- FarmPolicy - http://farmpolicy.com -

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

Regulatory Issues- EPA, Clean Water Act

DTN writer Todd Neeley reported yesterday that, “If nothing else, EPA Administrator Gina McCarthy hopes a trip to Missouri this week to talk to farmers and agribusiness representatives will help to dispel what she said are ‘myths’ about the agency’s proposed Clean Water Act rule.

“During a conference call with reporters Tuesday ahead of a farm tour in the Columbia, Mo., area Wednesday and a speech before the Agricultural Business Council of Kansas City Thursday, McCarthy wasted little time tackling claims made by agriculture interest groups and others about the proposed rule.

“‘Unfortunately there is a growing list of misunderstandings going around and we’re trying to clarify the issues,’ she said. ‘Hopefully it is an opportunity to set the record straight. This is not about restricting farmers, but protecting waters downstream. While there are legitimate concerns, we’re hearing some concerns that, to put frankly, are ludicrous.’”

The DTN article noted that, “McCarthy said the notion that EPA is regulating small unconnected waters such as puddles is ‘just silly.’

“‘It’s about protecting small waters that can affect downstream water quality,’ she said. ‘For the first time we’re making clear that we aren’t regulating all ditches.’ She added EPA is not regulating groundwater.

“Of a claim going around that farmers will need permits if their cattle are crossing streams: ‘Well, that’s ludicrous.’”

Mr. Neeley pointed out that, “One concern raised by various agriculture groups about the exempt conservation practices, is whether those practices would have to conform to USDA Natural Resource Conservation Service rules. Ag groups are concerned EPA would be in effect giving authority to NRCS to enforce the act.

On Monday, the National Milk Producers Federation said in public comments to EPA are concerned the CWA rule would affect their relationship with NRCS.”

“The National Cattlemen’s Beef Association also filed similar comments suggesting that NRCS would become ‘the water police.’”

Yesterday’s article added that, “One purpose for traveling to Missouri, McCarthy said, is to make sure the voices of those farmers and ranchers who support EPA’s efforts aren’t ‘drowned out.’ She said the agency has received little-publicized positive feedback on the rule from farmers and ranchers.”

A news release yesterday from the National Pork Producers Council (NPPC) stated in part that, “A group of agricultural organizations, led by the [NPPC] and the American Farm Bureau Federation, said an interpretive rule that accompanies a proposed Clean Water Act (CWA) regulation is a legislative rule that must go through notice and comment rulemaking.

“In comments submitted yesterday to the U.S. Army Corps of Engineers, the U.S. Department of Agriculture and the U.S. Environmental Protection Agency, more than 90 organizations said the interpretive rule ‘binds farmers and ranchers with new, specific legal obligations under the CWA. It modifies existing regulations interpreting the statutory term ‘normal farming, ranching and silviculture.’”

Also, Timothy Cama reported yesterday at The Hill Online that, “Sen. John Barrasso (R-Wyo.) is trying to use a bill aimed at preserving federal lands for hunting and fishing as a vehicle to block the Environmental Protection Agency’s (EPA) attempt to redefine its jurisdiction over the nation’s lakes and rivers.

Barrasso Tuesday introduced an amendment to stop the EPA’s ‘waters of the United States rule,’ which it is drafting with the Army Corps of Engineers to clarify which bodies of water the federal government can regulate under the Clean Water Act, requiring permits for some potentially harmful uses and prohibiting others.”

The Hill article pointed out that, “Barrasso introduced his amendment the same day that EPA officials launched an outreach effort to the agricultural community on the proposal. EPA chief Gina McCarthy told reporters that the rule will not expand the government’s authority over water.”

In other developments regarding the EPA “waters” issue, Benjamin Goad reported yesterday at The Hill Online that, “House GOPers are poised to mark-up their fiscal 2015 Interior and Environment appropriations bill [this morning]. The 136-page legislation is chock full of language designed to block the Obama administration’s regulatory agenda on numerous fronts.”

The Hill update indicated that, “If enacted as drafted, the bill would either dial back or entirely block the following regulations…[T]he EPA’s ‘Waters of the United States’ rule designed to clarify (Republicans say expand) the agency’s jurisdiction over streams and other smaller bodies of water. After the power plant rules, the water regulation is probably the most contentious of pending EPA regulations.”

On the other hand, The Washington Post editorial board indicated in today’s paper that, “Lawmakers, mostly but not only Republicans , are seeking to undermine the twin foundations of Environmental Protection Agency authority: the Clean Air Act and the Clean Water Act . In both cases, Congress should back off.”

The Post opined that, “The agency badly needs clearer rules on which bodies of water it has the power to regulate. This clarification has been needed since a pair of Supreme Court rulings last decade left murky the definition of ‘waters of the United States,’ a core Clean Water Act term. Environmental groups complain that this uncertainty has led agency personnel to hold off on enforcing the act in places where it almost certainly has jurisdiction. Everyone can agree that the EPA can regulate the Chesapeake Bay and the large rivers that feed into it. But what about the streams that lead into those rivers? The wetlands and ponds adjacent to them? More isolated headwaters that are hydrologically related? The EPA claims authority over all of these.

Many Republicans condemn that claim as a lawless and virtually limitless power grab — ‘The Obama EPA is trying every scheme they can think of to take control of all water in the United States,’ Sen. John Barrasso (R-Wyo.) said — rather than a good-faith effort to lawfully reassert federal control over significant waterways. It’s true that the agency’s plan would expand the scope of Clean Water Act regulation. But it also would expand the number of exceptions. Besides, the proposal is contingent on an extensive scientific review confirming the ecological need to regulate upstream. The EPA reckons that the benefits of resource preservation and pollution control would offset the added regulatory costs. It’s past time for this definitional line to be drawn, and lawmakers’ objections aren’t convincing enough to justify forcing the EPA to start over. If lawmakers don’t like the call the EPA is making, they should clarify the terminology themselves.”

In other regulatory developments, Benjamin Goad reported yesterday at The Hill Online that, “The Environmental Protection Agency (EPA) is updating decades-old emissions standards for grain elevators, and is rejecting an industry bid to repeal certain provisions of existing regulations.”


Agricultural Economy

University of Illinois agricultural economist Gary Schnitkey indicated yesterday at the farmdoc daily blog (“Release of 2015 Crop Budgets”) that, “The 2015 Illinois Crop Budgets are available in the management section of farmdoc (click here for the budgets).  Budgets are given for corn, soybeans, wheat, and double-crop soybeans grown in northern, central, and southern Illinois. Central Illinois is further divided into categories for high and low productivity farmland.  Overall, 2015 returns are projected at the same levels as 2014 returns, which are considerably lower than returns from 2010 through 2013.  These lower returns signal the need to reduce 2015 cash rents.”

After additional analysis, yesterday’s farmdoc update noted that, “If return projections hold, average cash rents will be above operator and land returns for both 2014 and 2015 (see Figure 1).  This would indicate farmer would suffer losses in both years.  Higher returns could occur in either 2014 or 2015 if prices or yields are higher than those in the projections shown in Table 1.

“These projected losses have implications for the setting cash rents for the 2015 crop year.  Many of these rental rates will be set during the late summer and early fall.  At this point, returns projections suggest that cash rents at or above average levels need to be set lower for 2015, as current average levels will result in farmer losses.  This would result in two years with operator and land returns below average cash rents (see Figure 1).  Cash rents rose from 2006 through 2013.  Just as cash rents rose in recent years as a result of increased in operator and land returns, now cash rents should decrease as a result of lower return projections.”

Bloomberg writer Phoebe Sedgman reported today that, “Corn dropped to the lowest level in almost four years on expectations that a record harvest in the U.S., the biggest exporter, will boost global supplies. Soybeans headed for the longest run of losses since 2009.

“Corn for December delivery fell as much as 0.5 percent to $4.0225 a bushel on the Chicago Board of Trade, the lowest for a most-active contract since August 2010.”

Bloomberg writers Lydia Mulvany and Whitney McFerron reported yesterday that, “Soybeans fell for a seventh straight session in Chicago, the longest slump in five years, as signs that U.S. crops are in good condition boosted prospects for a record harvest.”

Tim Landis reported yesterday at the State Journal Register (Springfield, Il.) Online that, “The possibility of record 2014 yields continues to grow in Illinois corn and soybean fields.”

The article indicated that, “‘It’s some of the best conditions we’ve seen this time of year,’ said University of Illinois farm economist Darrel Good. ‘Now, July has been cool and wet, and that’s just what corn likes.’”

In other developments, a news release yesterday from Earth Justice indicated that, “Today, environmental and food safety groups challenged California’s illegal practice of approving new agricultural uses for neonicotinoid pesticides despite mounting evidence that the pesticides are devastating honeybees.

“Pesticide Action Network, Center for Food Safety, and Beyond Pesticides, represented by Earthjustice, filed the legal challenge in the California Superior Court for the County of Alameda, urging the California Department of Pesticide Regulation (DPR) to stop approving neonicotinoid pesticides pending its completion of a comprehensive scientific review of impacts to honeybees. DPR began its scientific review in early 2009 after it received evidence that neonicotinoids are killing bees, but five years later, DPR has yet to take meaningful action to protect bees.”

In transportation related news, Ron Nixon reported in today’s New York Times that, “The House Ways and Means Committee released a bipartisan plan on Tuesday that would provide federal financing for transportation projects through May 15, 2015, and would be the first step in replenishing the Highway Trust Fund, which will run out of money next month unless Congress acts.”

And a news release yesterday from Rep. Kevin Cramer (R., N.D.) stated that, “BNSF Railway and Canadian Pacific Railway (CP) have publicly filed their second weekly status updates on the backlog in grain shipments, Congressman Kevin Cramer said today. The figures from BNSF show a total of 4,696 past due rail cars in North Dakota averaging 28.5 days late as of July 3, an improvement from the previous report which indicated 4,942 past due cars were averaging 32 days late. The CP report shows a total of 24,786 open requests in North Dakota with an average age of 9.68 weeks. The previous report showed 23,818 open requests but did not indicate the average age of the requests…The BNSF report can be viewed here, and the CP report can be viewed here.”

Also, Christopher Doering reported earlier this week at The Des Moines Register Online that, “The ethanol industry Monday urged a federal regulator overseeing the nation’s railroads to provide relief for shippers of the renewable fuel who have faced delays.

Growth Energy, which represents ethanol manufacturers, told the Surface Transportation Board that producers of the renewable fuel should be given the same relief that the agency provided to grain shippers in June.”

More broadly, Reuters writer Jonathan Saul reported yesterday that, “An improved outlook for global bulk shipping rates spells bad news for grain exporters as they go into the latest sales campaign, with increased freight costs squeezing profit margins and adding to price competition in leading markets.

U.S wheat exporters look to be the hardest hit as ship owners prepare to crank up rates, expecting a clamour for their vessels. The biggest hike may be to the major Middle Eastern market – giving smaller producers, situated nearer the region, a price edge.”

The article added that, “For corn and soybeans, freight has less of an impact, partly because there are fewer global suppliers. The United States and Brazil supply 80 percent of the world’s soybean exports, while the United States, Brazil and Argentina combine to supply two-thirds of the world’s corn exports.”



DTN writer Todd Neeley reported yesterday that, “EPA Administrator Gina McCarthy reiterated her previous statements that the Renewable Fuel Standard 2014 volumes would be released ‘soon,’ during a conference call with reporters Tuesday. But this time she may have provided a hint about where EPA is going with the law.

“‘It has become very clear to me that there’s some general concern about volumes and adjustment to volumes,’ she said. ‘We’re just taking the time we need to make sure the Renewable Fuel Standard takes that into account. It has taken awhile longer. I think they’ll (ag, ethanol) be pleased that we’re taking the time to get it right.’”


Farm Bill

Benjamin Goad reported yesterday at The Hill Online that, “The Agriculture Department’s Food and Nutrition Service is taking commentson its plan to study the success of the national school lunch and school breakfast programs.

The analysis follows changes in regulations implemented under the Healthy, Hunger Free Kids Act, which led to more stringent meal pattern and nutrient requirements for school meals.

“‘FNS has to determine the success of school meals in meeting the program goals set by the new standards, the cost of serving healthful meals that are acceptable to children, and the relationship of the school meals and competitive foods to children’s participation in the programs and dietary quality,’ the agency said.”

Also yesterday, Ramsey Cox reported at The Hill Online that, “Senate Veterans’ Affairs Committee Chairman Bernie Sanders (I-Vt.) said he and his House counterpart had a ‘productive’ meeting before the weeklong recess in an effort to produce a conference report to address the VA healthcare scandal. But added that he wouldn’t accept certain pay-fors… ‘This bill is not going to be paid for by cutting education of food stamps,’ Sanders said. ‘That ain’t going to happen.’”

With respect to conservation, Sen. John Thune (R., S.D.) indicated this week that, “The vegetative cover on CRP [Conservation Reserve Program] grasslands must be removed every five years to improve its habitat and environmental potential, allowing new growth in these areas. Removing this cover is known as mid-contract management. Certain contracts require CRP participants to destroy the residue by baling, stacking, and burning. Burning this vegetative cover, which could instead be used for feed, is difficult to understand and creates safety risks. Additionally, CRP only pays a small percentage of the actual cost of removing and destroying the cover, increasing the cost to farmers.

“I recently sent a letter to USDA Secretary Tom Vilsack asking that current CRP participants be allowed to utilize the vegetative cover removed under mid-contract management.”

And, an update yesterday at CNN Online (The Lead with Jake Tapper) explored issues associated with international food aid, “Why Won’t Washington Work: 65% of U.S. food aid budget not spent on food.”

Keith Good