FarmPolicy

December 15, 2019

Disaster Aid; Biofuels; Animal Ag; Food Safety; Trade; Climate; and Political Notes

Disaster Aid

Dan Morgan reported on Friday at The Fiscal Times Online that, “When politically embattled Democratic Sen. Blanche Lincoln of Arkansas announced in September that the Obama administration had delivered on its promise to provide hundreds of millions of dollars worth of aid to farmers hit by wet weather in 2009, a key selling point was that it would not increase the federal deficit.

“A Sept. 15 press release from her office stated that the $630 million in assistance — targeted heavily toward farmers in Arkansas and other southern states — was ‘paid for’ and was ‘deficit neutral.’

“But an examination of the program’s funding mechanism by The Fiscal Times found that it will result in an increase in the budget deficit and require additional borrowing by the government. USDA and federal budget officials contacted for this article did not take issue with that conclusion.”

Mr. Morgan explained that, “Although cotton yields were down across the South in 2009 due to flooding and wet weather, soybean and rice crops that are also eligible for aid achieved yields close to or above those of the previous decade, according to data compiled by the National Agricultural Statistics Service. Crops in many southern states have experienced excellent harvests and high prices this year.

“Nonetheless, farmers will be able to qualify for a check merely by certifying they had a 2009 loss of 5 percent on their rice, cotton, soybean or sweet potato crops last year. Those applying won’t need to supply new documentation to USDA, although their records could be subject to a spot check. Losses of 5 percent on a crop are within the range of normal year-to-year harvest variations, which is why previous disaster programs have generally required proof of losses of at least 20 percent.

“Lincoln, a former House member elected to the Senate in 1998, moved up to become chair of the Agriculture Committee late last year, and then used her enhanced position to pressure Democratic leaders and the White House to support additional aid for farmers in her region. But that has done little to help her retain her seat, and she is running far behind her Republican challenger in the polls. Her office did not respond to a request for comment.”

After additional analysis, Friday’s article added that, “Squeezed by the spending restrictions and an unanticipated $550 million expenditure for Lincoln’s program, the USDA confirmed in a statement last week that bonus buys will be financed through the department’s borrowing arm, the Commodity Credit Corporation (CCC). In effect, department officials are shifting the necessary borrowing for Lincoln’s farm aid initiative to the CCC.

“The Commodity Credit Corporation, another Depression-era entity with broad authority, can borrow up to $30 billion a year to do such things as supporting commodity prices and meeting domestic food requirements.

“‘If we need to make a bonus buy in fiscal year 2011 we will go to the CCC,’ said Jonathan Coppess, administrator of the USDA’s Farm Service Agency which will manage the new disaster program. But such borrowing adds to the deficit, according to federal budget officials who asked not to be identified because the matter is deemed controversial.

Aside from the issue of the program’s cost to taxpayers, there are also questions about the need for the special relief from Washington in a year in which millions of Americans suffered economic hardship without receiving help from the government.”

Biofuels

Bloomberg writers Mario Parker and Leela Landress reported on Friday that, “The highest corn costs in two years are failing to dent profits for U.S. ethanol producers as demand grows and prices for the biofuel and a byproduct used for animal feed increase.

“Plants in Iowa are making an average 27 cents for every gallon of fuel produced, compared with a loss of 6 cents as recently as July, according to Ag Trader Talk, an online grains- information service in Clive, Iowa. Mills in Illinois are making about 25 cents, up from a loss of 2 cents, it said.”

The article noted that, “A combination of increased ethanol usage, higher prices for dried distillers grains — a byproduct of the fermentation process — and natural gas costs near a 13-month low are benefitting ethanol refiners. The fuel jumped 20 percent this year, the second-best energy investment after coal, which has gained 35 percent. Corn, the main feedstock, rose 40 percent.”

Dan Piller reported on Friday at the Green Fields Blog (Des Moines Register) that, “The big bet oil refiner Valero Energy of Texas made on ethanol last year continues to pay off as the company reported $47 million in operating profits from its ten ethanol production facilities, including plants at Fort Dodge, Charles City, Albert City and Hartley.

“For the nine months ended Sept. 30 Valero reported operating profits from ethanol of $139 million, up from $71 million last year when it took over seven plants from bankrupt VeraSun Energy of Sioux Falls, S.D. Valero has since added three more ethanol plants.”

Animal Agriculture

Karen Dillon reported yesterday at The Washington Post Online that, “For decades, factory farms have used antibiotics even in healthy animals to promote faster growth and prevent diseases that could sicken livestock held in confined quarters.

“The benefit: cheaper, more plentiful meat for consumers.

But a firestorm has erupted over a federal proposal recommending antibiotics only when animals are actually sick.”

Yesterday’s article indicated that, “The guidelines, which say there is a clear risk to human health, are only recommendations but are a first step toward possible regulations to limit the use of antibiotics in the United States.

“Despite meat industry protests, the medical community says that the FDA recommendations don’t go far enough. They are weak and voluntary, and after decades of study, the FDA should just issue regulations, the medical industry says.”

The FDA is expected to issue the final guidance possibly early next year. An FDA spokeswoman said the agency wanted to move quickly to begin phasing in its guideline principles, but first it is studying an overwhelming number of comments received from the public,” the article said.

Food Safety

Philip Brasher reported on Friday at The Des Moines Register Online that, “Egg producers and government regulators are separately taking steps to improve egg safety in the wake of a nationwide salmonella outbreak that was tied to farms in Iowa.

“Producers ‘want nothing else to happen like what happened in Iowa,’ said Howard Magwire, vice president of government relations for the United Egg Producers. The trade group is developing safety standards for the industry that would go beyond federal regulations.

The article stated that, “The United Egg Producers is developing industry standards that will mirror the agency’s production rules and go a step further by requiring participating producers to vaccinate all hens against salmonella. Because of contamination that the food agency found in feed at one of the Iowa operations, the producers’ group also is considering writing sanitation standards for feed mills, Magwire said.”

Mr. Brasher noted that, “Meanwhile, the USDA and FDA have given themselves until Nov. 30 to come up with a plan for training employees to spot food-safety problems, according to a Sept. 15 letter. ‘It is imperative that field employees are properly educated as to these responsibilities,’ Agriculture Secretary Tom Vilsack wrote in the letter.

Vilsack told The Des Moines Register that the food agency will train USDA egg inspectors to spot problems on egg farms. He said the two agencies began working on ways to better coordinate their oversight of food shortly after President Barack Obama took office in January 2009, he said. USDA and FDA officials have been meeting to iron out details of how they will work together.”

Trade

Reuters writers Tracy Zheng, Niu Shuping and Tom Miles reported on Friday that, “China has rejected a cargo of U.S. corn after finding it contained an unsanctioned genetically modified strain, two sources familiar with the situation said on Friday.

“‘China only allows 11 varieties of GM corn to be imported to the country, and the cargo was found with GM material outside the 11 varieties,’ said one source, who declined to be identified.

“‘The animal and plant quarantine department has barred it from entering China,’ the source said. He said it was supplied by a Japanese trading house.”

The article added that, “Chinese corn imports have rocketed this year, and are expected to continue growing next year, after China’s own harvest couldn’t keep up with a boom in demand, mainly driven by production of corn-based animal feed.

“It was unclear if the rejection of a cargo on GMO grounds would have a wider impact on the corn trade.”

Climate Issues

The Washington Post editorial board opined yesterday that, “It’s not plan A, B or even C, but if Congress continues to do nothing on climate change, environmentalists can at least take heart that some states are planning to cut greenhouse emissions on their own. As usual on such issues, California leads the way, with a robust greenhouse gas law mandating a reduction in the state’s emissions to 1990 levels by 2020, which its state legislature approved in 2006. But even that could be undone on Tuesday, when voters consider Proposition 23, an oil-company-backed ballot measure that would all but repeal the state’s emissions-curbing law. Its passage would be disastrous.

“If one of America’s most environmentally conscious states repudiates its greenhouse gas law, others’ enthusiasm to move in the absence of a federal program will deflate, and the country may lose its chance to examine a large-scale, market-based, domestic carbon-reduction program at work.”

Dennis T. Avery, the director of the Hudson Institute’s Center for Global Food Issues, indicated in a piece from last week (“Why Are Republicans Climate Skeptics?”) that, “The New York Times marvels editorially that none of the Republicans running for the Senate accept the ‘scientific consensus that humans are largely responsible for global warming.’ Maybe that’s because the Republicans come from more rural (Red) states that haven’t had any warming—man-made or otherwise.

“My colleague Ed Long, formerly a NASA physicist, has found a severe problem with the ‘official’ U.S. temperature records from the Goddard Space Institute and the National Data Collection Center. Both data sets deal with the inevitable gaps in station-by-station data by averaging the gap station with another nearby station. Supposedly, this works because ‘stations in the same latitude bands tend to share a more similar climate.’

Too often, however, this has led to averaging rural and urban temperatures together.”

The Hudson piece added that, “Long says GISS ‘adjustments’ over ten years have progressively lowered temperatures for far-back data and raised the temperatures in the recent past. This ‘adjustment’ increased a 0.35 degree C per century uptrend in 2000 to 0.44 degrees C per century in 2009—a 26 percent increase. NCDC, meanwhile, has shifted the ‘official’ rate of temperature change for 1940–2007 from 0.1 degree per century in the raw data to an ‘adjusted’ 0.6 degrees C per century—a 600 percent ‘adjustment.’

To assess the real size and meaning of the rural-urban divergence, Long selected one rural station and one urban station per state; the rural and urban station trends were then averaged separately. The results are startling.

The rural data set shows no warming since 1890! The temperatures have trended up and down, but there’s no overall increase. The urban stations show a strong warming, especially after 1965. Are these two ‘skeleton sets’ of raw data more representative of reality than the urban-polluted ‘adjusted’ data sets in the official records? Long says ‘Yes’”

Political Notes

Peter Wallsten and Danny Yadron reported in today’s Wall Street Journal that, “Republicans are positioned for large gains Tuesday, likely retaking the House and picking up seats in the Senate, amid strong voter frustration with President Barack Obama and the Democratic-run Congress, according to a new Wall Street Journal/NBC News poll.

“Republicans held a six-point edge, 49% to 43%, when likely voters were asked which party they hoped would be in charge.”

“The new Journal poll found the economy is a major factor motivating voters,” today’s article said.

With respect to the South Dakota Congressional race, The Washington Post noted yesterday that, “In the heated race for South Dakota’s sole House seat, Republican state Rep. Kristi Noem’s campaign against incumbent Stephanie Herseth Sandlin (D) [an Ag Committee Member] has become a cause celebre among conservatives.

“Noem has attacked Herseth Sandlin for being too close to the Democratic leadership, while Democrats have gone after Noem for an awful driving record that includes 20 speeding tickets, six court notices for failure to appear and two arrest warrants.

The matchup has become one of the most intriguing of the cycle.”

A news release Saturday from Rep. Herseth Sandlin’s office stated that, “Today, U.S. Representative Stephanie Herseth Sandlin hosted U.S. Department of Agriculture Secretary Tom Vilsack at Augustana College in Sioux Falls, SD. Secretary Vilsack and Rep. Herseth Sandlin held a panel discussion and question-and-answer session on the biofuels industry and the rural economy. They highlighted new USDA initiatives to install 10,000 blender pumps and develop aviation biofuel; the leadership role of South Dakota in all aspects of biofuels; and the future opportunities for South Dakota producers.”

Meanwhile, Kasie Hunt reported yesterday at Politico that, “One vote.

“That’s all John Thune needs to get reelected as a U.S. senator because he’s running completely unopposed this year — an unusual circumstance that has allowed him to travel the country raising money for Republicans and campaigning for other candidates as he weighs a possible presidential run in 2012.”

The article stated that, “At the moment, Thune’s focus is on Noem, a candidate many Republicans expect will immediately become a star if she defeats Rep. Stephanie Herseth Sandlin. Thune is devoting two days on the trail to her, making 10 stops in nine cities and towns, where crowds vary from about 20 in tiny DeSmet to hundreds in larger towns.

“Their stump speeches are short: Thune spends a few minutes talking about the deficit before introducing Noem as a candidate who can balance a budget, meet a payroll and bring ‘common-sense, Midwestern conservative values’ to Congress.”

In the North Dakota Congressional race, The Washington Post reported yesterday that, “Few of the country’s imperiled Democrats are in as much trouble as Rep. Earl Pomeroy (D) [an Ag Committee Member], who has held North Dakota’s lone House seat for 18 years. Running against state Rep. Rick Berg (R), Pomeroy’s party identification appears to be weighing him down in this Republican-leaning state. Pomeroy is running as a moderate, but the GOP has sought to tie him to President Obama and the national Democratic leadership.”

Valerie Bauerlein reported in today’s Wall Street Journal that, “Democratic U.S. Rep. Mike McIntyre [an Ag Committee Member] has built a career of bringing home the bacon to his rural district in the state’s sandy southeastern corner, from computer labs to veterans’ clinics.

But now Mr. McIntyre is fighting for his political life against Republican challenger Ilario Pantano, an Iraq War veteran and tea-party favorite who warns he won’t be a ‘pork and candy guy.’”

The Journal article stated that, “More than half of the Blue Dog Democrats running for re-election are at risk, including four North Carolina House members, according to the nonpartisan Cook Political Report. Earlier this month, the Cook report moved Mr. McIntyre’s race into a more competitive category, from a ‘likely’ Democratic win to ‘lean’ Democratic.”

The Washington Post reported yesterday that, “And in the state’s [Arkansas] 1st and 2nd districts, Democratic incumbents Marion Berry and Vic Snyder, respectively, opted to retire rather than face tough campaigns.

“Republican Tim Griffin is favored in the 2nd District. The 1st District race is a tossup between Berry’s chief of staff Chad Causey and Republican Rick Crawford, a farm broadcaster.”

Curt Hodges reported in today’s Jonesboro Sun (AR) that, “Both candidates for Congress in Arkansas’ 1st District were going full steam ahead on Saturday, and they plan to keep up the pace as the campaign heads to Tuesday’s general election.”

The article noted that, “‘I just want everyone to know that I will be a strong advocate for the 1st District,’ Causey said. He said he will support Arkansas farmers and work to compile a farm bill that will help keep the safety net beneath American agriculture.”

Keith Good

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