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Articles from 2008 In November


Obama targets farm payments in financial mess

For the full article, click on the headline above.

Agriculture already is being eyed for budget savings when the new Obama Administration takes the helm in January. While announcing key members of President-elect Barack Obama's financial team in the Office of Budget and Management, Obama referenced a recent Government Accountability Office (GAO) report revealing the ineffectiveness of farm payment limits.

Obama pointed out that his financial team will go through the federal budget -- "page by page, line by line" - eliminating those programs that are unneeded and don't operate in a "sensible cost-effective way."

His first example - a GAO report revealing that from 2003 to 2006 millionaire farmers received $49 million in crop subsidies even though they were earning more than the $2.5 million cutoff for such subsidies.

"If this is true, it is a prime example of the kind of waste I intend to end as President," Obama said.

GAO found that of the 1.8 million individuals receiving farm payments from 2003 through 2006, 2,702 had an average adjusted gross income (AGI) that exceeded $2.5 million and derived less than 75 percent of their income from farming, ranching, or forestry operations, thereby making them potentially ineligible for farm payments. Nevertheless, USDA paid over $49 million to these individuals.

Notably, according to the GAO, a founder and former executive of an insurance company received a total of more than $300,000 in farm program payments in 2003, 2004, 2005, and 2006 that were subject to the AGI provisions.

An individual with ownership interest in a professional sports franchise received a total of more than $200,000 in farm program payments during the same time frame. A top executive of a major financial services firm received more than $60,000 in farm program payments in 2003. The individual received these payments directly, not through an entity.

Sen. Chuck Grassley, has been a long-standing advocate of tightening payment limitations and requested the GAO report. The most recent report is one of a series of reports requested by Grassley on improper farm payments. Last year, Grassley released a Government Accountability Office report on farm payments going to dead people. The first report was released in 2004.

More trouble ahead

According to USDA officials, a number of factors—such as resource constraints that hamper its ability to examine complex tax and financial information as well as a lack of authority to obtain and use IRS tax filer data for such purposes—contribute to the department's inability to verify that each individual who receives farm program payments complies with income eligibility provisions.

However, USDA does not routinely sample individuals receiving farm payments to test for income eligibility; instead, its annual sample selected for review is based primarily on compliance with eligibility requirements other than income. The 2008 Farm Bill directs USDA to use statistical methods to target those individuals most likely to exceed income eligibility caps.

President Bush tried to push for tighter payment limits, one of many reasons Bush vetoed the farm bill. GAO states the 2008 Farm Bill will likely increase the number of individuals likely to exceed the income eligibility caps. "That is, with lower income eligibility caps under the 2008 Farm Bill, the number of individuals whose AGI exceeds the caps will rise, increasing the risk that USDA will make improper payments to more individuals. For example, had the new Farm Bill been in effect in 2006, as many as 23,506 individuals who received farm program payments would likely have been ineligible for crop subsidy and disaster assistance payments totaling as much as $90 million," GAO reported.

"It's hard to have faith in USDA's ability to police these income limits. Unfortunately, it's one thing after another. One year we have payments going to dead people, now we have payments going to owners of professional sports teams. I hate to think what might be next," Grassley said.

Grassley added USDA noted in its own database that nearly 100 people exceeded the income limits, but did nothing about it. "Now, with tighter income limits from the new farm bill, not only does the federal treasury stand to lose a good deal of money, but the taxpayer will be helping big farmers get bigger, which is not who the farm payment system was intended to help," he said.

GAO recommendations

GAO recommends that USDA work with IRS to develop a system for verifying the income eligibility for all recipients of farm program payments.

 If USDA determines that it needs authority to work with IRS, it should seek this authority from Congress, as appropriate.

In commenting on a draft of this report, USDA agreed with these recommendations but disputed some of the findings. GAO believes that the report is fair and accurate.

 

Economy is Wild Card in Beef Cattle Price Forecasts

Most sectors of the nation's beef industry are losing money, which has caused production forecasts for next year to be reduced. Usually a decrease in production would provide a boost of cattle prices for producers and feedlot operators, but USDA livestock analyst Shayle Shagam says while that might happen, it might not due to offsetting factors including the economy.

"You do have expectations of declining production in 2009 which would tend to be price supportive," Shagam says. "But the economic situation, the macro economy in the U.S., is a real wild card. If there is a retrenchment by consumers you would tend to see some pressuring on prices as consumers either slide toward lower value cuts of meat or slide toward other meat products which may be perceived as being cheaper or cut back on the amount of dining out that they would normally do."

Those moves would all have a negative impact on the cattle sector. Shagam does think that cattle prices may improve in 2009, but says it all still depends on how the macro economy shapes up in the coming year.

Federal Agencies Set Energy Corridors

Four Federal agencies have released a Final Programmatic Environmental Impact Statement proposing to designate more than six-thousand miles of energy transport corridors on Federal lands in 11 Western States. The proposed energy corridors would facilitate future placement of oil, gas, and hydrogen pipelines, as well as electricity transmission and distribution facilities on Federal lands in the West.

The Federal lands are located in Arizona, California, Colorado, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, and Wyoming. The Department of the Interior’s Bureau of Land Management and the U.S. Departments of Energy, Agriculture, and Defense prepared the statement as part of their work to implement Section 368 of the Energy Policy Act of 2005.

The statement identifies a number of requirements that will help ensure that energy transport projects within the energy corridors are planned, implemented, and operated in a manner that protects and enhances environmental resources. The corridors will be incorporated into the relevant agency land-use and resource management plans or equivalent plans.

Public Meetings on Bovine Tuberculosis Scheduled

The USDA's Animal and Plant Health Inspection Service has announced the schedule for a series of public meetings this month on the national bovine tuberculosis program. Each meeting will be held from 8 a.m. to 4:30 p.m. local time with registration one hour before.

"We want to hear directly from producers and stakeholders on our TB program and are looking for innovative, realistic approaches to effectively addressing this disease in the United States," said APHIS administrator Cindy Smith. "We can improve the TB program so that it can meet current challenges, but public participation is vital to reach that goal."

These discussions will explore approaches to reducing the risk of disease transmission from affected herds, disease mitigation measures for wildlife and whether the program's objective should be eradication or control of TB in domestic livestock. Other topics include budget concerns, import issues and indemnities. Participants can submit oral and written comments and pose questions at these sessions.

For the complete schedule of meetings and more information about bovine tuberculosis and the national eradication program, click HERE.

Gate Closes on 'Cow and Sow Tax' Comments

Back in late July, the U.S. Environmental Protection Agency published an Advance Notice of Proposed Rulemaking to regulate greenhouse gas emissions from automobiles under the Clean Air Act.

"In large part, it was sparked by the lawsuit a few years ago against acid rain issues involving the Northeast," says Julie Suarez, director of public policy for New York Farm Bureau. "Unfortunately, the way it's drafted, the permit captures the livestock industry, for the first time, in the clean air permit process."

One provision would require any entity that emits more than 100 tons per year of greenhouse gases (methane from livestock, for instance) to obtain a permit. USDA calculates that any agricultural operation with more than 25 dairy cows, 50 beef cattle or 200 hogs emits more than 100 tons of greenhouse gases.

USDA statistics indicate that the permit requirement would impact 99% of milk production, more than 90% of beef production and more than 95% of all hog production in the United States. The permit fee would vary from state to state.

But for states using EPA's "presumptive minimum rate", this could amount to $175 per dairy cow, $87.50 per beef cattle and over $20 per hog.

"It's a little sensational to call it a 'tax', since it's technically a permit fee," notes Suarez. "But it's a de facto charge per head. The impact is the same – money out of farmers' pockets." For a minimum 25-cow dairy, that would be $4,375.

Gate Closes on 'Cow and Sow Tax' Comments

Back in late July, the U.S. Environmental Protection Agency published an Advance Notice of Proposed Rulemaking to regulate greenhouse gas emissions from automobiles under the Clean Air Act.

"In large part, it was sparked by the lawsuit a few years ago against acid rain issues involving the Northeast," says Julie Suarez, director of public policy for New York Farm Bureau. "Unfortunately, the way it's drafted, the permit captures the livestock industry, for the first time, in the clean air permit process."

One provision would require any entity that emits more than 100 tons per year of greenhouse gases (methane from livestock, for instance) to obtain a permit. USDA calculates that any agricultural operation with more than 25 dairy cows, 50 beef cattle or 200 hogs emits more than 100 tons of greenhouse gases.

USDA statistics indicate that the permit requirement would impact 99% of milk production, more than 90% of beef production and more than 95% of all hog production in the United States. The permit fee would vary from state to state.

But for states using EPA's "presumptive minimum rate", this could amount to $175 per dairy cow, $87.50 per beef cattle and over $20 per hog. EPA's comment period ends today, Friday, Nov. 28.

You can submit your comments via email. Just send them to: a-and-rDocket@epa.gov. Be sure to reference Docket ID# EPA-HQ-OAR-2008-0318 in the subject line.

"It's a little sensational to call it a "tax", since it's technically a permit fee," notes Suarez. "But it's a de facto charge per head. The impact is the same – money out of farmers' pockets." For a minimum 25-cow dairy, that would be $4,375.

ICGA Urges Iowans To Show Support For American-made Ethanol

Members of the Iowa Corn Growers Association are very upset about the Indy Racing League's decision announced last week to partner with APEX-Brasil to promote Brazilian ethanol at IRL races in the United States in 2009.

In response to the IRL decision, the ICGA is now asking all Iowans to call the IRL and voice support for American-made ethanol and tell the IRL that Iowans are very disappointed in IRL's decision to support Brazilian ethanol.

"The IRL has assured us that the Iowa Corn Indy 250 will be running on 100% corn ethanol, but the partnership with APEX-Brasil will be to promote Brazilian ethanol at all IndyCar events," says Craig Floss, executive director of the ICGA. The imported ethanol from Brazil is made from sugar cane.

Burned by Brazil—on ethanol decision

Floss, along with Tim Recker, immediate past president of ICGA, flew to Indianapolis on Monday November 24 and met with IRL officials. They were assured that the Iowa race will be run on American-made corn ethanol. But beyond that, they weren't assured that any other IndyCar races—even the famed Indianapolis 500—wouldn't be run on Brazilian ethanol.

In response to the IRL's decision to use and promote Brazilian ethanol, the joint executive committee of the Iowa Corn Growers Association and the Iowa Corn Promotion Board decided on November 26 to issue a call to action. "We are urging all Iowans to call IRL today and voice their support of American-made corn ethanol," says Floss. "Please pass this phone number or email instructions on to your friends, neighbors, business partners and anyone you think supports ethanol. Urge them to either call IRL at 317-492-6526 or go to the website at www.indycar.com/contact and leave an email message."

Tell IRL that U.S. ethanol is important to you

"Tell the IRL that American-made ethanol is important to you," says Recker. "An economic crunch has taken Americans by storm and now the ethanol industry and agriculture in Iowa are taking another hit as the Indy Racing League announced a partnership to pipe foreign-made ethanol right into the heartland."

He adds, "We need you to stand up! The Iowa Corn Growers Association and the Iowa Corn Promotion Board have sponsored the Iowa Corn Indy 250 for the past two years as an event to celebrate the league running on 100% corn ethanol. To Iowa Corn's disappointment the IRL now announces a sponsorship agreement with APEX-Brasil to promote foreign ethanol. This is a complete surprise to us!"

"We urge Iowans to express their frustration at the IRL's support of foreign fuel and ask for the IRL's support of American made corn ethanol," says Recker.

You can leave them this message, says Recker. "I support American corn ethanol and I am disappointed in the IRL decision to promote foreign fuel. I am calling to ask you to promote American-made corn ethanol because homegrown fuels matter to me and our economy."

NOTE: "Please do not call the Iowa Speedway in Newton, where the annual Iowa Corn 250 race is held, because this is an Indy Racing League decision," says Floss. He adds that "The IRL has committed to Iowa Corn leaders that the Iowa Corn Indy 250, presented by Pioneer, will be running on 100% American-made corn ethanol next summer."

Culver To Extend Harvest Weight Limit Exemption

Iowa Governor Chet Culver is extending the temporary weight limit exemption in order to help farmers transport this year's corn and soybean harvest.

On October 1, 2008 Culver signed a proclamation granting a temporary weight limit exemption which is set to expire on Saturday November 29. This proclamation increased the weight allowable for shipment of soybeans, corn, hay, straw and stover to 88,000 pounds gross weight without the need for an oversize/overweight permit.

On Sunday, November 30 Governor Culver will issue a proclamation extending the exemption for an additional 30 days.

The proclamation directs the Iowa Department of Transportation to monitor the operation of the proclamation, assure the public's safety and facilitate the movement of the trucks involved. The exemption does not change the lower weight limits as posted on bridges and overpasses, as well as interstate highways in Iowa. Farmers who are transporting grain are also required to follow their vehicle safety standards on axle weights.

Montana State Partners on Carbon in $67 Million Fed Award

The U.S. Department of Energy has awarded $66.9 million to the Montana State University Big Sky Carbon Sequestration Partnership to fund a project that will inject a million tons of carbon dioxide into sandstone rock layers in the southwestern state.

The effort is expected to render a major benefit to advancing the sequestration effort, which will boost agriculture's carbon projects.

The award is the third and final stage of federal funding for the partnership, which is based at MSU. About $14 million of the federal money will stay on the MSU campus to pay for the university's contributions to the project.

"This grant speaks to the strong science program, both research and instruction, at MSU," say Geoff Gamble, university president.

The award will allow the partnership to launch Phase III of the project, a commercial-scale eight-year carbon sequestration study that could begin early in 2009. That project will spend two years building infrastructure and drilling an 11,000-foot well into the sandstone rock layer west of Big Piney, Wyo.

Next, the partnership will inject more than a million tons of CO2 into the underground formation.

Carbon dioxide is one of the greenhouse gasses that scientists have linked to global climate change. Rather than allow the CO2 to escape into the air, geologic sequestration injects liquefied carbon dioxide into permeable and porous rock formations deep underground where a seal known as a cap rock keeps it permanently trapped.

"We will be able to move carbon sequestration technology from the laboratory to large-scale field demonstrations and ultimately to the marketplace," says Jeffrey Kupfer, DOE deputy secretary of energy.

"By doing so, we will help our nation meet growing energy demand and reduce greenhouse gas emissions."