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Farm Bill; Ag Economy; Biofuels; and Political Notes

Farm Bill: Rep. Frank Lucas- Chairman-Designate of the House Agriculture Committee

Jim Myers reported yesterday at the Tulsa World Online that, “Despite his political resume and physical stature [6 feet 4 inches tall], [Rep. Frank Lucas (R-OK)] has made a career of staying out of the spotlight.

“Randy Swanson, a former Lucas press spokesman and top aide, humorously recalls how the ‘Marlboro Man’ routinely hung behind when cameras showed up at an event.

“Those days could be numbered.”

The article stated that, “With Republicans headed back to power in the House, Lucas is set to take over as the next chairman of the House Agriculture Committee.

“That will make him the first Oklahoman in more than two decades to lead a standing committee in the House, and his chairmanship is expected to coincide with the next reauthorization of the country’s farm bill.

“When pressed about his penchant for not seeking attention in the political world, Lucas concedes that he takes a methodical approach to ‘take care of my folks.’

“‘I prefer to think of myself as the workhorse versus a racehorse. Steady, slow, consistent. Get the job done,’ he said.”

With respect to biographical information, yesterday’s article pointed out that, “A fifth-generation Oklahoman who lives on a farm that has been in his family for nearly a century, Lucas was born Jan. 6, 1960. He graduated from Cheyenne’s public high school and received a degree in agricultural economics from Oklahoma State University in 1982.

“He married his wife, Lynda Lucas, in 1988, the year he was first elected to the state House of Representatives. She runs their 150-head cow/calf operation in Roger Mills County while he’s away.

“Lucas remains involved enough in the family business to have ended up with a broken nose and a missing tooth from working with cattle.”

Mr. Myers pointed out that, “‘Remember, I define making sure that we have a sufficient supply of food for this country right along with defending the borders and protecting the airspace,’ Lucas said about his support of farm subsidies.”

Farm Bill: Nutrition

The USDA’s Economic Research Service (ERS) released a report yesterday titled, “WIC Participation Patterns: An Investigation of Delayed Entry & Early Exit.” An ERS summary of the report stated that, “Despite the health benefits of participation, many eligible households do not participate in the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC). While roughly half of infants born in the United States receive WIC benefits, USDA statistics indicate that eligible pregnant women and children 1-5 years of age are far less likely to participate in WIC than eligible infants and postpartum women. This implies that a number of pregnant women delay enrollment until after having a child, and that many households leave the program when a participating child turns 1 year old.”

Agricultural Economy

Jack Farchy reported yesterday at the Financial Times Online that, “Staple food commodities from corn to soyabeans and palm oil hit their highest levels since the 2008 food crisis amid concerns over dry weather in Argentina.”

The FT article noted that, “Rising prices are heightening concerns of food inflation in emerging economies and increased fears of a food crisis in poorer countries.

“The UN Food and Agriculture Organisation’s food price index, which tracks the cost of cereals, oils, meat, dairy and sugar, rose above 200 points in November for the first time in two years. Recent price moves make another increase likely this month.”

Bloomberg writers Luzi Ann Javier and Rudy Ruitenberg reported yesterday that, “Soybeans rose to the highest level in 28 months in Chicago on concern the dry weather hurting crops in Argentina will spread to Brazil. Wheat rose on forecasts for rain and flooding in parts of eastern Australia.”

Tom Polansek reported in today’s Wall Street Journal that, “Wheat prices soared to the highest point in more than two years on a combination of persistent dry conditions in the U.S. plains states and the disclosure of recent purchases by Egypt, the world’s largest wheat buyer.

“The price of the soft, red winter wheat futures contract for March delivery rose 18 cents, or 2.3%, to $7.9825 a bushel on the Chicago Board of Trade.

It is the highest closing price since August 2008, when grain prices were just beginning to decline following a spike brought on by food shortages.”

John Foley indicated in today’s New York Times that, “Food prices globally are rising to dangerous levels. There is talk of a coming crisis, like the ones that produced riots around the world in 2008 and 1974. Many of the ingredients of a disaster are present, but governments can stop the problem before it causes too much damage.

“A warning sign is the price of traded staples like wheat, corn and rice. Prices shot up in 2010, soaring 26 percent from June to November and brushing the peaks of 2008, according to the Food Price Index kept by the Food and Agriculture Organization of the United Nations. That hits poor countries that import much of their food, including the Philippines, Mexico, Nigeria and Pakistan.”

The Times item added that, “Food riots in 2011 are possible, but not inevitable. Granted, the world will have to get used to more food scares as the population expands and the diets of the poor get richer. But the moment when humanity outgrows the earth is thankfully not yet here. Cool-headed policies can still prevent a real crisis.”

The “Washington Insider” section of DTN (link requires subscription) reported yesterday that, “In the United States, the food price outlook is for only modest increases for 2011 but still is causing concern in some quarters over the possible renewal of the food-versus-fuel debate of 2007 and 2008 — a development that depends heavily on the weather. Such debates can be increasingly important now because they can lead to political fights over whether to waive the U.S. ethanol mandate. And, while such concerns seem remote now, observers suggest that could change quickly under certain conditions.

In addition, increasing prices could lead to other policy conflicts, well ahead of the 2012 farm bill debate. For example, incoming House Agriculture Committee Chairman Frank Lucas, R-Okla., told the press recently he wants to give USDA more flexibility to manage the conservation reserve program so that the department can release idled land.

“Lucas sees that approach as providing USDA the ‘flexibility to allow at least enough acres to come out to maintain some kind of equilibrium’ between the competing uses of corn for livestock feed, food and biofuels. However, if the past is any guide, many conservationists, hunters and others who support the CRP for its environmental and recreational values can be expected to oppose such a proposal, possibly sparking a far-reaching debate on resource use well ahead of the 2012 schedule.”

Meanwhile, a news release yesterday from University of Missouri Extension stated that, “The farm sector will be a bright spot in the Missouri economy in 2011, says a University of Missouri economist.

“‘Net farm income is expected to exceed $3 billion, a milestone reached for the third time since 2004,’ says Scott Brown, with MU Food and Agricultural Policy Research Institute (FAPRI). ‘More incredible is that farm income never topped $1.5 billion prior to 2004.’

Planted areas for soybeans, corn, wheat, cotton, rice, sorghum and harvested hay are expected to total near 14 million acres in 2011, Brown said. That is an increase of over 650,000 acres above 2010.”

The release added that, “Government payments to farmers will be down. With changes in the economy, Missouri producers are expected to see some of the lowest levels in government payments since 1998 during the next few years. High market prices for most commodities have reduced payments to only 5 percent of the total income for the farm sector from 2007 to 2009.”

Jenny Michael reported on Monday at the Bismarck Tribune Online that, “Andy Swenson, North Dakota State University farm management specialist, said commodity prices and input costs are forecast to be high in 2011. Add that to the uncertainty that always exists in agriculture and it’s a ‘mixed bag’ of expectations.”

Monday’s article noted that, “Those strong commodity prices from the end of this year are expected to last into 2011, Swenson said. However, prices for fertilizer, crop insurance and fuel are expected to increase.

“Chemicals, along with corn and soybean seed, should remain about the same price as in 2010, but wheat seed will increase, Swenson said. All in all, he expects costs to be 8 percent to 10 percent higher than in 2010.”

Swenson expect more total acres will be planted in the state, due to a likely reduction in prevented planting acres and an expected increase in the number of hay or pasture acres broken up to take advantage of high commodity prices. What crops will be planted usually depends on the price outlook in the spring, he said.”

C-SPAN’s Washington Journal program is focusing on food policy all this week. A brief summary of yesterday’s program stated: “Chandler Goule, National Farmers Union, Government Relations Vice President looks at how the economy has impacted food policy in America with regard to small farmers.” To watch a replay of this portion of yesterday’s Washington Journal program, just click here.

Biofuels

Chuin-Wei Yap reported yesterday at The Wall Street Journal Online that, “China’s Ministry of Commerce opened an antidumping investigation into U.S. exports of a livestock feed that the U.S. farm industry lobby has sought to promote among Chinese feed mills, the latest in a series of trade actions Beijing has started against major trading partners.

“The ministry said in a statement Tuesday it plans to look for any evidence of dumping of distillers dried grains, or DDG, from July 2009 to this past June, but may widen the window to see if there was any harm to China’s industry starting from 2007.

“China also slapped antidumping duties on U.S. chicken this year, accusing the U.S. of subsidizing its poultry industry and hurting China’s domestic industry.”

In other news with implications for biofuels, Andrew Restuccia reported yesterday at The Hill’s Energy Blog that, “Gas prices became a major topic of discussion this week after the former president of Shell said that the United States could see gas prices as high as $5 per gallon in 2012.

“‘When American consumers are short or prices are so high — $5 a gallon for gasoline, for example, by 2012 — that’s going to set a new tone. It’s going to be panic time on behalf of the politicians,’ John Hofmeister, who was president of the company from 2005 to 2009, told Platts Energy Week. Platts Energy Week aired the interview with Hofmeister Sunday.”

And in other news regarding energy, Chris Clayton reported yesterday at DTN (link requires subscription) that, “U.S. senators who proposed earlier this month to eliminate $196 million in funding for USDA’s new Biomass Crop Assistance Program ended up retreating from that position after understanding the full impact of their proposal, Agriculture Secretary Tom Vilsack said last week.

“‘The folks who were creating the omnibus bill thought they were limiting, not eliminating the programs,’ Vilsack said in an interview with DTN/The Progressive Farmer. ‘When they found out it was elimination they were calling for, they were rapidly scurrying back in a different direction.’

“BCAP has been a controversial program since USDA rolled it out in mid-2009, costing nearly $450 million in less than two years for a program originally expected to cost $70 million over five years in the 2008 farm bill. Yet, Vilsack defends the expansive scope of BCAP as a key element to ensuring every region of the country can develop renewable-energy industries.”

Mr. Clayton also pointed out that, “A one-year extension of the current biodiesel production and ethanol blender credits gives the administration time to help work with the industry to fashion a longer-term strategy and commitment to energy incentives, [Sec. Vilsack] said.

“‘One area of focus in 2011 will be ‘What do we do with this industry?’ Is it time for us to shift from a reliance on a blenders’ credit to a time where we might be rewarding those who put blender pumps in their gas stations or build a pipeline for infrastructure, or figuring out some way to incent Detroit and get them to stop trying to prevent EPA from increasing the fuel blend to building more of these cars that can use more ethanol.’”

Political Notes

Russell Berman reported yesterday at The Hill Online that, “President Obama and Republicans taking over the House are girding for a series of showdowns set to begin almost immediately after Congress resumes next week.”

The article stated that, “Raising the debt limit to allow the government to borrow more money has become an almost-routine act of Congress in recent years, a necessary repercussion of a national debt that has soared to nearly $14 trillion.

But after an election in which dozens of GOP winners pledged to tackle that debt, lifting the ceiling will be anything but routine.

The first fight could come in February, and might pit Republicans against Republicans as much as Republicans against Obama. While Tea Party-aligned lawmakers will push for deep spending cuts to begin lowering the debt, [John] Boehner has already acknowledged that as Speaker, he will likely have to preside over a vote to increase the debt limit.”

The Hill article pointed out that, “On spending, both Republicans and the Obama administration begin with a small area of agreement: Both believe it should be cut. They disagree sharply, however, on what to cut and when to start cutting.”

And yesterday’s article also indicated that, “One area where Republicans might have an upper hand is in their fight against the Environmental Protection Agency (EPA). With the Democrats’ cap-and-trade plan dead in Congress for the foreseeable future, the Obama administration has turned to executive rule-writing to try to reduce carbon emissions and combat climate change.”

Meanwhile, an update posted yesterday at Politico noted that, “Minnesota Democrat Amy Klobuchar is the most popular senator facing reelection in 2012, according to a new survey released by Public Policy Polling.

“The former Hennepin County attorney clocks in with a sparkling 59 percent approval rating, giving her a 30-percentage-point spread over her unfavorable number.”

Keith Good