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Farm Bill; Regulations; Ag Economy; Biotech; Biobased Label; and Biomass Loans

Farm Bill

A news release yesterday from Sen. Kent Conrad (D-ND) stated that, “[Sen. Conrad] announced today that Jim Miller, Under Secretary for Farm and Foreign Agricultural Service at the United States Department of Agriculture (USDA), will return to his staff next month as a senior aide leading his negotiations on the next Farm Bill.

“‘Jim Miller is one of the best. He is deeply committed to farmers and ranchers and America’s rural communities. His encyclopedic knowledge of ag policy has only increased while at USDA. I am fortunate to have him come back to my staff and put that experience and knowledge to work helping craft a new Farm Bill,’ Senator Conrad said.”

The release noted that, “‘I have a deep respect for the work Senator Conrad has done in helping to write the last two Farm Bills and look forward to supporting his efforts in preparation for the next piece of comprehensive agriculture legislation,’ Miller said. ‘I welcome the opportunity to return to Capitol Hill and re-join Senator Conrad’s exceptional team.’

“Miller served as a senior advisor to Senator Conrad from 2004-2008 and was his lead negotiator on the 2008 Farm Bill. In 2009, he was appointed Under Secretary for Farm and Foreign Agricultural Service — the third highest-ranking official at the USDA.”

A news release yesterday from the House Committee on Agriculture Democrats stated that, “U.S. House Agriculture Committee Ranking Member Collin C. Peterson, D-Minn., today announced the Democratic members who will serve on the Agriculture Committee during the 112th Congress.

“‘The Agriculture Committee oversees a wide range of issues, including farm programs, nutrition programs, crop insurance, renewable energy, conservation, commodity markets and rural development. These members bring a great deal of expertise and a commitment to addressing the challenges of those who live, work and raise their families in rural America. I look forward to working with them, along with the new majority, in this Congress,’ Peterson said.

“The Democratic Caucus today named 20 Democrats, including 13 returning members and seven new members, to the House Agriculture Committee.”

According to Politico, the seven new members are, “Reps. Chellie Pingree (Maine), Joe Courtney (Conn.), Peter Welch (Vt.), Marcia Fudge (Ohio), Terri Sewell (Ala.) and James McGovern (Mass.), along with Northern Mariana Islands Del. Gregorio Sablan, will join 13 returning members on the Democratic side.

“Former Chairman Collin Peterson (D-Minn.) is returning to the committee as the ranking member. He’s joined by Reps. Tim Holden (Pa.), Mike McIntyre (N.C.), Leonard Boswell (Iowa), Joe Baca (Calif.), Dennis Cardoza (Calif.), David Scott (Ga.), Henry Cuellar (Texas), Jim Costa (Calif.), Tim Walz (Minn.), Kurt Schrader (Ore.), Larry Kissell (N.C.), and Bill Owens (N.Y.).”

With respect to freshman members of the House Ag Committee, Gary Truitt reported on Tuesday at Hoosier Ag Today (HAT) Online that, “A year ago, Marlin Stutzman was a Northeast Indiana farmer; today, he is the Congressmen from the 3rd Congressional District. Stutzman said making the move from NE Indiana to Washington has been quite an adjustment, ‘The traffic in Washington takes some getting used to.’ Stutzman is one of the new GOP members of the House Ag Committee and is looking forward to bringing his on-farm experience to the Farm Bill debate, ‘The Farm Bill often is looked at as an easy place to make budget cuts.’ He told HAT direct farm payments are a favorite target of those who do not understand agriculture. He said, on his farm, government payments accounted for less than 1% of his income. While he defends direct payments to growers, he admits the safety net system for agriculture needs to be changed.

During a question and answer session at the Ft. Wayne Farm Show on Tuesday, a number of farmers voiced concerns about regulations coming from Washington. He told HAT that Congress is in the mood to put the brakes on the EPA and other agencies that are trying to regulate agriculture, ‘I feel the President will use these regulators even more over the next two years now that he no longer has a majority in both Houses of Congress.’ He said Congressional oversight committees will have their work cut out for them overseeing these federal agencies. He said ag has changed in the past 10 years and government policy needs to change to better serve today’s farm family.”

Executive Branch Regulations

On the issue of executive branch regulations and agriculture, a statement yesterday from American Farm Bureau president Bob Stallman indicated that, “The American Farm Bureau Federation welcomes the President’s focus on reforming the regulatory process…The President’s Executive Order notes that the regulatory system should promote economic growth, be based on the best available science, allow for public participation and an open exchange of ideas, and use the least burdensome tools for accomplishing its ends. EPA’s Chesapeake Bay TMDL rule fails on all these counts. For example, EPA failed to analyze (or at least failed to publicly disclose) the economic impact that would result from its TMDL, even after repeatedly promising to do so. If the new executive order is to have any meaning, we expect it will result in the reconsideration of EPA’s Chesapeake Bay TMDL. Otherwise, we have to wonder whether this Executive Order will bring about any real change.”

A news item earlier this week from the National Cattlemen’s Beef Association (NCBA) stated that, “The [NCBA] welcomed news that President Obama today, Jan. 18, 2011, signed an Executive Order titled ‘Improving Regulation and Regulatory Review’ that seeks to review all federal regulations and eliminate job and growth-killing regulations.

“‘If there were one word to describe the first two years of President Obama’s Administration, it would be regulation,’ NCBA President Steve Foglesong said. ‘From the U.S. Department of Agriculture’s (USDA) Grain Inspection, Packers and Stockyards Administration’s (GIPSA) proposed livestock and poultry marketing rule to the Environmental Protection Agency’s (EPA) regulatory rampage – this Administration’s regulatory agenda to-date won’t just stymie growth in the U.S. beef cattle industry, it could kill the industry as we know it.’”

In related developments, Andrew Restuccia and Ben Geman reported yesterday at The Hill’s Energy Blog that, “House Energy and Commerce Committee Chairman Fred Upton (R-Mich.) plans to take dead aim at the Environmental Protection Agency’s climate change regulations this year, according to a document obtained by The Hill laying out the panel’s 2011 agenda.

“‘We believe it critical that the Obama administration ‘stop’ imposing its new global warming regulatory regime, which will undermine economic growth and U.S. competitiveness for no significant benefit,’ says the document, which lays out a suite of ‘key issues’ that will come before the committee.”

Yesterday’s update added that, “While the individual items included in the document are not surprising, the agenda, taken as a whole, illustrates the breadth of GOP opposition to the White House energy and environment agenda.

The backgrounder says EPA has been regulating ‘too much too fast without fully analyzing the feasibility and economic and job impacts of the new rules.’”

Agricultural Economy

AP writer Dinesh Ramde reported yesterday that, “The nation’s dairy farmers can expect 2011 to be a second straight year of modest growth, according to a report released Wednesday that offers a small dose of optimism to an industry still recovering from a devastating 2009.

Feed costs for dairy cows will be higher for at least the first half of 2011, but increased milk demand will help drive sales and revenue, according to the report by Wisconsin researchers. Wisconsin is the No. 2 milk producer in the nation behind California.

“‘I think 2011 could be a good-enough year’ for milk prices, said Mark Stephenson, a dairy expert at the University of Wisconsin-Madison who contributed to the report. ‘I think 2010 was a treading-water sort of year. There was a lot of equity lost on dairy farms across the country in 2009. It would take much better prices to make up for that.’”

In more detail regarding livestock feed costs, Rachel J. Johnson pointed out yesterday in the latest USDA- Economic Research Service Livestock, Dairy, and Poultry Outlook report that, “The latest USDA forecasts indicate rising feed prices for the 2010/11 crop year. The corn price is forecast to average $4.90 to $5.70 per bushel, and the soybean meal price is forecast to average $320 to $360 per ton. These latest price forecasts represent an increase from last month’s forecasts. Positive processor margins for ethanol and strong exports will contribute to the higher price. Supplies of corn are expected to be lower as yield per harvested acre is expected to be lower than in 2009/10, despite higher planted acreage. Supplies of soybeans and soybean meal are also forecast to be slightly lower than in 2009/10” (at page 13).

Also yesterday, USDA’s National Agricultural Statistics Service noted in its latest Milk Production report that, “Milk production in the 23 major States during December totaled 15.0 billion pounds, up 2.8 percent from December 2009. November revised production at 14.4 billion pounds, was up 3.1 percent from November 2009. The November revision represented an increase of 8 million pounds or 0.1 percent from last month’s preliminary production estimate.”

Meanwhile, in a report released this week (“Non-Land Costs Higher in 2011”) University of Illinois Agricultural Economist Gary Schnitkey stated that, “Non-land costs to produce corn in central Illinois will rise in 2011, approaching $500 per acre. These costs will be higher than in 2010, but likely below 2009 levels. Non-land production costs likely will continue to increase into the 2012 production year.”

The report added that, “Given current corn prices, corn production looks to be profitable in 2011 even with higher production costs. While profitable, rising production costs have increased the break-even price necessary to cover costs. Given current costs, average cash rents, and normal corn yields, current break-even prices for corn are in the $3.80 to $4.00 per bushel range. Continued cost increases will raise break-even levels in 2012. These high break-even prices suggest the need for continued prices above $4.00 per bushel in order for profitability to continue.”

In other developments, Bloomberg writer Jeff Wilson reported yesterday that, “A Chinese trade delegation will sign a deal tomorrow in Chicago to buy an unspecified amount of U.S. soybeans, according to the U.S. Soybean Export Council.”

Mr. Wilson explained that, “China, the world’s largest buyer and consumer of the oilseed, imported $9.06 billion in the first 11 months of 2010, up 21 percent from a year earlier, data from the Department of Agriculture show. Sales totaled 20.9 million metric tons from January to November, up 11 percent from a year earlier.

“Minnesota agriculture officials will host the 24 members of the Chinese delegation today on the first stop on a four-day soybean-industry tour, the Minnesota Soybean Association said in a release on its website. The mission coincides with President Hu Jintao’s visit with President Barack Obama in Washington.”

Biotech

The Christian Science Monitor editorial board indicated yesterday that, “Of all the world headlines that Sen. Richard Lugar [R-IN] could have highlighted this week – the visit of China’s president in Washington, for instance, or the revolt in Arab Tunisia – the most burning issue for him was … alfalfa.

“The plant, used for animal feed, was the surprising topic of the senator’s opening remarks at a Monitor breakfast with reporters Jan. 18. Alfalfa holds a special interest for this active Indiana farmer who is also the ranking Republican on the Senate Foreign Relations Committee. Alfalfa, he notes, is one example of why world food prices have risen so sharply – the second such rise in just over two years.”

The opinion item added that, “Bad weather had a lot to do with this most recent surge [in the prices of some food commodities], but the point Lugar seemed to be making was that floods and drought are not the only causes of ‘food insecurity.’ He pointed to the environmental tussle in the US over genetically modified alfalfa as holding a lesson for Africa, which strongly resists ‘GM’ seeds and crops.

Biologically altered seed, resistant to pests or drought, can safely increase yields. The senator has seen it on his own family farm of 604 acres, which produced 40 bushels to the acre when he was a boy and now produce 160 bushels.”

Philip Brasher reported yesterday at the Green Fields Blog that, “Key congressional Republicans are taking Agriculture Secretary Tom Vilsack to task over a proposed shift in the way biotech crops will be regulated. A letter released on the eve of a House hearing on the subject says the policy threatens to slow down the development of new biotech products.”

DTN Ag Policy Editor Chris Clayton reported yesterday (link requires subscription) that, “Agriculture Secretary Tom Vilsack will walk into a House Agriculture Committee forum in Washington on Thursday knowing the chairman thinks Vilsack has crossed a regulatory line by proposing to reshape biotechnology policy over the proposed deregulation of Roundup Ready alfalfa.

“Agriculture Committee Chairman Frank Lucas, R-Okla., cosigned a letter Wednesday with Senate Agriculture Committee members Sen. Saxby Chambliss, R-Ga., and Sen. Pat Roberts, R-Kan., which questions how Vilsack could consider any regulatory framework for biotech crops not based solely on science. Chambliss has been serving as ranking member of the Senate Agriculture Committee, but Roberts is expected to take over that role.”

Mr. Clayton noted that, “Vilsack is scheduled to testify at what is being called a ‘forum’ because Democrats had not named their 20 members of the committee until Wednesday. Under House rules, the committee cannot hold an official hearing until it has held an organizational meeting.

“The agriculture secretary has said USDA faces more legal challenges over its deregulatory process, which includes the state of Roundup Ready sugar beets, which are also tied up in a legal challenge. Vilsack said last month in an interview with DTN that there must be a balance of the economic interests involved.”

Biobased Label

Paul Voosen of Greenwire reported yesterday at The New York Times Online that, “The Department of Agriculture will launch a new product label tomorrow for consumer and industrial products that have been wholly — or, more likely, partially — created from farm crops or forestry, rather than fossil fuels.

The voluntary label, modeled on programs like USDA’s organic label and Energy Star, should begin appearing in stores this spring.

“Consumers have long waited for any third-party labels that certify some degree of sustainability or support of energy independence in the products they buy, given the plethora of competing green claims on the market. The biobased label will help fill some of that void, said Kathleen Merrigan, USDA’s deputy secretary.” (Note that audio from a news briefing on this issue can be heard here).

Biomass Loans

Reuters writer Charles Abbott reported yesterday that, “A handful of next-generation biomass plants will be named on Thursday as recipients of federal loan guarantees intended to bring new biofuels to market, said an industry source.

“The loan guarantees would assist construction of commercial-size plants using material such as wood chips, straw or crop debris. The new feedstocks, predominantly cellulose, are supposed to replace corn as the major U.S. source of biofuels over time.

“Agriculture Secretary Tom Vilsack said last fall that five biomass projects around the nation would be selected for Agriculture Department loan guarantees. He said he hoped to announce the awards by the end of 2010.”

The Reuters article noted that, “Half a dozen applications were under review at USDA last fall with up to $650 million in guarantees available, said one official. USDA awarded two guarantees in 2009.

“A USDA spokesman declined to comment ahead of an expected update by Vilsack on renewable energy programs on Thursday.”

Keith Good