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Ag Economy; Nutrition Fact Panels; Biofuels; EPA Issues; and Budget Issues

Ag Economy

The latest edition of the Main Street Economist, a publication from the Kansas City Federal Reserve, is titled, “A Rural Rebound in 2010.” The article, which was written by Jason Henderson and Maria Akers, stated that, “In 2010, rural America was at the forefront of the economic recovery. As sluggish job growth reined in the U.S. economy, rural firms harnessed stronger global commodity demand and raced ahead of their metro peers. In fact, rural job growth sped up in the second half of the year with jobs stretching 2 percent above year-ago levels in the third quarter, outpacing metro gains. In addition, rising exports of farm commodities and manufactured goods spurred job and income gains in rural communities, fueling optimism for economic prospects in 2011.

“Farm profitability strengthened with commodity markets at the end of the year. Robust agriculture and energy markets also fueled gains in manufacturing and service activity to overcome the headwinds of a weak housing sector. In past recoveries, robust commodity markets and firm manufacturing activity sustained growth in the rural economy for multiple years. Can the rural economy lead the nation’s recovery again in 2011?

“This article reviews developments in the rural economy and discusses prospects for the year ahead. In 2010, rising global food demand and smaller supplies fueled a booming farm economy. Rural firms seized these opportunities to restore economic activity and job growth on Main Street. Together, stronger farmgate and Main Street activity point to further prosperity in 2011. Rural prosperity, however, will depend on the ability of rural firms to compete in emerging global markets.”

The authors pointed out that, “If recent history holds true, rural America could lead U.S. economic gains in 2011. Stronger commodity markets and export activity have positioned rural America for sustained growth in the year ahead. As the recovery strengthens, consumer spending should reinforce service sector gains and overcome the sluggish housing market.

Since 1990, the rural economy has outpaced metro gains during the first two years of economic recovery. After the 1990-91 recession, annual rural employment and per capita income growth was stronger than in metro areas through 1994. After the 2001 recession, rural areas led metro areas in terms of employment and incomes through 2003.”

Meanwhile, Liam Pleven and Matt Moffett reported in today’s Wall Street Journal that, “Scorching summer heat in South America is cutting harvest forecasts in one of the world’s key farm belts, helping propel crop prices to two-year highs and fueling concerns about tight global supplies.

“Dry weather caused by the La Nina weather pattern already is damaging fields in Argentina, which will be the world’s second-largest corn exporter this crop year and third-largest soybean exporter, according to U.S. data. With temperatures reaching into the 90s, weather also is threatening crops in southern Brazil and Uruguay, which declared a state of emergency last week for farmers in the north of the country. The region’s role in world food markets means any production problems there could be felt around the globe.

“Weather forecasters see more heat and little rain on the immediate horizon. That could limit production further as recently planted corn and soybeans have reached key stages of development with only one-quarter of the amount of rainfall they normally need in some regions.”

The Journal article added that, “Prices of corn, soybean and wheat crops remain well below 2008 peaks. But analysts figure prices for some crops could rise further as the extent of any lost production becomes clear. The result could be higher consumer prices at grocery stores.”

In other news, the AP reported yesterday that, “Florida farmers have lost at least $115 million in this winter’s cold blast. And it’s not over yet.

“According to the St. Petersburg Times, reports show the losses through Dec. 20 affected fruits, vegetables, citrus, foliage and aquaculture. Almost 9,000 acres of farmland was deemed a total loss.

“Florida Department of Agriculture spokeswoman Sarah Criser said $115 million is a conservative figure that will likely rise.”

And C-SPAN’s Washington Journal program is focusing on food policy all this week. A brief summary of yesterday’s program stated: “Susan Prolman, National Sustainable Agriculture Coalition, Executive Director examines sustainable farming and its impact on our natural resources and rural areas.” To watch a replay of this portion of yesterday’s Washington Journal program, just click here.

Nutrition Fact Panels

P.J. Huffstutter reported in today’s Los Angeles Times that, “Coming soon to a grocery store near you: nutrition labels, like the ones seen on soda pop and potato chips, slapped on packages of raw ground meat and chicken breasts.

The U.S. Department of Agriculture announced Wednesday that a new federal rule will require 40 of the most commonly purchased cuts of poultry, pork, beef and lamb to carry labels that disclose a variety of information to consumers.

Slated to go into effect Jan. 1, 2012, the rule will require meat producers to disclose the total number of calories, the number of calories that come from fat, and the total grams of fat and saturated fat. The labels also must include details about protein, cholesterol, sodium and vitamins in the product, according to federal officials.”

The LA Times article added that, “The rule will apply to raw and single-ingredient major cuts of meat and poultry, including boneless chicken breast, tenderloin steak and ground meat such as hamburger or turkey, officials for USDA’s Food Safety and Inspection Service said. The new nutrition labels must be attached to the package itself or be available to shoppers at retail stores, officials said.”

Today’s article also noted that, “Food nutrition experts say consumers may be surprised at what they read: According to the USDA’s Nutrient Data Laboratory, a 4-ounce serving of ground beef that is 80% lean meat contains about 280 calories — with 200 of those calories coming from 23 grams of total fat.

“‘More and more, busy American families want nutrition information that they can quickly and easily understand,’ Agriculture Secretary Tom Vilsack said in a statement released Wednesday. ‘We need to do all we can to provide nutrition labels that will help consumers make informed decisions.’”

Reuters writer Christopher Doering reported yesterday that, “The U.S. Centers for Disease Control and Prevention says two-thirds of American adults and 15 percent of children are overweight or obese. In some states, the childhood obesity rate is above 30 percent.

“The White House, lead by U.S. first lady Michelle Obama, has urged food manufacturers to re-package food so that it is healthier for children in an effort to help combat child obesity.”

Mr. Doering indicated that, “The National Cattlemen’s Beef Association said in a statement it supported showing the nutritional content of beef products on a label. But Kristina Butts, NCBA’s executive director of legislative affairs, said the industry needed 18- to 24-months to implement the new requirements.

“‘While NCBA believes consumers have the right to know what nutrients are found in meat, we also realize retailers and others in the food-production chain will face significant new costs associated with this final rule,’ said Butts.”

Biofuels

A news item posted yesterday at Agri-Pulse indicated that, “A new audit report from USDA’s Office of Inspector General found wide-ranging problems in the way the Farm Service Agency (FSA) administered the Collection, Harvest, Storage and Transportation (CHST) component under the new Biomass Crop Assistance Program (BCAP). The FSA spent a total of over $243 million on the CHST portion in 2009 and 2010.

“Based on a review of 12 county office operations in 4 States, as well as overall administration of the program at the national office, OIG found problems including inconsistent application of program provisions across State and county offices, varying methods for measuring biomass moisture levels, inconsistent use of program forms, and data errors.

“‘These problems occurred because FSA, in an effort to quickly implement the program to comply with a deadline established by Presidential Directive, was unable, in the limited timeframe, to develop a handbook, specialized forms, or a computer support system that was suited to the specific requirements of the CHST program,’ noted OIG in the report.”

EPA Issues

Juliet Eilperin reported in today’s Washington Post that, “The Environmental Protection Agency established an aggressive ‘pollution diet’ for the Chesapeake Bay on Wednesday, spelling out steps that six states and the District must take by 2025 to put the troubled estuary on the path to recovery.

“The legally enforceable road map – more than 200 pages long, with more than 3,000 pages of appendices – will affect a variety of activities in the region, including how pig and chicken farms dispose of waste and the way golf course operators fertilize their fairways.

“The plan is ‘the largest water pollution strategy plan in the nation,’ said Shawn M. Garvin, the agency’s regional administrator for the mid-Atlantic region. It is intended to fundamentally change the tenor of the long-failed Chesapeake cleanup. The EPA once preached cooperation with state efforts it was supposed to oversee. Now, it is playing cop, promising legal punishments if the states don’t live up to their pledges to cut pollution.”

The Post article stated that, “The EPA is prepared to enforce the state plans with what Garvin called ‘rigorous accountability methods, ranging from challenging operating permits for wastewater treatment plants or farms to prosecuting polluters for violating the Clean Water Act.’

“The agency identified three areas that need particular attention over the next decade: wastewater treatment in New York, West Virginia’s agricultural sector and Pennsylvania’s storm-water treatment. In those areas, Garvin said, the EPA may have to ‘place additional controls on permitted sources of pollution.’”

Today’s article added that, “Virginia Gov. Robert F. McDonnell (R) issued a statement Wednesday saying his state, which has committed to finalizing a new storm-water rule and a bay-wide limit on applying fertilizer to urban lands, could ‘achieve significant cost-effective reductions in pollution to the bay.’”

And Maryland Gov. Martin O’Malley (D), who has pledged to explore steps such as requiring cover crops on farmland vulnerable to runoff and a potential statewide fee system to improve storm-water utilities, said it made economic sense to invest in the restoration effort.”

In other EPA related developments, Andrew Restuccia reported yesterday at The Hill’s Energy Blog that, “Sen. Kay Bailey Hutchison (R-Texas) is calling on the Environmental Protection Agency (EPA) to delay plans to implement new greenhouse-gas standards on oil refineries, arguing the regulations would amount to ‘a new gas tax.’

“The new greenhouse-gas standards ‘will hurt every American driver, trucker, farmer and flier with higher gasoline, diesel and jet fuel prices,’ Hutchison said in a letter sent Wednesday to EPA Administrator Lisa Jackson. ‘Higher prices passed on to consumers will feel like a new gas tax.’

“It’s the latest example of Republicans criticizing EPA’s plans to impose climate-change regulations. Republicans have made plans to attempt to block the agency’s climate change authority next year.”

Budget Issues

The New York Times editorial board opined in toady’s paper that, “On Dec. 22, just before they left town for the holidays, House Republican leaders released new budget rules that they intend to adopt when they assume the majority in January and will set the stage for even more budget-busting tax cuts.

First, some background: Under pay-as-you-go rules adopted by Democratic majorities in the House and Senate in 2007, tax cuts or increases in entitlement spending must be offset by tax increases or entitlement cuts. Entitlements include big health programs like Medicare and Medicaid, for which spending is on autopilot, as well as some other programs for veterans and low-income Americans. (Discretionary spending, which includes defense, is approved separately by Congress annually.)

The new Republican rules will gut pay-as-you-go because they require offsets only for entitlement increases, not for tax cuts. In effect, the new rules will codify the Republican fantasy that tax cuts do not deepen the deficit.”

The Times added that, “The new rules mandate that entitlement-spending increases be offset by spending cuts only — and actually bar the House from raising taxes to pay for such spending.”

“The challenge for President Obama and Democratic lawmakers is not to get drawn into that warped mind-set. They need to present an alternative, including investments — in energy, technology, infrastructure and education. They also need a plan for long-term deficit reduction that recognizes what the Republicans ignore: Never-ending tax cuts make the deficit worse. Prudent tax increases need to be part of the solution,” the Times editorial board said.

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And lastly today, Emmanuel Touhey reported yesterday at The Hill Online that, “The 111th Congress will go down as one of the most chaotic in Senate history because of the constant turnover in personnel.

“That influx of fresh faces means the 112th Congress will begin with a notably inexperienced group of senators.

“More than one-fifth of the upper chamber’s 100 seats changed hands over the last two years. Three states — Delaware, Illinois and West Virginia — saw their seats turn over twice. Only about a dozen seats had changed hands in each of the previous two Senates.”

The Hill article noted that, “To find more turnover, one has to go back to the 79th Congress of 1945-47 in which 14 members were appointed to fill Senate vacancies.

“‘We’re going to have a lot of senators in their first term [in the next Congress],’ said Betty Koed, associate historian of the Senate. ‘Because of recent elections, close to half of the Senate is in its first term and is less experienced.’

“There will be only 28 senators in the upper chamber who have served more than one full term when Congress is sworn in Jan. 5, according to Koed. There will be 30 senators with less than three years of experience in the office, while another 42 senators will still be serving out their first six-year term.”

Keith Good