News Clips July 6, 2011

PLEASE NOTE - Contents in the NFU News Clips are presented from their original sources. National Farmers Union does not have editorial control over the content. NFU does not endorse the views and issues contained in these articles and they do not necessarily represent NFU's official policy and positions. The News Clips are intended to provide news stories as they are presented by the media.

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In this edition:

·         Ethanol still holds promise, but critical challenges remain

·         How Combat Wins the Day in Washington -- Even When Compromise on Energy Policy Is in Reach

·         It Was a Volatile June for Agriculture

·         Food ad guidelines cause backlash

·         Fixing the farm bill

1.      Ethanol still holds promise, but critical challenges remain

July 6, 2011

      Farm and Dairy 

It’s easy to spot a grain truck heading down a country road in this rural, central Ohio county. The fields are large and flat and the ground is fertile, but there’s an even bigger reason for the trucks: an active ethanol plant. On any given day, semis loaded with Ohio corn trickle into POET Biorefining, while other trucks loaded with ethanol pass on their way out — transporting a fuel to blender companies and retail markets across the state. About 68 million gallons of ethanol leave the plant each year, along with 175,000 tons of distillers grains — the leftover corn nutrients used in livestock feed. It’s an American fuel produced here in Ohio, and it has promise. Read more… 

2.   How Combat Wins the Day in Washington -- Even When Compromise on Energy Policy Is in Reach

July 5, 2011

New York Times

It was a bipartisan proposal that sparked the interest of the two most influential players in official Washington: cutting U.S. oil demand through tax incentives for vehicles fueled by natural gas. House Speaker John Boehner (R-Ohio) pointed to the natural gas plan as an example of a "bite-sized chunk" of achievable energy reform. "Why wouldn't we have a bill to encourage vehicles to use natural gas and do it by itself?" he asked at a news conference. Twenty days later, President Obama hailed the broad across-the-aisle support for the vehicles measure. Read more…

3.      It Was a Volatile June for Agriculture

July 6, 2011

Seeking Alpha

Rain continued to delay farmers planting corn and soybeans throughout June, but hard work and long hours have lead to crop progress almost entirely catching up to historical averages. As of June 20th, 97% of the U.S. corn crop had emerged, while the 5-year historical average is 99%. 92% of the U.S. soybean crop had emerged by June 27th; on par with the historical average. The big news of the month was the highly anticipated Planted Acreage Report from the USDA on June 30th, and to analysts' surprise, it reported increased corn planted acres to 92.3 million in 2011.Read more…

4.      Food ad guidelines cause backlash

July 5, 2011

Politico

Advertisers, broadcasters, grocers and food manufacturers are pushing back on a proposal that would set voluntary guidelines restricting what foods can be advertised on television. Many cereals, energy drinks and even some milk would be banned from the airwaves under the administration’s suggested guidelines. Industry groups are strongly lobbying the administration to rescind them. In 2009, Congress directed the FDA, CDC, FTC and Department of Agriculture to develop recommendations for the minimum nutrition levels foods should meet to be marketed to kids up to age 17. Read more…

5.      Fixing the farm bill

July 5, 2011

Dairyherd Network

In the context of a Congress bent on slashing spending, the question has already been asked: Why do we fund farm supports? Or “handouts,” if you prefer a harsher definition of the more than $20 billion annually shelled out to U.S. farmers under the auspices of USDA’s various market support, resource conservation and rural development programs. Those who support farm subsidies point out that those programs help maintain food production, and thus food security, when low farm-gate pricesimpact highly leveraged farmers and producers—which includes just about anyone serious invested in agriculture these days. Read more…

1.   Ethanol still holds promise, but critical challenges remain

July 6, 2011

Farm and Dairy

Chris Kick

It’s easy to spot a grain truck heading down a country road in this rural, central Ohio county. The fields are large and flat and the ground is fertile, but there’s an even bigger reason for the trucks: an active ethanol plant.

On any given day, semis loaded with Ohio corn trickle into POET Biorefining, while other trucks loaded with ethanol pass on their way out — transporting a fuel to blender companies and retail markets across the state.

About 68 million gallons of ethanol leave the plant each year, along with 175,000 tons of distillers grains — the leftover corn nutrients used in livestock feed.
It’s an American fuel produced here in Ohio, and it has promise.

“Every gallon of ethanol we produce reduces our oil imports and our dependence on foreign oil, and it keeps us from flowing money out to countries that may not be all that friendly to the U.S,” said Cliff Brannon, the plant’s general manager.

Economic return

And if that’s not enough, “it keeps jobs in the U.S.,” Brannon said. Like the 40 people who work for him, as well as POET’s two other identical plants in Fostoria and Leipsic, Ohio.

All told, Ohio has a half-dozen operating ethanol plants, with some owned by other entities. Three are owned by POET; the others are owned by Guardian Lima, in Lima; Valero Renewable Fuels Co. in Bloomingburg; and Andersons Marathon Ethanol, in Greenville.

They’re multi-million dollar projects, which also create jobs for the workers who build the plants. The Ohio Ethanol Association says 240 jobs are directly tied to Ohio’s ethanol industry, which has $900 million in annual sales and spends $600 million at local businesses.

* * *
But this industry also has its challenges. One of those is its youth.

The Marion plant has only been operational a couple years, and other plants in Ohio also are in their infancy, with a few that have been put on hold.

Harrison Ethanol in Ohio’s Harrison County is one of several plants termed “non-operational.” The plant was never finished because of the weak economy and lack of funding, said managing member Wendel Dreve.

The Harrison plant is a much smaller-scale facility than POET and also has the goal of combining several thousand head of livestock in a “closed loop” system. Its funding comes from independent investors.

“Their (POET) plan works,” Dreve said, but he said the Harrison plant has more local interest, to serve the local livestock and crop producers.

The plant could potentially be operational in 12-14 months, he figured, but it all depends on the economy and the price of corn.

Dreve still believes in the project, but it needs a boost. He’d like to see some federal loan guarantees and new investors.

Many achievements

Even with some setbacks, ethanol still constitutes up to 10 percent of all gasoline sold at the pump. A new standard was approved by the U.S. Environmental Protection Agency in the fall of 2010 to allow up to 15 percent blend of ethanol in vehicles made in 2001 and newer. Flex-fuel vehicles can use the most ethanol, at 85 percent.

But the challenge, Brannon said, is making the different blends available to consumers. He’s one of many ethanol advocates who want to see funds made available to help privately owned fuel stations invest in blender pumps, so more motorists can use higher-percentage ethanol.

He estimates about 800,000 flex-fuel vehicles in the United States can run on 85 percent ethanol.
“But the availability of that fuel is limited,” he said. “We have one blender pump in the state of Ohio right now.”

* * *
Mike Irmen, director of ethanol services for The Andersons, said the company’s Greenville, Ohio, plant has run continuously since opening in 2008. But this year “has been very tough on many producers due to tight corn supply and the resulting high prices,” he said.

The Andersons, like POET, would like to see more blender pumps installed. But Irmen said retailers also need liability waivers so they can protect themselves from damage claims, if a consumer incorrectly puts the wrong fuel into his vehicle.

He thinks more scrutiny should be given to oil subsidies, than those given to ethanol.

“If our country’s leaders are really serious about making significant budget cuts in an effort to balance the budget, the oil subsidies are where the real money is,” he said.

Traditionally, blenders of ethanol have received a federal tax credit of 45 cents per gallon. But pressure from other industries who feel disadvantaged, and national budget tightening are causing legislators to raise questions.

Recent efforts in the U.S. Senate moved forward to repeal the tax credit, as well as a 54 cent per gallon tariff on imported ethanol.

The tax credit has also pitted farmer against farmer, specifically the livestock producer versus the crop grower.

“The (tax credit) and the tariff on imported ethanol have put cattlemen and other end-users of corn at a competitive disadvantage to the corn-based ethanol industry when it comes time to buy a bushel of corn,” the National Cattlemen’s Beef Association President, Bill Donald, said in a statement mid-June. “Repealing the (tax credit) and the import tariff are important steps to fully leveling the playing field.”

Market access

Brannon and other ethanol-backers say they want to “level the playing field,” as well, albeit in a different way.

Brannon said the industry understands why there is concern over government funding, and he’d rather see those funds used to install infrastructure the industry needs to be accessible to consumers, and compete on its own.

“We want to convert that into infrastructure and then, going forward, there will be no need for having the (tax credit) and we will have market access so that we can compete directly with gasoline,” he said.

If the infrastructure can be built, along with a better system of piping ethanol to the eastern markets, Brannon is confident the fuel will hold its own.

“We really want to be able to compete in the market directly with gasoline,” he said. “We believe if consumers have the choice at the pump, they’re going to pick ethanol every time because they’re going to choose between paying higher prices for gasoline — where their money is going to be going over seas — or they can buy domestically produced ethanol.”

* * *

Good resource

As a fuel, ethanol is 59 percent cleaner burning than gasoline, and it’s renewable. It can actually increase fuel efficiency up to about a 30 percent blend, and it costs less per gallon than pure gasoline.

Brannon and other ethanol backers say there’s plenty of reasons why ethanol and other uses for corn can co-exist, as they have for the past few years.

Dwayne Siekman, CEO of the Ohio Corn and Wheat Growers Association, said the state’s 460 million gallons of ethanol translates to about 1.2 million metric tons of distillers grains — a feed that still contains the original fats and proteins found in corn, minus the starch.

“That’s one of the things that everyone forgets,” he said.

And, another well-known fact among corn growers is yields are on the rise. Maybe not this year, after a record wet spring, but overall yields per acre are trending upward.
“On average, the per-bushel yield is consistently going up,” Siekman said. “There’s more grain out there; it’s not being diverted.”

According to an analysis released in May by the Renewable Fuels Association, America’s ethanol producers supplied nearly 35 million metric tons of livestock feed in the 2009/2010 marketing year. By volume, it’s greater than the total amount of grain consumed by all of the beef cattle in the nation’s feedlots.

Nearly 25 percent, or 9 million metric tons of distillers grains produced in 2010 was exported.

Whatever side of the debate, the benefits of ethanol are very pronounced.

A new study conducted by researchers at Iowa State University and the University of Wisconsin found that ethanol reduced wholesale gas prices in 2010 by nearly 90 cents per gallon.

Department of Energy data shows U.S. gasoline use averaged 138 billion gallons per year from 2000 to 2010, which would produce a cost savings due to ethanol of $34.5 billion over the past decade.

“This study confirms that ethanol is playing a tremendously important role in holding down volatile gasoline prices, which are currently inching closer to all-time record highs,” said Renewable Fuels Association (RFA) President Bob Dinneen.

More efficient. Like the 27 other POET ethanol plants across the nation, the one in Marion continues to get better at what it does. Brannon said they’re becoming more efficient and can produce more ethanol from less corn.

And, they’re exploring other ways to make ethanol, including from corn cobs. The company, which has headquarters in Sioux Falls, S.D., is working with equipment manufacturers to provide an efficient way to gather and bale the cobs.

Other plants are exploring ethanol from entirely different crops, like switchgrass and miscanthus. It’s called cellulosic ethanol, but it’s all the same fuel, Brannon said.

POET is only one player in a much bigger industry, but they continue the same values that helped ethanol get its start.

“They really believe in energy independence for the U.S,” Brannon said. “They believe in farming as a huge asset for the country that’s going to help us become independent.”

To view this story at its original source, follow this link: http://www.farmanddairy.com/news/ethanol-still-holds-promise-but-critical-challenges-remain/26804.html

2.   How Combat Wins the Day in Washington -- Even When Compromise on Energy Policy Is in Reach

July 5, 2011

New York Times

Elana Schor

It was a bipartisan proposal that sparked the interest of the two most influential players in official Washington: cutting U.S. oil demand through tax incentives for vehicles fueled by natural gas.

House Speaker John Boehner (R-Ohio) pointed to the natural gas plan as an example of a "bite-sized chunk" of achievable energy reform. "Why wouldn't we have a bill to encourage vehicles to use natural gas and do it by itself?" he asked at a news conference.

Twenty days later, President Obama hailed the broad across-the-aisle support for the vehicles measure. "Getting 150 members of Congress to agree on anything is a big deal," he said in a high-profile speech.

But that was March -- and four months can make all the difference in a capital where bipartisanship and compromise are no longer the assets they once were. In an era of perpetual electioneering and well-organized pressure campaigns from both right and left, controversy can easily trump compromise, even when wide-spread agreement seems well within reach.

That discord is often lawmakers' most palatable political option may not be surprising. Democrats and Republicans alike talk about cleaning up the environment and promoting clean energy, but they can differ dramatically on how to do it and where to set priorities.

"On energy, beyond all the talking points and the way the issues are framed, there really is an ideological difference between the way conservatives and liberals think about it," said Heritage Action for America CEO Michael Needham, among several right-leaning activists who have pried 14 GOP co-sponsors off the natural gas vehicles bill.

In Needham's energy-policy nexus, liberals aim to create incentives for "new technologies to be viable in a way they're not viable today," while conservatives view the market as the best determinant of viability and focus mainly on increasing supply of fuels.

That vision is likely to leave most Democrats wanting, as it leaves out the tradeoffs between environmental protection and energy production that have driven the biggest wedge between the parties in recent years. But environmentalists do not disagree that the fundamental partisan gulf on their issues is widening, particularly given the divided government set up after Republicans took the House in 2010.

"If [Rep. Henry] Waxman [D-Calif.] -- or, more likely, [Sen. Jeff] Bingaman [D-N.M.] -- got into a position to likely do something," that legislative product would be tugged further to the right during conference talks with the House majority, Sierra Club global warming and energy programs director Dave Hamilton said.

"[T]his has been the quandary all along ... anything they do, if they're going to actually get it through Congress, is destined to be meaningfully degraded," he added.

The natural gas vehicles proposal's chief sponsor, Rep. John Sullivan (R-Okla.), in a concession to critics, has halved its time horizon and removed a mandate that was included in previous versions. He continues to tout the bill's bipartisan profile, telling a Tulsa audience last week that his is "the only energy bill today that can pass the House, the Senate and be signed into law by the president of the United States."

But such optimism is contradicted by the cool response of GOP leaders in the wake of conservative resistance to carving out new tax benefits for one energy sector at a time when existing breaks for ethanol and other fuels are under attack.

"I'm not a co-sponsor of his bill, but it certainly merits discussion," House Energy and Commerce Chairman Fred Upton (R-Mich.) said last month, "and we'll be doing that as we look at a hearing [in the] fall."

Sullivan and his Democratic allies on the issue, who made the natural gas vehicle credits part of their "Make it in America" jobs agenda, had said that House floor action could happen as soon as this summer.

"I've never seen a bipartisan bill that shrinks the size of government," said Chris Chocola, the former Indiana House Republican who leads the fiscal conservative group Club for Growth, which wields enormous influence in GOP primaries and has often gone after Republicans who it deems not pure enough on key policy questions. "Just because it's bipartisan doesn't mean it's good policy -- in fact, most times it gets to the lowest common denominator."

One week after Boehner's March nod to the natural gas vehicles bill, Chocola's and Needham's groups joined more than two dozen others in March to call for a broad repeal of all industry-specific energy subsidies and a moratorium on new ones (E&E Daily, March 18). The conservatives' entreaty made few headlines at the time but caused a ripple effect now reaching the White House doorstep, as the Senate canceled its recess this week to dig in on a debt limit deal that now hinges partly on whether Republicans will accept revenue raised by rolling back ethanol and other energy tax breaks.

Even as he announced the upper chamber's high-stakes scheduling shift -- ostensibly to give Congress extra time to hammer out a compromise -- Majority Leader Harry Reid (D-Nev.) underscored the political upside of partisan combat by blasting the GOP.

"Republicans are willing to risk our economy to protect tax breaks for owners of corporate jets, yachts and oil companies," Reid said. "Average Americans are struggling to afford gas for their cars."

All about the money

Much of the force tugging lawmakers to their ideological corners on energy policy comes down to dollars, both those spent by special interests and those disbursed in dwindling amounts by U.S. EPA and other federal agencies.

Asked if Congress' current paralysis on big-ticket energy issues could ease following the 2012 elections, the Sierra Club's Hamilton pointed to the corporate campaign finance spigots opened by the Supreme Court's Citizens United decision as creating "a phantom opponent" that would continue to encourage more extreme positions.

In the past, he said, swing votes could be won over by polls that showed support for environmental protections. "Now they know that no matter what they do, no matter what the public thinks, no matter what the state of play on an issue is, they're going to face millions of dollars of ads framing that issue to the opposite of where they want to be," he added. "So they have to play toward that criticism, not toward public opinion."

On the other side of the spectrum, conservatives see potent grass-roots energy that can be harnessed to help tar certain policies -- such as the natural gas vehicles bill, or ethanol supports -- as generated by special interest lobbying cash.

"[W]ith some very large lobbying [investment] by people who'd benefit, they got substantial bipartisan support for Washington picking a winner," Needham, of Heritage Action, said about the natural gas legislation. The resulting criticism from the GOP base, he added, is "very unusual."

Of course, foes of the vehicles bill have exerted significant lobbying pull of their own to help dim its prospects. Energy giant Koch Industries has aligned with conservative activists to slam the bill as a market-distorting subsidy, sparking politically charged pushback from GOP and Democratic co-sponsors alike (E&E Daily, May 16).

Fiscal motivations also polarize lawmakers during the appropriations season, which lately appears never-ending amid a constant clamor over how deeply and how fast to cut the federal budget. Such slashes often hit energy and environmental programs hard, most recently during the winter-long fight over fiscal 2011 spending that saw the House GOP's opening bid take a $3 billion bite out of EPA and more than $1 billion from the Energy Department (E&E Daily, Feb. 19).

The ultimate compromise on that front, forged minutes before a slated government shutdown, knifed $1.6 billion from EPA and as much as $1.4 billion from DOE. Democrats ultimately declared victory, however, because the deal averted GOP-backed policy riders that would have limited EPA authority (E&ENews PM, April 12) -- though those could come up again during negotiations over raising the debt ceiling.

Weighing the outcome of that spending battle, League of Conservation Voters legislative director Tiernan Sittenfeld questioned the very wisdom of framing policy compromises as a worthwhile goal.

"The environment, especially during the Bush years, has been starved for funding for so long," Sittenfeld said. "So I think that just saying, 'Compromise, let's split down the middle' doesn't make sense, since there have already been too many compromises."

 To view this story at its original source, follow this link: http://www.nytimes.com/gwire/2011/07/05/05greenwire-how-combat-wins-the-day-in-washington-even-whe-98771.html?pagewanted=2

3.   It Was a Volatile June for Agriculture

July 6, 2011

Seeking Alpha

Rain continued to delay farmers planting corn and soybeans throughout June, but hard work and long hours have lead to crop progress almost entirely catching up to historical averages. As of June 20th, 97% of the U.S. corn crop had emerged, while the 5-year historical average is 99%. 92% of the U.S. soybean crop had emerged by June 27th; on par with the historical average.

The big news of the month was the highly anticipated Planted Acreage Report from the USDA on June 30th, and to analysts' surprise, it reported increased corn planted acres to 92.3 million in 2011. Corn prices were limit down, as the increased acreage will produce an estimated 273 million bushels at the current USDA yield estimate. The USDA also reported quarterly stocks of corn increased due to decreased feed and residual demand.

In mid-June, the U.S. Senate passed a bill by a commanding margin to remove the 45 cent ethanol tax credit. The 45 cent tax credit is set to expire on December 31, 2011, and it is unlikely that the current bill will pass into law before the set expiration. An immediate cut to the tax credit would certainly help corn balance sheets, but the cut cannot completely ease the pressure of potential yield loss and a delayed 2011 corn harvest due to the difficult planting season.

Analysts would like to see attention turned to the expansion of the newly approved E15 gasoline, rather than continuing the blender tax credit. Tax credits to help build gas station infrastructure to handle E15 gasoline would likely replace any lost gap in corn demand from the 45 cent tax credit cut, as higher amounts of ethanol would be required to blend into the E15 gasoline.

Grain Prices

Corn prices decreased by 18.8% this month and closed at $6.29 per bushel during another volatile month of trading. July corn increased as much as 4.8% in early June due to a bullish WASDE Report, but favorable weather and an extremely bearish USDA Planted Acreage Report at the end of the month drove prices lower. Corn crop conditions are rated 68% Good/Excellent as of June 27th, slightly below last year’s rating of 73%

Soybean prices decreased by 5.4% in June to $13.06 per bushel due to favorable planting and growing conditions throughout the month. The strength of the U.S. Dollar and growing debt concerns in Greece have put downward pressure on soybean prices. The planted area of the 2011 U.S. soybean crop is the smallest since 2008, according to the USDA, which may give support to weakening prices.

Wheat prices decreased this month to $5.84 per bushel, a 33.9% decrease due to the continued bearish price outlook since Russia announced its lifting of its export ban back in May. Favorable weather conditions in the U.S. have lead analysts to almost entirely write off the crop condition concerns of earlier in the year. The progress of the U.S. winter wheat harvest is also ahead of historical pace thus weakening prices.

WASDE

The USDA updated the U.S. and World balance sheet estimates for major agricultural commodities in the World Agricultural Supply and Demand Estimates [WASDE] report mid-month. WASDE reports in the summer are a barometer of overall world demand, forecasted production and inventory adjustments. In June, U.S. ending stocks for 2011/12 were revised lower for corn and wheat, but increased for soybeans.

Bullish news for the U.S. corn continues midway through 2011, as the 2011/12 U.S. projection for corn production and ending stocks were decreased by 305 and 205 million bushels to 13,200 and 695 million bushels respectively due to a decrease in estimated planted area which now includes the flooded acres of the Ohio and Mississippi valleys.

Current USDA projections rank this corn crop as the largest corn crop in U.S. history, but ending stocks are the lowest since 1995. The USDA maintained its forecast for corn yields and beginning stocks, at 158.7 bushels per acre and 730 million bushels respectively.

We will look forward to the July WASDE Report which should make an adjustment for the recently increased planted acres which will likely drive production and ending stocks higher.

Planted Acreage Report

A bearish surprise for the grain markets on June 30th, as estimated acreage for planted corn and quarterly stocks for soybeans were significantly higher than consensus expectations in the USDA Planted Acreage Report. Analysts expected planted corn acreage to decrease, but instead increased along with quarterly soybean stocks.

The USDA raised estimated planted corn acres to 92.3 million, up from their March estimate of 92.2 million acres. This also represents a 5% increase in planted acres compared to 2010 and highest planted acreage in the United States since 1944, behind only the 93.5 million acres planted in 2007.

The USDA released its estimate of quarterly corn stocks of 3.67 billion bushels, significantly below 2010 estimates of 4.3 billion bushels. However, usage of 2.85 billion bushels for the three-months ending, May 31, 2011, was significantly lower than the 3.38 billion bushels consumed over the same period in 2010.

Farmland

Farmland prices remain above growth neutral for the 17th straight month according to the Creighton University Rural Main Street Index, but the farmland index continued to decline to 62.0 from May’s 75.0. Bankers are concerned that a large drop in commodity prices could have a negative effect on farmland values and one-third of respondents noted that outsiders were the primary buyers for farmland.

Bankers also expressed concern regarding the impact of the Missouri River flooding on the economy. Larry Winum, president of Glenwood State Bank, noted;

The current and potential flooding problems will certainly have an adverse economic impact on sectors of agriculture, business, and on our communities along the Missouri River. A sad situation for a lot of people.

Outlook

Farmland values have been continuing to rise throughout this "offseason" of buying due to the ongoing support of high grain prices. If the December 2011 corn can remain above $6.00, farmers will be confident for 2012 and continue to reinvest in farmland. We have observed impressively high cash rent offers across the Midwest within the last few weeks proving that farmer demand to add property to their operation is as strong as ever.

We still are bullish on farmland values throughout 2011 due to the constraints on the U.S. corn crop and global demand. Perfect weather conditions would yield 158.7 bushels per acre, but any unexpected weather patterns could change the yield outlook significantly over the next 12 weeks.

 To view this story at its original source, follow this link:   http://seekingalpha.com/article/278126-it-was-a-volatile-june-for-agriculture

4.   Food ad guidelines cause backlash

July 5, 2011

Politico

Jennifer Haberkorn

Advertisers, broadcasters, grocers and food manufacturers are pushing back on a proposal that would set voluntary guidelines restricting what foods can be advertised on television.

Many cereals, energy drinks and even some milk would be banned from the airwaves under the administration’s suggested guidelines. Industry groups are strongly lobbying the administration to rescind them.

In 2009, Congress directed the FDA, CDC, FTC and Department of Agriculture to develop recommendations for the minimum nutrition levels foods should meet to be marketed to kids up to age 17. The group issued its recommendations in April and is now taking public comment.

The restrictions are voluntary, but industry groups worry that they will one day become mandatory, or that the agencies will use the regulatory control they have over them in other areas — such as broadcasters’ licenses — to make them de facto mandates.

“Frankly, these folks might want to switch to decaf,” the FTC’s David Vladeck wrote in a blog posted Friday that pushes back on what he calls the “myths” industry groups are circulating.

Vladeck, the director of the Bureau of Consumer Protections, says the Interagency Working Group merely issued the report that Congress ordered.

“This is a report to Congress, not a rulemaking proceeding, so there’s no proposed government regulation,” he said. “In fact, the FTC Act explicitly forbids the commission from issuing a rule restricting food advertising to children.”

The goal behind the guidelines is to reduce the number of advertisements of fatty, sugary or low-nutrition foods marketed to kids. The food industry spent more than $1.6 billion in 2006 to market messages to kids that promoted foods often high in calories and low in nutrition, according to the FTC.

But industry argues the proposal goes too far. According to Dan Jaffe, executive vice president of government relations at the Association of National Advertisers, 88 of the 100 most advertised foods and beverages don’t make the cut.

“It would make it impossible to advertise some waters … most cereals, yogurts, soups and peanut butter,” Jaffe says of the items on the cut list. “You name it, and it’s probably on the list.”

The restrictions go further than school nutrition and WIC standards, says Scott Faber, a vice president of the Grocery Manufacturers Association. And they could cover informal marketing.

“No mom in America thinks removing a pizza place’s name from their kid’s jersey is in any way going to contribute to healthier diets,” he said.

The agencies say they’re taking suggestions on how to refine the guidelines.

“Some people are confusing the Working Group with the Grinch,” Vladeck wrote. “It’s true we’re proposing companies not market candy directly to children. We also recognize and applaud companies like Mars, Hershey and Cadbury Adams that already voluntarily have stopped advertising to kids.

Industry is also worried about the way the agencies defined a program targeted to kids and teens. If 20 percent of a show’s audience is adolescents 12 to 17 years old, it should be subject to the restrictions, according to the guidelines. Advertisers worry that it could include programs such as "SportsCenter" or sports games.

“Even if a program has 80 percent adult [viewers], it would still be treated as child-directed advertising,” Jaffe said.

In the House Appropriations financial services subcommittee, Rep. Jo Ann Emerson (R-Mo.) attached a requirement to the guideline’s funding that requires a cost-benefit analysis.

She said she’s “very concerned” the guidelines would “lead to extraordinary pressure from the federal government to restrict efforts to market healthy foods to the American public. … A report telling Americans that whole grain breakfast cereals and bottled water shouldn’t be advertised to audiences under the age of 17 isn’t going to help improve the health of our nation.”

The issue could also come up this week at a hearing on regulations at the House Energy and Commerce’s oversight subcommittee.

Advertisers in particular are concerned that the exodus of food-makers from the market would result in a dramatic drop in ad rates.

The greatest frustration, they claim, is that they don’t believe the proposed guidelines are going to have any impact on the nation’s obesity problem.

“After that’s all done, you would still not necessarily be marking any substantial impact on obesity. That seems to be a totally misguided way to approach this,” Jaffe said.

To view this story at its original source, follow this link: http://www.politico.com/news/stories/0711/58326_Page2.html

5.   Fixing the farm bill

July 5, 2011

Dairyherd Network

Dan Murphy

In the context of a Congress bent on slashing spending, the question has already been asked: Why do we fund farm supports? Or “handouts,” if you prefer a harsher definition of the more than $20 billion annually shelled out to U.S. farmers under the auspices of USDA’s various market support, resource conservation and rural development programs.

Those who support farm subsidies point out that those programs help maintain food production, and thus food security, when low farm-gate pricesimpact highly leveraged farmers and producers—which includes just about anyone serious invested in agriculture these days.

But the justification for continuing to pour funding into national farm programs is even simpler, although little effort is made to educate the public about this rationale. It is this: agricultural production does not respond to market signals as other, less essential production does.

In other words, people don’t stop eating when food prices experience a spike. Thus, during a low pricecycle, producers and commodity buyerstend to base production decisions on unrealistically low prices. When prices then surge as investors and speculators bid up commodity futures—or when the supply-demand equilibrium is upset—rapidly rising priceswreak havoc on livestock producers, meatpackers and poultry processors, the ethanolindustry and other food sectors dependent on farm commodities.

Market support payments are designed to smooth out the swings in commodity pricing and maintain a vital food production sector as a necessary component of national security.

At least that’s the theory.

But it’s one the Republican-controlled Congress is loath to accept. Already, the 2012 House agricultural appropriations bill cut $2.7 billion from the previous year’s funding, slashing $760 million from conservation programs, $686 million from domestic feeding programs, $354 million from ag-related research, $337 million from rural economic development funding and $285 million from food safety appropriations.

No matter where you stand politically, that kind of budgetary surgery certainly isn’t timely, given the urgency of both short- and long-term agricultural productivity to feed a surging world population.

So why do politicians—and a large cross-section of the citizenry—consider federal farm bill funding to be such a “target-rich environment’ for spending cuts? There are three reasons:

First, only 2% of the population in the United States is directly involved in farming and livestock production. Politically speaking, that’s not a very potent constituency, at least not in terms of electioneering, which is why our elected officials generally pay scant heed to production agriculture and farm-related issues.

Second, much of the subsidies and market payments that flow from farm bill programs end up in the pockets of relatively wealthy farmer and ranchers. As former USDA Secretary Mike Espy once famously said, “If you’re a farmer, and you qualify [for the programs], you get a check.” That makes it easy for the public to take offense at the billions that are targeted to various support programs.

Third, and most importantly, the problem with the farm bill is that it’s become a hodgepodge of programs, perks and payments meted out according to guidelines that rival the tax code in their complexity. Everything from conservation efforts, to rural development, to disaster relief to nutrition and feeding programs have been limped in with market support payments such that there’s something for everyone to hate when the multi-year, multi-billion dollar legislation comes up for a vote every four years. Critics point out that farm state legislators long ago struck a “deal” with their urban colleagues to lard the farm bill with enough social spending for food stamps, senior and child nutrition and other feeding programs that a quid prop quo can be agreed on to push a relatively intact farm bill through each quadrennium.

But the result is that the farm bill becomes a bloated, overstuffed monstrosity just waiting to be chopped up like dry kindling. That leaves three critical program areas dangerously open to damaging cutbacks:

Conservation. From the Farmland Protection Program to the Conservation Stewardship Program, farm bill funding support vital protection for vast amounts of the nation’s arable land base and water resources. These programs received increased funding last time around in 2008, but face drastic cuts at a time when resource limitations loom more ominously than ever.

Agricultural diversity. Currently, most of the more than $20 billion of annually spent on subsidies is targetedto corn, cotton, rice, wheat and soybeans. That’s not necessarily wrong, but it leaves smaller farmers, specialty producers and growers of virtually all other crops are a distinct disadvantage. At the same time, with urban sprawl swallowing up farmland at frightening rates, keeping ranch and farmland in production is vital for our long-term food security.

Research. For more than 150 years, land-grant universities have delivered an incredible return on investment for American taxpayers. Crop and animal science research has helped U.S. food productivity achieve stunning success. But because of the emphasis on the major commodity crops, far too little time, money and personnel have been devoted improving so-called “minor” crops, such as sorghum, barley, oats and a host of fruits and vegetables. Plus, the private sector cannot, and will not, make up any gaps in funding, especially when the payback from commercially viable developments isn’t rapid enough.

The farm bill should be a cornerstone of public sector efforts and investments to promote the cultivation and consumption of domestically produced foods, keep rural America economically viable and to incentivize farmers and ranchers to undertake projects that protect the environment and help conserve natural resources of soil, water and wildlife habitat.

Everything else should be stripped out and dealt with separately. Otherwise, the good that come from prudent investments in agriculture’s productive capacity could be undermined.

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