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Climate Bill (Senate Hearing); Dairy Sector Issues (House Hearing); CFTC Issues; and Peanuts
Climate Bill- Senate Hearing
Yesterday, the Senate Committee on Environment and Public Works held a hearing entitled, “Economic Opportunities for Agriculture, Forestry Communities, and Others in Reducing Global Warming Pollution.”
The hearing yesterday lasted nearly two hours; however, included below are a few brief FarmPolicy.com audio clips that provide a glimpse into the nature of the testimony, as well as perspectives from some Senators on the Waxman-Markey climate legislation.
To listen to the opening statements from Committee Chairman Barbara Boxer (D-California) and Ranking member James Inhofe (R-Oklahoma), just click here (MP3-6:51). This clip provides a general overview of two opposing views on the legislation.
American Farm Bureau Federation Bob Stallman was one of the three witnesses who testified yesterday, a summary of his organization’s perspective on Waxman-Markey is available here, while an interesting exchange between Mr. Stallman and Ranking Member Inhofe can be heard here (MP3- 5:16). In this Q and A, Sen. Inhofe and Mr. Stallman address agricultural cost estimates of the climate bill, the Copenhagen summit on climate change, as well as the position of the National Association of Wheat Growers, a farm organization which supports the passage of the Waxman-Markey bill.
A separate exchange between Mr. Stallman and Sen. John Barrasso (R-Wyoming) also included more specific details on the potential impacts of the climate bill on production agriculture, this exchange can be heard here, (MP3-5:15).
And in his opening statement at yesterday’s Senate hearing (related news release), Senator Kit Bond (R-Missouri) tackled the issue of the bill’s potential impact on agricultural production expenses and highlighted in greater detail the recent report on the subject from the Food and Agricultural Policy Research Institute (FAPRI). To listen to the comments from Sen. Bond, just click here (MP3-4:17).
In related news, the FAPRI report was also a key subject for discussion on yesterday’s AgriTalk Radio Program with Mike Adams.
Scott Brown, a research professor at FAPRI provided more background and analysis with respect to the institute’s estimates regarding production costs and the climate bill- to listen to a clip from yesterday’s program on this issue just click here (MP3-5:14).
And in a second segment from yesterday (MP3-2:24), AgriTalk host Mike Adams and Dr. Brown touched on potential revenue possibilities that might be made available under Waxman-Markey.
In other news on yesterday’s Senate hearing, Philip Brasher reported yesterday at The Greenfields Blog (The Des Moines Register) that, “Under such a program, farmers and landowners could earn credits, or annual payments, for reducing carbon emissions through measures such as reduced tillage or planting trees.
“But Sen. Christopher Bond, R-Mo., questioned whether many of those credits would actually materialize, citing an EPA study of the House bill.
“A landowner could get an annual carbon-offset payment of about $75 an acre for planting trees, but the trees would cost about $1,200 per acre, Bond said.
“‘This cash cow is really a pig in a poke,’ Bond said.”
Mr. Brasher added that, “Absent from the hearing was any discussion of concerns raised by the Environmental Working Group over an agricultural offsets provision in the House-passed climate bill. EWG says rules for the offsets are so loose they’ll essentially just allow utilities avoid making reductions in greenhouse gas emissions. The bill would allow farms to get out of contracts for carbon-saving credits after five years. Some farms also could get credits even though they’ve already doing continuous no-till for a number of years. The net effect of these provisions is to let as many as 67 coal-fired power plants avoid making reductions in emissions, according to EWG.”
Although not testifying at yesterday’s Senate hearing, the National Farmers Union issued a news release, which noted that, “National Farmers Union today outlined the organization’s climate change priorities to the Senate Environment and Public Works Committee to underscore the significant role agriculture can play in climate change legislation.
“In a letter to committee Chairwoman Barbara Boxer, D-Calif., and Ranking Member James Inhofe, R-Okla., NFU President Roger Johnson said he will be presenting the organization’s climate change priorities and concerns to the Senate Agriculture Committee at a July 22 hearing.”
With respect to that upcoming hearing, Dow Jones news reported yesterday (article posted at DTN, link requires subscription) that, “The chairman of the Senate Agriculture Committee, who will help craft landmark climate legislation, Tuesday said the bill needed to have more cash emission credits to win his support.
“Chairman Tom Harkin, D-Iowa, said his committee would consider the House-passed legislation next week. Agriculture Secretary Tom Vilsack and Environmental Protection Agency chief Lisa Jackson will headline the hearing.”
Yesterday’s Dow Jones article added that, “Besides giving the agriculture industry more credits for offset programs, the Iowa Democrat said he wants to change the allocation system designed in the House for utilities. Under the House bill, power companies would get more than 30 percent of the total allocations, with the distribution based 50 percent on a utility’s emissions and 50 percent based on sales. Under that program, East and West coast utilities get more emissions because they serve bigger populations – and have more sales – even though the power plants generate fewer emissions. Midwest utilities, however, rely far more on coal-fired power plants with higher emissions, but will get fewer credits because they serve smaller populations.”
And the article concluded by noting that, “Attempting to get another cash boost for the farming sector, Harkin also said he wanted to include provisions in the energy and climate bill that would boost the allowed blend rate for biofuels to 15 percent from 10 percent and mandate flexfuel cars and blend pumps at gasoline stations.”
A news release issued yesterday by Sen. Mike Johanns (R-Nebraska) on the climate bill stated that, “Senator Mike Johanns today sent a letter to U.S. Secretary of Agriculture Tom Vilsack requesting analysis of the cost of cap-and-trade legislation for agricultural producers organized by commodity and by state. He also requested that this analysis be included in any testimony the U.S. Department of Agriculture (USDA) presents to the U.S. Senate next week.
“‘Today USDA provided testimony to the U.S. Senate for the second time in two weeks without also presenting analyses of the increased costs American agricultural producers would pay under the cap-and-trade bill passed in the House last month,’ Johanns said. ‘According to USDA’s testimony today, the Department knows that cap-and-trade will increase agriculture production costs, but asserts that the opportunities will outweigh these costs. I hope this assessment is based on sound economic analysis and not just rhetoric. I know USDA is committed to looking out for the interests of American agriculture, so I look forward to the Department sharing its analysis of increased input costs with the Committee and producers across the country.’
“According to an analysis of the highly-respected Food and Agricultural Policy Research Institute released yesterday, the House cap-and-trade bill could increase the input costs of a typical Midwestern farm by tens of thousands of dollars annually. Johanns is eager to compare this and other analyses with USDA data to determine the base for USDA’s assertion that benefits will outweigh costs.”
Meanwhile, Roll Call writer Jennifer Bendery reported yesterday that, “Senate Democratic moderates, led by Sen. Tom Carper (Del.), huddled Tuesday with a group of House Democrats to get advice on how to advance climate change legislation in their chamber.
“The issue has stalled in the Senate as Midwestern Democrats voice concerns that the House-passed bill will hurt manufacturing- and coal-dependent areas that are already struggling. A climate change bill narrowly cleared the House last month.”
From an international perspective, David Pierson and Jim Tankersley reported in today’s Los Angeles Times that, “U.S. Energy Secretary Steven Chu and Commerce Secretary Gary Locke are in Beijing this week to talk about climate change with Chinese leaders. The hope is to open the nation’s market to American clean technology products while nudging China toward committing to hard targets for reducing greenhouse gas emissions.
“They have their work cut out for them.
“Although China is rapidly expanding its use of alternative energy to curb dependence on fossil fuels, it’s favoring its own wind and solar manufacturers over foreign suppliers. And despite recently surpassing the United States as the world’s largest emitter of carbon dioxide, China has stated repeatedly that the U.S. and other industrial powers must take the lead on cutting emissions.”
And in a related article on the general issue of energy costs, Gerry Shih reported in today’s New York Times that, “A recent surge in energy prices helped drive up both retail sales and prices that producers paid, the government reported Tuesday.”
Today’s article added that, “Separately, the Labor Department reported a 1.8 percent increase in the Producer Price Index, a measure of prices paid by retailers to factories and farmers. That increase caught economists by surprise as the index rose only 0.2 percent in May, and surveys before the government release indicated a 0.9 percent rise in June.
“The jump in producer prices will probably revive the debate over whether the economy is headed toward inflation.”
Dairy Sector Issues (House Hearing)
A news release issued yesterday by the House Agriculture Committee stated that, “Today, the House Agriculture Subcommittee on Livestock, Dairy, and Poultry held a hearing to review the economic conditions facing the dairy industry. Representative David Scott of Georgia is Chairman of the Subcommittee.
“‘This hearing was the first of several in the coming weeks on the economic situation facing the dairy industry, and there will be ample opportunities to hear additional perspectives as we continue this process,’ said Chairman Scott. ‘We were able to develop a timely snap shot of the problems that are facing our domestic dairy industry and some of the solutions available. But it has also raised some very good questions for further consideration. I do think there is consensus however that we must act both in the short term and the long term to provide some relief to our beleaguered dairy industry. So we will continue to examine the economic struggles of this industry and I look forward to our continued discussions with our subcommittee, producers and processors.’”
A list of witnesses, as well as their opening statements, from yesterday’s House hearing can be viewed by clicking here, and a general backgrounder on the dire economic situation currently facing dairy producers was aired earlier this week on The NewsHour with Jim Lehrer (“Global Recession Impacts Dairy Prices, Farmers”)- transcript and video replay (6:52) available here.
DTN Political Correspondent Jerry Hagstrom reported yesterday that, “Small-dairy farmers dressed in cow suits gathered outside the Longworth House Office Building Tuesday to protest their exclusion from a House Agriculture subcommittee hearing on plummeting raw milk prices, while House Ag Chairman Collin Peterson dropped in on the hearing and announced that the subcommittee should hold two more hearings before the August break in an attempt to grapple with problems plaguing the industry.
“Peterson, D-Minn., said that more farm groups should be invited to one of the hearings and that another hearing should examine the impact of international trade on the dairy situation. Ag Committee staff quickly scheduled a hearing for July 21.”
Mr. Hagstrom added that, “Speaking with reporters outside the hearing room, Peterson said he believes USDA ‘is about at the end of the road’ in actions the department can take to help the industry and said that he hopes public hearings will come up with policy alternatives ‘we can rally around.’
“Peterson also said that he sees regional conflicts over dairy developing as they have in the past and said he wants to avoid ‘regional wars’ among dairy producers.”
Bloomberg writer Alan Bjerga reported yesterday that, “U.S. milk-price support programs are hurting dairy companies as they try to expand and innovate, according to the head of a trade group representing Dean Foods Co. and other producers.
“Government programs distort markets, contributing to imbalances that have helped push wholesale milk prices down 46 percent in the past year, said Paul Kruse, the chief executive of Brenham, Texas-based Blue Bell Creameries LP. He testified for the International Dairy Foods Association at a congressional hearing today in Washington.
“As dairy farmers cope with low prices, lawmakers need to re-examine policies rather than increase subsidies, said Kruse, who is also chairman of the dairy group. Congress should ‘avoid the temptation to put a Band-Aid on an old system and look at long-term approaches that get us to grow and innovate as an industry,’ he said.”
Mr. Bjerga added that, “The USDA, which raised dairy-export subsidies in May, is seeking ways to help milk producers, James Miller, the undersecretary for farm and foreign agricultural services at the U.S. Department of Agriculture, said at the hearing. He said the department expects prices to rise later this year and in 2010.”
Bob Meyer reported yesterday at Brownfield that, “Pennsylvania dairy farmer Tom Wakefield, a member of the board of directors of the National Milk Producers Federation told the group, ‘Dairy farmers across the country are facing ‘an unprecedented financial catastrophe,’ and Congress needs to work with the U.S. Department of Agriculture to work on measures to help farmers survive the situation.’ Wakefield says the U.S. dairy industry was building up to meet growing export business and that export market disappeared when the world economy crashed. Wakefield reiterated National Milk’s call for a temporary increase in the government purchase prices for cheese and nonfat dry milk and thanked USDA for fully implementing the Dairy Export Incentive Program again this fiscal year.
“He also informed the group the NMPF Strategic Planning Task Force is working on the development of long-term solutions for the dairy situation in this country and is currently gathering input from producers across the country. Once completed, the task force will provide their findings to members of Congress.”
A news release issued yesterday by the National Farmers Union indicated that, “National Farmers Union President Roger Johnson today outlined a series of steps that would alleviate the effects of the dairy crisis on producers.
“In testimony submitted for the record Johnson said that while no single action by either Congress or the administration will immediately resolve today’s crisis, a suite of options does exist to ensure producers will survive one of the most devastating economic periods.
“‘NFU has long supported a comprehensive dairy policy that accounts for dairy profitability, income stabilization, limitation on imports, competitive markets and supply-inventory management,’ Johnson said.”
CFTC Issues
In a separate Bloomberg article from yesterday, Alan Bjerga reported that, “House Agriculture Committee Chairman Collin Peterson said he and House Financial Services Chairman Barney Frank are ‘90 to 95 percent’ agreed on new derivatives legislation and that a bill will pass Congress this year.
“‘We’ll get a bill off the floor and out of conference and passed this year,’ the Minnesota Democrat said today after a congressional hearing in Washington. Peterson and Massachusetts Democrat Frank are crafting new rules for the $592 trillion derivatives market. Last week, the two held a hearing on the topic in which Treasury Secretary Timothy Geithner testified.”
Peanuts
An item posted earlier this week at the Southeast Farm Press Online reported that, “After an extremely rocky winter and spring, Virginia peanut growers are optimistic their products will be making a comeback in the hearts and cupboards of American consumers.
“Demand for peanut products plummeted last winter due to a national salmonella food safety scare that was traced to one processor. Even before that, the supply of peanuts from previous crop years had built to levels that dramatically depressed farm prices.
“This spring Virginia farmers planted 50 percent fewer peanuts than in 2008, down to only 12,000 acres. However, on June 2 Nielsen News reported that national peanut butter sales had returned to historically high levels. In fact, they were up 3 percent over the same period in 2008. That has given industry insiders and growers hope that perhaps the worst has passed for the peanut industry.”
For more background on current issues and the peanut sector, see this item, which was posted yesterday at AgWired.com; as well these brief reports, which were posted yesterday at SouthEast AgNet Online.
Keith Good
