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

Farm Bill

David Rogers reported yesterday at Politico that, “Yards from the finish line, farm bill negotiators are struggling with two final issues — dairy and payment limits — each of which takes Congress back full circle to the question asked when the whole debate began two years ago.

How far should government go to protect farmers from bad times — and, sometimes, themselves?

“In dairy’s case, Speaker John Boehner (R-Ohio) is adamant that he won’t accept the hands-on approach espoused in the Senate bill to manage future milk supplies to protect farmers’ margins. Corporate giants like Kraft Foods and Nestle back the speaker. And this puts House Agriculture Committee Chairman Frank Lucas (R-Okla.) in the hellish position of having to go against the man who’s been his best friend and ally in the whole tortured farm bill debate: Rep. Collin Peterson (D-Minn.).”

The article noted that, “In the case of payment limits, it’s a very different set of players. But the question is again one of balancing government’s role and the risks of modern agriculture.”

Mr. Rogers explained that, “Talks have continued through this week’s recess. And the House and Senate Agriculture staffs continue to speak hopefully of filing a bill prior to President Barack Obama’s State of the Union address next Tuesday evening.

“Meeting that schedule is a major challenge. Meatpackers and ranchers have their own scores to settle first over labeling rules for livestock. But real progress appears to have been made in crafting a revised dairy program that can break the deadlock between Boehner and Peterson, Lucas’s ranking Democrat.”

After a closer and more detailed look at dairy issues, the Politico article stated that, “If anything, the debate over payment limits may be more contentious: How far up the ladder should the government go as farms get ever bigger?”

And while discussing payment limitation issues, and the “actively engaged” definition, Mr. Rogers pointed out that, “One potential compromise is to kick the issue back up to [Ag. Secretary Tom Vilsack] and ask him to take a more aggressive role in cracking down on the genuine ‘bad actors’ abusing the current rules. But payment limit advocates would say this had been tried before, in the 2008 farm bill, without success. Obama himself comes under criticism for not living up to his own 2008 campaign promises to tighten enforcement.

“‘The fundamental issue is whether or not the payment limits, enshrined by Congress in farm bills for four decades, are real or fake,’ the National Sustainable Agriculture Coalition said in a statement Thursday. ‘Under current law they are fake. They can fairly easily be sidestepped by adding more and more farm managers to a general partnership that controls the farm.’”

The Lincoln Journal Star (Neb.) editorial board indicated this week that, “Rep. Jeff Fortenberry says it would be a ‘travesty’ if a congressional conference committee strips limits on direct subsidy payments from the farm bill.

“The description is apt on many levels.

For one thing, the payment limits are in both the House and Senate version of the farm bill. That’s a clear expression of majority sentiment.”

Also on this issue, Daniel Looker reported yesterday at Agriculture.com that, “[Sec. of Agriculture Tom Vilsack] said Thursday that a he has talked to Senate Chairwoman Debbie Stabenow (D-MI), Grassley and others about the payment limit issue.

“‘As they deal with this, they have to recognize that agriculture is different in different parts of the country,’ Vilsack said, adding that what works for corn and soybean farms in the Midwest may not work for cotton farms in the South.”

Mr. Looker added that, “Vilsack said that when Grassley criticizes current practices under payments, the Iowa senator ‘has a solid point that this has resulted in some people qualifying that are not actively engaged in agriculture.’

“Vilsack said that one way to resolve the issue might be through USDA’s rule making. ‘I don’t think you see a solution that is written into law,’ he said. Vilsack said he hasn’t seen a bill yet and that he’s basing that likelihood ‘on what has happened in the past.'”

Erik Wasson reported yesterday at The Hill’s On the Money Blog that, “As it stands, the best shot for passage [of the Farm Bill] appears to be filing the bill on Monday night and setting up a quick Wednesday vote in the House, sources said. The House breaks for recess on Wednesday for the annual Republican retreat.”

“Getting it done next week would be a heavy lift because negotiators as of Thursday were still dealing with major points of contention, including coming up with a compromise on dairy subsidies and the issue of how to structure payment limits,” the article said.

Mr. Wasson pointed out that, “The toughest battle in the bill over food stamp cuts has largely been resolved by House Agriculture Committee Chairman Frank Lucas (R-Okla.) and Senate Agriculture Committee Chairwoman Debbie Stabenow (D-Mich.). They have agreed to just under $9 billion in cuts over 10 years.”

Also yesterday, Tim Devaney reported at The Hill’s RegWatch Blog that, “A top Democrat is urging the Obama administration to press forward with a rule requiring that meat producers label their products with information about where it came from.

In a letter sent Thursday, Rep. Rosa DeLauro (D-Conn.) asked Agriculture Secretary Tom Vilsack to enforce a controversial country-of-origin rule that would require meat producers to label their products with information about where the animal was born, raised and slaughtered.”

In other Farm Bill developments, Rob Hotakainen reported yesterday at The Kansas City Star Online that, “Brazil is threatening to launch a full-blown trade war against the U.S. next month, accusing Congress of ignoring an order by the World Trade Organization to stop subsidizing its domestic cotton growers.”

The article noted that, “‘We are in the position where there are no options left but retaliation,’ Welber Oliveira Barral, Brazil’s former secretary of development, industry and foreign trade, said at a meeting with reporters last week in Washington.

“That has many U.S. business officials fretting. They want to head off losses by getting the United States to comply with all international trade rules.”

The Kansas City Star article added that, “‘We have not yet seen sufficient effort to make the new farm bill comply with the WTO rules,’ Gilson Pinesso, the president of the Brazilian Cotton Growers Association, said last week. He spoke through an interpreter after attending meetings on Capitol Hill to discuss the farm bill talks.

“Others are more optimistic.

Jay Boyette, the director of commodities for the North Carolina Farm Bureau, predicted that Congress will approve a farm bill that will scrap direct subsidies for domestic growers, which he said should go a long way toward satisfying the Brazilians.”

Meanwhile, the Los Angeles Times editorial board stated yesterday that, “Chickens and eggs have provoked a controversy in Congress over what comes first, interstate commerce rules or state laws. According to Rep. Steve King, a Republican from Iowa (the nation’s largest egg-producing state), California’s new law requiring that all eggs sold in the state come from chickens kept in non-confining cages violates the interstate commerce clause of the Constitution.

“In response, King persuaded his colleagues to pass the Protect Interstate Commerce Act (also known as the King amendment) as part of the House version of the U.S. farm bill. It prohibits states from enacting any laws that set standards for agricultural production that exceed those in other states governing the same production. But the amendment is misguided and overly broad, and it does far more than release egg farmers in one state from having to follow the stricter rules of another state in which they do business.”

The LA Times opinion item indicated that, “The Senate version of the farm bill does not include this amendment. As House and Senate conferees reconcile the bill, they should throw out the King amendment.”

Also yesterday, the Modesto Bee editorial board opined that, “House Speaker John Boehner stopped by California on Wednesday, claiming he wanted to open the spigot for drought-stricken farmers, while doing a little rainmaking for the National Republican Congressional Committee.”

The Bee opinion item pointed out that, “The speaker’s discovery of California’s water problems is important, though late in coming.

For example, Boehner couldn’t get his crew to pass a farm bill. Without a farm bill, the government cannot offer federal disaster relief for our drought – which would normally qualify. Only a few California crops qualify, but almonds growers could get some help.”

 

Agricultural Economy

A news release yesterday from the University of California at Davis stated that, “As California braces for record drought, ranchers are among the most immediately impacted, and most say they are not ready for the severe water shortages and lack of forage that drought would bring, according to a new study by researchers at the University of California, Davis.

“A statewide survey and follow-up interviews by the research team document a deep and growing concern over the severe conditions facing the ranching community. More than one-third of interviewed ranchers expect devastating impacts to their operations if drought conditions persist.”

And in trade issues, Julie Girling, a member of the European Parliament for South West England and Gibraltar, indicated yesterday at The Wall Street Journal Online that, “French red lines on agriculture and America’s desire to have financial regulation be treated outside the current trade negotiations dominate the headlines about the proposed trans-Atlantic free-trade zone. But the biggest threat to the Trans-Atlantic Trade and Investment Partnership may well be the EU’s expanding embrace of ‘precautionary’ regulation—often in contradiction to established norms of science and risk management.

“As tariffs between the two trading partners are already low, the real payoff to trade and economic growth will come from the reduction of so-called ‘non-tariff barriers,’ which often means regulations on food and chemicals used in agricultural and industrial processes. In Europe, some public interest groups—with an aligned activist scientist movement, and parts of the European Commission together with many members of the European Parliament—are waging an emotion-based campaign for ‘zero risk.’ They disingenuously offer to legislate and regulate for the impossible—an Eden without risk. This approach undermines any attempt to rationally balance risks and benefits.”

 

Biofuels

Donnelle Eller reported on the front page of yesterday’s Des Moines Register that, “About the time the national recession was hitting, general manager Tom Brooks walked into Western Dubuque Biodiesel for the first time and found 400 applications for the eastern Iowa plant’s 31 jobs.”

Today, though, production at the plant has stopped while Brooks and others wait for the biodiesel market to improve. Other plants also have idled production or cut output. Their fates depend in part on a federal proposal to scale back the amount of renewable fuels that must be blended into the U.S. fuel supply,” the article said.

Ms. Eller noted that, “The Environmental Protection Agency proposes freezing the amount of biodiesel that must be blended into the nation’s fuel supply this year to the 2013 level of 1.28 billion gallons. The problem is that the industry produced a total of 1.7 billion gallons last year. And at the end of the year, it was producing at an annualized rate of 2 billion gallons.”

Yesterday’s article indicated that, “The biodiesel industry’s future is further clouded after losing a $1 blenders’ tax credit at the end of the year. The tax credit makes biodiesel more competitive with petroleum diesel, industry leaders say.

While much of the focus on the EPA proposal has been on ethanol — with the corn-based renewable fuel possibly rolled back about 10 percent, to 13 billion gallons — the younger biodiesel industry could be hit hardest.”

Chris Clayton reported yesterday at the DTN Ag Policy Blog that, “While talk around the farm bill remains quiet in Washington, discussion about the Renewable Fuels Standard is heating up as EPA’s comment deadline on its proposal approaches on Tuesday.”

Mr. Clayton noted that, “In the Senate, 31 senators signed a letter to [EPA Administrator Gina McCarthy], led by Senate Majority Whip Dick Durbin, D-Ill., and Sen. Charles Grassley, R-Iowa. The senators called the EPA proposal ‘a significant step backward — undermining the goal of increasing biofuels production as a domestic alternative to foreign oil consumption. Further, the proposed waiver places at risk both the environmental benefits from ongoing development of advanced biofuels and rural America’s economic future. We urge you to modify your proposal.’

In the House, 30 lawmakers signed a similar letter, led by Reps. Kristi Noem, R-S.D., and Cheri Bustos, D-Ill., stating, ‘We are further concerned that the rationale used by the EPA is inconsistent with the current statute and could jeopardize the future of the renewable fuels industry.’ The congressmen asked EPA to revise its proposal to ensure it is consistent with the law.”

And DTN writer Todd Neeley reported yesterday that, “In the U.S. Environmental Protection Agency’s absence, a public hearing on proposed Renewable Fuel Standard cuts took on the feel of a campaign rally Thursday as state officials, ethanol industry representatives, farmers and others from across the Midwest took aim at EPA’s proposal.

“The Iowa hearing came about after the EPA and other Obama administration agencies turned down a request for an official hearing on a proposal to cut the RFS by some 3 billion gallons for 2014 — the first across-the-board cut of the mandate since the RFS’ passage in 2005 and renewal in 2007. The public comment period for the EPA proposal ends Jan. 28.

Most notably, many of those who testified expressed concern that cutting the RFS could trigger a 1980s-like farm crisis, when an estimated one-third of Iowa farmers went out of business.”

Also, Christopher Doering reported yesterday at The Des Moines Register Online that, “The U.S. Environmental Protection Agency told the oil industry Thursday it would reconsider its 2013 target for cellulosic biofuels as production of the advanced fuel struggles to grow.

“The regulator told the American Fuel & Petrochemical Manufacturers and the American Petroleum Institute of its decision. The two trade groups had petitioned the EPA in October to reconsider the cellulosic component of the Renewable Fuel Standard. The mandate requires refiners to blend ever increasing amounts of biofuels into the nation’s gasoline supply through 2022.

“The EPA said in October that refiners had to blend in 6 million gallons of cellulosic ethanol made from crop residue, grasses or wood chips. The oil industry has until June 30 to comply with the 2013 biofuel quotas. A drop in the cellulosic target for 2013 would be the second time the agency has lowered the figure. The EPA initially proposed output of 14 million gallons in January 2013.”

 

Biotech

Reuters news reported yesterday that, “Two leading U.S. grain groups have asked Syngenta AG, the world’s largest crop chemicals company, to halt commercialization in the United States of two genetically modified (GM) strains of corn not currently approved in China.

The National Grain and Feed Association and North American Export Grain Association asked Syngenta to hold back on its Agrisure Viptera and Duracade corn varieties until China and other U.S. markets have granted regulatory approval.”

 

Budget

Erik Wasson reported yesterday at The Hill’s On the Money Blog that, “President Obama will deliver his fiscal 2015 budget a month late.

“The budget, officially due on the first Monday in February, will come out on March 4, the White House said Thursday.

“An official said work on the proposal was delayed by the two-year budget deal that Congress passed in December and the omnibus spending bill that was passed this month.”

 

Immigration

Jake Sherman and Anna Palmer reported yesterday at Politico that, “The same House Republicans who punted on immigration last year are now privately crafting an intricate plan to try to pass it in 2014.

“Most people close to the planning expect votes on four bills by the end of the summer, including one that would give undocumented workers legal status.

“And though none of the bills is likely to offer a path to full citizenship, the fact Republicans are preparing to take on immigration at all is a sign the party is coming to grips with a political reality: if they want to win elections in the long run, they’ll have to face the issue.”

Keith Good