Wednesday, July 27, 2011

Getting farmers to grow veggies not so easy

Nutrition activists have argued for some time that more farm subsidies should be going into fruits and vegetables rather than grain and cotton, the commodities that have long dominated the money. But it turns out that getting grain farmers to grow veggies instead is easier said than done, at least in the Midwest.

Farmers who get government payments for land that's traditionally grown corn, soybeans and other subsidized crops have long been barred from planting fruits and vegetables on that acreage. Existing fruit and vegetable growers in California and other states have insisted on that restriction. However, a special provision in the 2008 farm bill allowed some Midwest farmers to start switching some corn and soybean acreage to tomatoes and other vegetables destined for processing. As it turns out, only about 10,215 acres have been planted to vegetables, just 14 percent of the 75,000 acres allowed under the pilot program.

Many farmers already had land to grow vegetables on that wasn't subject to the subsidy restrictions, says Bruce Nelson, administrator of the Agriculture Department's Farm Service Agency. Another factor: Demand for processed vegetables is weak.

Some 155 farms participated in the pilot project. Eight-five percent of the farms and farmers were in just three states - Illinois, Indiana and Minnesota - out of seven that were eligible.

Iowa-Canada comparison illustrates U.S. productivity

Here's a fun fact, mostly because it illustrates the incredible productivity of American agriculture: Iowa alone produces far more grain than Canada, when measured in tons, and more soybeans than China, calculates economist Lester Brown of the Earth Policy Institute.

Over the last five years, Iowa has produced an average of 57 million tons a year to Canada's 49 million tons. Iowa's grain is all corn, Brown says. Canada's is all wheat, which is far less productive per acre. Iowa produces four tons of grain per acre, compared to 1.4 for Canada.

Iowa also produces almost as much soybeans as China does on less than half as much land, Brown says. Iowa produced 13 million tons of soybeans last year from 10 million acres. China produced 15 million tons on 22 million acres.

"Iowa is at the heart of the U.S. Corn Belt, a phenomenally productive piece of agricultural real estate. It enables the United States, with only 4 percent of the world's people to produce 40 percent of the world's corn and 35 percent of its soybeans," writes Brown.

Tuesday, July 26, 2011

Biofuel industry airs frustration with environmentalists

The biofuel industry got to air some of its frustrations with the environmental movement at an Energy Department biomass conference today. One of the sessions at the meeting featured a debate between Brooke Coleman, executive director of the Advanced Ethanol Council, and Nathanael Greene of the Natural Resources Defense Council. The Advanced Ethanol Council is an offshoot of the Renewable Fuels Association and represents companies that are trying to commercialize ethanol made from crop residue and other sources of biomass.

Coleman says environmentalists are making unreasonable demands on the ethanol in terms of performance standards and essentially providing cover for the oil industry and other opponents of the biofuel. "They're all thanking you for it," Coleman told Greene. Advanced ethanol companies already are struggling to get off the ground, and "it's almost like the environmental community is trying to make it worse," Coleman said.

As for Greene, he says that biofuel companies should expect to be held to higher environmental performance standards if they're going to ask the government for help in the form of usage mandates, subsidies and loan guarantees. "And don't whine about it when people say we want to measure that," he said.

"You need only look at what’s happened to the corn ethanol industry … to see what happens if you just bulldoze the public and use their money to support the industry," Greene said. 

What's happened to the corn ethanol industry, of course, is that it has lost a great deal of political support

as the price of corn has risen, pressuring food prices.

Deficit plans offer clues to ag cuts

Congress and the White House still seem far apart on an agreement to raise the debt ceiling, but some of the proposals that have come out may offer some clues as to how much spending will have to be cut in the next farm bill.

The Gang of Six plan called for $11 billion in cuts over 10 years. The proposal did not specify which programs should be targeted but did protect food stamps from cuts. Were the entire cut to come out of the $4.7 billion in direct annual payments that go to grain and cotton growers it would amount to about a 23 percent reduction. (In Iowa, the largest recipient of such subsidies, the typical direct payment averages around $30 an acre.) Now comes Senate Majority Leader Harry Reid's plan, which specifically would cut those direct payments by about 30 percent. The cut would be made by reducing the payment rate. Farmers are now paid on 85 percent of their base acreage. That would be reduced to 59 percent.

I wouldn't put too much stock in what programs these plans target, only the total reduction. Congress will have the last say on how the cut is distributed when the next farm bill is written, presumably in 2012. The chairman of the House Agriculture Committee, Frank Lucas, R-Okla., made clear at a hearing last week that he wants to look at food stamps for savings.

Another note: The Gang of Six plan has to be the high-water mark for what ag interests can expect to get in any deal, given that the Six include Sens. Kent Conrad, D-N.D., and Saxby Chambliss, D-Ga.

Wednesday, July 20, 2011

Threat to crop subsidies raises environmental concerns

 It’s an axiom among many critics of U.S. farm policy that crop subsidies to grain and cotton subsidies encourage practices that are bad for the environment.  What those critics may fail to realize is that producers who take that money have to comply with restrictions on how they farm environmentally sensitive land, such as slopes that are prone to erosion. End those subsidies, or cut them so much that farmers stop taking them, and those producers will be largely free to farm how they like at a time when high commodity prices are encouraging growers to plant fencerow to fencerow.

 With Congress likely to make deep cuts in farm spending as part of a deficit-reduction plan, there’s a chance that the $5 billion in fixed, annual direct payments to growers will be slashed or replaced altogether. Conservationists are worried about what that could mean for highly erodible cropland.

 “The end of direct payments would have a significant impact, a negative impact, on the compliance incentive,” USDA economist Roger Claassen said at a meeting this week of the Soil and Water Conservation Society.

 About 25 percent of cropland is subject to the restrictions. Farmers can meet the requirements in a number of ways, including reduced tillage and planting grass waterways, strips that trap water and sediment flowing from fields. 

 How much of a difference ending direct payments would have on erosion rates isn’t clear. Land that’s subject to those restrictions accounted for 25 percent of the reduction in soil erosion that took place between 1982 and 1997. (The restrictions were put in place in 1985.) But it’s not known exactly how much of the erosion reduction would have taken place anyway.

 One alternative under discussion is to make compliance with the conservation restrictions mandatory for farmers who buy federally subsidized crop insurance. There was just such a requirement from 1985 to 1996.

 The problem is that the farmers who are most dependent on crop insurance live in areas such as the Dakotas, and they are less likely to have problems with soil erosion than farmers in, say, Iowa, who have less need for crop insurance, as Claassen explains. Farmers who are the least dependent on crop insurance could theoretically be tempted to drop their coverage if they don’t want to be bothered with the farming restrictions. 

 The lesson for critics: Be careful what you wish for.

USDA struggles to finance next-gen biofuels

 The Obama administration’s effort to develop next-generation biofuels that will replace corn ethanol is still very much a work in progress. That’s evident from a summary provided to the House Agriculture Committee of a loan guarantee program authorized by the 2008 farm bill.

The USDA’s flagship project, the Range Fuels wood-to-ethanol plant in Georgia, ran into trouble almost immediately. Another project has been de-obligated because the lender no longer qualifies. Here is the summary of the projects:

-Range Fuels, Inc. (cellulosic ethanol) – $80 million guaranteed loan approved 1/16/09. Loan closed on 2/10/10. On January 3, 2011, Range Fuels failed to make the scheduled payment for principal and interest on the bonds. Range Fuels is current on deferred principal/interest only payments and working to find additional partners with capabilities of financial support. The Agency is reviewing a plan from the Lender outlining the potential transfer/sale.

-SoyMor Biodiesel, LLC (waste corn oil/distillers syrup from ethanol) - $25 million application approved on 6/10/09. On September 1, 2010, RD received letter from (American Bank) stating the lender no longer qualifies as an eligible lender, having fallen below the minimum acceptable levels of capital. SoyMor was unable to obtain a new lender. The $25 million was de-obligated.

-Sapphire Energy (algae to advanced aviation fuel) – $54.5 million guaranteed loan approved 12/03/2009. Agency continues to work with lender to close the loan..

-Freemont Community Digester (anaerobic digester/will process community waste, mostly food and beverage; has a contractual arrangement to sell waste CO2) -- $12.75 million loan guarantee approved 10/15/2010. Loan closed; Agency issued a loan note guarantee on Tuesday.

-Enerkem Corp. (Cellulosic Ethanol) – $80 million guaranteed loan approved 1/4/2011.

-INEOS New Planet BioEnergy, LLC (Cellulosic Ethanol) – $75 million guaranteed loan approved 1/4/2011. Agency continues to work with Lender to close the loan.

-Coskata, Inc. (Cellulosic Ethanol) – $87.85 million guaranteed loan approved 6/3/2011. Agency continues to work with Lender to close the loan. 

Monday, July 18, 2011

Guide offers climate advice to meat eaters

No. 2 in carbon footprint, guide says (USDA photo)

 Looking to reduce your carbon footprint? You may want to skip the lamb chop and cut back on the beef. The Environmental Working Group commissioned an assessment of the greenhouse gas emissions of meat and other protein sources and released its findings today.
 Lamb ranked by far the highest in greenhouse gas emissions, followed by beef and cheese. The key reason those are high is that they all come from ruminants that produce a lot of methane during digestion and in their manure.  Lamb ranks No. 1 because it produces the least amount of meat relative to its live weight.
 Lamb generates nearly 40 kilograms of carbon dioxide equivalents for every kilo consumed, giving it a 50 percent greater carbon footprint than beef.
 Beef generates more than 27 kilos of greenhouse gases per kilo consumed, twice the emissions of pork and nearly four times more than chicken.
 By comparison, eggs produce less than five kilos of emissions per kilo eaten. Lentils ranked lowest in emissions, with less than one kilo.
 The analysis, which was performed for EWG by an independent firm called CleanMetrics, attempted to account for everything from the fertilizer that went into growing the feed the animal ate to the methane it emitted, the fuel needed to get the product to market, and even the amount of each food that was typically wasted. Farmed salmon wound up ranking relatively high in part because a lot of the fish is thrown away, according to the report. Discarded food accounts for at least 20 percent of emissions associated with meat and dairy products, EWG said.
 The amount of meat that is wasted varies considerably, according to Agriculture Department data cited by the study. About 40 percent of fresh and frozen fish is discarded, compared to just 12 percent of chicken and 16 percent of beef and 31 percent of turkey.
 EWG’s Meat Eater’s Guide also evaluates the relative healthfulness of different protein sources based on their saturated fat content and other factors.
 “By eating and wasting less meat (especially red and processed meat) and cheese, you can simultaneously improve your health and reduce the climate and environmental impact of food production. And when you do choose to eat meat and cheese, go greener,” the guide says.

Tuesday, July 12, 2011

Beef producers worry about egg industry deal

Cattle producers have joined the pork industry in raising concerns about the agreement between the United Egg Producers and the Humane Society of the United States to seek federal standards for housing hens.

"Unlike the UEP-HSUS agreement, our cattle care programs should never be weakened by being misused or construed as the basis of a regulatory or government mandated program," said Colin Woodall, vice president of government affairs for the National Cattlemen's Association.

Under the legislation proposed by the UEP-HSUS, egg farms would be required to switch to a larger style cages for housing hens. The standards, if enacted, would be the first for on-farm handling of livestock.

Say what? Conservative plan calls for regulating farms

Soil-saving practices on Iowa farm. (USDA)

 Want to save money on the farm bill? Force farmers to control soil erosion and other environmental problems through regulations and fees rather than continuing to give them subsidies to do so. 

 That idea comes, believe it or not, courtesy a conservative group. It’s a central idea in a group of proposals released today by the American Enterprise Institute, which is trying to frame the debate on how to restructure U.S. farm policy and cut its cost. 

 It comes as no surprise that the papers prepared for AEI by agricultural economists argue that  the current the system of commodity subsidies and crop insurance is a waste of money should be dismantled. It’s also not surprising that the papers find that existing conservation programs are duplicative and too costly as well.  However, the economists go on to argue that in the long run it would penalize farmers who do pollute rather than paying farmers not to pollute. 

“A polluter-pays system would achieve conservation and reduce emissions at a benefit to taxpayers and would improve signals about the real cost of agricultural production. Conservation programs should also be integrated, reducing competition among programs for the same land, and farms should be evaluated for program participation based on the whole farm or conservation program.”

One suggested way to do that is to set up a system of tradable pollution permits. If that idea sounds familiar it's because it was the core concept of the cap-and-trade plan for reducing greenhouse gas emissions. To help farmers with the increased costs that they would face from addressing their environmental issues, the existing commodity and conservation programs should be merged into a single program that would provide payments to producers of all crops, argues Tomislav Vukina, an agricultural economist at North Carolina State University.

Vukina does allow that the reordering subsidies in that way “might cause substantial political difficulties on the road to implementation.” You think?  
The AEI's ideas come at a time when Congress and the White House are negotiating over deep cuts in federal spending that almost certainly mean steep reductions in funding for farm and conservation programs. Conservative lawmakers who see the AEI proposals as a roadmap for making those cuts in farm spending may want to take a look at the fine print. 


Thursday, July 7, 2011

Landmark deal to remake how eggs produced

Example of new hen housing, made by Big Dutchman
A stunning, landmark deal between the largest animal rights group and the egg industry would change the way hens are raised in this country. It shouldn't be surprising that it's making others in the livestock industry nervous.

The agreement, announced today, marks a victory for both the industry and the Humane Society of the United States, which has been seeking to use a series of ballot initiatives, most successfully in California, to force some major changes in way that livestock are raised in the United States.

The egg industry has known for some time that the so-called battery cages that are now the standard industry practice would have to be replaced with something more acceptable to the public. But producers didn't want to go cage-free, as HSUS had been pushing, in part because cage-free operations require more and better trained workers. Cage-free hens also need more feed, further increasing production costs. The industry preferred instead to switch to a larger style of cages, known as "enriched colony" housing, that give the birds more room to move around and also include perches and nesting areas. (See photo) The deal announced today between HSUS and the United Egg Producers allows the industry to do just that and gives farms a decade and a half to phase in the new housing.

There's a big catch, however.  The two groups agreed to jointly ask Congress for a federal law that set standards and a timeline for the changes, and that legislation will have to pass for the deal to go through. If the bill doesn't pass,  "then the agreement would be off and we'd be likely to see more ballot measures, litigation, etc. Both sides want to work together to enact," HSUS' Paul Shapiro told me.

Most hens now have about 67 square inches of space in conventional cages. Under the HSUS-UEP deal that would increase up to 144 square inches.

As HSUS notes, such a law would mark the first time Congress has ever set standards for how any species of animals is raised on farms. No small achievement for HSUS.

The pork industry, which has tangled with HSUS for years over the way sows are housed, doesn't like the idea of federal standards for animal welfare. "It would inject the federal government into the marketplace with no measurable benefit to public or animal health and welfare," the National Pork Producers Council said. The group said it is "gravely concerned that such a one-size-fits-all approach will take away producers' freedom to operate in a way that's best for their animals."

Get some more details of the agreement here, in, of all things I thought I'd never see, a joint statement from HSUS and a major livestock producer group.

Senate deal kills ethanol subsidy

So this is how the ethanol subsidy is going to end.

Or at least it looks that way after key senators reached a deal to end the 45-cent-per-gallon subsidy at the end of this month along with the 54-cent tariff on imported ethanol. The House and the White House have to go along, but this is clearly the best deal the industry is going to get. Ending the subsidy early under this agreement frees up $668 million to extend tax incentives intended to encourage sale of higher blends of ethanol at service stations, as the AP's Mary Claire Jalonick reports. But that $668 million is far from what the industry wanted just a few months ago when it was backing a multiyear phaseout of the subsidy proposed by Sen. Chuck Grassley, R-Ia.

Congress first created a tax incentive for fuel ethanol in 1978 and the subsidy has managed to survive ever since in no small part because of Iowa's pivotal role in the presidential nominating process.

What impact would ending the subsidy now have? University of Missouri economists recently estimated that extending the subsidy, which is curently set to expire Dec. 31, would increase ethanol production by a billion gallons in 2012 and increase the average price on next year's corn crop by 16 cents a bushel. Farmers would net an extra $25 an acre in 2012, according to the analysis.