Archive for May, 2009

Big Oil Warms to Ethanol

An article in today’s New York Times points to a new biofuels plant in the oil town of Jennings, La., as a sign that big oil is warming to ethanol. Technicians from oil giant BP are working in cooperation with Verenium Corporation to convert locally grown sugarcane into ethanol at the plant.

The experiments at the Louisiana plant are in preparation for building a second $250 million plant in Florida with the capacity to produce 36 millions gallons a year of new biofuels. The Florida refinery will be the first commercial plant of its type built with oil money and expertise.

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Ag Exports Forecast at $96 Billion for 2009

The forecast for fiscal year 2009 agricultural exports is $96 billion, down from $115 billion in FY2008, according to the Agriculture Department’s Economic Research Service. The ERS report Outlook for U.S. Agricultural Trade points to an improved outlook for soybeans and products, which “more than offsets a downward adjustment for wheat.” The report notes that fierce competition remains in global grain markets with the grains sector accounting for nearly all the expected annual decline in bulk commodity shipments.

The forecast for FY2009 agricultural imports is $81 billion, $2 billion higher than the FY2008 total. A prolonged and severe recession and weak consumer spending has reduced import growth to the slowest rate in many years, according to ERS.

World trade volume is expected to drop between 6 percent and 9 percent, as the recession continues throughout the developed world.

Energy, Ag Groups Blast Indirect Land Use

Agriculture and energy groups told the chairman and ranking member of the House Agriculture Committee that indirect land use calculations should not be used to regulate the production of renewable fuels, calling the idea “a theory that defies reality.”

The comments were made in a letter sent by the American Farm Bureau Federation, National Farmers Union and Growth Energy to House Agriculture Committee Chair Collin Peterson (D–Minn.) and ranking member Frank Lucas (R-Okla.) in support of the Renewable Fuel Standard Improvement Act (H.R. 2409).

“It is our strong belief that the theory of using indirect land use calculations for determining the life cycle emissions of a liquid fuel is unrealistic and problematic,” the letter stated. “There are too many unanswered questions about how it is defined and implemented. It is not based on universally accepted science, and should not be used to regulate the production of renewable fuels by our nation’s farmers and renewable fuels producers.”

According to the groups, using indirect land use calculations would also put U.S. agriculture in jeopardy by making farmers responsible for actions in other countries, which are beyond their control. Far too many variables determine other nations’ farming practices, including macro economic issues, worldwide weather and productivity gains, as well as variable uses for the same commodity.

Senators Urge Vilsack to Not Attack Ag

U.S. Sen. Saxby Chambliss (R-GA) talks with supporters as he campaigns on December 1, 2008 in Perry, Georgia. Chambliss is up against Democrat Jim Martin in a runoff election for the U.S. Senate seat tomorrow.Sen. Saxby Chambliss (R-Ga.), the ranking member of the Senate Agriculture Committee, and seven other senators sent a letter to Agriculture Secretary Tom Vilsack Thursday expressing concerns about President Barack Obama’s 2010 budget and urged Vilsack to “refrain from pitting the needs of children against the men and women who produce the food, feed, fiber and fuel we consume every day.”

 “We think it is unfair and unproductive for you to attack the very farmers and ranchers

who form the foundation of our rural economy. These farmers and ranchers who

represent the vast majority of agricultural production deserve a USDA that will fairly represent them and not put forward false choices. USDA has responsibility for a wide variety of interests, certainly we should be able to advocate for one without vilifying another,” the letter emphasized.

In addition to Chambliss, the letter was signed by Sens. Thad Cochran (R-Miss.), John Cornyn (R-Texas), Mike Crapo (R-Idaho), James Risch (R-Idaho), Pat Roberts (R-Kan.), John Thune (R-S.D.) and David Vitter (R-La.).

Ag Committee Formidable Opponent to Climate Change Bill

House Agriculture Committee members, angry over how major energy and climate legislation could affect farmers and ranchers, are eyeing options to alter the bill when it passes through their committee next month, according to the New York Times.

The agriculture panel could create some of the most formidable opposition to the compromise brokered by Reps. Henry Waxman (D-Calif.) and Ed Markey (D-Mass.), as the proposal to regulate greenhouse gas emissions makes its way to a vote on the House floor sometime this summer.

Democrats and Republicans on the committee have a long list of grievances against the bill, and leaders of the panel are looking for ways to alter the legislation or slow it down before a full House vote. They want to see more offsets for farmers, a greater role for the Agriculture Department and changes in the bill’s requirements for renewable fuels.

Obama’s Fuel Efficiency Standards a Blow to E-85

President Barack Obama’s tough fuel economy program for vehicles could put another damper on the struggling ethanol business, because the alternative fuel packs lower energy content than gasoline, accoraccording to Reuters.

Obama on Tuesday introduced the most aggressive proposal yet to boost U.S. auto fuel economy standards. The proposal would require passenger vehicles to average 35.5 miles per gallon by 2016, which will pose a major problem for E85, a blend of 85 percent ethanol and 15 percent gasoline. The proposal would also put a damper on flex-fuel vehicles that are capable of running on E85.

Flex fuel cars typically get 20 percent to 30 percent fewer miles per gallon when they burn E85 due to ethanol’s lower energy content.

Obama’s plan is also a blow to the ethanol industry’s wish for the federal government to hike the ethanol blend in gasoline from 10 percent to up to 15 percent, unless the auto industry makes specially-built engines that overcome the mileage difference. This is viewed as unlikely due to the dire straits of the auto industry.

OK Pre-Emption Bill Now Law

Oklahoma Gov. Brad Henry (D) signed the livestock pre-emption bill (HB 2151) into law Wednesday. The measure establishes that the Oklahoma Department of Agriculture is the legal entity in the state responsible for overseeing animal well-being issues in Oklahoma. The measure prevents municipalities, counties, etc., from enacting orders or regulations on animal care that are more restrictive than rules outlined by the Oklahoma Department of Agriculture.

Oklahoma Farm Bureau supported the bill. “We don’t want an outside group coming into Oklahoma, mandating how we care for livestock,” said Mike Spradling, Oklahoma Farm Bureau president. “Our producers have learned through experience and training the proper animal husbandry and they have every intention to care for animals in the best possible way.”

Passage of Proposition 2 in California, which outlaws the confinement of certain production livestock, prompted the Oklahoma bill. The Oklahoma legislation is attracting interest in other states as a way to protect agriculture from animal activists attempting to restrict livestock production methods.

In related news, Maine Gov. John Baldacci (D) has signed into law a bill backed by the Humane Society of the United States that regulates treatment of farm animals in that state. The new law, which takes effect in January 2011, will prohibit crates and cages for breeding pigs and veal calves.

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