December 15, 2019

Farm Bill; Biotech Forum; EPA Issues; and Bio Loans

Categories: Audio /Ethanol /Farm Bill

Farm Bill: Political Notes- Budget and Spending

David M. Herszenhorn reported in today’s New York Times that, “House Republican leaders confronted pressure from conservatives on Thursday to take more aggressive steps to cut federal spending, with a large group of lawmakers calling for outlays to be slashed by $2.5 trillion over the next decade, far more than the party has sought so far.

The proposal, from the Republican Study Committee, a conservative bloc that counts more than two-thirds of House Republicans as members, calls for immediate reductions of at least $100 billion, compared with cuts in the current fiscal year of up to $80 billion being sought by party leaders.”

The Times article indicated that, “The $2.5 trillion in cuts would exclude the military, and would not touch the big entitlement programs, Medicare and Social Security. As a result, its effect on the entire array of government programs, among them education, domestic security, transportation, law enforcement and medical research, would be nothing short of drastic.

“Committee leaders said this was appropriate and necessary, given the government’s $14 trillion debt and annual deficits at their highest levels since the years just after World War II.”

The fight over federal spending levels is the highest priority for the new Republican majority other than repeal of the Democrats’ health care overhaul,” The Times article explained.

Janet Hook reported in today’s Wall Street Journal that, “The study committee’s proposal would end federal control of Fannie Mae and Freddie Mac, reduce federal subsidies for Medicaid and abolish or diminish support for dozens of programs and agencies, such as the Corporation for Public Broadcasting and Amtrak.

“The list of cuts is laden with agencies that have long been targeted by Republicans without success, such as the National Endowment for the Arts, but also programs that enjoy bipartisan support, such as farm subsidies and support for airline service to remote airports.”

Farm Bill: Policy

DTN Ag Policy Editor Chris Clayton reported yesterday (link requires subscription) that, “With $6 corn, $13.50 soybeans and $1.40 cotton, agricultural groups are going to be taking a bunker mentality in 2011 trying to fend off cuts in farm programs and keep tax incentives for biofuels.”

Yesterday’s article added that, “Effectively, farmers are pitted against their own wishes that the federal government reduce spending. That was reflected recently at the American Farm Bureau Federation [AFBF] convention in Atlanta as delegates revised proposed policy resolutions to show they want a safety net that includes crop insurance, direct payments, a simplified Average Crop Revenue Election program and counter-cyclical payments.”

Mr. Clayton pointed out that, “Last year, President Obama proposed to reduce the cap on direct payments from $40,000 per person, per year to $30,000 and reduce the high end of adjusted gross income (AGI) eligibility for farmers to receive direct payments. Neither proposal moved in Congress, but it’s likely the Obama administration will take another swing at these proposals when the president’s budget is released in February.

National Farmers Union President Roger Johnson said he thinks it will be hard to ignore direct payments when Congress discusses agriculture cuts.”

And the DTN article added that, “‘We’ve always said that we’re willing to take our fair share of cuts, but we have already seen cuts in the crop insurance program,’ [AFBF Pres. Bob Stallman] said. ‘Money has already been taken out of that program, which is part of the farm bill. So we feel like we’ve already given.’

With the constant rumblings about budget cuts, Secretary of Agriculture Tom Vilsack and others have made the case that agriculture gave at the office with the $4 billion hit to the baseline from the SRA.”

Farm Bill: Personnel

Congressional Quarterly writer Ellyn Ferguson reported yesterday that, “A senior lawmaker known more for his advocacy for anti-hunger initiatives than farm programs is among seven Democrats named as new members of the House Agriculture Committee.

Jim McGovern, D-Mass., co-chairman of the House Hunger Caucus, said Wednesday he would continue to pursue policies that boost federal nutrition programs, which will be part of the 2012 farm bill the committee will produce.

Although there is little agriculture in his central Massachusetts district, McGovern said he plans to be a voice for consumers on a panel typically dominated by members from major farm states.”

Rep. McGovern added that, “I look forward to continuing my work on hunger, nutrition, food safety, and overhauling our agricultural subsidy policies. Historically, large commodity producers have had a seat at the table on the Committee. I will serve as a voice for the consumer and the family farmer.”

Meanwhile, Agri-Pulse reported earlier this week that, “Reacting quickly to USDA Under Secretary for Farm and Foreign Agricultural Services Jim Miller’s resignation, FFAS employees received the following e-mail Wednesday announcing that ‘Michael Scuse will assume the role of Acting Under Secretary of Farm and Foreign Agricultural Services (FFAS) upon the departure of Under Secretary Jim Miller later this month.’”

In part, the Email stated that, “Scuse brings two very important strengths to the job of Acting Under Secretary for FFAS: extensive knowledge of agriculture and a solid management background.”

With respect to the Senate, the “Washington Insider” section of DTN reported yesterday (link requires subscription) that, “Former Chairman Blanche Lincoln, who lost her bid for reelection in Arkansas, will be replaced by Sen. Debbie Stabenow of Michigan. In addition, Sen. Pat Roberts, R-Kan., now says that he will become ranking member of the committee, while Georgia Republican Saxby Chambliss, who had been expected to continue in that position, is now expected to serve as the top Republican on the Senate Intelligence Committee.”

The DTN item pointed out that, “Roberts will take the committee post as the panel prepares to write a new multi-year agriculture and rural policy bill by 2012, when the current bill expires. A controversial vestige of the 1996 bill that Roberts helped write when he was chairman of the House Ag Committee is the $5 billion in direct annual payments that goes to farmers regardless of good or bad markets, and which has already been criticized well ahead of the coming debate. The payments originally were designed to phase out after providing a financial cushion as the federal government ended restrictions on the acreage that could be planted for major crops. However, the 2002 Act made them permanent…So, in the current anti-deficit and anti-spending climate, it will be important to see how Roberts and Stabenow are able to approach the role for federal loans, subsidies and other supports.”

House Ag Committee Biotech Forum

Chris Clayton reported yesterday at DTN (link requires subscription) that, “USDA will make a decision on the regulatory status of Roundup Ready alfalfa ‘very, very shortly’ after a comment period comes to an end on Jan. 24, Agriculture Secretary Tom Vilsack said Thursday during his first appearance before the House Agriculture Committee since the Republicans gained controlled of the House.

“At a public forum on the biotechnology regulatory approval process, Vilsack told the committee that he wants farmers to be able to decide as soon as possible what they can plant this spring. But in meeting with reporters afterward, he declined to discuss any further details of how the decision would be implemented until it is announced.

Vilsack engaged in a lengthy and somewhat contentious dialogue with members at Thursday’s event.”

(Note: An audio replay of yesterday’s hearing is available here, and opening statements from Chairman Lucas and Ranking Member Peterson can be found here and here. Testimony from Sec. Vilsack and Chuck Conner, the President of the National Council of Farmer Cooperatives, can be found here and here).

Mr. Clayton explained that, “USDA is considering three options on Roundup Ready alfalfa: continued regulation, full deregulation or a partial deregulation that would require isolation distances from other crops of up to 5 miles and other geographic restrictions, and establish measures to make sure that the genetically engineered alfalfa does not contaminate conventional or organic alfalfa.

Seed companies, major farm groups and senators and members of Congress from farm states have called for full deregulation, meaning that genetically engineered alfalfa could be planted anywhere. They contend that because USDA’s Animal and Plant Health Inspection Service (APHIS) has said Roundup Ready alfalfa is not a plant pest, any other decision would not be scientifically based.”

The DTN article added that, “After Vilsack left the forum, Chuck Conner, president of the National Council of Farmer Cooperatives and former Agriculture deputy secretary and acting secretary in the Bush administration, testified that USDA should continue to base its regulatory decisions only on science if the United States is to maintain its leadership position on agriculture.

“‘The best way to ensure production of this valuable crop is for USDA to grant full deregulation without further delay,’ Conner said.”

Philip Brasher reported yesterday at the Green Fields Blog that, “Agriculture Secretary Tom Vilsack went to Capitol Hill today to defend his department’s proposed planting restrictions on genetically engineered alfalfa. He told lawmakers the government needs to protect non-biotech farmers from being harmed financially by contamination from the genetically engineered alfalfa.

“He said it’s an issue of protecting the ‘property rights’ of farmers.

“The Agriculture Department believes the herbicide-tolerant alfalfa is safe, but has proposed restrictions on where it can be planted to keep the crop from cross-pollinating with organic or non-biotech alfalfa crops.”

Reuters writer Charles Abbott reported yesterday that, “The Agriculture Department bases its approval of genetically modified crops on scientific safety reviews, Agriculture Secretary Tom Vilsack said on Thursday, despite charges he may put unjustified restrictions on an alfalfa strain.

Frank Lucas, chairman of the House Agriculture Committee, said the USDA’s decision on ‘Roundup Ready’ alfalfa, developed by Monsanto Co, could ‘have negative impacts on all U.S. agriculture’ and the future of agricultural biotechnology.

“Lucas and other committee members said adoption of GM crops could be hindered by Vilsack’s suggestion that growers of traditional and GM crops should find a way to ‘co-exist.’ It could result in cropping limits that go beyond federal law, they said. None spoke in support of Vilsack’s approach.”

Mr. Abbott noted that, “Chuck Conner, deputy agriculture secretary during the Bush era and now head of the National Council of Farmer Cooperatives, said USDA would set a dangerous precedent if it imposed planting restrictions for Roundup Ready alfalfa and could invite other nations to reject U.S. GM crops.”

Bloomberg writer Alan Bjerga reported yesterday that, “Vilsack told the lawmaker that the frequency with which biotech crops are challenged in court requires a new approach that encourages agribusinesses and opponents, including organic farmers, to settle their differences before resorting to litigation.

“‘We have to figure out how to build the levels of trust’ that let growers of biotech crops coexist with farmers who don’t, he said. ‘These are all great marketing opportunities.’

Chuck Connor, a former acting agriculture secretary under President George W. Bush, said the regulatory process was not the place for negotiating political positions.”

House Subcommittee Chair for Rural Development, Research, Biotechnology, and Foreign Agriculture, Tim Johnson (R-IL) pressed Secretary Vilsack about the statutory authority USDA was operating under with respect to the biotech issues being discussed, as well as some of the potential economic implications. A portion of their somewhat edgy discussion can be heard here, (MP3-4:32)

GOP Freshman member Rick Crawford (Arkansas) asked Secretary Vilsack about some practical aspects of the biotech issues being discussed, including points regarding buffer zones. To listen to a portion of this exchange, just click here (MP3- 3:15)

EPA Issues

Reuters writer Tom Doggett reported this morning that, “U.S. regulators are expected to announce on Friday that gasoline blended with up to 15 percent ethanol is safe to use in vehicles built during the 2001 to 2006 model years, sources familiar with the matter told Reuters.

“The Environmental Protection Agency last October approved so-called E15 gasoline for cars and trucks made during 2007 and later. Gasoline for other vehicles can hold up to 10 percent ethanol.

“The 50 percent ethanol boost in gasoline in cars and trucks built since the 2001 model year would cover more than half the vehicles now on U.S. highways. The move should please ethanol producers and the U.S. farmers who grow the corn used to make it.”

A separate Reuters article from yesterday reported that, “Environmental conservation groups sued the U.S. Environmental Protection Agency on Thursday to force it to tighten regulation of pesticide use, arguing that the agency was not consulting wildlife officials.

“The Center for Biological Diversity has successfully sued the EPA on similar grounds, focusing on individual species, but the new suit seeks a broad change in policy by the agency to meet what it says are Endangered Species Act rules.”

Bio Loans

DTN’s Chris Clayton reported yesterday (link requires subscription) that, “The Obama administration on Thursday announced $645 million in loan guarantees for cellulosic and renewable diesel projects that could produce up to 200 million gallons of fuel in four Southern states, and also announced payments to biofuel producers in 33 other states.

“Agriculture Secretary Tom Vilsack announced $405 million in loan guarantees for three advanced biofuel projects in Alabama, Florida and Mississippi.”

“The loan guarantees, announced by USDA and the Department of Energy, help boost commercial development for a cellulosic industry that has lamented challenges getting bank credit to build production-scale facilities,” the DTN article said.

Reuters writer Timothy Gardner reported yesterday that, “The U.S. government on Thursday gave four biofuel companies loan guarantees of nearly $650 million to help build plants that will make motor fuels from sources like animal fat, orange peels and trash.

The government is supporting the development of new feedstocks for ethanol to ease dependence on corn. Nearly 40 percent of the U.S. corn crop goes to making ethanol, which has spurred concerns from environmentalists and food groups that production of the fuel can raise food prices.”

Ben Geman reported yesterday at The Hill’s Energy Blog that, “The Energy Department on Thursday announced what it called the first department loan guarantee for the production of ‘advanced’ biofuels.

“The agency is offering a conditional commitment of $241 million for the plant, a joint venture — called Diamond Green Diesel LLC — between Valero Energy Corp. and Darling International Inc.”

Keith Good

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