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Farm Bill; Biofuels; Ag Economy (WASDE); EPA; and Climate

Farm Bill

A news release yesterday from Debbie Stabenow (D-MI), the incoming Chair of the Sen. Ag Committee, stated that, “[Sen. Stabenow] toured three agriculture businesses that create jobs in Michigan. This followed her inaugural speech as Chairwoman, which she delivered yesterday to the Michigan Agri-Business Association. She toured Dow Agrosciences in Harbor Beach, Cooperative Elevator in Pigeon, and Star of the West Milling in Frankenmuth today.

“‘Michigan’s agriculture businesses are some of our greatest success stories,’ Senator Stabenow said. ‘One in four people in our state has a job thanks to agriculture. As Chair of the Senate Agriculture Committee, it’s my job to help those companies stay successful and to keep growing. Today’s visits were an opportunity for me to see some of the great businesses we have in Michigan that are thriving and creating jobs.’”

As Michigan’s second-largest industry, agriculture generates more than $71.3 billion in revenue each year and accounts for one out of every four jobs in the state.”

A news release yesterday from Nebraska GOP Senator Mike Johanns stated that, “[Sen. Johanns] today outlined his goals for the Senate Agriculture, Nutrition, and Forestry Committee as the 112th Congress begins. In addition to hearings about the reauthorization of the farm bill set to expire in 2012, Johanns stressed the importance of the committee’s oversight responsibilities related to the Administration. He also outlined hearing ideas regarding new rules and regulations proposed by agencies such as the Environmental Protection Agency that could be potentially harmful to American agriculture. Johanns outlined his hearing priorities in a letter to Sens. Debbie Stabenow (D-Mich.) and Pat Roberts (R-Kansas), who are expected to be Chair and Ranking Member, respectively, of the committee.”

Meanwhile, Daniel Looker reported earlier this week at Agriculture Online that, “Farm Bureau delegates voted to give their lobbyists the flexibility to work for continuing nearly all of the existing commodity programs at their annual policy debate in Atlanta, Georgia Tuesday, even though funds may be more limited if Congress decides to cut federal spending this year.”

Reuters writer Charles Abbott reported yesterday that, “With budget cuts looming in Washington, [American Farm Bureau] delegates listed a half-a-dozen acceptable paths to take when farm law is overhauled in 2012.”

The article noted that, “Delegates called for a strong farm safety net but did not mention renewal of a disaster-relief fund. A potential challenge to the $5 billion a year ‘direct payment’ program fizzled. The payments are popular with wheat, cotton and rice growers. Critics say the money would be better spent in programs that help farmers through hard times.

“A day before delegates met, Agriculture Secretary Tom Vilsack said during a speech to AFBF members that cuts were possible.

“‘When you’re dealing with having to reduce deficits, we’re going to have to make difficult choices,’ said Vilsack. “

House Ag Committee Chairman Frank Lucas (R-OK) indicated yesterday that, “The resolutions AFBF passed during the annual meeting will serve as an important guide as we begin the process of reauthorizing the farm bill in 2012. We share a belief that a strong safety net for our farmers and ranchers is essential for producing an abundant and affordable food and fiber supply. The 2012 farm bill faces clear budget challenges and I encourage all involved to begin thinking about how we address these challenges in the most fiscally responsible way.

“I want to commend the Farm Bureau for taking a strong stance on one of the most significant issues facing American agriculture: the hostile regulatory approach of the EPA. As the new Chairman of the House Agriculture Committee, I pledge to hold vigorous oversight of the administration on a number of issues that threaten the livelihoods of our farmers and ranchers.”

And an update yesterday at the AgMag Blog (Environmental Working Group- EWG) regarding food and agriculture policy noted in part that, “Unless we’re willing to settle for budget crumbs or cuts in programs we favor, reformers are going to have to step up with offset ideas and build a winning case for them.

“At EWG, we’re not willing to settle for crumbs or cuts in programs that have either been perennially underfunded or are new and needed but just happen to fall outside the perquisites of the subsidy lobby. We plan to inform, organize and fight hard for a fairer, healthier, environmentally saner food and agriculture system.

“We need phones to ring. We need warm bodies to show up—with attitude. You know, like the Tea Party.”

With respect to budget allocations and spending, Reuters writers Andy Sullivan and Richard Cowan reported yesterday that, “The U.S. public overwhelmingly opposes raising the country’s debt limit even though failure to do so could hurt America’s international standing and push up borrowing costs, according to a Reuters/Ipsos poll released on Wednesday.

“Some 71 percent of those surveyed oppose increasing the borrowing authority, the focus of a brewing political battle over federal spending. Only 18 percent support an increase.

“The poll underscores the tough task ahead for U.S. lawmakers as the debt nears its current ceiling of $14.3 trillion. Treasury Secretary Timothy Geithner last week warned that a failure to raise the borrowing limit in the coming months could lead to ‘catastrophic economic consequences.’”

In a closer look at nutritional issues, AP writer Mary Clare Jalonick reported yesterday that, “Schoolchildren would have to hold the fries – and pick up more whole grains, fruits and vegetables – on the lunch line under proposed new federal standards for school lunches.

“The Agriculture Department proposal applies to lunches subsidized by the federal government and would be the first major nutritional overhaul of school meals in 15 years. It is expected to be announced Thursday.

The guidelines, which were obtained by The Associated Press and confirmed by USDA, would require schools to cut sodium in those meals by more than half, use more whole grains and serve low fat milk. They also would limit kids to only one cup of starchy vegetables a week, so schools couldn’t offer french fries every day.”

The AP article explained that, “Agriculture Secretary Tom Vilsack said the new standards could affect more than 32 million children and are crucial because kids can consume as much as half of their daily calories in school.

“‘If we don’t contain obesity in this country it’s going to eat us alive in terms of health care costs,’ Vilsack said Wednesday, prior to the release of the guidelines.”

Biofuels

Reuters writer Charles Abbott reported yesterday that, “Congress should transform the $6 billion a year ethanol tax credit into a program that underwrites the installation of ‘blender’ pumps and pipelines so biofuels are more widely available, the largest U.S. farm group said on Tuesday.

“The 45-cent a gallon tax credit, which goes to gasoline blenders, expires at the end of this year. Congress voted for the one-year extension last month amid arguments whether to end the tax credit altogether or to reform biofuels supports.

Ethanol trade groups are divided on the shape of biofuel supports. One of them, Growth Energy, would end the credit in favor of more biofuel pumps at filling stations and pipelines to supply them.”

Mr. Abbott explained that, “Until now, the 6-million member American Farm Bureau Federation supported the tax credit as well as blender pumps, which can dispense fuel that is up to 85 percent ethanol. Delegates voted to change policy to emphasize biofuel infrastructure and to discontinue the tax credit.

“‘The whole discussion has been evolving within the industry and within Congress,’ said AFBF president Bob Stallman. He said it might be easier to defend a program that expanded the biofuel network. ‘Frankly, our members have said that’s a good idea for us to make that transition.’”

Agricultural Economy (WASDE)

A news release yesterday from USDA’s National Agricultural Statistics Service (NASS) stated that, “Despite the less than ideal soil conditions and above normal temperatures during the 2010 growing season, U.S. corn growers harvested the third largest crop on record, according to the Crop Production 2010 Summary released today by [NASS].

Corn production totaled 12.4 billion bushels, down 5 percent from the record high, set last year. Corn yield in 2010 is estimated at 152.8 bushels per acre, 11.9 bushels below last year’s record. Planted area, at 88.2 million acres, is the second largest since 1946, behind the 93.5 million acres record set in 2007.

The 2010 soybean production totaled 3.33 billion bushels, down only one percent from the record production, set in 2009. The average soybean yield in 2010 is estimated at 43.5 bushels per acre, 0.5 bushels below last year’s yield. The area planted for soybeans in 2010, at 77.4 million acres, fell only fractionally short of last year’s record.”

Also yesterday, the World Agricultural Outlook Board (WAOB) released its monthly World Agricultural Supply and Demand Estimates (WASDE) report, which incorporated the latest NASS estimates.

With respect to corn, the WAOB stated that, “Corn used for ethanol is raised 100 million bushels offsetting the reduction in expected feed and residual use. Record December ethanol production, as indicated by weekly Energy Information Administration data, boosts corn use to date.”

“The 2010/11 marketing-year average farm price projection is raised 10 cents on both ends of the range to $4.90 to $5.70 per bushel as cash and futures prices are expected to strengthen.”

An overview table of U.S. corn variables from yesterday’s WASDE report can be viewed here. Likewise, a summary of U.S. soybean variables can be viewed here, and a U.S. wheat summary from yesterday’s report can be seen here.

Reuters news reported yesterday that, “The department said the stocks-to-use ratio — an important indicator of supply and demand — for corn was projected at 5.5 percent, the lowest since 1995-96 when it dropped to 5 percent. The ratio reflected a decline in the yield estimates for last fall’s harvest and an increase in its outlook for ethanol use.

The stocks-to-use ratio for soybeans was 4.2 percent, the lowest level since soybeans became a major crop for American farmers, said Keith Menzie, an oilseeds analyst for the department’s World Agricultural Outlook Board.”

Scott Kilman and Liam Pleven reported in today’s Wall Street Journal that, “Evidence of tightening global food supplies grew as the U.S. Agriculture Department cut its estimates for global harvests of key crops and raised some demand forecasts, adding to worries about rising food prices.

Prices of corn and soybeans leapt 4% Wednesday and wheat gained 1%, continuing the broad rally in commodity prices that began in June. With yesterday’s gains, prices of corn futures contracts are now up 94% from their June lows; soybeans are up 51% and wheat is up 80%.”

The Journal article added that, “Prices of many agricultural commodities are still below the levels that sparked food riots in poor countries around the world in 2008. But economists see few signs that prices for grain, livestock and cotton will cool significantly anytime soon, signaling potential headaches for consumers and food companies.

“‘The markets are very, very tight,’ said Joseph Glauber, the USDA’s chief economist. ‘There is concern, no doubt.’”

Bloomberg writers Jeff Wilson and Whitney McFerron reported yesterday that, “‘There’s no room for error anymore’ on farms around the world, said Dan Basse, the president of AgResouce Co., a commodity consultant in Chicago. ‘With any weather issues, we’re going to make new all-time highs in corn and soybeans, and to a lesser degree, wheat futures.’”

“‘The pressure is acute, in terms of planting fence row to fence row, and really getting the message out to farmers that they need to be planting up their front yards,’ Basse said today on a conference call with reporters and analysts.”

AP writers Christopher Leonard and Michael J. Crumb reported yesterday that, “‘It’s just confirming that supplies are lower than we thought, and demand is better than we thought, and when that happens you see prices bidding up,’ said Chad Hart, an Iowa State University grain marketing specialist.”

And a separate AP article from yesterday reported that, “Buoyed by higher prices and an early harvest of other crops, the nation’s farmers planted far more of their land in winter wheat crops than a year ago, according to a government report issued today.

Seeding of winter wheat acres are up 10 percent to total 41 million acres nationwide, the National Agricultural Statistics Service reported today.”

And Bloomberg writer Luzi Ann Javier reported yesterday that, “U.S. acreage planted to rice, the worst-performing grain in Chicago, may drop next season as some farmers in the world’s third-largest shipper switch to soybeans and other more profitable crops, the USA Rice Federation said.”

In other news on the U.S. agricultural economy, The U.S. Federal Reserve released its January Beige Book report yesterday, which contained a brief economic summary of current economic conditions by Federal Reserve District. With respect to agriculture, yesterday’s report included these district summaries.

Environmental Protection Agency (EPA)

Robin Bravender reported yesterday at Politico that, “The Environmental Protection Agency is desperate for some friends in the Senate.

“Republicans have made unraveling the Obama administration’s climate rules one of their top priorities this year, and with the GOP-led House expected to easily pass a measure to handcuff EPA’s authority, the rules’ fate may be determined by how hard the agency’s champions in the Senate will fight.

At least 56 senators — just four short of the 60 needed to overcome a filibuster — will most likely support measures to hamstring climate rules, and an additional eight votes may be in play this Congress, a POLITICO analysis shows.”

The article pointed out that, “A group of Senate Democrats intends to hold weekly meetings to discuss plans to fend off attacks on the EPA, said Senate Environment and Public Works Chairwoman Barbara Boxer (D-Calif.). The meetings will center on ‘protecting the public, to make sure that they don’t do anything to weaken the Clean Air Act, Safe Drinking Water Act, Clean Water Act; to make sure that they don’t stop the states from their work in protecting the public from carbon and other pollutants.’”

Climate Issues

Ben Geman reported yesterday at The Hill’s Energy Blog that, “Sen. John Kerry and other advocates for climate change legislation say data showing that 2010 was tied for the hottest year on record should prompt action.”

Meanwhile, Reuters writer Tom Doggett reported yesterday that, “The Environmental Protection Agency said on Wednesday it will delay for three years requiring biomass-fired boilers to have permits for emitting carbon dioxide emissions.

“‘We are working to find a way forward that is scientifically sound and manageable for both producers and consumers of biomass energy. In the coming years, we will develop a common sense approach that protects our environment and encourages the use of clean energy,’ said EPA Administrator Lisa Jackson.

“The EPA said that it plans to finish by July a rulemaking that will defer permitting requirements for CO2 emissions from biomass-fired and other biogenic sources for three years.”

The article added that, “U.S. Agriculture Secretary Tom Vilsack welcomed the EPA’s decision, saying it will benefit farmers, ranchers and forest owners who play a crucial role in providing renewable energy from wood, switchgrass and other agricultural products.”

Keith Good