FarmPolicy

Biofuels; Ag Economy; Labor; Farm Bill; Regulations; Taxes; and Trade

Biofuels: Renewable Fuel Standard

Reuters writer Ayesha Rascoe reported yesterday that, “The U.S. Environmental Protection Agency on Monday said it has begun weighing requests to suspend the U.S. ethanol mandate, which requires refiners to blend ethanol into gasoline, and is seeking public feedback.

“The governors of North Carolina and Arkansas asked the agency last week to temporarily waive the U.S. quota on ethanol made from corn, because the worst drought in 50 years has driven corn prices higher and hurt livestock producers who depend on the grain for feed.”

The article added that, “By law the agency has until November 13 to make a decision on the waivers, meaning EPA could act on the requests after national elections on November 6.

“Aimed at reducing U.S. reliance on foreign oil, the Renewable Fuels Standard, or RFS, would require 13.2 billion gallons of ethanol to be made from corn this year.”

Reuters writer Patrick Rucker reported today that, “Two U.S. states that depend on the livestock industry are adding their voices to a string of states asking Washington to ease pressure on corn prices by suspending rules that send a large share of the crop to produce ethanol.

“Georgia, the center of U.S. poultry production, and New Mexico, with its large cattle industry, this week asked federal officials to suspend a program that encourages converting corn into ethanol fuel.”

The article noted that, “Poultry farmers in Georgia are spending about $1.4 million more in feed costs per day due to the drought and ethanol rules, Georgia Governor Nathan Deal wrote in a letter to the EPA that seeks a waiver of the ethanol mandate.

“But corn farmers note that about a third of the ethanol-distilled corn becomes livestock feed and that the mandate has other built-in flexibilities that could be tried before shelving the program.”

Mr. Rucker added that, “‘New Mexico’s agricultural economy is primarily composed of dairy and range livestock production,’ Governor Susana Martinez wrote in a letter to the EPA this week. ‘I urge you to consider granting an immediate waiver.’”

In a related article, Reuters writer Janet McGurty reported yesterday that, “Renewable fuel credit prices fell across the board on Tuesday as fears of an ethanol waiver roiled the Renewable Identification Numbers (RINs) market.

“Benchmark E12 RINS, referring to RINs created in 2012, traded at 3.60 cents a gallon, down 13 percent from Monday’s trade level of 4.15 cents a gallon. Prices fell after Georgia became the fifth state to request a waiver for ethanol use, adding to fears that the Environmental Protection Agency (EPA) could consider removing the mandate for ethanol use on some basis.”

With respect to some of the multiple variables that can impact ethanol production, Ian Berry and Own Flether reported yesterday at The Wall Street Journal Online that, “On Tuesday, corn reached a record closing high, and soybeans are only a few cents shy of all-time highs. Corn for September delivery rose 2% to settle at $8.3125 a bushel at the Chicago Board of Trade. Soybeans for September delivery rose 2.9% to settle at $17.535 a bushel.”  (See related graph).

And the AP reported yesterday that, “The price of oil resumed climbing Tuesday, reaching its highest point since early May…Benchmark crude finished up 71 cents at $96.68 in New York. Earlier, it crossed $97 for the first time since May 11. It lost 4 cents Monday after rising for four straight days.”

Meanwhile, Ronald D. White reported in yesterday’s Los Angeles Times that, “The [Energy Department’s weekly survey of gas stations, released on Monday] showed the U.S. average for a gallon of regular gasoline rose 2.3 cents over the last week to $3.744, squeaking past the previous national record for the third week of August, set in 2008, of $3.740.”

Former federal lawmakers Stephanie Herseth Sandlin and Tom Ewing opined yesterday at Politico that, “America is suffering from the worst drought since the Dust Bowl. Thirty-two states have been declared natural disaster areas, rural communities are hurting, and lawmakers from the local, state and national level are looking for solutions. As often happens in times of crisis, a potential solution is being touted that would have drastically negative consequences in the long run – altering America’s Renewable Fuels Standard, or RFS…[W]e are concerned that recent calls by some elected leaders to temporarily waive the RFS’s corn ethanol requirement actually represent a re-launching of opposition to the RFS as a whole, or to biofuels in general. Such opposition must be recognized and opposed.”

Yesterday’s column stated that, “Granting any waiver based solely on political expediency would be inappropriate. Indeed, that would pile disaster upon disaster for the very communities suffering from the drought, putting us on a path of undoing the RFS’s work longer-term. If our priority is helping rural America and continuing to enhance our energy security, we must prioritize protecting the RFS.”

And Zack Colman reported earlier this week at The Hill’s Energy Blog that, “The head of a top fuel industry group wants Congress to take action that he says would protect consumers by keeping a more corrosive blend of gasoline off the market.

“American Fuel and Petrochemical Manufacturers (AFPM) President Charles Drevna told The Hill on Monday that a U.S. Court of Appeals of the District of Columbia decision last week will put consumers at risk. The court upheld an Environmental Protection Agency (EPA) policy that let gas stations offer fuel with a higher ethanol content.”

The Hill update noted that, “In ruling that the EPA could let retailers offer E15 fuel — a mix of 15 percent ethanol to 85 percent gasoline — if they take proper measures to inform drivers of the risks to their cars, Drevna says the court failed to acknowledge that the blend is not suitable for most vehicles on the road.

“‘Decisions have to be made now. EPA was totally off base certifying a fuel that is incompatible with engines today,’ Drevna said. ‘We don’t believe that putting a 4-square inch sticker on a gasoline pump that will warn consumers about misfueling is going to be effective. Misfueling is going to be inevitable.’”

Agricultural Economy: Drought

Tom Steever reported yesterday at Brownfield that, “U.S. Agriculture Deputy Secretary Kathleen Merrigan says her tour of Illinois corn and soybean fields revealed some insect infestation and of course, a lot of damage from the drought.

“‘[An] ear of corn that maybe was four inches long with four kernels tops,’ Merrigan said, during an interview with Brownfield Ag News, ‘I mean it was just devastating.’

“Merrigan says, however, that despite being wiped out for the season, farmers are resilient and are thinking ahead to next season.”  (Related audio is available at the Brownfield link).

Charlotte Adinolfi reported yesterday at the Connecticut Post (Bridgeport) Online that, “[Agricultural producer Ben Freund] does not typically make enough of his own corn or hay to feed his cows. With 33 percent of the United States experiencing severe to extreme drought conditions and 55 percent experiencing moderate to extreme drought, the availability of feed for the coming months will become scarce since regions greatly affected by the drought produce the most feed. While most farms in Connecticut and throughout the Northeast have yet to feel the impact, they are waiting for the effect to hit home.

“‘We are in the middle of a squeeze,’ Freund said. ‘Our price hasn’t adjusted to incorporate the increased cost of grains.’”

The article explained that, “To make matters worse, without a farm bill in Washington, a wave of uncertainty is sweeping across the nation, especially in the drought-stricken Midwest and even in Connecticut. While the state grows enough forage and corn for livestock, farmers here depend on grains from the West to supplement the diet of their herds.

“The House approved a one-year, $383 million in disaster relief plan for farmers, but Congress went home before the Senate acted on the bill. The Senate had previously passed a disaster aid package as part of a five-year farm bill, but GOP leaders in the House refused to bring that to a vote because they worried many Republicans would object to the nearly $80 billion included in the bill for the food stamp program. That means no aid is likely to be approved until Congress returns in early September.

“Northeast farmers and dairy farmers in particular are stuck waiting for the disaster to strike here. Throughout the summer, milk prices have dropped.”

In other news, the AP reported yesterday that, “The U.S. Department of Agriculture has awarded almost $200,000 for a new access road into a western New York business park that will be home to a Greek yogurt plant.

“U.S. Sen. Charles Schumer announced the USDA grant Monday and said it would pave the way for Pepsi’s Quaker Muller Greek Yogurt plant in Batavia. Schumer said the road also will support the Alpina yogurt plant opening this fall as well as other current tenants of the business park.”

Meanwhile, on a separate topic, Dina ElBoghdady reported in today’s Washington Post that, “Americans throw away up to 40 percent of their food every year, cramming landfills with at least $165 billion worth of produce and meats at a time when hundreds of millions of people suffer from chronic hunger globally, according to an analysis released Tuesday by the Natural Resources Defense Council.

“The analysis, a compilation of various studies and statistics, found that waste exists from farm to fork even as an ongoing drought threatens to boost food prices. But the resources that the government has devoted to identifying where the inefficiencies exist and how to combat them pale in comparison with efforts underway in Europe, particularly in the United Kingdom, the report concluded.”  (The Post article also included this graphic illustration).

Labor Issues

Jane Wells reported earlier this week at CNBC Online that, “There’s a different sort of drought plaguing California, the nation’s largest farm state. It’s $38 billion agricultural sector is facing a scarcity of labor…[S]ome crops aren’t get picked this season due to a lack of workers.”

The article added that, “The Western Growers Association told CNBC its members are reporting a 20 percent drop in laborers this year. Stronger border controls are keeping workers from crossing into the U.S. illegally, and the current guest worker program is not providing enough bodies.”

Also, Campbell Robertson and Julia Preston reported in today’s New York Times that, “On Monday, the United States Court of Appeals for the 11th Circuit issued three decisions that assessed Alabama’s [immigration] law as well as a similar law in Georgia. The findings did not dramatically change the reality on the ground, for the most part continuing to block provisions already on hold, and even allowing two sections currently blocked to go into effect.

“But the findings were the first broad determinations by an appeals court since the Supreme Court’s decision in June on an immigration enforcement law in Arizona. And while the judges applied the Supreme Court’s ruling, they also went considerably beyond it, blocking statutes in Alabama and Georgia that the highest court had not directly considered.

“On the Alabama law, the appeals court struck down many of the measures that had gone furthest in making the everyday lives of illegal immigrants so difficult.”

Chris Clayton provided additional details on the Appellate Court rulings in reporting at the DTN Ag Policy Blog yesterday.

The New York Times editorial board succinctly indicated in today’s paper that, “A federal appeals court in Atlanta on Monday properly blocked several provisions of immigration laws in Alabama and Georgia, saying they violated constitutional rights and undermined federal law. The rulings were huge setbacks for the repellent idea that states can bypass federal authority over immigration and create their own schemes to harass and expel undocumented residents.”

Farm Bill

Over the past couple of days, Senate Ag Committee Chairwoman Debbie Stabenow (D., Mich.), Rep. Mike Ross (D., Ark.) and Rep. Kristi Noem (R., S.D.) have all called for Congressional action on the Farm Bill when lawmakers return to Washington in September.

While pointing out that, “This year, the Senate and the House Agriculture Committee adopted a new, less expensive subsidy system based on crop insurance and, in the case of dairying, insurance protecting farmers’ margins between the price of milk and cost of feed;” the Wisconsin State Journal editorial board stated recently that, “And on farm policy reform, America needs action.”

In news regarding the Egg Bill (H.R. 3798), the Minneapolis Star-Tribune editorial board noted yesterday that, “This is a bill Congress should support. The change wouldn’t be forced on producers overnight, but gradually over 15 to 18 years, with built-in exemptions for small producers. Studies show that the average American eats 250 eggs a year in wide varieties of food products. They should have the peace of mind to know the eggs came from hens that weren’t abused.”

Whether the House and Senate are able to resolve the Farm Bill before the end of September, or if the legislation gets pushed into consideration after the election, issues related to budget sequestration and the “fiscal cliff” could become increasingly important.

Ramsey Cox reported yesterday at The Hill’s Floor Action Blog that, “Sen. Kent Conrad (D-N.D.) told constituents Monday that he and a bipartisan group of seven senators are still working on a plan to greatly reduce the national deficit and avoid the looming ‘fiscal cliff.’

“‘A lot of important behind-the-scenes work is being done now on the key elements of a comprehensive, balanced and bipartisan long-term fiscal plan,’ Conrad said. ‘While our small group consists of four Democrats and four Republicans, upwards of 40-plus Republican and Democratic Senators are supporting and encouraging our efforts to reach a balanced agreement that includes entitlement changes, tax reform and additional spending cuts.’”

Yesterday’s update added that, “On Monday, [Sen. Conrad] said that the pressure to avoid the fiscal cliff could help prompt lawmakers to take action to avoid the situation by passing a comprehensive plan.”

Regulations- Environmental Protection Agency

Erica Martinson reported yesterday at Politico that, “In a rebuke to the Obama administration, a federal court took a hammer Tuesday to a controversial EPA regulation aimed at forcing states to be ‘good neighbors’ on air pollution.

“The U.S. Court of Appeals for the D.C. Circuit said Tuesday that the EPA’s Cross-State Air Pollution Rule overstepped the boundaries laid out by Congress. Power companies, coal companies, labor unions, trade associations and state and local governments had challenged the rule, which EPA finalized in August 2011.”

Sen. Mike Johanns (R., Neb.) and Sen. Jerry Moran (R., Kan.) issued statements in support of the decision, while The Wall Street Journal editorial board indicated today that, “The message is that regulators must follow the laws of the United States. Why do federal judges constantly have to remind EPA Administrator Lisa Jackson of this basic principle?”

And Dar Danielson reported yesterday at RadioIowa Online that, “The Environmental Protection Agency plans to hold a meeting with livestock producers in the northwest Iowa town of Arcadia next week. ‘There’ll be a whole variety of issues come up I’m sure dealing mostly with the Clean Water Act and with cattle producers’ permits and how they can comply with those permits,’ according to Karl Brooks, the administrator for E.P.A. Region 7 which includes Iowa.”

Estate Taxes

A news release yesterday from Sen. John Thune (R., S.D.) stated that, “[Sen. Thune] says the American Farm Bureau Federation (AFBF) report released today clearly shows that the Democrat-controlled Senate’s recently passed tax legislation would jeopardize the future of 71 percent of South Dakota’s family farms because it intentionally returns the death tax exemption to $1 million next year instead of keeping it at the current $5 million.”

Trade

Vicki Needham reported yesterday at The Hill’s On the Money Blog that, “A leading business coalition expects the House to take up a bill that would extend normal trade ties to Russia shortly after returning from the summer break.

“The National Foreign Trade Council (NFTC) expects the House to hold a vote Sept. 12 on a bill that combines provisions providing permanent normal trade relations (PNTR) to Russia with human-rights legislation.”

The World Trade Organization noted today that, “Today (22 August 2012), Russia becomes the 156th WTO member.”

Keith Good

Posted by Keith Good • August, 22, 2012 • 4:16 am