorted and attacked. The two, along with Independent candidate B. Thomas Marking, participated in a debate televised by South Dakota Public Broadcasting.”

And Shawn Neisteadt reported last night at KELO-TV Online (SD) that, “It’s a race too close to call. And Wednesday night, the candidates for South Dakota’s seat in the U.S. House of Representatives faced off one last time before voters choose which one of them will represent the state.”

The update noted that, “It’s been a heated campaign, and it didn’t take long for our debate to heat up as well, with the two leading candidates exchanging shots, going point-for-point when talking about the federal stimulus program.”

In the North Dakota “Toss-Up” race for Congress; Kristen M. Daum reported yesterday at a Forum Blog (ND) that, “The president of the National Farmers Union will be in Fargo on Thursday to campaign for Democratic incumbent Earl Pomeroy [who serves on the Ag Comm].

Roger Johnson will be speaking at a press conference with North Dakota Sen. Kent Conrad and Fargo Deputy Mayor Tim Mahoney to tout ‘Pomeroy’s efforts advancing the priorities most important to the people of Fargo,’ according to an announcement from the North Dakota Democratic-NPL Party.”

And the issue of farm subsidies came up in a recent debate among candidates for the Colorado Forth Congressional District seat. The District is currently categorized as “Leaning Republican,” and the two leading candidates in the race are Democrat incumbent Betsy Markey [who serves on the Ag Comm] and GOP challenger Cory Gardner.

During the October 19 debate, a questioner asked Mr. Gardner about the prospect of cutting farm subsidies; to listen to this brief exchange, just click here (MP3- 1:13).

Keith Good