Capitalizing on his June 9 executive order creating the first-ever White House Rural Council, President Obama turned his Administration loose this month across the country, and while there was much talk about the “rural economy,” “rural jobs,” “on-farm biofuels” and “rural broadband access”– and Secretary of Agriculture was right by the President’s side – there was nary a word on production agriculture unless a direct question was asked. The Rural Council was used as the forum August 12 for the President to release a report entitled “Jobs and Economic Security for Rural America,” which Obama said, “…highlights some of the many programs and policies my Administration has implemented in rural America to support economic growth. It offers a look at the economic agenda we will continue to pursue during my presidency.” In a seven-page press release in advance of the meeting, USDA listed jobs creation, health care, education, “innovation and investment,” “outdoor opportunities,” and veterans and military families as the areas in which the Obama Administration has excelled during the last two and one-half years. It also included 22 separate state “visits” by Cabinet secretaries, agency administrators and other Administration officials. Critics said the council meeting and the ensuing bus tour through Minnesota, Iowa and Illinois was simply an elaborate campaign event designed to shore up Obama support in ag areas where the President did not win a lot of votes in 2008. The White House called the bus tour a “listening tour” – complete with “issues forums” and an announcement the President will present to the new Joint Select Committee on Deficit Reduction in September a detailed plan as to how to cut federal spending by $1.2-1.5 trillion, reduce the deficit and spur job creation and speed economic recovery, the last two likely being a major 2012 election issues. At one Minnesota event, Obama said, “One of great strengths as a country is agriculture. And one of the pledges I made…was to double our exports. And a big component of that is agricultural exports, and so far we’ve seen ag exports rise to over $100 billion.” The President said ag exports create over 800,000 jobs “all across America.” He said his council would be looking at “how we can be sure we can get more capital to small farmers; how we can help young farmers who want to go into farming to able to buy land…because right now, if you’re not a mega-farm, a lot of times you get squeezed.” One topic receiving a lot of attention was biofuels, a component of the jobs/broadband/on-farm fuel mantra of the Administration when it comes to farm policy priorities. The President said the Administration is moving to “where we need to start taking advantage of a whole range of biofuels,” not just corn-based ethanol, because “using refuse, using stuff we don’t use for food to create energy” makes more sense. Obama talked about his long-standing support for “biofuels,” adding, “the more we see the science the more we want to find ways to diversify our biofuels so that we’re not just reliant on corn-based ethanol.” He acknowledged livestock producers are facing increasing feed costs – along with higher consumer food costs – but restated his Administration’s belief only 4% of that increase is to due to corn being diverted for ethanol production, and stated again, “It’s going to be important to use the science to figure out how we can make biofuels out of things that don’t involve our food chain.” Capping off the week of council meetings and listening opportunities, the While House announced USDA and the Departments of Energy and the Navy will invest up to $510 million in private sector partnerships to produce “drop-in aviation fuels and marine fuels to power military and commercial transportation.” These fuels would compete with ethanol, a move that spurred Farm State congressional criticism. The U.S. Navy has committed to getting 50% of its fuel needs from biomass by 2020, and the new competition with ethanol, said Rep. Collin Peterson (D, MN) said the new public-private venture likely won’t succeed and called the new program “a big problem. It is just another competition with ethanol that we don’t need really.” The partnership involves jointly working with private industry to construct or retrofit biofuel plants and refineries so they can produce fuel using non-food crop feedstocks to produce fuel. However, only a few companies are actively working on biomass-based aviation biofuels, and Peterson for one said the non-corn feedstocks are not found in areas where the plants would likely be built. In previous weeks, USDA has announced by itself or in concert with other departments and agencies, $12.2 million in grants to “spur research” into growing biofuel and bioenergy crops in California, Colorado, Illinois, Florida, Kansas, Missouri, Oklahoma, South Carolina and Virginia; $11.6 million to more than 900 ag producers and rural small businesses to implement renewable energy and energy efficiency measures; $45 million for contracts to be issued for four Biomass Crop Assistance Program (BCAP) projects setting apart acreage in Kansas, Montana, California, Oregon and Washington for production of non-food, biomass fuel crops.
The newborn Joint Special Committee on Deficit Reduction – the so-called “super committee” – is working feverishly to hire staff and come up with a schedule of meetings, both public and private, so it can hit the ground running when Congress returns in September. And key in everyone’s mind is how the 12 members from both sides of the Hill and both sides of the aisle will decide to how and where to make the $1.2-1.5 trillion in federal spending cuts over the next decade that must be ready for congressional action by November 23. There are effectively two ways the committee can go: First, would be to operate behind closed doors, taking instructions from House and Senate leadership as to where the cuts will fall given most candidates – including federal farm programs – have already been identified through previous spending cut/deficit reduction efforts. The other – and more likely to be the path chosen – is for the super committee to give each House and Senate authorizing committee a spending cut target, and keep their fingers crossed each committee will not only provide recommendations to hit those targets by the October 14 deadline, but the legislative language for inclusion in the overall bill the super committee has to produce and Congress must pass by December 23 if the federal government is to avoid mandatory across-the-board cuts to hit the $1.2-trillion target. Sen. Charles Grassley (R, IA) said in Iowa this week he hopes the super committee listens closely to the ag committees when it comes to cutting ag programs, and took the opportunity to push his farm program payment limitation proposal. Others are concerned that because on-farm cash income has been running at record high levels the last four years – thanks to corn prices and exports – ag could be more vulnerable than before because farmers are currently flush with cash. Sen. Debbie Stabenow (D, MI), chair of the Senate Agriculture Committee, told farmers in Michigan this week she sees the greatest threat to ag spending to be the House GOP freshman who have pushed for nearly $50 billion in cuts. “In Congress, we have a tug-of-war going on right now,” she said, warning the group farm program payments will be cut, but that programs like crop insurance must be preserved to keep in place the federal farm income safety net.
An August 17 memo from the Office of Management & Budget (OMB) to federal departments and agencies says all federal departments must find a way to cut their FY2013 budget request by 10% from current levels, and warned agencies not use shortcuts, to concentrate on cutting specific programs to avoid across-the-board cuts and not to rely on new user fees or changes in mandatory spending to reach the 10% goal. The OMB memo said requests for discretionary spending must be at least 5% below what agencies received for FY2011, and that additional cuts to bring the total to 10% should be identified. However, OMB also told the agencies to identify programs which need funding increases, with particular attention paid to duplicative or less-effective programs so that dollars can be spent on the program that has the best results.
EPA and hundreds of other federal agencies this week released their “final regulatory review plans,” schematics on how the Administration intends to review hundreds of agency regulations to ensure they meet a White House executive order requiring all existing and pending federal regulation not be “burdensome” or “job killers.” For EPA, the White House said the plan counters criticism the agency is “out of control,” but critics of the agency’s regulatory zeal said the plan does not go far enough. Under the new plan, EPA will review 35 regulations, 16 of which will “be done quickly with an eye toward modifying, streamlining, expanding or repealing regulations or related program during the 2011 calendar year.” The other 19 will be reviewed over a longer time period, the agency said. EPA said it will work with USDA to establish “regulatory certainty for farmers,” reduce reporting and recordkeeping for gasoline and diesel fuels, and better coordinate air pollution rules. This action, the agency said, will be done every five years. The U.S. Chamber of Commerce said the White House effort “is worthy, but the results of this look-back will not have a material impact on the real regulatory burdens facing industry today.” In a related development, the House Energy & Commerce Committee did not ease its zeal to rein in EPA and its regulatory initiatives, taking action just before leaving Washington, DC, for its August recess to create an interagency committee to analyze and determine the impact of several of the agency’s rulemakings. The broad concern across regulated industry is EPA continues to issue multiple regulations on industry making it difficult, if not impossible, for industry to plan and invest, said Rep. John Sullivan (R, OK), chief sponsor of the EPA rein-in bill. The bill includes an amendment by Rep. Ed Whitfield (R, KY) to delay pending EPA rules on mercury and the long-pending air toxic regulations for power plants and large industrial boilers, and was supported by Rep. Mike Ross (D, AR) in pushing for the language to delay these rules until six months after an analysis has been completed.
Sen. Barbara Boxer (D, CA), chair of the Senate Environment & Public Works Committee, said she intends to move an as-yet nonpublic draft two-year highway reauthorization package through her committee in early September, but acknowledged Congress must first work out a deal on a four-month extension of existing programs. And while a short-term extension is very likely, the overall reauthorization process is not nearly so certain, making states which rely upon federal checks to maintain state and federal highways and bridges, very nervous. Rep. John Mica (R, FL), chair of the House Transportation & Infrastructure Committee, has hammered out a six-year draft plan that would hold federal transportation spending levels on highways and infrastructure – payments made directly to the states – to the amount of dollars brought in by the federal gas tax, which expires at the end of September. If Mica pegs state spending to state gas tax revenue, critics say, some states could experience 6-35% reductions in federal dollars for their highway, bridge and commuter system projects. Meanwhile, there is a growing movement to let the federal gas tax expire, with proponents saying it makes no sense for states to collect the gas tax, send it to the Highway Trust Fund, only to wait six to nine months to receive their transportation infrastructure checks back from the Trust Fund.
While national dairy industry organizations are lining up in favor of the federal dairy reform initiatives developed by the National Milk Producers Federation (NMPF) – and subsequent legislation introduced by Rep. Collin Peterson (D, MN) – Upper Midwest state dairy groups joined other critics of the national reform plan, calling the sweeping changes “only the starting point,” claiming their status in the national dairy scene is unique. NMPF announced last week Dairy Farmers of America (DFA), a major dairy marketing cooperative, has endorsed the program, but the Minnesota Milk Producers and the Wisconsin Dairy Business Association said the proposals as written will stop growth and “harm diversity.” The NMPF proposal and Peterson legislation are focused on supply management, margin insurance based on feed costs and a rewrite of the federal milk marketing order program. The state groups contend the current proposals would effectively price domestic milk out of the foreign market impacting 13% of current production that goes for export. The local groups also oppose the supply management concepts because it would force them to cut production 4-8%, adding the milk marketing order rewrite would disadvantage producers who sell milk primarily for cheese production. As to the margin insurance proposal, the state groups say insurance should be pegged to production to ensure small, medium and large dairies benefit. The International Dairy Foods Assn. (IDFA), which represents the big corporate dairy processors, says the NMPF plan will “take the industry in the wrong direction,” while Peterson, who will be joined by Rep. Mike Simpson (D, ID) when the Peterson plan is formally introduced in September, will bring stability to a market plagued by wild price swings and overproduction.