FarmPolicy

February 25, 2020

Climate- EPA Water Rule; Biofuels; Farm Bill; Ag Economy; FDA; and, Immigration

Climate, EPA Water Rule

DTN Ag Policy Editor Chris Clayton reported yesterday that, “Demonstrating some of the complications involved in agriculture and climate change, U.S. Agriculture Secretary Tom Vilsack disputed Republican views on the Obama administration’s work with dairy producers to reduce methane while the secretary also dismissed a study raising doubts about carbon emissions from cellulosic biofuels.

“Vilsack spoke at an Earth Day forum on climate change held at Drake University and co-sponsored by the magazine New Republic and the League of Women Voters.

“USDA also used the forum to announce $6 million in grants to 10 universitiesto study the effects of climate change on agriculture. The universities are designated as USDA’s ‘climate hubs’ to help producers adapt to changing climate conditions.”

The DTN article added that, “The dairy industry has been proactive in reducing greenhouse gas emissions throughout the entire supply chain by 25% by 2020. USDA made a financial commitment to invest more in anaerobic digesters to reduce methane from dairy production while also producing electricity from the digesters. USDA has financed 92 such digesters and has a goal to fund one a week.

“The work with the dairy sector was highlighted by the White House Climate Action plan last month that was labeled as a biogas roadmap for the dairy industry. That prompted press releases and multiple letters by some Senate Republicans urging USDA to put in writing that the department is not going to regulate methane from livestock. Vilsack reiterated USDA continues to support the work done by the dairy industry.”

Yesterday’s article also noted that, “Later, in a brief interview, Vilsack indicated he thinks lawmakers are stoking fires over regulatory threats because of the mid-term election season.

This is a political year, so people are using every opportunity — it’s like the Clean Water (Act) waters of the U.S. rule from EPA — it’s easy to twist and confuse folks,’ Vilsack said. ‘So we at USDA have to do a better job making people understand this is not mandatory, this is voluntary. And in fact, producers across the country are accepting the challenge, particularly in the dairy industry. We have a terrific relationship with them, so we have to do a better job of educating people.’”

On the issue of the EPA Clean Water Act issue, a news release yesterday from the American Farm Bureau Federation (AFBF) stated that, “The [AFBF] today asked its members to resist a proposed rule from the Environmental Protection Agency that it says will impose unworkable regulations on the nation’s farms.

Published Monday in the Federal Register, the more-than-111,000-word ‘Waters of the U.S.’ proposed rule reflects the EPA’s latest interpretation of the 1972 Clean Water Act. The rule could ultimately lead to the unlawful expansion of federal regulation to cover routine farming and ranching practices as well as other common private land uses, such as building homes.

“‘This rule is an end run around congressional intent and rulings by the U.S. Supreme Court, alike,’ AFBF President Bob Stallman says. ‘Congress and the courts have both said that the 50 states, not EPA, have power to decide how farming and other land uses should be restricted. It’s time to ditch this rule.’”

Meanwhile, Donnelle Eller reported yesterday at The Des Moines Register Online that, “U.S. Agriculture Secretary Tom Vilsack said today that agriculture tends to take the brunt of criticism about climate change, but the industry contributes only 9 percent of the greenhouse gases blamed for a warming planet.

“‘Everyone assumes what’s happening globally is happening nationally,’ said Vilsack, a keynote speaker at Drake University forum on climate change. ‘Clearly, there are challenges globally in terms of agriculture and its contribution to greenhouse gas emissions. That’s not necessarily the case in the United States.’”

The Register article also pointed out that, “[Jeffrey Ball, an energy policy columnist at The New Republic] pressed Vilsack on whether ethanol and other renewable fuels are an environmental benefit, referring to a University of Nebraska study released this week that says cellulosic ethanol creates 7 percent more greenhouse gases than use conventional gasoline.

“‘The study started with an assumption about the way corn stover would be removed from the land. The problem with the assumption is no farmer in the country would actually take that much crop residue,’ he said.

“‘When you start with a faulty assumption, you end up with a faulty conclusion,’ Vilsack said.”

 

Biofuels

In other news relating to biofuels, Timothy Cama reported yesterday at The Hill’s Energy Blog that, “The Environmental Protection Agency (EPA) on Tuesday retroactively lowered the volume of cellulosic biofuel that refiners must blend into traditional fuels, aligning the 2013 mandated volume to the actual amount of fuels produced.

“EPA’s original mandate for 2013 was based on a projection that producers would make 6 million ethanol-equivalent gallons of cellulosic biofuel, but just over 800,000 gallons of the fuels were actually produced that year, the agency said. Tuesday’s action sets the cellulosic biofuel blend level at 0.0005 percent, reflecting the amount of fuel produced.”

The Hill update noted that, “The year is over, but EPA’s revision means that refiners will not have to use credits or pay penalties for not reaching the target.”

Meanwhile, DTN writer Todd Neeley reported yesterday (link requires subscription) that, “With potentially just weeks to go before the U.S. Environmental Protection Agency could announce a final decision on the renewable fuel standard, U.S. ethanol and agriculture interests Tuesday launched a television and digital advertising campaign to counter months of national advertising by the U.S. oil industry attacking ethanol.

“The Fuels America coalition announced what it calls the ‘Oil Rigged’ campaign that includes the purchase of a 30-second television advertisement to air on cable for the next two weeks along with a website, oilrigged.com.”

 

Farm Bill Issues

Reuters writer Christine Stebbins reported earlier this week that, “A plan in the new U.S. farm law to help dairy farmers limit losses from rising feed costs or falling milk prices may become a model in coming years for livestock producers who have resisted similar types of insurance.

“The plan, called the Margin Protection Program, takes a page from the popular multibillion-dollar government-backed crop insurance programs for grain, cotton and other crops. In short, MPP will create formulas to insure against loss of ‘revenue’ rather than actual loss of animals.”

The Reuters article indicated that, “But the thrust of the 1,000-page Agricultural Act of 2014, signed into law Feb. 7, was to move away from ‘direct payments’ toward more elaborate insurance coverage. The dairy program aims to convince not just dairy farmers but all livestock producers they can benefit as crop producers have.

“‘In the past we’ve had our program tied to the price of milk and only the price of milk. This recognizes that it’s more important to look at the margin between the price of milk and feed costs,’ said Chris Galen of the National Milk Producers Federation.”

In developments regarding nutrition issues, an opinion item posted recently at the The Pittsburgh Tribune-Review Online noted that, “The ‘success’ of Michelle Obama’s Healthy Hunger-Free Kids Act is evidenced in school trash everywhere. That’s where these meals are ending up, which explains why more than a million participants in the $12 billion federal school lunch program pulled out last year, according to the General Accountability Office.”

House Ag Committee member Rodney Davis (R., Il.) also discussed nutrition related issues in a brief conversation yesterday on WDWS radio (Champaign, Il.).

A portion of yesterday’s discussion, in which Rep. Davis referenced this recent Los Angeles Times article on school food waste, can be heard here (MP3- 2:17).

And an update yesterday at Roll Call Online pointed out that, “House Republicans are facing a brain drain of historic proportions atop their committees — as many as half of their chairmen could be forced to step down next year, thanks to a 20-year-old rule.

“The shakeup is due mostly to the GOP’s self-imposed limit, adopted in 1994, on how long a Republican congressman can chair a committee. It’s a policy that is widely popular within the Republican Conference, but is increasingly being questioned by members losing their gavels.”

More specifically, the Roll Call article noted that, “Also term-limited are Agriculture Chairman Frank D. Lucas of Oklahoma…[L]ucas has said he would consider asking for a waiver if sweeping agricultural legislation remained unfinished. With that task now behind him, he is likely to hand the gavel to Ethics Committee Chairman K. Michael Conaway of Texas, who told reporters he has been campaigning for the post all year.”

 

Agricultural Economy

Marcia Zarley Taylor reported yesterday at the DTN Minding Ag’s Business Blog that, “Farmers, economists and financial analysts continue to debate whether today’s robust farm finances could weather a protracted downturn–something on the order of a possible decade of depressed commodity prices averaging $4 corn and $10 soybeans as USDA and others now forecast. In other words, did grain producers salt away enough reserves during their glory days of 2006-2012 to tide them over now that the cycle is reversing?

“A recent USDA report gave the nation’s 900,000 full-time farmers the best financial grades in at least 20 years, as measured by remarkably low debt to asset ratios (see ‘How Bulletproof Are Farm Finances?’ on DTN’s Farm Business page). But Kansas State University Economist Allen Featherstone sees many parallels to 1979 and cautions against over confidence. Among them: Interest rates are so low today, they could easily spike more than the 67% as they did in the early 1980s, again pressuring those young and commercial farms that rely so heavily on debt. Cycles that slash farm income and repayment capacity are the norm in agriculture, Featherstone adds, but the 1980s were particularly harsh. He says farmers average repayment capacity stood at a healthy 153% in 1979, but tumbled to a mere 16% by 1981 when commodity prices collapsed and interest rates soared on variable debts.”

The DTN update explained that, “Another important factor many analysts overlook, however, was how repeated droughts in 1981, 1983 and 1988 compounded farmer woes when commodity prices had already tanked. Many simply kept refinancing their carryover debts, living off their equity.

The same debt debacle wouldn’t happen today. Nine out of 10 acres of U.S. cropland are now protected by crop insurance, most of it with revenue protection not just yield loss. But such security wasn’t available 35 years ago. Even as late as the early 1990s, crop insurance participation rates hovered about 30%. That left growers dependent on erratic and unpredictable federal disaster aid programs to make up the losses, often years after the fact. Congress also piled on generous Farmers Home Administration (FmHA) emergency loans without regard to repayment ability and with disastrous results.”

Meghan Grebner reported yesterday at Brownfield that, “The outlook for grain farmers has changed significantly in recent months. Purdue ag economist Chris Hurt says new crop prices for both corn and soybeans have moved closer to the cost of production. ‘I think it’s an overall improvement from where we were, but we were at pretty low levels,’ he says. ‘I think if we compare that to 2013 – we’re certainly looking for tighter margins, reduced incomes, which will likely pull the total US farm income down somewhat.’”

Meanwhile, Emiko Terazono reported yesterday at The Financial Times Online that, “An El Niño weather phenomenon, which can trigger extreme weather patterns around the world and disrupt commodities markets, could start as early as July, according to a leading forecaster.

“The Australian Bureau of Meteorology on Tuesday said six of seven weather models suggested sea surface temperatures in the Pacific could exceed El Niño thresholds ‘as early as July.’”

More specifically with respect to livestock issues, Bloomberg writer Elizabeth Campbell reported yesterday that, “Pork stockpiles in the U.S. dropped 11.2 percent at the end of March from a year earlier, the government said.

“Warehouses held 575.223 million pounds of pork, down from 647.784 million on March 31, 2013, the U.S. Department of Agriculture said today in a report. Inventories declined 12.1 percent from the end of February.”

On the PEDv (Porcine Epidemic Diarrhea virus) issue, Bloomberg writers Laura Curtis and Alan Bjerga indicated yesterday that, “‘It will have an impact on the pork supply and have a corresponding impact on what people pay for bacon,’ American Farm Bureau Federation President Bob Stallman says at Bloomberg Government breakfast.

“‘It’s a very virulent form of disease and it will have an impact’ on pig farmers and consumers, though any form of significant federal aid is unlikely due to political, budgeting challenges in federal govt this year, he said.”

A news update yesterday from Sen. Kay Hagan (D., N.C.) indicated that, “[Sen. Hagan] is continuing efforts to address the deadly Porcine Epidemic Diarrhea virus (PEDv) that is devastating pork producers in North Carolina and significantly impacting the agricultural economy. Hagan led a group of six Senators in sending a letter to Senate Appropriations Committee leaders requesting funding to help develop a vaccine to stop the spread of the disease. No treatment currently exists for PEDv, which has killed millions of pigs across the United States and impacted 562 farms in North Carolina alone.”

And Jesse McKinley reported on the front page of today’s New York Times that, “Something strange is happening at farms in upstate New York. The cows are milking themselves.

“Desperate for reliable labor and buoyed by soaring prices, dairy operations across the state are charging into a brave new world of udder care: robotic milkers, which feed and milk cow after cow without the help of a single farmhand.

“Scores of the machines have popped up across New York’s dairy belt and in other states in recent years, changing age-old patterns of daily farm life and reinvigorating the allure of agriculture for a younger, tech-savvy — and manure-averse — generation.”

The Times article noted that, “Robots allow the cows to set their own hours, lining up for automated milking five or six times a day — turning the predawn and late-afternoon sessions around which dairy farmers long built their lives into a thing of the past.”

And in trade related news, Emiko Terazono reported today at The Financial Times Online that, “China becoming the world’s largest corn importer has always been a question of when, not if – a point underlined by the recent forecasts from the US Department of Agriculture.

“These show China, which is already the world’s leading importer of soyabeans, will overtake Japan in 2020 at the top of the corn purchasing leaderboard. (The world’s most populous country will leapfrog South Korea as the third top corn importer in 2017 and take Mexico’s number two spot in 2019).”

The FT article noted that, “The USDA projects China to increase its pork, poultry, and beef output to reach 90m tonnes by 2023/24, a rise of about 30 per cent from 2012.

“‘Since about 3kgs of feed are needed to produce each kilogramme of meat, feeding a large and increasing population of animals will be a growing challenge,’ say James Hansen and Fred Gale, authors of the USDA report China in the Next Decade: Rising Meat Demand and Growing Imports of Feed.”

And Linda Yueh noted yesterday at the BBC Online that, “Trade deals don’t usually take centre stage at summits among world leaders. But the Trans-Pacific Partnership (TPP) is at the forefront of US President Barack Obama’s first state visit to Japan.

“Both leaders hope it will serve their own purposes: it is how President Obama can make his so-called ‘Asia Pivot’ more concrete than just an aspiration, and how Japanese Prime Minister Shinzo Abe can put some substance to the structural reforms within his ambitious plan dubbed ‘Abenomics.’”

The BBC item stated that, “In Japan, five ‘sacred’ agricultural products of rice, beef/pork, dairy, wheat, and sugar are protected. For example, Japan has a 778% tariff on imported rice.”

Juliet Eilperin and Chico Harlan reported in today’s Washington Post that, “Two primary areas — agricultural products and automobiles — have been the main sticking points in the countries’ negotiations. The Japanese government has traditionally been reluctant to take on rice and cattle farmers, two important domestic constituencies, and the Japanese auto market is one of the most closed in the world. Only about 6 percent of the autos sold in Japan are foreign.”

Mitsuru Obe reported yesterday at The Wall Street Journal Online that, “Japan sees a recently concluded free-trade agreement with Australia–in which it lowered but didn’t scrap tariffs on Australian beef–as a template for a deal with the U.S. But U.S. officials say Tokyo’s agreement with Australia doesn’t open its markets enough.

“Farmers in Japan have long enjoyed strong protection from imports, and some opponents of scrapping those tariffs are now framing the issue as a matter of national security.

“‘Japanese farmers may not be as competitive as Americans, but their presence makes sure that our grandchildren will never die of hunger,’ Ken Saito, head of the ruling Liberal Democratic Party’s agriculture caucus, said last week.”

Also yesterday, Tim Devaney reported at The Hill’s RegWatch Blog that, “U.S. farmers say importing Brazilian beef could contaminate the nation’s food supply and cost the industry billions.

“National Farmers Union (NFU) President Roger Johnson warned the U.S. Department of Agriculture (USDA) on Tuesday not to allow beef imports from Brazil, where the country’s livestock recently suffered from foot and mouth disease.”

 

FDA- Spend Grains

Sarah Mimms reported yesterday at National Journal Online that, “The federal government could start to treat some breweries like livestock feed manufacturers—and raise the price of your beer, milk, and other products—in the near future, thanks to a proposed regulation from the Food and Drug Administration.

“Beer and food for cows would seem to have little in common, but actually for centuries—according to the Beer Institute, a lobbying group representing American breweries—many beer-makers have donated or sold at low cost the barley and other grains left over at the end of the brewing process to local farmers, to be used as feed for livestock. These ‘spent grains,’ which have had all of the sugars taken out of them during the brewing process, are a huge source of protein for the animals and would otherwise just be trashed by beer-makers.”

The National Journal article stated that, “As the Obama administration works to proactively prevent food-borne illnesses in humans and animals, the FDA is pushing new safety regulations on breweries who give their spent grains to farmers. The rule falls under the FDA Food Safety Modernization Act, which President Obama signed back in 2011.

“There’s just one problem, critics say: There is no evidence linking spent grains with food poisoning, either for animals or humans.”

 

Immigration

Matt Fuller reported yesterday at Roll Call Online that, “An immigration overhaul may seem like a toxic issue to most in the GOP, but, in Illinois, it’s a battle cry.

“Illinois Republican Reps. Adam Kinzinger and Aaron Schock delivered video testimonials, recorded in the same room, for a pro-immigration event being hosted Tuesday in Chicago by the Illinois Business Immigration Coalition, which also features former Speaker J. Dennis Hastert, R-Ill.

“In his video, Kinzinger says, ‘Now, more than ever, Americans are seeing firsthand how our broken immigration system is really holding our nation back. Through common-sense policies, we have the opportunity to grow our economy, and provide security and well-paying jobs for families all across Illinois and America.’”

The Roll Call update added that, “Schock had a similar, even stronger message in his video testimonial: He endorsed a pathway to citizenship.

“‘Quite frankly, I think if a man or a woman likes their American job, wherever they were born, they should be able to keep that job,’ he said. ‘We need a clear path to citizenship for workers who are already here and a fair and efficient on-ramp for those who want to come here.’”

Keith Good

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