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Farm Bill; Ag Economy; Biofuels; and, Biotech Issues

Farm Bill

Late last month, House Agriculture Committee Chairman Frank Lucas (R., Okla.) was a guest on Oklahoma Horizon television, a nationally televised weekly program that explores economic and social trends. Chairman Lucas was interviewed by program host Rob McClendon.

The interview, which was uploaded on Sep. 28, and is available here, focused “on the on again – off again 2012 Farm Bill.”

Chairman Lucas talked about the current political dynamics of divided government in Washington, D.C. and noted that beyond the traditional farm program areas, that the nutrition title was an important point of consideration for the legislation.

The Oklahoma Republican went on to talk about the potential of getting a Farm Bill passed in the post-election lame duck session of Congress. Noting that he was a farmer by trade, and therefore an eternal optimist, Congressman Lucas indicated that there was the possibility of action on the Bill during that time.

Nonetheless, Chairman Lucas did note the crowded agenda that will face lawmakers on their return to the Capitol, including budgetary issues such as the “fiscal cliff,” and potential sequestration.

Within the context of these large budgetary concerns however, Chairman Lucas noted that both the Senate and House Ag Committee passed versions of the Farm Bill do generate substantial savings that could be fused together in considerations on budgetary matters.

Chairman Lucas did acknowledge that the outcome in the November election, Senate, House and executive branch, could be variables that impact the political climate, and potential progress, in the lame duck session.

Meanwhile, Mike Christopherson reported yesterday at the Crookston Times (Minn.) Online that, “Months ago, amid the positive vibes emanating from the halls of the U.S. Capitol in Washington, D.C. all the way to the farm fields of the Seventh District in Minnesota that he represents, U.S. Rep. Collin Peterson was already concerned. Despite the U.S. Senate approving a new farm bill with relative ease, Peterson was worried that the bill faced much tougher prospects in the House.”

The article noted that, “Peterson’s fears have been realized. The House Republican leadership over the past few months wouldn’t allow the farm bill to come up for a vote and Congress has recessed for the election, leaving the legislation in limbo.

“But, during a visit to Crookston earlier this week, Peterson said he still has hope that the House will approve a farm bill during the ‘lame duck’ session that will convene after the election and wrap up before lawmakers take their oaths of office in January 2013.”

Yesterday’s article indicated that, “‘I’m really hoping we can still get this done,’ Peterson told the Times after a tour of Crookston’s New Flyer of America metro transit bus final assembly plant, which he took with Sen. Amy Klobuchar as part of her ‘Made in America’ tour. Saying he’s ‘good friends’ with House Speaker John Boehner, an Ohio Republican, Peterson said Boehner wants a farm bill approved during the House’s lame-duck session as well. ‘If not, we’re faced with starting the whole thing over in the new year, and who knows how that new bill might look?’ Peterson said. ‘The bill we have now is a good, strong bill.’

“Peterson said he can’t help but ‘feel for’ Republican candidates like U.S. Senate candidate Rick Berg in North Dakota, a current colleague of Peterson’s in the House. Berg is battling Democrat Heidi Heitkamp for the Senate seat being vacated by Kent Conrad, and Berg is having a hard time explaining why the leaders of his party in the House won’t pass a farm bill.

“‘People like Berg are paying the price; in some states the farm bill is no big deal so a guy can sort of skirt by, but in North Dakota it’s a huge deal,’ Peterson said.”

Interestingly, Farm Bill related issues have surfaced in the U.S. Senate race in Connecticut.

Brian Lockhart reported earlier this week at the News-Times (Danbury, Conn.) Online that, “It was 40 years ago, and only to purchase about a week’s worth of groceries. But Linda McMahon’s temporary reliance upon food stamps has the Republican candidate again distancing herself from the GOP’s conservative orthodoxy as she runs for a U.S. Senate seat in blue-state Connecticut.

“‘I can tell you in today’s economy, with so many people out of work, I would not support cuts to our food and nutrition programs,’ McMahon told Hearst Connecticut Newspapers on Tuesday.”

The article noted that, “Most recently, the Republican-run House of Representatives was unable to pass a farm bill, in part because of divisions between moderates and conservatives over how deeply to cut food stamp spending.”

The Hill’s Ballot Box Blog reported yesterday that, “Republican Linda McMahon holds a 1-point lead over Rep. Chris Murphy (D-Conn.), indicating the race for Connecticut’s Senate seat is still in flux just over a month out from Election Day.”

And Jennifer Steinhauer reported in today’s New York Times that, “Representative Steve King tapped his fingers impatiently against the lectern as his Democratic debate opponent, Christie Vilsack, lit into him about the House’s failure to take up a farm bill. ‘I have just one question for Congressman King,’ Mrs. Vilsack said, as the Republican looked on with irritation. ‘Where is the farm bill?

“It was an uncommon moment for Mr. King, the Tea Party firebrand who for the last decade has threshed his opponents like a combine through corn. This time around, he is in the unfamiliar and highly uncomfortable position of defending his House seat against an aggressive, well-known Democrat with a lot of outside money supporting her bid.”

Separately, the political campaign of Senate Ag Committee Chairwoman Debbie Stabenow (D., Mich.) recently released a campaign ad that features Michigan producers who highlight the passage of the Farm Bill by the Senate.

(For additional updates on several House and Senate races with Farm Bill related implications, click here).

Meanwhile, a news release yesterday from Rep. Steve King indicated that, “[Rep. King] released the following statement today in support of Congressman Tim Huelskamp (R-KS) issuing the Nutrition Nanny challenge to top USDA officials to ‘embrace the calorie limits and diet restrictions associated with the new mandates.’ On Monday, the USDA Deputy Under Secretary for Food, Nutrition and Consumer Services Dr. Janey Thorton, the official responsible for implementing the new school lunch mandates, blogged in response to increasing criticism over the USDA’s call for parents to replicate meals that their children are being forced to eat in school cafeterias at home.

“‘My legislation, the ‘No Hungry Kids Act’, was introduced in direct response to the USDA and Secretary Vilsack’s directive to put every child on a diet,’ said King. ‘The USDA’s school lunch requirements are only hindering, not helping, the growth of our school children. This kind of overregulation- rationing food, limiting meat consumption and putting every child on a diet- is the outcome of an ever expanding nanny state.’”

And Sam Shawver reported yesterday at The Marietta Times (Ohio) Online that, “Ohio Sixth District [GOP] U.S. Congressman Bill Johnson, in an e-mailed statement Wednesday, expressed disappointment that the [Farm] bill wasn’t acted on prior to last month’s recess.

“‘Having grown up on a farm, I know how important certainty is to farmers. That’s why I was disappointed that a farm bill wasn’t brought to the House floor before Congress adjourned last month,’ he said. ‘It is important that America has a clear and stable agriculture policy that farmers can rely on into the future.

“‘What we should not be doing is passing a farm bill in which 80 percent of the funding is spent on unrelated programs,’ Johnson added. ‘I want a farm bill that actually works for farmers.’”

 

Agricultural Economy

The AP reported yesterday that, “The nation’s worst drought in decades is showing no sign of letting up in several key Midwest farming states, worrying farmers harvesting the summer’s withered corn crop in record time that their winter crops may also be at risk.

“Overall drought conditions in the lower 48 states held steady over the seven-day period ending Tuesday, with about one-fifth of the total land area in extreme or exceptional drought, the two worst classifications, according to the U.S. Drought Monitor’s weekly update of its drought map released Thursday.

“Conditions worsened, though, in Kansas and Iowa, the nation’s biggest corn producer, and nearly 98 percent of Nebraska was still deemed to be in one of the two worst categories.”

Also yesterday, a news release from the Food and Agriculture Organization (FAO) of the United Nations stated that, “Following two months of stability, the FAO Food Price Index rose slightly in September 2012, up 1.4 percent, or 3 points, from its level in August.”

For more detailed analysis of yesterday’s FAO report, see this Bloomberg interview with FAO Economist Abdolreza Abbassian.

Meanwhile, Bloomberg writer Alan Bjerga reported yesterday that, “Organic-foods sales to businesses including Dean Foods Co. totaled more than $3.53 billion last year, about 0.9 percent of total U.S. farm receipts, the Department of Agriculture said.

At least 3.65 million acres were used to raise certified organic crops and livestock, the USDA said yesterday in a report. That’s approximately 0.4 percent of the 917 million acres of farm and ranchland in the U.S.”

Mr. Bjerga noted that, “The USDA report was based on a survey of certified organic farms, operations that comply with government standards that restrict or ban the use of synthetic chemicals and hormones. An earlier survey of organic operations, in 2008, included farms that were not certified as organic by the department. That report found that 14,450 farms — about a fourth of them uncertified — had produced about $3.16 billion in sales.”

The Bloomberg article added that, “The survey was conducted to provide the department’s Risk Management Agency with better information for federal crop- insurance programs, the USDA said. Organic producers pay a surcharge for many insurance policies, and payouts often don’t reflect their higher costs, according to some producers.”

 

Biofuels

Ryan Tracy reported in yesterday’s Wall Street Journal that, “The U.S. ethanol industry’s latest push to expand is off to a slow start, with many gas-station owners wary about a new gasoline blend containing 15% ethanol.

“Since the blend known as E15 first hit the market for regular cars in July, eight fuel stations in Kansas and Iowa have started to sell it, according to the Renewable Fuels Association, an ethanol trade group. The group says regulators in three other states—Nebraska, South Dakota, and Illinois—have cleared it for sale and expects stations there to offer the fuel soon.

But concerns over storing the fuel and burning it in older vehicles have stalled its adoption. Most stations are in ‘sit back and wait’ mode, in the words of R.J. Rymas, director of fuels for Rockford, Ill.-based gas-station owner Road Ranger LLC.”

An update yesterday at DomesticFuel.com indicated that, “Secretary of Agriculture Tom Vilsack held a town hall meeting at World Dairy Expo in Madison, Wisconsin this week and took questions from the audience, one of which concerned ethanol and the impact it has had on livestock producers.”

The update quoted Sec. Vilsack: “‘We hear a lot of people say that 40% of the corn crop is being used for fuel production but it’s not really 40% because a third of it comes back in DDGS [distillers grains] which is used by the livestock industry,’’ he said. ‘So, it’s less than 40%, more like 27 percent.’”

Yesterday’s update added that, “Vilsack also defended the Renewable Fuel Standard…”

The Food and Agricultural Policy Research Institute (FAPRI) released a report yesterday titled, “Renewable Fuel Standard Waiver Options during the Drought of 2012.”  According to FAPRI:  “The 2012 drought has caused higher crop prices, leading to requests for biofuel use mandates to be waived. This report provides analysis of waiver options that would reduce domestic biofuel use requirements.”

More specifically, key results from the FAPRI report included: “Reducing the overall RFS has a small negative effect on the corn price in 2012/13 relative to the baseline because overall ethanol use and production are projected to be motivated mostly by crop and fuel market conditions in the current marketing year, not the RFS. Waiving the mandate, a minimum use requirement, has limited market impact if people were going to use almost as much as the mandate anyway.

A waiver in 2012/13 may have larger negative impacts on corn market prices in 2013/14 than in 2012/13. Extra biofuel use in one year typically can help to meet the next year’s mandate. If this practice is permitted, a waiver in 2012/13 could make it far easier to satisfy the RFS in 2013/14, when limits on E10 blending make mandate compliance difficult. If the waiver also disallows counting biofuel use in 2012/13 against the mandate in the next year, then the mandate might be more difficult to meet in 2013/14. In this case, corn prices in the year after the waiver would be higher than in the baseline.

“Waiving the advanced mandate reduces sugar cane ethanol imports, leading to more corn starch ethanol production and a higher corn price in 2012/13.

“More generally, mandate changes can have partly offsetting ethanol trade impacts. Reducing domestic use of corn starch ethanol tends to cause more exports. Reducing imported advanced ethanol tends to cause less exports.”

 

Biotech Issues

A news release yesterday from the European Food Safety Authority (EFSA) noted in part that, “The [EFSA] has concluded that a recent paper raising concerns about the potential toxicity of genetically modified (GM) maize NK603 and of a herbicide containing glyphosate is of insufficient scientific quality to be considered as valid for risk assessment.

“EFSA’s initial review found that the design, reporting and analysis of the study, as outlined in the paper, are inadequate. To enable the fullest understanding of the study the Authority has invited authors Séralini et al to share key additional information.”

Meanwhile, Marc Lifsher reported yesterday at the Los Angeles Times Online that, “A television spot opposing Proposition 37, the genetically engineered food labeling initiative, was pulled briefly this week to better identify a think-tank researcher attacking the ballot issue.

“The controversy came as the opponents of the ballot measure, with $35 million in contributions from the food industry and biochemical firms, expanded a week-old television advertising blitz.

“Proposition 37 would require retailers and manufacturers of processed foods to label fresh produce or manufactured, packaged food that contain or likely could contain ingredients made from plants or animals whose DNA has been manipulated in a laboratory.”

Ken Anderson reported yesterday at Brownfield that, “An initiative that would require the labeling of foods that contain genetically modified organisms (GMOs) has been launched in Washington state.

“Observers say the initiative effort, called I-522, is very similar to what is taking place in California with Prop 37.  Prop 37, which would require GMO labels on certain foods and beverages, will be on the California ballot in November.”

Keith Good