AG NEWS 08/17/2012

“New University Studies Show Little Impact of RFS Waiver”

Two new reports reinforce the findings of a recent analysis by University of Illinois economists. Analyses released by Iowa State University and Purdue University conclude that waiving the Renewable Fuel Standard would not result in meaningfully lower corn prices. According to the Purdue University analysis – the flexibility built into the RFS serves to reduce the corn price without need for a waiver. If the EPA did waive the RFS – the Purdue economists found corn prices might decrease further by approximately 5.6-percent in 2013. Iowa State’s analysis – which updates an earlier report – found that fully waiving the RFS would result in just a 7.4-percent reduction in corn price in the 2012-13 marketing year. The flexibility enabled by surplus RIN credits was a significant factor in both analyses.

Iowa State Professor Bruce Babcock says the desire by livestock groups to see additional flexibility on ethanol mandates may not result in as large a drop in feed costs as they hope. He says the flexibility built into the RFS allowing obligated parties to carry over blending credits from previous years significantly lowers the economic impacts of a short crop because it introduces flexibility into the mandate. The authors of the Purdue study made similar comments – stating that a partial waiver is not a stroke of the pen solution to record high corn prices. According to a Purdue University press release – corn prices pushed higher by the worst U.S. drought in half a century would not necessarily moderate if the federal government’s corn ethanol mandate were temporarily suspended.

Renewable Fuels Association President and CEO Bob Dinneen says the EPA will likely rely on the type of information contained in these studies when considering the recent waiver request from the governors of North Carolina and Arkansas. He says the analyses compellingly show that waiving the RFS is unnecessary and would be ineffective in meaningfully reducing corn prices. Dinneen also notes that an EPA analysis in response to a 2008 RFS waiver request found that a five-percent reduction in corn price – similar to impacts found in the Purdue and Iowa State studies – resulted in just a .28-percent change in food prices.

“Cattlemen Glad to See Additional Support for RFS Waiver”

The governors of Arkansas and North Carolina are the latest to request that EPA Administrator Lisa Jackson waive the Renewable Fuel Standard to bring relief to the thousands of farmers and ranchers across the U.S. experiencing the effects of the ongoing drought. Arkansas Cattlemen’s Association President Marcus Creasy says the drought has severely affected his cattle and his business operations. He says cattlemen in drought-affected regions are struggling to feed their cattle – all while the price of grain increases. North Carolina Cattlemen’s Association President Bill Cameron says his main concern is whether cattle farmers across the country will have enough feed for the cattle in their care. Creasy asks how many more congressional members, state leaders and livestock producers have to express their support for a waiver of the ethanol mandate before EPA listens.

Arkansas Governor Mike Beebe told Jackson in a letter this week that higher feed costs following the passage of the first RFS in 2005 and the second in 2007 have resulted in a long-term shortage of grain in the nation. He says that’s taking a terrible toll on poultry and animal agriculture in his state – potentially forcing reduced production and job losses and increasing food prices for consumers worldwide. Beebe says the drought may have triggered the price spike in corn – but an underlying cause is the federal policy mandating ever-increasing amounts of corn for fuel. North Carolina Governor Beverly Perdue offered the same thoughts in a separate letter to Administrator Jackson.

The governors of Maryland and Delaware had previously requested an RFS waiver – as have more than 180 members of Congress and a coalition of meat and poultry organizations.

“OCM Defends Alliance with HSUS”

Representing the Organization for Competitive Markets – beef producer Mike Callicrate explained on AgriTalk radio this week why OCM is working with the Humane Society of the United States. According to Callicrate – HSUS approached OCM because of some common interests. He says HSUS likes the family farm and ranch model and is looking for ways to support that – which opened a dialogue between the two groups. Callicrate defends HSUS as an animal welfare group and says he is in complete alignment with their philosophy that animals should be treated humanely. But the National Cattlemen’s Beef Association – Calilcrate says OCM is continually on the other side of the issues. He says NCBA fights OCM in Congress, in state legislatures and does so with their checkoff dollars. That’s why OCM is demanding a permanent injunction to separate NCBA from checkoff funds.

OCM has filed a lawsuit against USDA and the Cattlemen’s Beef Board in an effort to end NCBA’s role as a beef checkoff contractor. OCM claims that some of the 200-million dollars NCBA has received as a checkoff contractor has been misspent and diverted to promote policy instead of research and promotion. OCM believes the policies promoted are intended to help large packers and processors at the expense of family farmers and ranchers. Callicrate says the Secretary of Agriculture should have eliminated NCBA as a checkoff contractor two years ago when an Office of the Inspector General review found NCBA had misappropriated some checkoff dollars. NCBA CEO Forrest Roberts notes that the discrepancies were completely resolved to the satisfaction of USDA and the Cattlemen’s Beef Board. Roberts also has confidence in the processes NCBA now has in place to ensure the separation of checkoff dollars and membership funds.

Roberts says NCBA does not use checkoff money to fund policies that help large operations at the expense of small farmers and ranchers. He also questions OCM’s decision to form an alliance with HSUS – a group he says is all about eliminating animal agriculture and putting livestock producers out of business.

“Pork Imports to China Could Increase Significantly”

Despite the high grain prices – exports of U.S. pork to China could reportedly rise around 29-percent this year. Total pork imports from the U.S. may reach 620-thousand tons this year – up from around 480-thousand tons last year. That’s what Beijing Orient Agribusiness Consultant Ltd. research firm has told Dow Jones Newswires. An analyst with BOABC says the second half of the year is usually the peak season for consumption. Pork imports from the U.S. will account for less than two-percent of China’s annual pork consumption.

“U.S. Soybean Farmers Committed to Maintaining Sustainability”

Sustainability may be a buzzword – but it’s one U.S. soybean farmers believe has staying power. In fact – it’s so important that the United Soybean Board and soy checkoff recently joined other U.S. soybean organizations in supporting a pledge and set of data that demonstrate U.S. soybean farmers continue to improve their sustainability performance. This pledge and data will be used to help increase U.S. soy sales among those customers demanding sustainably sourced ingredients. USB Secretary Jim Call – a Minnesota soybean farmer – says the pledge will serve as the commitment of the entire U.S. soy industry that its farmers are sustainable. He says this aggregate approach is recommended instead of a certification process for individual soybean farmers. Within the pledge – Call says data is shared that shows a decreasing use of inputs and the increasing use of conservation practices by U.S. soybean farmers.

“USDA Accepting Value Added Grant Program Applications”

USDA is inviting agricultural producers to apply for grants through the Value Added Producer Grant program. U.S. Ag Secretary Tom Vilsack says producers can greatly enhance the bottom line of their businesses and improve their economic prospects when they improve the value of their products. He says the Value Added Producer Grant program has a proven track record of helping producers expand their markets and customer base. According to Vilsack – the funds in the program enable America’s farmers, ranchers and rural business owners to find ways to expand their product offerings, revenue streams and create more economic opportunity by brining additional value to what they already produce.

USDA Rural Development is making up to 14-million dollars in grants available for projects that help farmers and ranchers produce biobased products from agricultural commodities. The grants are awarded competitively and are available for planning activities or for working capital expenses.

Businesses of all sizes are encouraged to apply. Priority will be given to operators of small and medium-sized farms or ranchers that are structured as family farms, beginning farmers or ranchers or those owned by socially-disadvantaged farmers or ranchers. The application deadline is October 15th.