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Biofuels- Taxes; Farm Bill- Ag Economy; Climate; and Biotech

Biofuels- Taxes- Package Passes House

David M. Herszenhorn reported today at The New York Times Online that, “Congress at midnight Thursday approved an $801 billion package of tax cuts and $57 billion for extended unemployment insurance. The vote sealed the first major deal between President Obama and Congressional Republicans as Democrats put aside their objections and bowed to the realignment of power brought about by their crushing election losses.”

The Times article explained that, “The final vote in the House was 277 to 148 after liberal Democrats failed in one last bid to change an estate-tax provision in the bill that they said was too generous to the wealthiest Americans and that the administration agreed to in a concession to Republicans. The amendment failed, 233 to 194.

“Supporting the overall measure were 139 Democrats and 138 Republicans; opposed were 112 Democrats and 36 Republicans.

“The bill extends for two years all of the Bush-era tax rates and provides a one-year payroll tax cut for most American workers, delivering what economists predict will be a needed lift. The Senate approved the package on Wednesday by 81 to 19.”

Janet Hook and John McKinnon reported today at The Wall Street Journal Online that, “The bill goes to the White House for President Barack Obama’s signature after the House overcame persistent liberal opposition and passed it with an unexpectedly large bipartisan majority of 277-148. The measure passed the Senate earlier in the week also with an overwhelming majority.”

The Journal writers pointed out that, “The measure includes retention of the Bush-era tax rates and breaks for all earners for two years, as well as protection through 2011 from the Alternative Minimum Tax for more than 20 million mostly middle-class households. It includes a new payroll-tax credit for virtually all workers, as well as a 13-month extension of benefits for the long-term unemployed. The wealthy won a lowered estate tax rate for the next two years of 35% on estates of more than $5 million.”

Politico writer Jake Sherman reported today that, “The amendment to alter the estate tax provision – pushed by liberals – failed 194 to 233, with one voting present. Several Democrats joined Republicans to defeat the bill, including departing Reps. Artur Davis (Ala.), Steve Kagen (Wisc.), Glenn Nye (Va.) and Brad Ellsworth (Ind.).”

Lori Montgomery and Shailagh Murray reported today at The Washington Post Online that, “Obama administration officials Thursday night hailed the bill’s passage. ‘We had a responsibility to protect middle class families from a tax increase that would have hit their paychecks and harmed the recovery,’ Treasury Secretary Timothy F. Geithner said in a statement. ‘And while we do not agree on everything in this legislation . . . this legislation is good for growth, good for jobs, good for working and middle class families, and good for businesses looking to invest and expand their workforce.’”

A news release from the Renewable Fuels Association (RFA) stated in part that, “The [RFA] today applauded the swift action of the House of Representatives in passing compromise tax legislation that included extensions of key tax credit for the production and use of domestic ethanol. The bill will now be sent to President Obama for his signature.”

And Growth Energy CEO Tom Buis indicated that, “This vote today, which includes an extension of ethanol tax policy, will provide certainty in the market and give us a chance to work with Congress and the Administration to enact longer term tax policy reforms that will level the playing field in the fuels market. The infrastructure build out proposed in our Fueling Freedom proposal will help open the market to reduce our dependence on foreign oil, improve our environment, create U.S. jobs that can’t be outsourced and strengthen our national security.”

Rep. Jeff Flake (R-AZ) had sent a Dear Colleague Letter yesterday, which stated that; “The tax deal currently slated to be considered by the House would extend the expiring ethanol tax credit, as well as the prohibitive tariff on imported ethanol, for one year. The tax credit cost taxpayers $6 billion last year and is an unfortunate addition to an already bloated deal to curry favor. Congress can, and should, do better.”

In other news regarding biofuels, Todd Neeley reported yesterdays at the DTN Ethanol Blog that, “While it appears the volumetric ethanol excise tax credit and the ethanol import tariff are likely to be extended for one year, the fate of the biomass crop assistance program, or BCAP, may be in doubt.

“The Obama administration recently announced rules for BCAP, which is designed to pay farmers to provide biomass to approved facilities. It is considered to be an important program in the success of Poet LLC’s corn stover/cobs-to-ethanol plans in Emmetsburg, Iowa. BCAP is designed to pay farmers $45 per ton to provide biomass, making it more economical for farmers to be involved in biomass harvesting.”

Mr. Neeley noted that, “Without BCAP the cost to the farmer is more prohibitive.

The omnibus spending bill that currently is under a microscope because of more than 6,900 earmarks attached to the legislation designed to fund the government, would do away with funding for BCAP.”

However, Corey Boles and Brody Mullins reported today at The Wall Street Journal Online that, “In a victory for fiscal conservatives, Senate Democrats abandoned a $1.1 trillion bill [the omnibus spending bill] to fund the federal government for the remaining nine and a half months of the fiscal year, acknowledging that there isn’t sufficient support among lawmakers.

“A visibly frustrated Majority Leader Harry Reid (D., Nev.) said late Thursday that he was forced to drop the bill after nine Republicans who had previously indicated they would support the measure wouldn’t now vote for it.”

Farm Bill- Ag Economy

A news release yesterday from the House Committee on Agriculture Republicans stated that, “Today, House Agriculture Committee Chairman-elect Frank Lucas of Oklahoma issued the following statement congratulating the new Republican members of the House Agriculture Committee for the 112th Congress.

“I am pleased to welcome our new members to the Agriculture Committee. They represent a broad slice of the country and will bring that perspective as we address the issues facing production agriculture and rural economies.”

“The new Republican members on the Agriculture Committee are:

Rick Crawford (AR)
Scott DesJarlais (TN)
Renee Elmers (NC)
Stephen Fincher (TN)
Bob Gibbs (OH)
Chris Gibson (NY)
Vicky Hartzler (MO)
Tim Huelskamp (KS)
Randy Hultgren (IL)
Reid Ribble (WI)
Martha Roby (AL)
Bobby Schilling (IL)
Austin Scott (GA)
Steve Southerland (FL)
Marlin Stutzman (IN)
Scott Tipton (CO)

In other news, Linda H. Smith reported yesterday at DTN (link requires subscription) that, “Sure farm incomes rebounded about 30 percent this year versus 2009. But it’s 2011 that is poised to shatter the record book for many grain and cotton growers — if prices don’t crash between now and crop insurance price discovery time.

“‘We all know how quickly prices can change,’ said Gary Schnitkey, a University of Illinois economist and crop insurance expert. Much could happen before the Risk Management Agency sets price guarantees for most spring-planted crops based on February futures.

But if Illinois growers sold a normal crop at current prices ($5 corn, $12 soybeans), they’d take home 2011 revenue a third larger than the record 2007 and 2008 levels. So instead of record $175,000 to $200,000 average net incomes for corn-soybean growers in the state’s farm business farm management association, they could run closer to $300,000, Schnitkey said.”

The DTN article added that, “He’s recommending growers buy the highest coverage, lowest deductibles they can afford, preferably revenue coverage at 85 percent or 80 percent, or county-based Group Risk Income Protection (GRIP) at 90 percent. Plans like GRIP don’t offer individual coverage from spot yield problems, but they do deliver the best coverage in a price collapse. When prices crashed in mid-2008, 90-percent GRIP paid $400 per acre in some Iowa counties.

“‘The past couple of years, pre-harvest marketing has not turned out to be the best option, but we’re coming in with such prices we should give it a hard look,’ he said. ‘It would be a shame to let profits like this fall off the table, should circumstances change by harvest.’”

Liam Pleven reported yesterday at The Wall Street Journal Online that, “Arable land has again become a hot commodity—despite the struggles of the broader real-estate industry. It’s attracting buyers ranging from wealthy individuals and institutional investors to farmers themselves. Many are investing in farmland funds, though some farmers are expanding operations.”

“Farmland values in key upper Midwest states shot up 10% in the third quarter compared with last year, according to the Federal Reserve Bank of Chicago. The Kansas City Fed says prices of irrigated farmland jumped 12% in Kansas and Nebraska in the same period. The recent increases follow a 55% rise in value in real terms over the past decade.”

The detailed Journal article added that, “And then there’s the possibility of another collapse in land values.

“U.S. Agriculture Secretary Tom Vilsack says the situation now is different. ‘I don’t think we’re looking at a bubble, just because I think people have been far more conservative about debt,’ Mr. Vilsack says.”

Meanwhile, Ian Berry reported yesterday at The Wall Street Journal Online that, “U.S. AgBank and CoBank, two of the nation’s largest agricultural lenders, plan to merge next year, expanding their reach as the farm economy booms.

“The banks are two of the five banks that make up the Farm Credit System, a federally chartered network that accounts for more than a third of lending in the rural U.S. The banks serve as wholesale providers of financing to farm credit associations and lend to agribusinesses and rural utilities directly.”

Climate Issues

Reuters writers Richard Cowan and Timothy Gardner reported yesterday that, “Senator John Rockefeller of West Virginia on Thursday said he would seek a vote before the end of the current congressional session on his bill to postpone Environmental Protection Agency regulation of smokestack carbon dioxide emissions for two years.

“With EPA regulations due to kick in soon that would require big factories to start cutting pollution blamed for global warming, Rockefeller said: ‘I want to make it clear that I intend to get a vote this year on my EPA-suspension legislation.’”

Ben Geman reported yesterday at The Hill Online that, “Sen. Jay Rockefeller (D-W.Va.) — stymied thus far in his effort to delay EPA climate regulations — said he might seek a suspension of Senate rules to bring his legislation to the floor this year.

He would need 67 votes to suspend the chamber’s rules and bring his bill to the front of the line, making it extremely unlikely he could advance the measure. But it would give him a chance to effectively put members on the record on his bill to delay climate regulations.”

Darren Goode reported yesterday at Politico that, “A POLITICO analysis shows at least 56 senators would likely support Rockefeller’s amendment.”

A separate item posted yesterday at Politico reported that, “Leading House climate skeptic Jim Sensenbrenner appears to have landed a perch to lead investigations into global warming science.

“The Wisconsin Republican is set to become the vice chairman of the House Science Committee under incoming Chairman Ralph Hall (R-Texas), Hall told POLITICO Thursday.

“‘With his background, his insistence, he can do the mean things that we don’t want to do,’ Hall said. ‘I’m a peaceful guy; he likes combat.’”

Meanwhile, the AP reported yesterday that, “California regulators on Thursday approved the first system in the nation to give polluting companies such as utilities and refineries financial incentives to emit fewer greenhouse gases.”

“California is trying to ‘fill the vacuum created by the failure of Congress to pass any kind of climate or energy legislation for many years now,’ said [Mary Nichols, chairwoman of the state’s air quality board].”

The article included this explanation of the plan: “A company that produces pollution, such as a utility or a refinery, buys a permit from the state that allows it to send a specified amount of carbon dioxide and other greenhouse gases into the air each year.

“Those permits could then be bought and sold by the polluters in a marketplace.”

The AP article added that, “If a company in Fresno is 15 percent under its pollution allowance, it can sell the unused portion to a company in Long Beach that has exceeded its quota. The Fresno company gets to keep the money.

“Polluters can even make a profit, if the marketplace sets a price above the initial cost of the permit.”

In other climate related developments, DTN Political Correspondent Jerry Hagstrom reported yesterday (link requires subscription) that, “Farmers who think they won the battle over climate change when the cap and trade bill was stopped in Congress now face a related fight that may be harder to win: pressure from their own food processing and retailer customers to prove that commodities and other ingredients are produced in a ‘sustainable’ way.

“Last week, the USA Rice Federation, an organization of farmers, millers, merchants and other related businesses, held a session at its annual rice outlook conference here [Biloxi, Miss.] that highlighted how seriously American agriculture is beginning to take this nongovernmental challenge.

“The concept of sustainable development has been around since a 1983 United Nations commission said ‘the accelerating deterioration of the human environment and natural resources and the consequences of that deterioration for economic and social development’ meant that development had to change so that it ‘meets the needs of the present without compromising the ability of future generations to meet their own needs.’”

Mr. Hagstrom added that, “As vague and amorphous as that sounds, governments and international institutions have been trying to apply it to policy ever since, and they are increasingly joined by global corporations. Food retailers such as Walmart and global processors such as Kellogg’s, the cereal giant, are feeling the pressure from environmentally minded customers and governments other than the United States.”

It’s not clear what exactly Kellogg’s and other food processors and retailers will expect of farmers in the future, but it is clear they want the farmers to do as much as possible to reduce their environmental impact so that the final products will win consumer acceptance,” the DTN article said.


Philip Brasher reported yesterday at the Green Fields Blog (Des Moines Register) that, “The Obama administration is considering geographic limits on where biotech alfalfa can be grown, a restriction that would represent a shift in the government’s policy toward genetically engineered crops” [related USDA news release available here, related audio from Ag. Sec. TomVilsack available here].

Mr. Brasher added that, “Farmers who grow conventional or organic alfalfa went to court to block sales of Monsanto Co.’s biotech alfalfa because of concerns that it would contaminate seed supplies.

“Agriculture Secretary Tom Vilsack, who has been criticized by anti-biotech activists who claim he’s too close to Monsanto and other biotech companies, says his department needs to start taking into consideration the impact that genetically engineered crops can have on non-biotech farmers. Both the biotech and non-biotech sectors need to ‘thrive together,’ he said.”

Keith Good