Agri Business News 04-23-2010

2012 Farm Bill Hearing Kickoff Reveals Expected Partisan Divide.

The first 2012 Farm Bill hearing, kicking off what will be a long period of Washington, DC, and field hearings across the country, made clear the Democrats on the House Agriculture Committee see a much smaller pot of money for income protection programs in the next couple of years, while the GOP warned the Obama Administration not to turn rural America into urban “bedroom communities.” The lone witness at this week’s kickoff hearing, Secretary of Agriculture Tom Vilsack, armed with statistics and PowerPoint slides, committed to a “strong safety net” for farmers, but also stressed the need for new income opportunities “to generate wealth in a stronger, more prosperous rural America for generations to come.” Vilsack said the Administration’s approach to a new Farm Bill will concentrate on “five pillars” found in USDA’s new Regional Innovation Initiative, including greater broadband access; renewable energy and biofuels; regional food systems and supply chains; forest restoration and private land conservation, and ecosystem market incentives. But committee ranking member Rep. Frank Lucas (R, OK) challenged Vilsack on White House plans for strengthening the producer income safety net, saying all he’s seen form the Administration are plans to cut farm subsidies, reduce crop insurance and limit government farm payments at the risk of turning rural communities into urban “bedroom communities.” Lucas was frustrated Vilsack’s statement didn’t mention production agriculture, but stressed renewable energy projects and broadband Internet access. Vilsack said the Administration see it as “important for us to periodically recalibrate” its approach to income supports. Committee Chair Collin Peterson (D, MN) has warned for weeks that FY2011 budget reconciliation and spending cuts do not bode well for continuing traditional crop-specific support programs, and he’s been encouraging producer groups to think outside the box when it comes to the income protections the federal government provides. Peterson has publicly discussed the possibility of reinventing federal crop insurance as a replacement for individual commodity support programs, shifting it from a single crop protection system to “whole farm” coverage on all input costs, as well as income drops. Peterson also announced the next round of full committee field hearings on the 2012 Farm Bill: April 30 – Iowa State Fairgrounds, 1 p.m. CDT, Des Moines, Iowa; May 1 – Northwest Nazarene University, Old Science Lecture Hall, 1 p.m. MDT, Nampa, Idaho; May 3 – Fresno City Hall Council Chambers, 9 a.m. PDT, Fresno, California, and May 4 – Laramie County Community College Center for Conferences & Institutes, Centennial Room 130, 8 a.m. MDT, Laramie, Wyoming.

Senate Food Safety Delayed at Least Two Weeks.

The Senate bipartisan food safety reform bill, the subject of intense negotiations since it was approved by the Senate Health, Education, Labor & Pensions Committee (HELP) last November, will likely not see floor action until mid-May at the earliest. The additional time, however, will allow the bipartisan team of Senators led by Sen. Richard Durbin (D, IL) and Richard Burr (R, SC) to work out last-minute language on product traceability during a recall, as well as trying to back Sen. Dianne Feinstein (D, CA) away from her plan to try and amend the bill on the floor with a full ban on the plastics ingredient BPA. Originally expected on the floor last week, Senate Majority Leader Harry Reid (D, NV) pulled the food safety bill in favor a plan to force action on the Senate’s financial reregulation legislation. However, controversy surrounding that bill – the GOP claim the Democrats are ignoring its good-faith effort at bipartisanship – has delayed action. Reid says the financial reregulation package will take at least two weeks of floor time, and will likely not begin debate until the middle of next week.

House Energy & Commerce Subcommittee to Hold Antibiotic Resistance Hearing; Feinstein Hosts Danish Officials in “Briefing” on Banning Antibiotics in Agriculture.

The health subcommittee of the House Energy & Commerce Committee will hold an April 28 hearing to hear from government scientists on the risk of antibiotic resistance to human health, while May 4 will see a “briefing,” hosted by Sen. Dianne Feinstein (D, CA) on the “merits of and consequences of” of banning nontherapeutic antibiotic use in livestock production. The House hearing is expected to be the first in a series of hearings on antibiotic overuse broadly, including overprescription in human medicine and the increase in hospital-acquired infections. Appearing at the hearing will be federal Centers for Disease Control (CDC) Director Dr. Thomas R. Frieden, and Dr. Tony Fauci, director, National Institute of Allergy & Infectious Diseases, National Institutes of Health (NIH). Feinstein makes no secret of her support for a ban on growth promotion and feed efficiency uses of antibiotics, calling her briefing “so central to the debate on the Preservation of Antibiotics for Medical Treatment Act (PAMTA).” Offices of the World Health Organization (WHO) have been invited, and confirmed speakers will include representatives of the Denmark Technical University, the National Center for Antimicrobials & Infection Control, State Serum Institute, and a Danish pork producer. U.S. livestock and poultry groups have not been invited to participate, but have voiced serious concern about how the Danes portray the outcome of their ban. While reports and interviews with producers indicate the Danish “experiment” led to a reemergence of livestock diseases, increased use of antibiotics to treat those diseases and no measureable impact on human disease, the Danish government claims its ban on growth promotion and feed efficiency uses of the products is an unqualified success.

Senate Ag OKs Hard-hitting Derivatives Bill; Financial Reregulation Faces Rocky Road.

On a 13-8 vote this week the Senate Agriculture Committee approved a bill by panel chair Sen. Blanche Lincoln (D, AR) to dramatically tighten regulation of over-the-counter (OTC) derivatives, action which spawned opposition from other Senators and from the House. Meanwhile, Senate Banking Committee-approved legislation to reregulate the nation’s financial markets is Senate Majority Leader Harry Reid’s (D, NV) latest political showdown. Reid tried this week to bring the financial reregulation bill to the floor, but was rebuffed by Republicans. He says he’ll try and force a procedural vote on April 26. The GOP leadership said its opposition to bringing the bill to a floor vote is that it believes it can reach a bipartisan compromise on the bill and Reid is trying to thwart that effort. There is also concern broadly among both sides of the aisle with Lincoln’s approach to regulating derivatives, particularly a requirement to require banks to declare themselves either a bank for federal regulatory and credit access purposes, or a trading company. If designated as a bank, the institution would be required to spin off its trading desk. The issue also comes down to the definition of bona fide hedging to manage risk versus some banks, who while they hedge, also speculate in the markets which critics said has distorted market functions. Sen. Saxby Chambliss (R, GA), ranking ag committee member, said he agrees with about 90% of Lincoln’s bill, but saw a compromise approach he authored voted down by committee. He wants to work with her on the trading company spin-off provision, and has met with Secretary of the Treasury Tim Geithner on his concerns. Sen. Charles Grassley (R, IA), voted with Lincoln on her derivatives package, saying it will bring greater transparency to the markets, but stopped short of endorsing the broader banking bill. Also at issue is a bipartisan concern that farm credit banks would be treated the same as Wall Street institutions, while also increasing the farm credit banks’ up-front costs in derivatives trading. Lincoln’s exemption language for commercial hedgers gives Sen. Tom Harkin (D, IA) concern that a loophole is created that allows the financial side of multinationals to escape regulation. The White House supports strong derivatives regulation and sent Treasury Department officials, along with Commodity Futures Trading Commission (CFTC) regulators, to work with the ag committee to overcome problems. Meanwhile, Rep. Frank Lucas (R, OK), ranking member of the House Agriculture Committee, said the Lincoln approach “reversed months of bipartisan efforts in the House” to regulate derivatives. He said the House approach “strikes the appropriate balance for increased regulation of swaps,” and said the Senate approach will make it too costly for end-users to manage risk

Grassley Introduces Ethanol Bill; Tax Committees Wrestle with Biodiesel Tax Extenders.

A bill to extend federal support for corn-based ethanol through 2015 was introduced this week by Sen. Charles Grassley (R, IA), mirroring House legislation, and action immediately praised by the National Corn Growers Assn. (NCGA). Calling it the “GREEN Jobs Act”, Grassley was joined by Sens. Kent Conrad (D, ND), John Thune (R, SD), Ben Nelson (D, NE), Mike Johanns (R, NE) and Tim Johnson (D, SD) on the bill to extend the federal 45-cent-per-gallon ethanol blenders’ credit, as well as the small ethanol producers’ tax credit, the cellulosic producers’ tax credit and the ethanol import tariff. Meanwhile, House and Senate tax writing committees continue to try and find payment offsets for nearly 1,000 lapsed federal tax credits, including the $1-per-gallon blenders’ tax credit for animal and plant-based biodiesel and renewable diesel. Sen. Max Baucus (D, MT) and Rep. Sander Levin (R, MI), chairs of the two committees, say they’ll have the offsets in place so a bill can be enacted before Memorial Day that would grant the lapsed credits retroactive to January 1, 2010. The extenders bill was previously paid for by eliminating pulp and paper industry eligibility for certain biofuel tax credits, but that offset was usurped by the House to help offset the cost of health care reform.

USDA Announces 2010 County Loan Rates. The Commodity Credit Corp.

(CCC) this week announced the 2010 county loan rates for wheat, feedgrains and oilseeds. Those per bushel rates are: Wheat -- $2.94; corn -- $1.95; grain sorghum -- $1.95; barley -- $1.95; oats -- $1.39; soybeans -- $5.00, and other oilseeds -- $10.95 per hundredweight for each “other oilseed,” including sunflower, flaxseed, canola, rapeseed, safflower, mustard seed, crambe and sesame seed. USDA Releases State Fact Sheets. State-by-state fact sheets developed by USDA’s Economic Research Service (ERS) are now available from the department. The sheets include data on population, income, farm characteristics, farm financial indicators, top commodities produced and exports for each state in the U.S. The state fact sheets can be found at GRAIN WAREHOUSE OPERATORS that enter into contracts to provide goods and services to CCC, but who are not receiving payments from the U.S. government, can elect to decline to register with a government-wide Central Contractor Registration Service for the time being (NGFA). OSHA SOON TO BEGIN DRAFTING COMBUSTIBLE DUST STANDARD that will likely affect the grain and feed industry. One area of concern is the National Fire Protection Assn wanting OSHA to adopt their standards and combine its current five separate combustible dust standards into one single standard. This would affect the OSHA Grain Handling Standard in a negative way. The National Grain and Feed Association’s combustible task force will be working in opposition to the NFPA concept.


According to OSU Plant Pathologist Dr. Bob Hunger, Oklahoma has so far been spared significant wheat disease pressures. What is interesting is the increasing emergence of stripe rust. While showing up at low levels in some OSU breeder lines, stripe rust is showing up in Kansas in varieties that had previously thought to have been resistant. Varieties such as Sante Fe, Overley, Fuller, Post Rock, Jagaline, and Jagger are now showing susceptibility to stripe rust.

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