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In this edition:

·         Farm Bill is Top of Mind for Many

·         Buyers of U.S. Beef Keep Importing After Mad Cow Case

·         House Ag Members Weigh Rural Development Programs for Farm Bill Savings

·         News on the E15 Front

·         Defining Sustainability

Farm Bill is Top of Mind for Many

April 26, 2012

California Farmer

Note: updated to include news that the Senate markup hearings are scheduled to start today - April 26, 2012

With a mark up print in circulation - even at 900 pages - groups continue to chime in with their support for the farm bill, along with a fair share of potential tweaks. Groups will get their change to share input on the new bill starting Thursday morning at 10:30 a.m. (Eastern) since the Senate Ag Committee announced it would start the markup process.

We've covered a range of groups and their ideas. The National Farmers Union issued a release praising the Senate's work. and provided a letter to the Committee.

"The draft draft legislation put forth by Sens. Stabenow and Roberts provides for strengthened crop insurance programs and simplified protection options for farmers against yield losses through the Agricultural Risk Coverage (ARC) program," says Roger Johns, president, National Farmers Union. "ARC has promise as an effective safety net program and will better ensure that only farmers who need assistance will benefit from the program."

In that letter, Johnson thanked committee leaders for including livestock health and disaster programs. He also offered support for amendments to adopt prohibitions on packer ownership of livestock, a long-time issue for the organization. And Johns called for more funding for energy programs asking that the Committee "include the amendment by Sens. Kent Conrad, D-N.D., and Richard Lugar, R-Ind., which provides $800 million in mandatory funding for core energy programs. "These programs are critical for rural development and for helping America become more energy independent," Johnson says.

Amendments urged to limit payments

Meanwhile the Center for Rural Affairs offers up some amendment ideas of its own, noting that the cuts proposed are a challenge to small rural businesses. "the farm bill proposal before the Senate Ag Committee slashes investment in rural small business development and value-added agriculture while increasing crop insurance subsidies for some of the nation's largest farms and wealthiest landowners. There are opportunities to fix some of these issues right now, while the Committee debates amendments to the bill," said Traci Bruckner of the Center for Rural Affairs.

The amendment offered by Senator Sherrod Brown, D-Ohio, and Senator Ben Nelson, D-Neb., is an important first step. It would deny farm subsidies to individuals with taxable income over $500,000 and married couples making over $1 million. The money saved would be invested in revitalizing rural communities through small business development, beginning farmer programs, value added agriculture and assistance for small towns in updating water and sewer systems.

The group also supports an amendment from Sens. John Thune, R-S.D., and Mike Johanns, R-Neb. as well as Sens. Brown and Nelson, that would help "reverse the perverse incentive in current farm policy to break up marginal, erosion-prone grasslands.

The Senate Ag Committee will be dealing with more than 100 amendments when it begins deliberation.

Buyers of U.S. Beef Keep Importing After Mad Cow Case

April 26, 2012

Reuters

Charlie Dunmore and Theopolis Waters

Major export markets for U.S. beef from Canada to Japan stayed open after the United States reported its first case of mad cow disease in six years amid assurances that rigorous surveillance had safeguarded the food system.

U.S. live cattle futures were higher on Wednesday, but only recovered about half of what they lost on Tuesday when the market posted its biggest drop in seven months.

U.S. authorities quickly told consumers and importers around the world there was no danger that meat from the infected California dairy cow would enter the food chain. The cow tested positive for bovine spongiform encephalopathy (BSE), commonly called mad cow disease.

Mexico, South Korea, Japan, Canada and the European Union said they would continue to import U.S. beef, although two major South Korean retailers halted sales and Indonesia, a small buyer, suspended shipments.

In 2011, Canada, Japan, Mexico and South Korea combined took 65 percent, or 1.82 billion lbs, of U.S. beef exports.

"This finding will not affect trade between the U.S. and Canada," the Canadian Food Inspection Agency said in a statement on Wednesday. "Both countries have implemented science-based measures to protect animal and human health.

Japan's Chief Cabinet Secretary Osamu Fujimura said the new case of Bovine Spongiform Encephalopathy (BSE) reported on Tuesday should have no bearing on the Trans-Pacific Partnership (TPP) talks.

Japan already only allows imports of U.S. and Canadian beef from cattle aged 20 months or less.

USDA CONTACTING TRADING PARTNERS

U.S. Secretary of Agriculture Tom Vilsack said the positive response from trade partners was a sign of confidence in the preventative measures taken by the United States and that he was not concerned about potential a cut off in imports.

"I'm sending out a letter to 20 major trading partners today to reassure that the products they're buying are safe," Vilsack told Reuters Insider.

Benchmark June live cattle futures on the Chicago Mercantile Exchange were recovered about half of what they lost on Tuesday when the market fell the 3-cent daily trading limit.

Shares were little changed on Wednesday in leading U.S. beef producers Tyson Foods Inc and JBS-USA

Samples from the infected cow have been sent to laboratories in Canada and Britain for final confirmation, Paris-based World Organization for Animal Health (OIE) said in a statement, adding that the case was unlikely to affect the current USDA "controlled risk" categorization for mad cow disease.

"According to USDA statements, the steps taken so far are consistent with OIE standards," it added.

Russia's health watchdog said it could consider restrictions on U.S. imports but that it was waiting for more information on the outbreak and the planned U.S. response before taking a decision.

Korean retailer Lotte Mart, a unit of Lotte Shopping Co., said it had suspended sales due to what it said was "customer concerns", as did Home Plus, a unit of Britain's Tesco PLC.

Indonesian Vice Agriculture Minister Rusman Heriawan told Reuters that Southeast Asia's largest economy would suspend imports of U.S. beef from Thursday. The country only accounted for 0.6 percent of U.S. beef exports worth $17 million in 2011, mostly used in hotels and high-end restaurants.

Vietnam, which suspended U.S. beef imports between December 2003 and September 2011, said it had not changed its policy on U.S. beef in response to the latest news.

BEEF EXPORTS HIT AFTER 2003 CASE

Three previous cases of mad cow disease were confirmed in the Unites States between 2003 and 2006. Memories were still sharp of the first case in 2003, which caused a $3 billion drop in U.S. exports. It took until 2011 before those exports fully recovered.

Experts said the latest case was "atypical", meaning it was a rare occurrence in which a cow contracts the disease spontaneously, rather than through the feed supply.

They said the dairy cow had not been eaten by other animals and there was no risk of the disease being spread and estimated the chance of an animal spontaneously contracting the disease at about one in a million.

There are nearly 91 million cattle and calves in the United States, according to a USDA report released in January, of which about a third are beef cows and 9.2 million are milk cows. Mad Cow generally occurs in animals that are several years old, and beef cattle are generally slaughtered at 18 months.

COW'S HISTORY BEING TRACED

The USDA is still tracing the exact life of the infected animal, and the carcass of the cow is under quarantine and will be destroyed.

The cow was found at a rendering plant, which processes diseased or sick animals into mainly non-edible products for use in such things as soap or glue.

In the U.S. domestic market, companies are still smarting from the fallout over a ground beef filler that critics called "pink slime", made from scraps of beef sprayed with ammonia gas to kill bacteria. The product was pulled from grocery store shelves and forced one producer to idle several factories and another to file for bankruptcy.

House Ag Members Weigh Rural Development Programs for Farm Bill Savings

April 25, 2012

AgriPulse

Sarah Gonzalez

Witnesses defended Rural Development program benefits during the first of eight 2012 Farm Bill subcommittee hearings of the House Agriculture Committee today in Washington, D.C. While representatives of various rural industries agreed that the government's budget situation warrants consolidation of RD programs, they each noted how current investments are boosting rural economies. 

“We’re going to have to make some cuts, none of which are going to be painless,” said Rural Development Subcommittee Chairman Tim Johnson, R-Ill. “We’re not going to balance the budget unless we all recognize that every single component of what the federal government does is going to have to be examined.”

He noted the extensive number of programs currently targeting rural development across several agencies. 

“It is, in part, the sheer number of programs which makes it difficult to gauge the effectiveness of current policy,” he said. “Just a few weeks ago, on March 21, we heard testimony from the Government Accountability Office regarding the extent of duplication and fragmentation among federal agencies.” 

“There are more than 88 programs administered by 16 different federal agencies specifically targeted at rural economic development,” said President of National Council of Farmer Cooperatives Chuck Conner. “With a significant decrease in funding for the Farm Bill, it just makes sense to consolidate the programs.”

However, Conner said Value Added Producer Grants (VAPG) under Title VI of the Farm Bill are “instrumental for cooperatives overcoming many barriers,” including access to working capital. Conner said access to VAPG allows cooperatives to capitalize on producer opportunities, while “getting the biggest bang for the buck” of taxpayer dollars.   

He did acknowledge that various requirements for applying for the grants “have become complicated and burdensome” and that the time and energy to apply is often not worth the amount of funds awarded. Tri-County Council for Western Maryland Executive Director Leanne Mazer agreed that application and reporting requirements should be streamlined and broadened "to reflect the scale of rural investments and capacity of local organizations."

Commissioner of Brookings County, South Dakota, Donald Larson, testified on behalf of the National Association of Counties that some of the most needed investments in Rural Development are in water, wastewater, broadband and infrastructure. 

When Rep. Johnson asked where the witnesses would make cuts if in the position to do so, Larson defended the programs intended to support rural economies, saying the savings from eliminating direct payments in the Farm Bill might be redirected toward rural development programs.  

“The issues we talked about today, particularly broadband and water, are keys to rural America’s future success,” he said. “I think we can take some funding used in farm subsidies and those areas of the Farm Bill and redirect them into the rural development portfolio and probably have a much better and longer impact on rural America than a check to an individual farmer.”

Illinois Rural Water Association Executive Director Frank Dunmire, on behalf of the National Rural Water Association, said “as a lender of last resort,” USDA provides critical financing for water systems that are unable to secure commercial credit.

Dunmire explained that in FY 2011, USDA obligated over $1 billion in loans and grants to 695 water and wastewater projects. He said 82% of these funds were used for projects in communities with populations of 5,000 or fewer.

“And even though over the last 72 years USDA has made over $30 billion in water infrastructure loans to communities that others would not, the lifetime default rate for this program is 1.02%,” he said. 

Under the Senate draft of the 2012 Farm Bill released last week, the RD population eligibility cap was raised to towns of 50,000, unless otherwise specified. Rural water programs will be targeted at towns with 5,500 or fewer residents. 

Ranking Member Jim Costa, D-Calif., said the definition of “rural” must be reviewed before the House drafts its 2012 Farm Bill in order to more effectively serve communities that struggle with eligibility requirements. 

Rural Community Assistance Partnership Executive Director Robert Stewart said over 90% of the 53,000 community water systems serve populations under 10,000. Without exceptions to a raised population cap, he said “if the definition is expanded to 50,000 and under, many of our nation’s smallest communities will be unable to compete for Rural Development water and sewer infrastructure funds.”

Dunmire also commented on discussions to expand USDA loan and grant eligibility to more populous communities.

“Even though funding has been awarded to the smaller and poorer communities, as I mentioned earlier, there still is $3 billion backlog,” Dunmire said. “We do not believe anything is to be gained by increasing the pool of eligible communities for water infrastructure loans and grants.”

News on the E15 Front

April 26, 2012

FarmFutures

Ethanol industry groups are close to clearing the final hurdle to make E15 available after three years of work. According to the National Corn Growers Association, 99 ethanol producers have banded together to fund a nationwide fuel survey which will satisfy the final requirement of the partial E15 waiver by the U.S. Environmental Protection Agency.

In the statement, Garry Niemeyer, president, says the group "applauds the ethanol industry for this momentous accomplishment. We have long understood the economic, environmental and national security benefits of this renewable, domestic fuel. Finally, the hard work invested in pushing to increase these benefits through increased ethanol usage can come to fruition."

The ethanol producers stepped up to support the survey even though only a handful of the 160,000 gas stations that will participate are owned by the group.

"Ethanol producers have taken on a proactive role in this process and American consumers will benefit," says Niemeyer.  "Ethanol has the capacity to lower staggering prices at the pump while also reducing pollution.  With the survey in place, E15 is set for commercial sale as laid out by the EPA."

Groups representing the ethanol industry, including the Renewable Fuels Association, Growth Energy and the American Coalition for Ethanol also spoke out in defense of E15 and to applaud progress today.

"America's ethanol industry is committed to giving consumers greater choice at the pump by making E15 a commercial reality," said RFA, Growth Energy, and ACE.  "We will work diligently with the petroleum industry, gas retailers, automakers, and consumers to ensure E15 is used properly.  But we will not stand idly by and allow some of these interests to make wild and unsubstantiated claims about ethanol and E15 in order to malign ethanol and scare consumers.  The fact remains that E15 is the most tested fuel ever approved by EPA and is perfectly safe and effective for those engines approved in the waiver."

Whether the auto industry is ready or not will depend on a lot of factors, but there are some interesting early indicators.

Defining Sustainability                                         

April 25, 2012

DTN/The Progressive Farmer

Chris Clayton

A broad array of groups may be looking to measure agricultural sustainability or even create sustainable "certification," but that isn't playing out in the policy arena.

The 900-page draft bill the Senate Agriculture Committee released last week barely references "sustainability" except for a couple of pilot programs. Still, some see sustainability in farm policy as ensuring farmers are meeting basic conservation obligations.

"There's been all of this talk not only about the conservation and environmental and sustainable issues, but about healthy food and local food, diet-related diseases, and I think this farm bill may just shock people in how little it seems to address what most people say are the most urgent concerns," said Craig Cox, a vice president of Environmental Working Group and critic of farm subsidies. "I think a lot of folks are going to be very disappointed, if not angry, about the outcome."

The farm bill was supposed to be debated Wednesday by the Ag Committee, but Chairwoman Debbie Stabenow, D-Mich., announced late Tuesday that the markup meeting was being delayed, largely because of issues with the commodity title.

One of the biggest sources of controversy about sustainability in the farm bill is conservation compliance. Created in the 1985 farm bill, compliance is the floor of acceptable conservation practices a farmer must meet on highly erodible land to be eligible for commodity payments.

But the new farm bill will get rid of direct payments and counter-cyclical payments. The Senate bill would replace most commodity programs with a new one that would have a $50,000 payment cap. Meanwhile, a Government Accountability Office report earlier this month cited instances of farmers collecting more than $1 million in crop-insurance premium subsidies.

Major commodity groups and crop insurance companies have dug in their heels and are resisting the idea of marrying conservation compliance to crop insurance.

"The undersigned groups urge you to oppose attaching conservation compliance provisions to the crop insurance program," the farm groups and insurance companies wrote. "We fear this would cause numerous unintended consequences, including the potential loss of financing from our lenders, an undermining of the public/private partnership between the federal government and crop insurance companies, and a potentially unbalanced approach to a new mandate (depending on whether such a program covers only program crop commodities or is also applied to specialty crops)."

As if to counter the arguments, four former chiefs of USDA's Natural Resources Conservation Service sent a letter on Monday stressing the importance of conservation compliance. The four former chiefs said when conservation compliance began in 1985 "it sparked a decade of unprecedented progress in limiting erosion, cleaning up waterways and protecting wetlands."

The former NRCS chiefs added, "Today, high prices driven by strong demand for our commodities are boosting farm income but putting enormous pressure on our land and water resources. Maintaining the current conservation compliance provisions, which are both effective and achievable, is essential to our efforts to maintain the conservation gains of recent decades. Additionally, as you take steps to modernize our farm safety net, we urge you to make sure conservation compliance provisions cover all income support, including eligibility for crop and revenue insurance premium subsidies."

Some farmers don't see how anyone can champion sustainability while fighting against compliance. Craig Lang, former president of the Iowa Farm Bureau, says his support for tying conservation compliance to crop insurance helped lead to his ouster as state president last year. He defends the argument that compliance should be expanded.

"The farmers I talk to say yes, it makes sense because they want to be in a position to show consumers they are making the right decisions when it comes to conservation," Lang said.

Lang disputes the argument from groups claiming farmers would lose their access to bank loans if conservation compliance were tied to crop insurance. "That was about as egregious a position to take as possible, because if you are in compliance and there is a weather event, you are still in compliance and there is a leniency and there is ample time to get back into compliance," Lang said.

The American Farm Bureau took the Iowa Farm Bureau's position that compliance should not be tied to insurance eligibility.

The Farm Service Agency generally finds 99.5% of farmers to be in compliance in any given year. A farmer not in compliance has at least a year to get into compliance before risking the loss of commodity payments.

Jim Faulstich, a rancher near Highmore, S.D., raised the issue with visits to House Agriculture Committee members last week. Faulstich said he sees a lot more land being converted from grass to crops that he considers environmentally sensitive or at least marginal ground.

"With things as good as they are, with the agricultural economy as good as it is right now, I'm just concerned about the precedents we're setting on down the road, with not only maintaining ... the good prices we have right now, but the sustainability of agriculture and our natural resources," Faulstich said.

Farm policy should focus on protection of soil, as well as threats to agriculture such as water-quality challenges, flooding and minimizing regulatory demands from laws such as the Endangered Species Act, Faulstich said.

"I have to question anybody who is against conservation compliance because we all claim to be stewards of the land, and if we're in fact living in tune with the way the land should be used, then we don't have anything to fear," Faulstich said. "If we're against it, I think that's an indication we're going to abuse those natural resources and I don't think the country can withstand that long term."

PAYMENTS ON WORKING LANDS

Ferd Hoefner, policy director for the National Sustainable Agriculture Coalition, said work on sustainability actually focuses on farm practices, and is best exemplified by the Conservation Stewardship Program in the conservation title of the farm bill. CSP has an environmental benefits index that scores both eligibility for the program and the payment level. The Senate farm bill trims potential enrollment in CSP, but would still allow more than 10 million new acres annually under the program.

"We think it comes as close to anything we've ever had in the conservation tool box that is looking toward advanced conservation systems moving towards more sustainability," Hoefner said. "There's nothing else like that in the farm bill. On the working lands side, CSP is the only one that is based on environmental benefits."

SUSTAINABLE REFERENCES FOR PULSE CROPS

Under the Senate bill, there is language to encourage the expanded consumption and production of "pulse" crops, which means dry beans, dry peas, lentils, chickpeas or garbanzo beans. That language includes "research in sustainability to enhance global food security such as plant breeding, pest and disease management resulting in reduced application management strategies. It also references a need to improve nitrogen fixation to reduce the carbon and energy footprint of agriculture.

In helping address famine and food security in the Horn of Africa, the farm bill seeks to "enhance sustainability of long-term development programs targeting poor and vulnerable households, and reduce the need for emergency operations" in that region of Africa.

Sustainability hasn't been a major emphasis of the farm bill. The 2008 legislation had only three references to sustainability initiatives as well, largely research on biofuels, research on small livestock producers, and the Sun Grant program earmarking funds for universities.

Further, the Senate Agriculture Committee's draft bill has one mention of climate change. The Senate bill mentions "climate change" only in setting a $6 million annual budget for the USDA Office of International Forestry stemming from legislation in 1990, the Global Climate Change PreventionAct.