Tuesday, October 20, 2009

A world free of hunger?

We have the intelligence and the technology, but can we overcome the political hurdles?

By Sara Wyant

When Dr. Norman Borlaug, father of the ‘green revolution’ passed away in September, leaders from around the globe memorialized the Nobel Peace Prize winner as the "greatest hunger fighter of our time." But even he acknowledged that his work was far from over, especially in places like Africa, where one-third of the population is hungry and malnourished.

A diverse group of business leaders, including MicroSoft founder Bill Gates, is committed to building on Borlaug’s progress and turning the Iowa native’s vision into a global reality. Speaking at the World Food Prize ceremony in mid-Oct, Gates said that, while Borlaug’s passing was “cause for sadness, his life should make us optimistic. In the middle of the 20th century, experts predicted famine and starvation, but they turned out to be wrong – because they did not predict Norman Borlaug. He not only showed humanity how to get more food from the earth – he proved that farming has the power to lift up the lives of the poor.”

So how did one of the world’s richest men, who co-chairs the $30-plus billion Bill and Melinda Gates Foundation along with his wife and father, come to be so passionate about agriculture and especially the role of science in agriculture?

“When we started our foundation, we agreed that our giving should be guided by our belief that all lives have equal value—that every person deserves the chance to live a healthy and productive life, Gates explained in his speech. “Over time, our search for the greatest leverage brought us to the most compelling challenge in development: how do you help people who live on less than a dollar a day?

“The answer is in the work they do. Three-quarters of the world’s poorest people get their food and income by farming small plots of land. So if we can make small-holder farming more productive and more profitable, we can have a massive impact on hunger and nutrition and poverty.

Trouble ahead?

When it comes to increasing productivity, Gates has clearly done his math, but he’s troubled by the forces who oppose some of the science-based tools necessary to reach those goals.

“Africa is the only place where per capita cereal yields have been flat over the last 25 years,” he explained. “The average farmer in sub-Saharan Africa gets just over half a ton of cereal per acre. An Indian farmer gets twice that; a Chinese farmer, four times that; an American farmer; five times that. The technology and new approaches that are transforming agriculture in other parts of the world can be applied in new ways, and help Africa flourish too.
Gates says the global effort to help small farmers is endangered by an ideological wedge that threatens to split the movement in two. On one side “ a technological approach that increases productivity. On the other side is an environmental approach that promotes sustainability. Productivity or sustainability – they say you have to choose.

“It’s a false choice, and it’s dangerous for the field. It blocks important advances. It breeds hostility among people who need to work together. And it makes it hard to launch a comprehensive program to help poor farmers.

“The fact is, we need both productivity and sustainability – and there is no reason we can’t have both,” he emphasized. “The next Green Revolution has to be greener than the first. It must be guided by small-holder farmers, adapted to local circumstances, and sustainable for the economy and the environment.

“The charge is clear – we have to develop crops that can grow in a drought; that can survive in a flood; that can resist pests and disease. We need higher yields on the same land in harsher weather. And we will never get it without a continuous and urgent science-based search to increase productivity – especially on small farms in the developing world,” says Gates.

Other business leaders join

At the same World Food event, several other leading agribusinesses provided their support for ending world hunger, as part of the new Global Harvest Initiative (GHI). This effort was founded by Archer Daniels Midland Company, DuPont, John Deere and Monsanto Company, but is open to other members. These companies already invest more than $9 million a day in research and development, according to GHI.

“We agree that we must double our agricultural output if we are to meet the needs of the world population in 2050,” said Ellen Kullman, chief executive officer, DuPont. “We believe this must be done in a sustainable way to reduce agriculture’s environmental footprint and conserve the precious resources available to us. We know it’s going to require cooperative efforts across industries and geographies, and between private and public entities. With all of us working toward a common goal, we can leverage many opportunities throughout the agriculture value chains to feed our growing, global population.”
Bill Lesher, Global Harvest Initiative executive director agrees that the dynamics may finally be right to make significant headway.

“We are in a prime position to make the difference that Norman Borlaug envisioned. At no time have we encountered such a positive environment for change, such a diverse group of leaders primed to work together,” he adds.

Agriculture News, Farm Policy, and Rural Policy

Wednesday, September 16, 2009

JBS to buy Pilgrim’s Pride out of bankruptcy for $2.8 million

The U.S. subsidiary of Brazil’s meat giant JBS S.A. is to buy a majority share of Pilgrim’s Pride, the largest U.S chicken processor, and allow Pilgrim’s and six of its subsidiaries to emerge from bankruptcy protection in December, the companies announced today. The deal is subject to approval of the bankruptcy court and agreement by U.S. antitrust regulators.

Pilgrim’s was to file today a joint plan of reorganization and disclosure statement under bankruptcy code. The companies valued the transaction at approximately $2.8 billion with Pilgrim's selling 64 percent of the new common stock of the reorganized Pilgrim's Pride to JBS S.A., through its JBS USA Holdings subsidiary for $800 million cash. Proceeds from the sale of new common stock of the reorganized Pilgrim's will pay approved creditors in full, either in cash or by issuance of a new note, the Texas company’s statement said.

Existing Pilgrim's Pride common stock will be canceled and shareholders will receive the same number of new common stock shares representing 36 percent of the reorganized company. The plan also calls for exit financing of $1.75 billion provided by a lending group arranged by CoBank and Rabobank. Pilgrim’s said it anticipates the plan will be confirmed by the bankruptcy court in time to emerge from bankruptcy by the end of December, one year after it was filed.

By James C. Webster
Copyright Agri-Pulse Communications, Inc.
Agriculture News, Farm Policy, and Rural Policy

Wednesday, August 26, 2009

The Big Uneasy

Traditionally, members of Congress leave the sweltering August heat that engulfs Washington, D.C. this time of year to visit with voters back home, stump for fellow lawmakers at fundraisers, and maybe even spend some time with their own families. But this summer has been anything but traditional as throngs of angry voters turned out to see elected officials on their home turf

Some voters have been so angry about pending health care legislation that the town-hall meetings look like screaming matches. That prompted leaders like Speaker of the House Nancy Pelosi (D-CA) to call such unruly behavior “un-American.” Her comments only served to pour more fuel on the health care “fire,” as many citizens reminded her that talking to their lawmakers is as American as apple pie.

Public reaction to climate change legislation hasn’t been much better. Several members of Congress have been booed as they walked along parade routes. Onlookers waved huge signs, with phrases like “Just say ‘no’ to climate change” and complained about what they see as a huge new burden on the U.S. economy

Rural road trip

I spent most of my summer break driving across parts of the middle section of the United States and trying to get a sense of the collective “pulse” of the countryside along the way. Over a two-week time span, my husband, my 92-year old mother-in-law and I drove across Illinois, Iowa, Minnesota, Wisconsin, North Dakota, and Missouri, visiting some relatives, stopping at small-town cafes, and chatting with local farmers and business people. My summer “road trip” provided a great way to see the tremendous food production system we have in this country, while visiting with a wide variety of ordinary people about how they view what’s happening in Washington, DC. Here are some of my observations and their comments.

Too many unknowns. Whatever the topic, there seems to be an underlying feeling of nervousness about the direction of the country ----whether it’s the economy in general, falling commodity prices, the concern over job losses, or the huge federal deficit that’s looking like an iron-clad anchor on the next generation’s future. Some of this uncertainty may be expected with any new Administration that’s trying to get its feet on the ground and push for a very strong “change” agenda. However, it seemed like the nervousness extended from Obama supporters to conservative Republicans and many political perspectives in between. Some supporters are dissatisfied that change hasn’t happened more quickly, while others want to go slow because they worry that the rush to pass legislation will only lead to unintended consequences.

Concerns about the deficit were almost everywhere I traveled, an unease that will only worsen with news this week that the budget deficit will increase from $7 trillion to about $9 trillion over the coming decade.

Stimulus. What stimulus? In Illinois, home of President Barack Obama and Transportation Secretary Ray LaHood, you’ll see a few road signs telling you that construction projects are paid for with American Recovery and Reinvestment Act funding. The road and bridge improvements are welcomed in a state where traffic congestion is almost a daily burden. And although it may be hard to quantify, there were undoubtedly some new jobs created as a result of the construction.

But six months after the President signed the whopping $787 billion stimulus package with the intention of jump-starting an ailing U.S. economy, the majority of Americans are not seeing results where it counts: their pocketbooks. The Administration has been issuing press releases on almost a daily basis this summer about how the stimulus funding is working, but not getting much public relations boost for their efforts. In fact, many people told me that White House promises to save or create 3.7 million jobs, has actually backfired. Every new article that underscores how much the government is spending seems to generate more skepticism than optimism. “All they do in Washington is spend, spend, spend,” a North Dakota farmer told me. “Pretty soon the Chinese are going to own our government,” he added, referring to the large portion of the U.S. deficit that is financed by Chinese investors.

In a small-town in southwest Missouri, local officials told me they rejected stimulus funds for a sewer project, because it came with too many costly “strings” attached.
“We decided that using traditional rural development programs would be a better route because it would be cost less and be more manageable for our small staff,” an engineer on the project told me.

Health care. President Barack Obama captured 54% of the popular vote in Minnesota and many people from the land of 10,000 lakes find him personally appealing. But many are extremely reluctant to buy his health care reform proposal for a variety of reasons. An Obama supporter who is still going through breast cancer treatment told me that she feared that her doctor would not be able to prescribe the kinds of medicine she needs if some type of health care reform package is passed. “Now I’ve got options and a doctor who looks out for me, rather than a government program making those decisions,” she told me. “I’m scared to death about what choices I might have under new legislation.”

It’s not that people don’t want to see health care coverage improved. Several complained about the skyrocketing cost of health insurance. Farmers and other self-employed individuals want to be able to deduct the costs, just like other businesses. But many of these same critics like their current doctors and the availability of medical care. The idea of a far-reaching reform package, costing billions of dollars, seems to create more potential problems than solutions.

Climate change: Farmers either love or hate the prospects of climate change legislation, and there is almost no middle ground. Over 5.5 million acres have been enrolled nationwide in the National Farmers Union’s Carbon Credit program, providing some additional income for many cash-strapped farmers. Little wonder then that several NFU members in North Dakota are some of the biggest supporters of climate change legislation. They believe that taking a proactive approach and trying to shape legislation as it moves to the Senate is the best route for those in agriculture. But these folks seem to be in the minority. Many farmers equate the climate change bill to increased costs and less international competitiveness. Several state Farm Bureau associations are leading the charge against new legislation.

Outcome uncertain

President Obama says he still wants to see Congress act on health care and climate change legislation before the end of the year. His supporters are planning massive advertising blitzes and grassroots campaigns to build support for these key initiatives.

When Congress reconvenes on Sept. 8, some of the hot, humid weather may have subsided in favor of cooler, fall days. But after getting an earful from angry voters this month, the heat will still be on lawmakers to listen to these concerns from the countryside.

Agriculture News, Farm Policy, and Rural Policy


Sunday, August 2, 2009

Food and Nutrition celebration: An opportunity lost?

USDA officials held an important event recently, celebrating the 40th anniversary of the department’s Food and Nutrition Service (FNS). As I scanned the 100-plus people assembled for the event in the Whitten Building’s central patio, I found several dignitaries, but kept looking for “aggies” in the room. Unfortunately, I spotted only a handful.

Why were so few representatives of the nation’s primary farm and commodity groups at the invitation-only event? The folks at FNS say it was an abbreviated invite list and focused only on those groups they work with most often. But the fact that many agricultural groups weren’t on the “A” list, underscores a continuing gap between those who most need the food and those who produce most of the food.

In case you are not familiar, FNS administers the nation’s domestic nutrition assistance programs, including the Supplemental Nutrition Assistance Program or SNAP (formerly the Food Stamp Program); the National School Lunch Program, and 13 others. Their efforts touch one in five people across the U.S. with some type of feeding program.

Since 1969, when FNS was officially established the SNAP/Food Stamp Program has issued over $554 billion in program benefits; NSLP has served over 169 billion meals; and $27 billion in USDA commodities have been issued in food benefits for schools and another $23 billion in food benefits for household and emergency feeding programs.

Farmers and FNS “customers” are linked in a variety of ways. Spending on these programs makes up about two-thirds of USDA’s budget and utilizes billions of dollars in farm commodities. Congressional supporters of FNS are a crucial part of the political coalition that enables passage of major farm bills.

The hour-long ceremony, led by USDA’s Deputy Secretary Kathleen Merrigan, was everything you might expect from an anniversary celebration: a historical timeline, a progress report, and video to highlight the agency’s accomplishments. Congresswoman Jo Ann Emerson (R-MO) and Congressman James P. McGovern (D-MA) presented Merrigan with a resolution honoring FNS for 40 years of fighting hunger and improving nutrition. It was heartening to learn about the millions who have benefited and USDA’s plans to reach out to even more individuals who still go to bed hungry every night.

However, there was little recognition of the important connection between food production and food consumption in the FNS programs. The anniversary video started with one slide of a farm field, but the rest focused on how each of the programs worked and the types of consumers served. There was no discussion about how farm productivity has helped keep costs low so that millions of Americans can eat a safe, affordable food supply. And there was no mention of how plant breeding and biotechnology have played an important role in creating healthier foods.

In recorded remarks, Secretary Vilsack pointed out that President Obama is committed to reducing childhood hunger by 2015. To do that, the Secretary will need plenty of additional funds and lots of good thinkers on this subject. The folks at the FNS will certainly play a key role, but let’s hope they reach out to those who represent farmers and ranchers as part of the process.

At the same time, traditional agriculture groups also need to look for innovative new ways to be engaged with the food and nutrition community. Groups such as the American Farm Bureau Federation have already done so by working with Feeding America (formerly America’s Second Harvest) to donate millions of pounds of food. Working through their Young Farmers and Ranchers organization, Farm Bureau provided the equivalent of 6.4 million meals through Feeding America-affiliated food banks across the country last year

There’s an old bumper sticker that says: “If your child ate today, hug a farmer.” More farm and commodity organizations need to figure out how that embrace can go both ways.

Agriculture News, Farm Policy, and Rural Policy

Monday, July 20, 2009

Health care reform: Why the rush?

President Barack Obama says Congress needs to tackle health care reform before the August recess, but many members of his own party are asking: “Why the rush?”

The answer is twofold: Most presidents enjoy the typical “honeymoon” with voters during the first six months after their elections and the former Illinois Senator is no exception. His popularity ratings, while slumping in the last couple of months, are still fairly high,
According to an ABC News/Washington Post poll released July 20, 59% of Americans still think Obama is doing a good job, but that’s down from a peak of 72% when he took office.

Moving quickly, therefore, means he can leverage his personal popularity and push otherwise fence-sitting lawmakers into helping him achieve his top priorities. Thus, the need for speed.

But I hope the president also understands another underlying component of this debate. The rest of his term will be the equivalent of a living, governing hell without fixing the rising costs of government-provided health care, primarily Medicare and Medicaid.

The new Congressional Budget Office Director, Doug Elmondorf, explained why health care reform is so important to all of us when he testified before the Senate Budget Committee last week. It read like a version of “Scary Movie,” without the laughs. Here are a couple of excerpts:

“Under current law, the federal budget is on an unsustainable path---meaning that federal debt will continue to grow must faster than the economy over the long run. Although great uncertainty surrounds long-term fiscal projections, rising costs for health care and the aging population will cause federal spending to increase rapidly under any plausible scenario for current law.”

“For decades, spending on the federal government’s major health care programs, Medicare and Medicaid, has been growing faster than the economy. CBO projects that if current laws do not change, federal spending on Medicare and Medicaid combined, will grow from roughly 5% of Gross Domestic Product (GDP) today to almost 10% by 2035 and more than 17% by 2080.”

“Federal spending on Medicare, Medicaid and Social Security will grow relative to the economy both because health care spending per beneficiary is projected to increase and because the population is aging.”

“CBO estimates that in fiscal years 2009 and 2010, the federal government will record its largest budget deficits as a share of GDP since shortly after World War II. As a result of those deficits, federal debt held by the public will soar from 41% of GDP at the end of fiscal year 2008 to 60% at the end of fiscal year 2010.

Had enough? Let’s hope the Chinese and others who hold the majority of our debt, have not.
But here are two more “nuggets” from his testimony that drive home the threats to every farmer, rancher and business owner in the U.S.

"CBO’s long-term budget projections raise fundamental questions about economic sustainability. If outlays grew as projected and revenues did not rise at a corresponding rate, annual deficits would climb and federal debt would grow significantly. Large budget deficits would reduce national savings, leading to more borrowing from abroad and less domestic investment, which in turn, would depress income growth in the U.S. Over time, the accumulation of debt would seriously harm the economy. Alternatively, if spending grew as projected and taxes were raised in tandem, tax rates would have to reach levels never seen in the U.S.”

“Policymakers could mitigate the economic damage from rapidly rising debt by putting the nation on a sustainable fiscal course, which would require some combination of lower spending and higher revenues than the amounts now projected. Making such changes sooner rather than later would lessen the risks that current fiscal policy poses to the economy.”

President Obama has said that this expansion of health care coverage to millions of Americans must not drive up the deficit over the next 10 years. That's a worthy goal, but the health care reform packages emerging from House Committees don’t appear to meet that test. Something this big and this important is going to take more time to get it right.

Agriculture News, Farm Policy, and Rural Policy

# 30

Friday, July 10, 2009

ACRE participants trickle in....at least for now

Remember all of those predictions about how the new Average Crop Revenue Election (ACRE) program would attract hundreds of thousands of farmers and potentially be a budget-buster? During the 2008 Farm Bill debate, one USDA analysis suggested that the program would be so attractive that the department would pay out around $16 billion just to corn, wheat and soybean farmers in 2009 alone. But thus far, only 1,426 producers have signed on the dotted line, ranging from a "whopping" 372 in Nebraska to one in Texas. (See state by state numbers, below.) Little wonder that advocates are looking for new ways to promote this innovative new program and also find ways to avoid what may be a last minute rush prior to the August 14th signup deadline.

“I think (ACRE) will grow,” Ron Litterer, National Corn Growers Association Chairman recently told a House Agriculture Subcommittee. “But let me remind the subcommittee that ACRE enrollment didn’t begin until April 27, right in the middle of planting season. A lot of farmers haven’t had the opportunity” to study ACRE. Originally the sign-up deadline was back in June, but because of the time needed to implement the program, the deadline was pushed back to Aug. 14.

Holding off on the decision to participate may be a good thing for producers because it provides more time to assess the latest market prices and how the specific crops in their state and farm are doing. But if all of those folks wait until the last week, local FSA offices could be overwhelmed and unable to process all of the paperwork.

In anticipation of possible work load issues in county offices, Litterer proposed a modification in sign up procedures that makes a lot of sense. He suggested enabling producers and landowners interested in ACRE to file an “Intention” to Elect and Enroll into ACRE now and pull the trigger later.

“This declaration of an intention would encourage producers and landowners to visit their local FSA Offices now and complete all the required paperwork well in advance of the August 14th deadline. If producers and landowners do not notify the FSA Office that they want to continue with ACRE, their ACRE election and enrollment would revert to DCP (Direct and counter-cyclical program). By allowing producers to make a final decision on ACRE after submitting the initial enrollment documents, the signup process would have already been completed thereby alleviating long waiting lines at the FSA county office,” he explained.

Farmers tell me they still have a boatload of questions when it comes to ACRE and they don’t always feel confident that local Farm Service Agency (FSA) offices have all of the answers. But I expect USDA to push out a lot more information in the next few weeks. In the meantime, there are plenty of resources available from USDA, NCGA and many university Extension offices. Here are just a few resources:


State Number of ACRE Participants (as of July 7, 2009)

Alabama 2
Colorado 3
Delaware 5
Idaho 11
Illinois 225
Indiana 129
Iowa 184
Kansas 45
Kentucky 25
Michigan 3
Minnesota 16
Mississippi 2
Missouri 20
Montana 3
Nebraska 372
New York 1
North Dakota 30
Ohio 148
Oklahoma 10
Oregon 6
Pennsylvania 21
South Dakota 116
Tennessee 5
Texas 1
Utah 1
Virginia 1
Washington 14
Wisconsin 25
Wyoming 2
Total 1,426

Agriculture News, Farm Policy, and Rural Policy


Thursday, July 2, 2009

Wanted: People to participate in the Obama Administration’s Rural Tour

Maybe it was the short notice. Maybe it was the location. Maybe farmers and other rural folks in northwestern Pennsylvania were just too busy July 1 to turn out for the Vice President of the United States, Agriculture Secretary Tom Vilsack and a swarm of other heavy hitters for the Obama team.

Or maybe, just maybe, they were more interested in hanging on to their own jobs than learning about billions for new broadband investments that will generate jobs a few years from now. After all, the community gained access to broadband over one year ago.

Whatever the reason, the first stop of the Obama Administration’s new “Rural Tour” fell noticeably flat in terms of attendance.

Columnist Salena Zito of the Pittsburgh Tribune-Review reported in her blog that only around 100 or so people showed up just before Biden was ready to talk. The noon-time event was held in the Seneca High School off Route 8 in Wattsburg, PA., population 378. Vice-President Biden and Vilsack were joined by Commerce Secretary Gary Locke, Federal Communications Commission Chair Julius Genakowski and U.S. Rep. Kathy Dahlkemper, (D-Erie).

“The room looked so sparse that about 30 or so chairs were removed by volunteers to give the illusion of a full house,” Zito wrote. “The effect didn't exactly work.”

By the time the event got started, Zito told me that a few more folks showed up. If you counted the volunteers, the staff and the 40-60 schoolchildren in the room, the turnout could have been as high as 180, she said.

One can only wonder what Rep. Dahlkemper, a Blue Dog Democrat who already bucked the Obama Administration to vote against last week’s climate change bill, must be feeling about the low turnout. Ordinarily, the opportunity to bring even one heavy-hitter into your district would be a big deal. In this case, she had four in tow.

Granted, there were a few “bonus” opportunities for Pennsylvania Democrats. Prior to the event, Vilsack met with some dairy farmers to discuss low milk prices, but apparently, they didn’t hear anything that gave them hope for a turnaround anytime soon. And after the swing through Western Pennsylvania, Biden also managed to squeeze in a Pittsburgh fundraiser.

A White House spokesperson says the “Rural Tour” is not politically motivated, but it’s hard to ignore the key players and the map. The tour opened in Dahlkemper’s district, a Democrat who ousted seven-term Republican Rep. Phil English in the 2008 election.

On July 18, Energy Secretary Steven Chu and Agriculture Secretary Tom Vilsack will talk about renewable energy in Ringgold, VA.. Conveniently, Ringgold is part of a southern Virginia district represented by Rep. Tom Perriello, a Democrat who narrowly defeated Republican incumbent Virgil H. Goode Jr. last year.

My guess is that the White House will do a better job working the phones and generating attendance for future stops on the Rural Tour. If not, some members of the advance team may also be looking for new jobs.

I will be especially interested in the turnout on August 12th, when not one, but 5 cabinet members travel to Bethel, Alaska (population 6,356). The town is located 340 miles west of Anchorage and only accessible by air and river. How's that for a "captive" audience?

Secretaries Tom Vilsack Steven Chu, Shaun Donovan, Arne Duncan, and Ken Salazar are scheduled to discuss rural infrastructure, green jobs and a new energy economy, as well as climate change on that day. The topics are good and I hope the crowd is, too. Bring your airplane or boat and you may have a chance to visit, one on one.

Agriculture News, Farm Policy, and Rural Policy


Tuesday, May 19, 2009

Farm groups divided over climate change legislation

Most farmers and ranchers are worried about all of the day-to-day tasks of getting a crop in the ground, taking care of livestock and making sure that lenders are getting paid on time, so climate change legislation is probably the furthest thing from their minds. But like it or not, terms like cap and trade, offsets and emission allowances need to be added to farmers' long list of concerns. Understanding these terms could have more to do with long-term farm profitability than decisions like picking the best variety to plant or whether or not to cull some of your cows.

That’s because, believe it or not or like it or not, climate change legislation is moving through the House of Representatives like a steamroller, driven by Speaker of the House Nancy Pelosi and Energy and Commerce Committee Chairman Henry Waxman. The two California Democrats want to demonstrate to the world that they can address global warming, even though they had to cut so many side deals with members from coal and oil producing states that the legislation is a far cry from the original package.

Although the far-reaching climate change bill is still a “work in progress,” Democrats on the House Energy and Commerce Committee told reporters that they expect to have enough votes to move their bill, the American Clean Energy and Security Act of 2009, out of committee by the Memorial Day recess. In what has become typical fashion this year, Waxman released the whopping 932-page bill, (H.R. 2454) on a Friday with a pledge to start marking it up on Monday----providing almost no time to read and comprehend the entire measure.

But thanks to modern technology, you can quickly search the legislation for words like “agriculture.” As expected, the word is barely mentioned.

So is that good news? Many think that agriculture should be a prominent player in any type of climate change legislation because so many agricultural and forestry practices can sequester carbon and be a big part of the solution. According to the USDA, agriculture and forestry have the potential to reduce 15-25 percent of U.S. greenhouse gas emissions and provide new revenue streams for farmers and foresters in the process.

In a letter to Waxman last week, National Farmers Union President Roger Johnson called for the Energy and Commerce Committee to establish a “robust and flexible” offset program and to make sure that agriculture is not subject to an emissions cap. In addition, NFU called for the inclusion of several key provisions, including:
The USDA is granted control and administration of the agriculture offset program;
Early actors are recognized;
No artificial cap is placed on domestic offsets;
Carbon sequestration rates are based on science; and
Producers are permitted to stack environmental benefit credits.

Earlier this year, NFU was one of 12 agricultural groups that signed off on a list of "principles” for greenhouse gas legislation - The American Farmland Trust, American Soybean Association, National Association of Wheat Growers, National Cattlemen's Beef Association, National Corn Growers Association, National Farmers Union and National Milk Producers Federation, National Association of Conservation Districts, National Council of Farmer Cooperatives, National Farmers Union, Public Lands Council, United Fresh Produce Association, and the Western Growers Association. An updated fact sheet on those principles is available here: http://www.wheatworld.org/userfiles/file/Climate%20Response_ALL_4%2021%2009.pdf

But after Waxman started pushing hard to move legislation without incorporating agriculture, some of those same groups came out opposed to the bill.

The National Corn Growers Association (NCGA) sent a letter to Congressman Waxman earlier this week, expressing its concern with the current version and outlining the potential for negative economic impacts to the agriculture sector if a cap-and-trade system is not structured properly.

“After reviewing the legislation, we can see the bill does not clearly provide for a mechanism by which corn growers can sell carbon credits on the market,” NCGA President Bob Dickey said. “We strongly believe the bill will increase input costs without specific opportunities to offset those additions. We cannot support the American Clean Energy and Security Act in absence of the provisions that we have explained in some length to the Committee.”

American Farm Bureau Federation President Bob Stallman struck an even harsher tone in releasing a statement on its opposition to the bill.

“The (bill) is laden with so many policy prescriptions that its impact on the U.S. is almost impossible to measure and evaluate,” Stallman said. “We can be certain of some things, however—it will increase our operating costs and reduce our competitiveness abroad.”

According to Stallman, the measure does not adequately provide for alternative sources of energy that will “plug the hole” created when fossil fuel costs escalate dramatically. Farm Bureau is also concerned about the potential impact on fertilizer prices, given their sensitivity to natural gas costs.

“The bill would effectively lock the United States into these changes regardless of what is done by other countries, such as China and India,” Stallman said. “Such an approach is little more than gambling with U.S. jobs and productivity. Taken as a whole, the bill falls far short of what is necessary for agriculture to survive and grow.”

So the battle lines are drawn. We know that some groups are working hard to have “a seat at the table” in order to influence whatever comes out of Waxman’s committee, while others are working feverishly to stop the legislation altogether. The measure could die a slow death “kill in the Senate, where . But the biggest wild card it that the Environmental Protection Agency (EPA) might attempt to lower greenhouse gas emissions through regulations if no legislation is adopted.

Agriculture News, Farm Policy, and Rural Policy


Thursday, May 14, 2009

Vilsack sends mixed messages on risk management

There have been numerous times in my career when I've asked a fairly innocent question of a Secretary of Agriculture, only to get a rather eye-opening response. My first media briefing with former Secretary of Agriculture Ed Schafer provides a good example. I asked about his position on U.S. sugar policy and he gave me an answer straight from his home state of North Dakota, where he had served as an extremely popular governor. There was a communications staffer in the room, but she failed to understand the implications and intervene.

Schafer was so intent on giving me his perspective, based on his former position as Governor, that he forgot that he was now playing in the big league. The President and U.S. Trade Representative were not amused when they read about his response, which ran basically counter to their international trade policies.

Should he have been given some slack? Perhaps, because it was only his first meeting with reporters. But after awhile, you expect government officials to get the terminology and the policies down, and to not make comments when they don't know the answer.

Now we've got another former Governor in the Secretary's seat and he is unfortunately, making some of the same mistakes---even after he's been serving for more than 100 days.

Secretary Vilsack is definitely trying to walk the line with President Obama's policies, but some of his comments make me wonder whether or not he is shooting comments before he has a chance to really aim. Wednesday’s agricultural appropriations subcommittee hearing on his 2010 budget provides a good example.

As we reported on http://www.agri-pulse.com/, Vilsack sought to reassure lawmakers that "the President’s budget maintains the three-legged stool of farm payments, crop insurance, and disaster assistance.” Problem is, the "three-legged stool" he referred to is “farm bill lingo” for farm program payments: direct payments, counter-cyclical payments and marketing loans---not crop insurance and disaster payments.

Vilsack also went after crop insurance companies for their excessive profits. Now, I understand that big business bashing is in vogue, but his comments represented a very mixed message to the record number of farmers who have been paying for crop insurance.

The Secretary said that, while in the past it was hard to get farmers to sign up for crop insurance, today farmers often have to sign up as a condition of qualifying for bank loans or disaster relief “so there’s now more of a mandate.” Vilsack said the result is that private companies “have seen a huge increase in their market. . . so they are making a tremendous amount of money, billions of dollars. . . There is a tremendous amount of profit. . . We just think that this needs to be a fairer deal for taxpayers.”

Hmmm...Why would lenders require crop insurance? Perhaps because farmers who pay for crop insurance policies, many of which are now based on expected revenue, have a valuable risk management tool that allows them to market a crop prior to harvest and actually repay their lenders. It also makes farmers less likely to go begging to Congress for annual disaster assistance or to rely on the new so-called “permanent” disaster program.

Yes, companies received a lot of money for farmers last year but it was because they were insuring crops that, because of last year’s run-up in commodity prices, were worth billions of dollars. And in places like Iowa, where my family farms, the crop insurance industry paid almost $1.1 billion to the farmers for their losses, according to the most recent summary of business data released by USDA’s Risk Management Agency (RMA).

So what type of situation would these companies be in if they charged less and then had to pay for losses on all of the crops they insured at those higher levels? Probably not too eager to stay in the crop insurance business. At present, there are only 16 firms approved by RMA under their Standard Reinsurance Agreement

And it’s not only the insurance companies that could be impacted. How would farm lenders be faring if they didn't get their loans repaid? How many farmers would be in bad financial straits if they had not purchased crop insurance to cover their crop losses?

It’s unclear to me whether or not Vilsack really wants to create a new three-legged stool. Maybe he wants taxpayers to pay more in subsidies for annual disaster payments and less in subsidies for crop insurance. Maybe he’s just running in so many different directions with so little staff, that he needs more time to get “up to speed” on these issues

Regardless, I hope that he takes a more comprehensive look at what’s working for farmers in terms of crop insurance and what’s not, before taking a stand on this issue. Surely there can be some ways to reduce government costs, while still maintaining a strong risk management system that farmers, lenders and even the crop insurance companies can depend on.

Agriculture News, Farm Policy, and Rural Policy