April 22, 2018

Farm Bill; Ag Economy; Regulations (MF Global); and Renewable Fuels

Farm Bill- Policy Issues

Rep. Tom Rooney (R., Fla.), the Chairman of the House Agriculture Subcommittee on Livestock, Dairy and Poultry, was a guest on yesterday’s AgriTalk radio program with Mike Adams where a portion of the discussion focused on Farm Bill issues.  An audio replay of this portion of yesterday’s AgriTalk discussion with Chairman Rooney and Mike Adams is available here (MP3- 6:42), while an unofficial transcript of this portion of the conversation can be downloaded here.

With respect to the prospects of completing a Farm Bill by September, Chairman Rooney indicated that, “Well, despite the fact that this Congress has been very partisan and very polarized, I am somewhat optimistic that because our chairman, Chairman [Frank] Lucas [R., Okla.], has been able to work with Democrats in the Senate previously this year on what language would be and what cuts would be made, that there is a framework in place right now, as we speak, at least amongst members of the House and the Senate, on the agriculture committees.

“Whether or not we can expand that to getting enough votes in the greater House and the Senate and send something to the president remains to be seen, but I think that the Senate is going to start taking this up in April and May, and then we will begin to take it up in May and June. That’s what Chairman Lucas has told me.”

Chairman Rooney added that, “But again, trying to be the optimist here, we do have some agreements, we do have some framework in place, and a lot of members on both sides of the aisle that represent agricultural districts tend, from what I understand – and this is my first farm bill – to put partisanship aside for this kind of a vote.”

And Chairman Rooney alluded to the diverse set of variables that come into play in Farm Bill discussions, such as nutrition issues: “Unfortunately, the other thing that we have to deal with deals with food stamps and things that maybe don’t directly deal with farmers, and that’s all part of the negotiation, when you get into this, as you know.”

Later in the discussion, when asked about extending the 2008 Farm Bill, the Florida Congressman noted that, “Well, that’s something that I’d have to talk to my farmers with, but if we get to that point where it’s that or nothing, obviously we can’t leave our farmers high and dry. I don’t even want to start talking about that because once you start talking about that it becomes an option on the table that kind of makes the seriousness of debating this bill, getting this one done this year, less of an urgency.

“And we’ve just done that too much in too many areas in this Congress. We like to call it up there, well, we’re just punting. And we’ve been punting all Congress long with everything, and I hope that we don’t do that here. I mean, obviously, in the back of your mind you have to consider that as a contingency, but I don’t want that to be part of the original negotiation, or else it dominates the conversation and then it becomes a foregone conclusion.”

Also yesterday, Denise A. Raymo reported at the Press Republican Online (Plattsburgh, NY) that, “A federal Farm Bill is not expected to pass this year because of the November election and typical pace of government in Washington, D.C., Congressman Bill Owens told farmers.

“He was questioned on a number of agriculture issues during the recent Franklin County Farm Bureau PX Day, held at Scotty’s Diner in Moira.”

The article pointed out that, “Owens [a member of the House Agriculture Committee] said both House Ag Committee Chair Frank Lucas and Senate Ag Committee Chair [Debbie Stabenow] have worked hard to bring the Farm Bill in as a logical spending plan, but it likely won’t go anywhere this year.

“He praised the North Country for its participation in the Northeast regional hearings held in Saranac Lake in March.”

Erin Billups reported earlier this week at YNN (Syracuse, NY) Online (video included) that, “The House and Senate Agriculture Committees hope to pass a five year spending plan this year, but given the focus on deficit reduction and election year politics, it will be a heavy lift.”

The update noted that, “Dairy farmers could see a change in the MILC program, their safety net for when domestic milk prices fall below a specified level. And the Supplemental Nutrition Assistance Program, or food stamps, could also be cut, something New York Senator Kirsten Gillibrand, a member of the Senate Ag Committee, is fighting against.

“‘It makes a difference for these families in risk. We should never have a hungry child in America. We should never accept that. We should not cut any funding to our food stamp program,’ Gillibrand said.

“A House GOP aide, though, says SNAP takes up about 80 percent of spending in the Farm Bill and there’s plenty of fraud, abuse and inefficiencies that can be eliminated without compromising the integrity program.”

Meanwhile, Brad Harper reported yesterday at the Montgomery Advertiser (Ala.) Online that, “Alabama farmers and agribusiness officials gathered Wednesday on the lawn of the Capitol to celebrate their industry and to feed downtown workers with a buffet of locally produced products. They also brought a message for lawmakers, one that they hope takes root.”

The article noted that, “U.S. Rep. Martha Roby, R-Montgomery, was among those who spoke to the crowd, then mixed among them to sample the food from state businesses.

“‘Of course, I represent a lot of the farmers and the family farms that are here today,’ Roby said after speaking to the crowd. ‘I’m glad to be invited and use this as an opportunity to talk to farmers about issues they’re facing as we start working on the 2012 farm bill.’”

Mr. Harper indicated that, “That legislation also was on the mind of Teresa Wilson, who came from Dothan to dish out boiled peanuts to guests as a representative of the Alabama Peanut Producers Association. And Wilson was confident that the farm bill is in good hands.

“‘(Roby) has been a very good friend to us, even before she went into office,’ Wilson said. ‘We’re real concerned as far as protecting agriculture as a whole, and peanuts in particular, and she has our best interests at heart.’”

Also, Michael Rodgers reported earlier this week at The Greenville Advocate (Ala.) Online that, “Members of Luverne’s civic clubs and Brantley students got a chance to meet with Rep. Martha Roby, who represents Alabama’s Second Congressional District, on Tuesday.

“Roby began the day by speaking to a joint meeting of the Kiwanis and Rotary clubs, where she spoke about recent developments in Washington.”

The article added that, “Roby also said that another key element of [national] defense is supporting farmers and those that produce our food, which ties into her position in the House Committee on Agriculture.”

And a news release yesterday from the National Farmers Union (NFU) stated that, “Today, [NFU] joined more than 100 organizations representing a broad range of renewable energy, farm, ranch, commodity, environmental, and other groups to send a letter to leadership of the U.S. House of Representatives and Senate Agriculture Committees asking for reauthorization and funding of energy title programs from the farm bill that revitalize rural America and improve both national security and the environment.”

With respect to conservation issues, the AP reported yesterday that, “West Virginia has submitted the next phase of its plan to help clean up the Chesapeake Bay.

“The so-called watershed implementation plan released Thursday is part of a six-state and District of Columbia partnership to reduce pollution entering the estuary. The ‘pollution diet’ reduces sediment, nitrogen and phosphorus from various sources, including agriculture, wastewater treatment plants and storm water.”

In other policy related developments, Bill Tomson and Mark Peters reported in today’s Wall Street Journal that, “Young people working on farms are suffering fewer injuries, according to data from a new U.S. Department of Agriculture report that could provide ammunition to opponents of an Obama administration push to restrict child labor in agriculture.

“Workers under age 20 had 3,191 nonfatal injuries on farms in 2009, the latest year for which figures are available, down 36% from 4,964 injuries in 2006, the USDA said in the report issued Thursday.”


Agricultural Economy

A news release yesterday from the Food and Agriculture Organization of the United Nations stated that, “World food prices in March remained virtually unchanged from their February levels, according to the latest FAO Food Price Index, published today. The Index averaged 216 points in March, compared to 215 in February.”

And, Pam Smith reported yesterday at DTN (link requires subscription) that, “After two or three prolonged planting seasons in central Illinois, farmers are now faced with the opposite problem — too much good weather too soon.”

The article explained that, “Some farmers book vacations so they won’t be tempted to plant too soon. This week, DTN saw farmers washing and waxing tractors, and lining up tractors and planters at field edges as if they were waiting for the green flag at Talladega. South of Decatur, some farmers have already finished corn planting and are now wondering when to turn to soybeans.

“Mostly, there has been a lot of tillage — which hasn’t worked out well for those in the immediate region, which is extremely dry. Farmers have said they’ve forgotten about the worry of frost — they are now waiting for moisture before they plant.”


Regulations (MF Global)

Aaron Lucchetti reported yesterday at The Wall Street Journal Online that, “The trustee overseeing the brokerage arm of bankrupt securities firm MF Global Holdings Ltd. said his office was in ‘substantive discussions’ with J.P. Morgan Chase & Co. about resolving claims with the bank.

“In a short statement on his website Wednesday, the trustee James W. Giddens, said J.P. Morgan had cooperated with his office’s investigation, providing witness interviews and a review of documents by the trustees lawyers and accountants from Ernst & Young.

“‘The trustee and J.P. Morgan are presently engaged in substantive discussions regarding the resolution of claims,’ he added.”

DTN writer Katie Micik reported yesterday at the Market Matters Blog that, “The National Grain and Feed Association sent its initial set of recommendations on how to better protect segregated customer funds to Congress and the CFTC earlier this week. What’s interesting is the news came a day after CME Group, one of MF Global’s chief regulators, announced increased reporting requirements for futures firms that use its markets.

“Starting in May, CME Group will require all members of its clearinghouse to submit daily reports on the status of client funds that must be signed off on by a CEO, CFO or other designated official. The reports are required to detail client assets held on deposit versus outstanding trades.

“NGFA also asks that these reports be sent to the CFTC and include details like maturity and quality about the underlying investments the segregated funds are invested in.”

Meanwhile, Peter Schroeder reported yesterday at The Hill’s On the Money Blog that, “Rep. Barney Frank (D-Mass.) said a pair of bills being push by House Republicans would undo key pieces of the Wall Street reform law and keep financial derivatives ‘in the dark.’

“‘Having a lack of transparency in derivatives is a step back,’ he said in an interview with CNBC Thursday.”

The update explained that, “One bill would prevent regulators from requiring the prices of swaps, a type of derivative, to be made public in a similar fashion to stocks. Republicans argue that providing continuous pricing data on some derivatives could be difficult, but Frank argued it is the only way to ensure fair pricing and a fair market.

‘With regard to derivatives, we are the pro-market ones,’ he said. ‘We are the ones in favor of competition.’

“The second bill would block U.S. regulation of derivative transactions involving foreign subsidiaries of U.S. institutions.”

Reuters writer Roberta Rampton reported yesterday that, “U.S. lawmakers should ban commodity index funds and exchange-traded funds, a coalition of consumer and public interest groups said on Thursday, blaming the speculative investment vehicles for surging oil and gasoline prices.

“Gasoline prices have hit a record for this time of year, renewing concerns about the flood of investment into commodities first highlighted during the 2008 run-up in oil and food prices to all-time highs.

Senator Maria Cantwell, known for urging crackdowns on excessive speculation and energy price manipulation, is drafting legislation that would ban passive investors from the market, a spokesman confirmed. Details are not yet available.”


Renewable Fuels

Dan Morgan reported earlier this week at The Globalist Online that, “The plant world has a curious way of providing fodder for Republicans in the midst of important elections in the United States. In 1988, the party cast the Democrat’s presidential candidate, Michael Dukakis, as an elitist for suggesting that strapped Iowa corn farmers might make more money growing Belgian endive.

“The ridiculing of Dukakis struck a cultural chord with blue-collar voters wary of esoteric-sounding ideas — and, as a bonus, tapped into the native suspicion Americans have of all things European.”

Mr. Morgan pointed out that, “This year, Republican politicians are throwing algae at Democrats and hoping it will stick. Heading into a string of primaries in southern oil and gas states, former House Speaker Newt Gingrich, then still a plausible candidate for the Republican nomination for president, mocked President Barack Obama’s support for algae-based fuels. He called it ‘cloud cuckoo land.’

“The prominent conservative columnist Charles Krauthammer quickly followed suit, declaring ‘Algae is not what Americans believe in.’ The Republican message seemed to be that real men don’t fill up their pickup trucks with algae fuels when good old-fashioned gasoline is available.”

The article indicated that, “But algae is not endive. Esoteric-sounding or not, algae fuels are part of a new generation of advanced biofuels with the promise of easing the hammerlock of the OPEC cartel on the rest of the world.”

Mr. Morgan pointed out that, “Much of the work on the new fuels is taking place at the microbial level in science labs. One track involves finding — and then modifying — bacteria and enzymes tailored to extract vast untapped quantities of sugar now locked up in the tough, resistant cell walls of corn cobs, poplar trees, perennial plants such as switchgrass and miscanthus, and many other sources of biomass.”

The article stated that, “Another track involves algae. These tiny organisms grow on sunlight and carbon, and store energy in the form of oil and starches from which fuels, chemicals, cosmetics and medicines can be made. ‘Green crude’ is the main end product of algae.

More than 65 research institutions and dozens of companies (including big ones such as General Atomics and Honeywell) are working toward eventual large-scale commercialization. Some have broken ground on pilot projects. Phycal, Inc., recently signed a deal to sell fuel from algae to Hawaii’s electric utility.

“Solazyme, Inc., a leading algae company based in South San Francisco, went public last June with a $200 million stock offering to finance its research and production of algal oils in giant fermentation vats. It is working with Unilever, Chevron, and Dow Chemical and recently delivered algal oil for the U.S. Navy’s planned ‘Green Strike Group.’ Volkswagen’s U.S. operation wants to test how VW’s state-of-the-art clean diesel engine runs on Solazyme’s algae fuel.”

Mr. Morgan concluded his article by noting that, “The industry is still years away from producing commercial-scale quantities of fuel that is as cheap as gasoline, and many other hurdles remain. For example, water shortages are becoming acute in the Southwest United States, where ample sunlight is ideal for algae cultivation.

But awareness is growing that biofuels could be a significant part of the world’s energy future. Just recently, for example, a senior American politician noted that by the end of the decade ‘you could be fueling 12 airplanes, 20 airplanes, 30 airplanes’ with algae-based fuels. That was none other than Newt Gingrich, addressing an audience of California Republicans in February.”

Jennifer A. Dlouhy reported earlier this week at the Houston Chronicle Online that, “The federal government has given filling stations the green light to sell gasoline containing 15 percent ethanol, but that doesn’t mean motorists can count on buying the blend anytime soon.

There are still big hurdles to clear before it catches on.

“Now, lawmakers are tackling the biggest challenge: Soothing concerns by refiners and filling stations fretting about being held accountable in case the fuel blend known as E15 ends up in old cars or other equipment that can’t handle it.”

Keith Good

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