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Biofuels; Farm Bill; Food Safety; Environmental Perspectives; and Ag Economy

Biofuels: E15 Lawsuit

Reuters writer Timothy Gardner reported yesterday that, “U.S. auto and engine makers sued the Environmental Protection Agency on Monday for allowing higher blends of ethanol for newer cars, saying it could confuse consumers at fuel pumps and lead to engine damage in older vehicles.

“The suit, the second major legal challenge to the EPA on higher ethanol blends in as many months, asks the federal appeals court in Washington to send the decision back to the EPA and to review whether the decision violates the Clean Air Act.”

The article reminded readers that, “The EPA ruled in October that cars built in 2007 or later may burn gasoline containing 15 percent ethanol, or E15. Current legal levels are 10 percent. The EPA may decide as soon as January to allow E15 for cars built in 2001 and later.

“Growth Energy, an ethanol industry group, had asked the EPA for a waiver for the sale because the business faces a glut of the alternative fuel.”

Mr. Gardner pointed out that, “The suit is the latest hurdle for the U.S. government and ethanol producers to increase the amount of renewable fuel to be sold in the country.

Last month, food groups including the Grocery Manufacturers Association filed a suit seeking to overturn the EPA’s October E15 decision. They said allowing E15 could push up food prices because ethanol in the United States is mostly made from corn, also a feed for livestock.

“More than 30 percent of the U.S. corn crop goes to making ethanol, and corn futures prices are near two-year highs.”

Bloomberg writer Thom Weidlich reported yesterday that, “Organizations including the Alliance of Automobile Manufacturers today asked the federal appeals court in Washington to review whether the EPA’s ‘partial waiver’ allowing so-called E-15 fuels violates the Clean Air Act.”

The manufacturers said the testing EPA used for its decision was put in the administrative record too late for meaningful comment, that the regulator’s own statute says fuels can’t be approved that could cause failures, and that E-15 has been shown to adversely affect engines,” the Bloomberg article said.

Ben Geman stated yesterday at The Hill’s Energy Blog that, “The coalition is comprised of the Alliance of Automobile Manufacturers, the Association of International Automobile Manufacturers, the National Marine Manufacturers Association and the Outdoor Power Equipment Institute (which represents makers of equipment such as lawnmowers, garden tractors and chainsaws). It goes by the Engine Products Group, or EPG.”

The AP reported yesterday that, “The petition was filed in the U.S. Court of Appeals for the District of Columbia Circuit;” and added that, “Automakers say they are worried the EPA decision would eventually lead to motorists unknowingly filling up their older cars and trucks with E15 and hurting their engines. The problem could be exacerbated if E15 fuels are cheaper than more conventional blends, prompting owners of older vehicles to use the fuel despite the potential engine problems.”

The Renewable Fuels Association noted in part yesterday that, “EPA could have avoided this kind of market confusion by following all the science to its logical conclusion and allowing the use of E15 for all cars and light duty pickup trucks.”

While Growth Energy CEO Tom Buis stated that, “Concerns about misfueling are premature, as EPA is drafting a robust labeling rule and will conduct a vigorous public education campaign, and we are confident that the process will be successful.”

Farm Bill: Spending- Political Background

Manu Raju reported yesterday at Politico that, “Emboldened by Democrats’ decision to scrap an omnibus funding bill and extend the Bush-era tax cuts for two years, [Senate Minority Leader Mitch McConnell] is ready to deploy his larger Republican minority next year, insisting that Democratic leaders will need to bend to his party’s will – particularly on spending issues. Indeed, McConnell is signaling that the White House should be prepared in the new Congress to support Republican policies – not the other way around.”

Bloomberg writer Heidi Przybyla reported yesterday that, “Senators Mark Warner and Saxby Chambliss will seek to put the U.S. debt atop the agenda early in next year’s Congress by proposing legislation to slash government spending, reduce popular tax breaks and trim entitlement programs.

“Warner, a Virginia Democrat, and Chambliss, a Georgia Republican, have been working over the past six months to court a group of 25 senators from both sides of the political aisle in hopes of gathering support for their bill, Warner said today in an interview.

The legislation is based on a plan by the co-chairs of President Barack Obama’s debt-reduction panel that earlier this month failed to get enough support for its recommendations to be sent to Congress.”

Recall that the debt-reduction panel’s recommendations included a $10 billion cut in farm spending.

Sen. Chambliss is currently the Ranking Member on the Senate Ag Committee but media reports have suggested that he is expected to give up that slot but remain on the Committee.

Meanwhile, Sen. Tom Coburn (R-OK) yesterday “released a new oversight report, ‘Wastebook 2010’ that highlights some of the most egregious examples of government waste in 2010.

“‘As 2010 ends, millions of Americans are still struggling to find work. Even those lucky enough to have jobs have had to tighten their belts. Yet, Congress continues to find new and extravagant ways to waste tax dollars. In today’s economy, we can’t afford to spend nearly $2 million to showcase neon signs no longer in use at Las Vegas Casinos, nor can Congress and federal agencies afford to spend nearly $1 billion a year on unnecessary printing costs,’ Dr. Coburn said.”

Farm Bill: Potential Issues

More specifically on Farm Bill policy issues, a recent Congressional Research Service Report (CRS), “Farm Safety Net Programs: Issues for the Next Farm Bill,” by Dennis A. Shields, Jim Monke, and Randy Schnepf (Dec. 7) stated on page 19 that, “For supporters of farm programs, continued calls for wide-scale emergency disaster relief are an indication that the farm safety net is not functioning as well as producers and policymakers would like. Two programs with the most genuine safety net features, the SURE and ACRE programs, have been criticized as being too complex, which reportedly has limited participation, while providing too few benefits for farmers who face economic hardship. Also, some farmers have complained, both recently and prior to the 2008 farm bill, that MAL benefits and counter-cyclical payments do not provide enough assistance because trigger levels are mostly below current and expected price levels. Production costs relative to current levels of support are also a concern for many farmers, including dairy producers.

Critics of farm programs have long questioned the need for farm subsidies, contending that resources for agriculture could be better spent advancing environmental goals or improving agricultural productivity. Others cite an economic argument against the farm commodity programs: like any subsidy, farm programs distort production, capitalize benefits to the owners of the resources, encourage concentration of production, and comparatively harm smaller domestic producers and farmers in lower-income foreign nations.”

The CRS report added that, “Several issues might shape any potential changes to farm safety net programs in the next farm bill debate.

Managing farm risk—Crop insurance has very high participation rates, a result driven in part by the high subsidization levels but also because the program in fact reduces both yield and revenue risks. Some members of Congress and policy observers have wondered if crop insurance might be the only element of the farm safety net that remains in the distant future if farm programs are rationalized and funding is reduced.

“Farm policy observers have identified significant overlap between farm programs. For example, the ACRE program and crop insurance both address revenue variability. Also, the current farm program mix has several variations of ‘counter-cyclical-style’ payments, including marketing loan benefits, traditional (price) counter-cyclical payments, ACRE (revenue) payments, revenue-type crop insurance, and whole-farm insurance. In the view of some, a different array of programs might reduce farm risk in a more cost-effective way.”

In other Farm Bill related developments, a news release yesterday from USDA stated that, “Agriculture Deputy Secretary Kathleen Merrigan today announced USDA will provide funding to help organic producers and those transitioning to organic production implement resource conservation practices on their agricultural operations.

“‘Increasing consumer demand for organically grown foods is providing new opportunities for small and mid-size farmers to prosper and stay competitive in today’s economy,’ Merrigan said. ‘The 2008 Farm Bill calls for this assistance, and we want to help these farmers protect the natural resources on their land and create conditions that help foster organic production.’”

Farm Bill- House Ag Committee

The “Washington Insider” section of DTN reported yesterday (link requires subscription) that, “Incoming House Speaker John Boehner, R-Ohio, and the new majority Republican Party have decided to cut the size of a number of committees in the next Congress, but Agriculture is not one. The size of that committee will remain unchanged at 46 members.

“Next year, the committee will comprise 26 Republicans and 20 Democrats. The current committee has 28 Democrats and 18 Republicans.

“Incoming Agriculture Committee Chairman Frank Lucas, R-Okla., last week announced that 16 freshman Republicans will be added to the committee. With the retirement of former Rep. (and incoming Sen.) Jerry Moran, R-Kan., it therefore appears that seven current Republican members will leave the committee to make room for the newcomers.”

A news release last week from Rep. Glenn Thompson (R-PA) noted that, “[Rep. Thompson] today learned he has been reappointed to the House Agriculture Committee…During the present Congress, as a member of the Agriculture Committee, Thompson was active in the regulatory framework for dairy pricing, rural development and has traveled the country for field hearings in anticipation of the reauthorization Food, Conservation & Energy Act of 2008 – also known as the ‘Farm Bill.’ ‘I will continue to serve on this Committee to help serve Pennsylvania’s family farmers and agricultural sector.’”

Also last week, Rep. Randy Neugebauer (R-TX) stated in a release that, “I am honored to be reappointed to the Agriculture Committee. I look forward to representing the interests of the farmers and ranchers in the 19th District during the upcoming 2012 Farm Bill debate. The work done on this Committee is essential to ensuring the future of American agriculture and it’s competiveness in the global marketplace. My priorities on the Agriculture Committee will be to further improve crop insurance and ensure there remains a viable safety net for our nation’s producers. Agriculture is an important issue in West Texas and the Big Country.”

Meanwhile, a news release Friday from Sen. Sherrod Brown (D-OH) indicated that, “At yesterday’s Ohio Grain Farmers Symposium, staff from the office of U.S. Sen. Sherrod Brown (D-OH) delivered a briefing on expectations for the 2012 Farm Bill. The U.S. Senate will begin hearings to craft the upcoming Farm Bill in January, as the 112th Congress convenes. The annual symposium, sponsored by the Ohio Corn Growers Association, Ohio Soybean Association, and Ohio Wheat Growers Association, was held in Lima yesterday.

“‘Ohio agriculture has a rich history and a bright future. The Farm Bill supports Ohio farmers and invests in rural communities. It funds infrastructure in rural communities, provides new incentives to protect our natural resources, develops local markets for family farmers, helps struggling families put food on the table, and promotes healthy diets,’ Brown said. ‘I will continue to work on behalf of Ohio farmers to strengthen the 2012 Farm Bill.’”

Food Safety

Andrew Zajac reported in today’s Los Angeles Times that, “In a world where we get garlic from China, shellfish from Thailand and sugar cane from Mexico, Congress is poised to approve an ambitious food safety bill that would strengthen the nation’s top regulator and impose new rules on domestic production and trading partners.”

The House is expected to pass the measure Tuesday, sending it to President Obama for his signature,” the article said.

Recall that the Senate passed the food safety bill for the second time on Sunday.

Richard Raymond, a former undersecretary for food safety at the U.S. Department of Agriculture, noted last week at FeedStuffs Online that, “Never again will a U.S. Congressman or Senator be able to stand up in the halls and conference rooms of the U.S. Capital Building and say, ‘Last year, 76 million Americans suffered from a foodborne illness, 325,000 were hospitalized and 5,000 died’ so we must pass the food safety bill, and ‘So many people are sickened by eating food that we must have a single food safety agency.’

“The numbers above are from a report by Mead et. al published in January, 1999, in the CDC’s ‘Emerging Infectious Diseases’ journal that estimated the annual impact of foodborne illnesses in the U.S. A report that was based on the best data available at the time, but one that badly needed updating as illness rates have decreased for the major pathogens, and the data bases have become much more robust with time.

“But now they will quote the latest Center for Disease Control estimates (I stress ESTIMATES) released Dec. 15 and say 48 million people in America (1 in every 6) get sick every year, 128,000 are hospitalized and 3,000 die. To see the latest reports that have the media buzzing, go to www.cdc.gov./ncidod/EID/indes.htm or you can wait for the January edition of the hard copy of the CDC’s journal, ‘Emerging Infectious Diseases’ where the reports will be published.”

Environmental Perspectives

Juliet Eilperin reported in today’s Washington Post that, “As 2010 comes to a close, U.S. environmentalists are engaged in their most profound bout of soul-searching in more than a decade. Their top policy priority – imposing a nationwide cap on carbon emissions – has foundered in the face of competing concerns about jobs. Many of their political allies on both the state and federal level have been ousted. And the Obama administration has just signaled it could retreat on a couple of key air-quality rules.

Hence a shift of focus away from the toxic partisanship of Washington back to the grass roots and the shared values that gave the movement its initial momentum more than 40 years ago.”

The article noted that, “The change casts a sudden pall over environmentalists’ top-down approach…Now, instead of spending millions of dollars seeking to win over wavering lawmakers on the Hill, green groups are ramping up their operations outside D.C., focusing on public utilities commissions that sign off on new power plants and state ballot initiatives that could potentially funnel hundreds of millions of dollars to conservation efforts.”

Ms. Eilperin added that, “It remains unclear how hard President Obama will fight to advance environmental priorities: last week the EPA said it would postpone regulations on smog until July 2011 and on industrial boilers until April 2012, handing two victories to business interests and a bipartisan coalition of lawmakers who warned the stricter rules could exact a severe economic toll.”

Ag Economy

DTN Markets Editor Linda H. Smith reported yesterday that, “The DTN/The Progressive Farmer Agricultural Confidence Index rose from 140 in September to 151 in December, mainly fueled by the increase in commodity prices, reported Mary Rose Dwyer, DTN product manager for the Index.

“Producers are extremely positive about current conditions, with an overall rating of 215, compared with 186 in September. ‘Rising prices for a number of farm commodities have translated into an increase in producer confidence and a more positive evaluation of the present situation,’ said Patrick Westhoff, University of Missouri agricultural economist, when he saw the results.”

And Dow Jones news reported yesterday that, “Cotton rallied to a new post-Civil War closing high Monday as voracious demand in China and concerns over this season’s tight supplies sent prices soaring.

“Cotton prices have more than doubled since the start of 2010, and the gains are expected to be passed on to consumers as early as next year as some major apparel companies mull price increases.”

Keith Good