FarmPolicy

April 24, 2014

Biofuels; Farm Bill; Budget; Regulations; Ag Economy; and, Immigration

Biofuels

Zack Colman reported yesterday at the Hill’s Energy Blog that, “The fight between the biofuels industry and oil-and-gas lobby group the American Petroleum Institute (API) flared again Thursday when the Environmental Protection Agency (EPA) released its 2013 targets for a biofuel-blending rule.

EPA raised how much cellulosic biofuel — those made from non-edible feedstock — it expected refiners to blend this year as part of the renewable fuel standard.

EPA set the mark at 14 million gallons of cellulosic biofuel, up from about 8.65 million gallons last year. The new figure pleased the biofuels industry, but did not satisfy API.”

The Hill update noted that, “The two sides are tussling over a recent court decision that said EPA needs to set more realistic projections for cellulosic biofuel.

“Biofuels groups said the goal reflects new production coming online, while API maintained it was too lofty.”

A Dow Jones article from yesterday, which was posted at DTN (link requires subscription) reported that, “The U.S. Environmental Protection Agency on Thursday held its ground on the federal mandate for using renewable motor fuels, proposing to boost a requirement for next-generation fuel even after it lost a recent court case throwing out last year’s requirement.”

The Dow Jones article added that, “Brooke Coleman, executive director of the Advanced Ethanol Council, a group of cellulosic fuel producers, said the EPA got ‘the right number’ and provided ‘advanced biofuel investors and innovators with a predictable and durable path forward.’

“The American Petroleum Institute, an oil industry trade group, won a lawsuit earlier this month throwing out last year’s cellulosic fuel requirement. The EPA in 2012 required refiners to buy 8 million gallons of cellulosic fuel, but the industry only produced about 20,000 gallons that could count toward the mandate.

“The institute Thursday criticized EPA’s proposal to require even more cellulosic fuel this year. ‘The promised production [of cellulosic fuel] hasn’t happened,’ said Bob Greco, the institute’s downstream group director. ‘With today’s announcement, EPA has proven yet again that its renewable fuels program is unworkable and must be scrapped.’”

A related AP article yesterday by David Pitt noted that, “After decades of talk, the ethanol industry is building multimillion dollar refineries in several states that will use corn plant residue, wood scraps and even garbage to produce the fuel additive.

“The breakthrough comes at a key time for the industry, after the drought heightened criticism about the vast amount of corn used to brew up ethanol rather than be transformed into animal feed or other foods.”

The AP article added that, “About 70 cellulosic projects are under way, reflecting billions of dollars of private investment.”

Meanwhile, University of Illinois Agricultural Economists Scott Irwin and Darrel Good noted in an update yesterday at the farmdoc daily blog (“Expanding the Ethanol Blend Wall – a Role for E85?”) that, “We began a discussion of the potential domestic blend wall for ethanol in a post in May of last year. The issue remains important for the biofuels industry, regulators, and policy makers. Domestic ethanol consumption is almost entirely in the form of low level blends with gasoline capped at 10 percent (E10), although small amounts have been consumed in ‘flex fuel’ vehicles as an 85 percent blend (E85) and very small quantities are being consumed as a 15 percent blend (E15). With blending dominated by E10, the blend wall is reached when the ethanol inclusion rate reaches 10 percent of domestic motor gasoline consumption. The blend wall can be problematic since the federal Renewable Fuels Standards (RFS) require increasing quantities of renewable (ethanol) biofuels consumption for the next three years. Those requirements exceed the expected E10 blend wall (Figure 1).”

Yesterday’s farmdoc update also indicated in part that, “E85 may offer a partial solution for expanding the ethanol blend wall. E85 has been in the market for a number of years and there are currently a number of fueling stations for E85. The U.S. Department of Energy (DOE) estimates that number at 2,311, although this private source estimates the number at 3,043 stations in 2,043 cities. Based on these estimates, 2 to 2.5 percent of the fuel stations in the U.S. offer E85. Analysis by the DOE suggests that the current retail infrastructure could support E85 use of 600 million gallons annually compared to the current consumption of approximately 125 million gallons. Applying the DOE analysis to the private estimate of the number of E85 fueling stations would increase that estimate from 600 million gallons to 790 million gallons. The EPA also estimates that there are over 10 million flex fuel vehicles in service presently in the U.S. At average annual driving distances, that number is sufficient to consume several billion gallons of E85 annually.”

 

Farm Bill- Policy Issues

Rep. John Shimkus (R, Il.) appeared yesterday on WPMB radio (Vandalia, Il.) where in part, the conversation turned to the Farm Bill.

During this portion of yesterday’s interview (related audio- MP3- 3:31)), Rep. Shimkus focused attention on the Farm Bill extension, as well as the SNAP program (food stamps).  He suggested photo identification be included on SNAP cards to reduce abuse of the program.

Also yesterday, Reuters writer Susan Heavey reported that, “After more than a year’s delay, American schools soon will see new government rules targeting the kinds of snacks sold to students, a move nutritionists say could play an important role in fighting childhood obesity.

“Anxious schools have waited more than a year to find out how sales of potato chips, candy bars, sodas and similar treats to students will be restricted. These rules on food sold outside traditional cafeteria meals are a key part of the first major overhaul on school food in more than three decades.

“Agriculture Secretary Tom Vilsack recently told Reuters that the rules on what snacks may be offered in vending machines, school stores and the like, originally due in late 2011, are expected to be finished in the early part of this year.”

A news release Wednesday from Sen. Al Franken (D., Minn.) stated that, “[Sen. Franken] said passing a new five-year Farm Bill will be a top priority for him and for Senate leaders this year, as he cosponsored legislation similar to the measure that passed the Senate with overwhelming bipartisan support in 2012…Sen. Franken said he’s optimistic that House leaders, who blocked passage of a five-year bill in 2012, will be more open to the legislation this year.”

And Senator John Thune (R., S.D.) provided perspective on Farm Bill developments in a report Wednesday by Mike Hergert that was part of the Agriculture Today radio program from the Red River Farm Network – audio clip here (MP3- 0:45).

In other policy related news, Stephanie Strom reported in today’s New York Times that, “With Washington State on the verge of a ballot initiative that would require labeling of some foods containing genetically engineered ingredients and other states considering similar measures, some of the major food companies and Wal-Mart, the country’s largest grocery store operator, have been discussing lobbying for a national labeling program.

“Executives from PepsiCo, ConAgra and about 20 other major food companies, as well as Wal-Mart and advocacy groups that favor labeling, attended a meeting in January in Washington convened by the Meridian Institute, which organizes discussions of major issues. The inclusion of Wal-Mart has buoyed hopes among labeling advocates that the big food companies will shift away from tactics like those used to defeat Proposition 37 in California last fall, when corporations spent more than $40 million to oppose the labeling of genetically modified foods.”

The article indicated that, “Instead of quelling the demand for labeling, the defeat of the California measure has spawned a ballot initiative in Washington State and legislative proposals in Connecticut, Vermont, New Mexico and Missouri, and a swelling consumer boycott of some organic or ‘natural’ brands owned by major food companies.”

 

Budget

Jonathan Weisman and Annie Lowery reported in today’s New York Times that, “The Senate gave final approval on Thursday to legislation suspending the statutory debt ceiling until May, officially turning Congress’s attention to the next budget showdown: $1 trillion in across-the-board military and domestic spending cuts set to begin on March 1.

“The 64-to-34 vote ended for now a clash that had threatened the full faith and credit of the United States government. But the next budget fight is just four weeks away. House Republican leaders insist that the across-the-board cuts, known as sequestration, are coming, even as senators in both parties scramble for short- and long-term remedies.”

 

Regulations

A news release yesterday from Senator Pat Roberts (R., Kan.) stated that, “[Sen. Roberts] today introduced sweeping legislation to continue his fight against regulations issued by the Obama Administration that hurt the nation’s struggling economy.

Roberts’ bill, S. 191, the Regulatory Responsibility for our Economy Act would put the power of law behind the President’s widely touted, but largely ignored, executive order directing federal agencies to review their regulations ensuring they cause no harm to the economy or job creation.

“‘Two years ago, I applauded the President for recognizing that the volumes of regulations released by his administration were hurting job creation, stifling growth, and generally making life more difficult on hard working Americans. However, since that day, this promising executive order has received little more than lip service from this administration,’ Roberts said.  ‘Loopholes have been exploited across the Federal Government and Americans continue to struggle under the regulator’s boot. So let’s make it law. Let’s really look at the size and scope of our government and return it to its role as a partner in America’s success rather than an impediment to it.’ (Audio HERE).”

And a news release yesterday from the American Soybean Association (ASA) stated in part that, “The [ASA] welcomes legislation introduced yesterday from Senate Agriculture Committee members Pat Roberts (R-Kan.), and Mike Johanns (R-Neb.) that amends the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA) to eliminate the duplicative pesticide permitting requirements under the Clean Water Act.”

 

Agricultural Economy- Trade

Reuters writer Carey Gillam reported yesterday that, “The unrelenting drought gripping key farming states in the U.S. Plains shows no signs of abating, and it will take a deluge of snow or rain to restore critical moisture to farmland before spring planting of new crops, a climate expert said on Thursday…[T]hursday’s Drought Monitor report showed severe drought still gripping 87.25 percent of the High Plains, unchanged from the prior week. Fully 100 percent of the land area in Kansas, Colorado, Nebraska and Oklahoma remained engulfed in severe drought or worse, according to the Drought Monitor.”

The USDA’s National Agricultural Statistics Service released its monthly Agricultural Prices report yesterday, which stated in part that, “The corn price, at $6.98 per bushel, is 11 cents higher than last month and 91 cents above January 2012 [related graph]…The soybean price, at $14.10 per bushel, is down 20 cents from December but is $2.20 above January 2012 [related graph]…and…The January price for all wheat, at $8.10 per bushel, is down 19 cents from December but $1.05 above January 2012 [related graph].”

Dan Piller reported yesterday at The Des Moines Register Online that, “Russia said this week it will ban meat imported from the U.S. with the additive racaptomine, which is added to feed to help growth.”

In a statement regarding this development from yesterday, Iowa GOP Senator Charles Grassley indicated that, “With WTO membership comes an obligation to abide by the science-based WTO standards for trade,” Grassley said.  “It looks like Russia is ready to put up more unjustified, non-scientific barriers to pork and beef from the United States.  There have been concerns about Russia’s non-tariff trade barriers for awhile and, unfortunately, the Administration failed to press hard enough on these issues last year in negotiating Russia’s entry to the WTO.  Russia is an important market for pork and beef producers in Iowa and other parts of the United States.  The U.S. Trade Representative needs to take every action possible in response to Russia’s ban.”

 

Immigration

Peter Wallsten and Rosalind S. Helderman reported in today’s Washington Post that, “Rising tensions over whether to give illegal immigrants a chance to pursue full citizenship could ruin what President Obama and congressional leaders agree is a pivotal moment in resolving long-simmering problems in the country’s immigration system.”

Ashley Parker reported in today’s New York Times that, “As eight senators in a bipartisan group look ahead to a broad immigration overhaul, they are also looking back to 2006 and 2007 — the last time a major immigration measure was considered — as something of a reverse playbook.”

And, DTN Executive Editor Marcia Zarley Taylor noted yesterday at the Minding Ag’s Business Blog that, “Comprehensive immigration reform is critical to the economy as well as on moral grounds, said California Secretary of Agriculture Karen Ross in a phone interview with me this week. She oversees agriculture in a state that produces over 50% of the nation’s fresh produce and tree nuts, but thinks rural communities everywhere have a big stake in seeing an estimated 11 million illegal immigrants become documented workers. Raised on a western Nebraska farm that she still owns, she also brings a Midwesterner’s pragmatism to West Coast politics.

The country needs immigration reform ‘to be able to attract people to agriculture and to allow them to live openly and legally,’ Ross says. Inability to fully integrate immigrants into society as we did with past newcomers is already affecting the social fabric of our communities, she says.

Meanwhile, labor shortages create a crisis for agriculture employers, particularly in dairy and highly perishable specialty crops. According to a recent Texas A&M study, immigrants tend herds that produce three-fifths of the American milk supply. Yet dairy’s demand for 24-7 workers just isn’t being filled with enough locals, even with the nation’s high unemployment rates.”

Keith Good

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