EPA water proposal rattles ag industry (via The Des Moines Register)

For years, farmers and ranchers have cast a wary eye toward new laws and regulations from Washington that they fear will be costly and burdensome.

Agricultural producers argue they know the best way to take care of their land, not only to maximize production but to preserve the acreage they depend upon to survive.

Now, a rule being proposed by the Environmental Protection Agency outlining which bodies of water the agency would oversee under the Clean Water Act has again rattled the agriculture industry. The EPA says it is necessary after recent court rulings to clarify the 1972 law. Many farmers fear it amounts to nothing more than a land grab that could saddle them with higher costs, more regulatory red tape and less freedom to run their farms and ranches.

“This, in my career of farming, is the most scary and frightening proposition that I have witnessed,” said Craig Hill, president of the Iowa Farm Bureau Federation who farms 1,750 acres of corn and soybeans with his son in Milo. “Even though they say this doesn’t affect farmers, but you read this rule and you are not convinced at all. That’s why it’s so dangerous. And that’s why we have such a lack of trust.”

Divide between EPA, agriculture growing

The proposed water regulation, better known as the “Waters of the U.S.” rule, is the latest measure that’s symbolic of the growing fissure dividing the EPA and agriculture producers.

Farmers and ranchers have become more skeptical and less trusting of the environmental agency despite promises by the regulator that it is looking out for their best interests and willing to work with them when new rules and regulations are put in place.

In the past few years alone, the EPA has been criticized for a series of proposals that would have hurt the agricultural community, including one that would have regulated dust in rural areas and another last November that would reduce the amount of renewable fuels, much of it from corn, required to be blended into the country’s gasoline supply this year.

The agency also was sharply criticized after it released private information on 80,000 agricultural producers to environmental groups in 2013 through a Freedom of Information request, a decision for which the EPA has since apologized.

Despite assurances from the EPA, farm groups contend the Waters of the U.S. rule would expand the scope of so-called “navigable waters” protected by the Clean Water Act to include not only rivers and lakes but ditches, stream beds and self-made ponds that only carry water when it rains.

Hill and other farmers fear they would have to pay for costly environmental assessments and apply for permits allowing them to till soil, apply fertilizer or engage in some conservation practices because of the impact they might have on waterways that would be newly regulated by the EPA.

Hill said that under the proposed water rule if he wanted to build a pond or terrace for soil retention, he would have to apply for a permit, a process that can take two years and cost tens of thousands of dollars — a prohibitive price tag that would likely force farmers and ranchers to abandon such projects.

In remarks before farm trade groups and agricultural reporters, EPA Administrator Gina McCarthy has repeatedly said the proposed rule does not increase regulation and would not add to or expand the scope of waters protected by the Clean Water Act. She also said it is “not a land grab” and added that current exemptions in place for the Clean Water Act that do not require permits for “normal farming, ranching and agricultural practices” such as plowing, planting seed or minor drainage would be kept in place.

“If you were not legally required to have a permit before, the rule does not change that,” McCarthy told farm broadcasters in May. “Outreach for this proposal has been unprecedented. I’ve personally met with many ag organizations.”

Agency ramping up outreach efforts

McCarthy, who became administrator in July 2013, acknowledged during her confirmation hearing last year that EPA had a “deteriorating” relationship with agriculture and said the agency has not done enough in the past to work with farmers and ranchers.

In an effort to improve their agency’s relationship and better communicate their thinking to the agricultural industry, McCarthy and EPA Deputy Administrator Bob Perciasepe have stepped up their outreach efforts, conducting more meetings, holding roundtables to hear directly from local growers and giving additional speeches to farm groups.

They’re in the process of ramping up an outreach program across the country this summer to meet with agriculture groups to address concerns and clarify the scope of the proposed Waters of the U.S. rule.

McCarthy appeared at the Iowa State Fair last August, one of her first speaking engagements after taking the job; while Perciasepe says he drove a rice combine in Louisiana.

Officials at the EPA conduct meetings with their counterparts at the Agriculture Department to get a better feel for how proposed regulations could affect those in rural America. The EPA also has agricultural advisers scattered throughout the country to provide feedback.

Perciasepe, who graduated from Cornell University’s college of agriculture and life sciences, said in an interview the EPA’s relationship with the agriculture industry is “evolving,” calling their relationship “one of mutual respect.” They are natural allies, he said, with both of them focused on being good stewards of the land and protecting the environment.

“It’s always been a dynamic kind of family relationship, but I think it is definitely on the upswing,” said Perciasepe. “I think they are noticing that we are trying to do things differently.”

Bruce Babcock, an Iowa State University economist, said the breakdown in the relationship between agriculture and the EPA can be attributed to consolidation in the livestock industry where some animal feeding operations raising cattle, turkeys and chickens have grown significantly in size.

Livestock operations always have released methane in the air and sent manure flowing into nearby creeks and streams, but agriculture was left largely unregulated. The growth of massive animal operations, coupled with highly publicized spills into nearby streams, prompted questions during the 1990s about why farmers were essentially allowed to pollute, and didn’t have to meet clean water, air and other regulations that were strictly imposed on other businesses, Babcock said.

He said it was only natural that the EPA “would bear the brunt of animosity” from farmers facing new regulations.

Tension between ag, regulator natural

Babcock said the EPA is often left in a position where Congress writes the basic policy framework in the law, but leaves it up to the EPA to draft the detailed rules implementing it. The result is the EPA is left to face criticism from unhappy agriculture or environmental advocates no matter what decision it makes.

“The EPA is not like the USDA,” Babcock said. “USDA is really an advocate for agriculture. EPA is not an advocate for agriculture, they are a regulator of agriculture. There is an intrinsic tension that is going to have to exist. If not, the regulator is not doing their duty.”

In May, nine U.S. Senate farm leaders asked to sit down with McCarthy to discuss what Iowa Sen. Chuck Grassley describes as “heavy-handed” regulations that “threaten the very livelihood of farmers and rural communities.” Congressional leaders said their concerns ranged from pesticide and methane gas regulations to the handling of personal information from farming operations.

Grassley told reporters earlier this month the “anti-EPA” sentiment is one of the “highest visible issues he has to deal with” when he holds town meetings in Iowa. So far, the Senate Republicans have not been able to schedule a visit with the EPA. “It’s frustrating,” Grassley said. “They’re busy people, but you’d think we’d at least have a meeting set up.”

Don Parrish, senior regulatory relations director for the American Farm Bureau Federation, agreed with the EPA that the agency and his members all are working together to solve the same problems. The difference, he said, is how they get there.

For example, farmers apply nutrients, such as manure or fertilizer, based on information they have received from the USDA, land-grant universities, soil tests and other sources. The amount of nutrients needed, and when they should be applied, can change based on moisture, temperature, the presence of bugs or diseases — all factors that are beyond the farmer’s control. Parrish said the EPA — which holds environmental considerations above everything else, regardless of economic or social impact — allows little wiggle room, penalizing farmers and ranchers if they deviate too much in how much nutrients they apply.

“I don’t think they quite grasp the art aspect as to what it takes to be productive, efficient producers,” said Parrish.

Farm groups, including the American Farm Bureau Federation, contend the EPA regulations such as the Waters of the U.S. rule lead to higher costs for producers, with some growers unable to swallow the added expenses. They argue the stringent regulations are creating a ripple effect that is damaging the long-term health of the agricultural industry.

“You’re just seeing over time farmers unable to afford that, and they go out of business,” Parrish said. “And you’re seeing fewer and fewer people go into agriculture.”

Contact Christopher Doering at cdoering@gannett.com

Video: Senator Roberts Stands Up to the EPA Waters of the US Regulations (via Politico)

Senator Pat Roberts (R – KS) took to the Senate floor yesterday to rail against EPA’s proposed “Waters of the U.S.” rule and to gather support for his bill, which would prohibit EPA from moving forward with any changes.

“I think there is a is a file down there in the basement of the EPA, must be a big one – [that contains proposed rules on] rural Virginia dust, the navigable waters situation, endangered species so that the taking of farmers ground to plant native grass to protect the lesser prairie chicken, which we can’t even find, on and on and on – I think it must be labeled ‘What Drives Farmers and Ranchers Crazy,'” Roberts said. Every so often, “someone opens that draw and we go through this whole thing again. …Let’s shelve it for good.” A video of the senator’s full remarks is available here: http://bit.ly/1qJlekI

Crop insurance premium subsidies now subject to environmental compliance (via ERS)

Crop insurance premium subsidies now subject to environmental compliance
The 2014 Farm Act adds crop insurance premium subsidies to the list of benefits that could be withheld for noncompliance with conservation provisions, further supporting farmer incentives for environmental stewardship. Producers who fail to apply approved soil conservation plans on highly erodible cropland or who drain wetlands could become ineligible for all or part of a number of commodity programs, conservation programs, disaster assistance, and now crop insurance premium subsidies. In recent years, the value of such subsidies has increased as premium subsidy rates, crop insurance participation, and commodity prices all rose. On average, the Federal Government pays roughly 60 percent of crop insurance premiums, and about 80 percent of acreage for all major commodity crops is now covered by crop insurance. In 2012, crop insurance premium subsidies were roughly $6.7 billion or about 60 percent as large as commodity, conservation, and disaster assistance payments combined. This chart is found on the Conservation page in Agricultural Act of 2014: Highlights and Implications, on the ERS website.

Republican senators introduce Waters of the U.S. bill (via The Hagstrom Report)

Thirty Republican senators last week introduced a bill to stop the Environmental Protection Agency and the Army Corps of Engineers from proceeding with their proposed rule known as the Waters of the United States. 

The legislation, called the Protecting Water and Property Rights Act of 2014, is being led by Sens. John Barrasso and Mike Enzi, both Republicans of Wyoming.

On March 25, 2014, EPA and the Corps released their proposed rule redefining “waters of the United States” under the Clean Water Act. The bill prevents finalization of the agencies’ proposed rule. It also prevents the EPA and the Corps of Engineers from using the proposed rule or any substantially similar rule or guidance document in any other rulemaking or regulatory decision.

“After already calling on the EPA and Army Corps to withdraw the proposed rule, I want to make sure that the expansion of regulatory jurisdiction over ‘Waters of the United States’ is shelved for good,” said Sen. Pat Roberts, R-Kan., a co-sponsor of the bill. “This straightforward legislation prohibits the administrator of the Environmental Protection Agency and the secretary of the Army from finalizing the rule or trying a similar regulation in the future.”

The American Farm Bureau Federation officially endorsed the bill, Roberts noted.

“There are some very real examples of overreach by the EPA and the Corps of Engineers that show how ridiculous this regulation is,” said Sen. Charles Grassley, R-Iowa, another co-sponsor.

“It only serves to muddy the water of a dry creek,” Grassley said.

“Redefining what a navigable river is, even claiming jurisdiction in places where water doesn’t flow, just shows how out of touch the Obama administration is. This is way beyond the law. Passing legislation is an uphill battle, but this usurpation of power has to be stopped.” 

The full text of the legislation can be accessed via http://www.barrasso.senate.gov/public/_files/Barrasso_WOTUSbill.pdf

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Video Interview: EPA Waters of US Rule Bob Stallman Interview (via Agri-Pulse)

Sara Wyant, Agri-Pulse Editor and Publisher, recently interviewed American Farm Bureau Federation (AFBF) President Bob Stallman regarding the United States Environmental Protection Agency’s (EPA¨s) proposed ¨Waters of the US¨ rule and what it means for America¨s farmers and ranchers.

The Youtube video can be accessed by visiting https://www.youtube.com/watch?v=S6H8z4kaZVw#t=58

2014 Farm Bill: Overlap between PLC and Crop Insurance (via Farmdocdaily)

Overview

This article addresses the potential for overlap that can exist between crop insurance and the Price Loss Coverage (PLC) program option in the 2014 farm bill.  To provide perspective, the historical overlap that existed between target prices and crop insurance prices from 1974 through 2006 is examined.  The article ends with summary observations including implications for policy and the upcoming farm program decision by farmers.

Policy Background

Target prices began with the 1973 farm bill.  They have existed ever since except for the 1996-2001 crop years when the 1996 farm bill replaced target price payments with direct payments.  PLC is the latest version of target price programs.  It refers to target prices as reference prices.  All target price programs have made payments when the market price is below the target price, although different farm bills have used different measures of market price.

Price Decline Overlap

PLC and crop insurance can make payments for the same price decline if

(1)     price declines between the insurance pre-plant and harvest price discovery periods, and

(2)     the price decline continues throughout the ensuing crop marketing year resulting in a crop year average price that is less than the PLC reference price.

Analysis

The potential for this overlap is examined using target prices for the 1974-1995 and 2002-0606 crop years for the economically and politically important crops of corn, rice, sorghum, soybeans, upland cotton, and wheat.  This period was selected in part because market prices exhibited no sustained upward or downward trend.  Trends affect the probability of payment by target price programs.

The target prices are from Agricultural Statistics, an annual U.S. Department of Agriculture (USDA) publication (see here.)  Crop year average prices are from the USDA, National Agricultural Statistics Service (NASS) Quick Stats database (see here).  Consistent with PLC, per unit deficiency payment is calculated as the Target Price minus the U.S. crop year average price.

Insurance prices for 2000 and forward are from the Risk Management Agency (RMA) website, http://www.rma.usda.gov/.  For earlier years, a data set created by Art Barnaby of Kansas State University is used (see here).  RMA did not compute harvest insurance prices prior to the introduction of revenue insurance, which began with Crop Revenue Coverage (CRC) in 1996.  However, Art estimated harvest prices for prior years using RMA methods.  Note that crop insurance was not offered for rice until the 1987 crop year and the insurance price used for wheat is the price based on the Chicago futures market.

Findings

The insurance price declined between the pre-plant and harvest price discovery periods in about 50% of all years as well as during only those years in which a deficiency payment occurred (Figure 1).  Such a finding was expected because insurance prices for the examined crops are based on futures prices.  It is widely-accepted that futures prices are unbiased price estimates and that new bullish and bearish price information is generated randomly.  Hence price increases and decreases about 50% of the time.

 

figur1.jpg

 

During the years a deficiency payment was made and insurance price declined, average per unit deficiency payment expressed as a percent of the pre-plant insurance price exceeded average decline in insurance price for all crops (Figure 2).  The smallest difference is for corn:  a -15% decline in insurance price vs. a per unit deficiency payment that averaged 18% of the insurance pre-plant price.  The largest difference is for rice: a -18% decline in insurance price vs. a deficiency payment that averaged 59% of the insurance pre-plant price.  It should be noted that the average decline in insurance price is similar among crops, ranging from -13% for wheat to -18% for rice.  Again, this finding was expected for reasons discussed in the previous paragraph.

 

figur2.jpg

 

Summary Observations

  • An overlap can exist between target price deficiency payments and declines in crop insurance price between the pre-plant and harvest price discovery periods.
  • The exact degree of overlap expected between PLC and crop insurance is difficult to calculate because PLC pays on 85 percent of FSA farms’ base acres while insurance pays on 100% of acres planted on the insured unit.  Nevertheless, this overlap has the potential to be large as illustrated by the historical experiences during the 1974-1995 and 2002-2006 crop years.
  • A policy issue is whether the deficiency payments that coincide with the insurance deductible is an overlap.  Farmers will not likely view this part of PLC payments as an overlap.  However, the social contract which underpins public subsidies for farm insurance is that a partnership exists between society and farmers in managing farm production and revenue risk.  The farmer’s share of this partnership involves the insurance deductible and payment of a premium.  PLC payments alter the deductible component of the social contract.
  • Given that crop revenue insurance is a key, if not the key, component of the crop safety net, an obvious policy question is whether the overlap between PLC reference prices and crop revenue insurance prices should be considered when designing the crop safety net?  More specifically, should the overlap be eliminated by integrating the prices of the two programs?
  • A related, interesting historical policy question is whether the elimination of target prices between 1996 and 2001 by the 1996 farm bill allowed revenue insurance products to gain traction, thereby altering the future path of farm policy debates?
  • Farmers should consider the insurance – PLC overlap when making their farm program choice.  Overlapping payments would provide additional government assistance if prices decline and stay below the PLC reference prices.  Electing PLC also creates the potential for substituting PLC for crop revenue insurance in terms of providing assistance against price declines.  This substitution allows farmers to replace revenue insurance with cheaper yield insurance.
  • Because the new insurance Supplemental Coverage Option is only available if PLC is elected, insurance companies and agents have an economic self-interest in promoting PLC as the farm program choice.  However, the potential to replace higher premium revenue insurance with lower premium yield insurance when deficiency payments are expected blunts this economic self-interest.  It will be interesting to see how these competing impacts play out.

This publication is also available at http://aede.osu.edu/publications.

Issued by Carl Zulauf
Department of Agricultural, Environmental and Development Economics
The Ohio State University

40 maps that explain food in America (via Vox.com)

The future of the nations will depend on the manner of how they feed themselves, wrote the French epicurean Jean Anthelme Brillat-Savarin in 1826. Almost 200 years later, how nations feed themselves has gotten a lot more complicated. That’s particularly true in the US, where food insecurity coexists with an obesity crisis, where fast food is everywhere and farmer’s markets are spreading, where foodies have never had more power and McDonald’s has never had more locations, and where the possibility of a barbecue-based civil war is always near.

The following link includes 40 maps, charts, and graphs that show where our food comes from and how we eat it, with some drinking thrown in for good measure.

http://www.vox.com/a/explain-food-America

 

Genetically modified crops could help improve the lives of millions (Editorial – The Washington Post)

Genetically modified crops have increased the productivity and improved the lives of farmers — and the people who depend on them — all over the world. Now, they are banned in two counties in Oregon.

Voters in two Oregon counties have chosen to outlaw the cultivation of genetically modified organisms (GMOs) in the productive Rogue Valley. They are not the only ones going in the wrong direction. Several places in California, Hawaii, Maine and Washington state also have bans in place, though the Oregon counties are the first in which GMOs had been actively cultivated. Farmers have a year to remove the genetically modified crops from their fields. Several states also have or are considering a requirement that food containing genetically modified crops be labeled.

There is no mainstream scientific evidence showing that foods containing GMOs are any more or less harmful for people to consume than anything else in the supermarket, despite decades of development and use. If that doesn’t convince some people, they have the option of simply buying food bearing the “organic” label. There is no need for the government to stigmatize products with a label that suggests the potential for harm. Outright bans, meanwhile, are even worse than gratuitous labeling.

The issue is not just one of agribusiness profits, though some companies certainly stand to make money by creating and selling GMOs. The application of current biotechnological tools to agriculture offers a wide array of benefits , benefits that are only beginning to be seen. There is the potential to create crops that are easier to grow, better for the environment and more nutrient-rich. Smart genetic modification is one important tool available to sustain the world’s growing multitudes. Making good on that promise will require both an openness to the technology and serious investment in GMOs within wealthy countries. The prospect of helping to feed the starving and improve the lives of people across the planet should not be nipped because of the self-indulgent fretting of first-world activists.

As with any field, there’s room for reasonable caution and study using real science. But there is nothing reasonable about anti-GMO fundamentalism. Voters and their representatives should worry less about “Frankenfood” and more about the vast global challenges that genetically modified crops can help address.