Radio Interview: Update on Implementation of the 2014 Farm Bill

Dave Ladd, President of RDL & Associates, was recently a guest on the Linder Farm Network to provide an update regarding implementation of the 2014 Farm Bill.  Mr. Ladd can be contacted at daveladd66@gmail.com for additional details.

The interview can be accessed here: https://www.dropbox.com/s/h48z455xlb9j08h/Linder%20Farm%20Network%20%28July%202014%29.mp3

The Linder Farm Network: http://linderfarmnetwork.com/

EPA Chief Won’t Ditch the Waters Rule, But She Is Digging for Answers (via NationalJournal)

Is it worth the effort for an Environmental Protection Agency administrator in a Democratic administration to meet with her farm, ranch, and Republican critics?

Or should she stay safely among her environmental and conservation supporters in Washington and the coastal cities and just push ahead?

EPA Administrator Gina McCarthy, who is under fire in rural America for a “Waters of the United States” rule that EPA and the Army Corps of Engineers proposed in April, has been making the effort, with a trip to Missouri early in July and a meeting last week with Republicans on the Senate Agriculture Committee who have been asking for a sit-down since May.

The outreach hasn’t stopped the criticism, but McCarthy told me in an interview Thursday that she feels the effort has been worth it. McCarthy said the trip to Missouri was “a signal that this rule is very important to EPA.” On Capitol Hill she said she learned that “EPA speaks with a lot of technical language and science. It is not readily translated into what is clear on the ground for the farm community.”

WOTUS, as the rule is being called in environmental and agricultural circles, would define the scope of waters protected under the 1972 Clean Water Act following two Supreme Court decisions that said the feds had to come up with a more scientific basis for deciding what water bodies come under their jurisdiction. The point of the rule is to make sure that the nation’s drinking water is safe from discharges of pollution. The biggest point of contention is a provision that says EPA and the Army Corps would be allowed to decide on a case-by-case basis whether to regulate wetlands and other waters that are not directly connected to running streams and rivers but have “a significant nexus to a traditional navigable water, interstate water, or the territorial seas.”

Farm and ranch leaders who examined the rule immediately said they feared the provision could require them to obtain government permits for activities in which they have long engaged as a regular part of their businesses—and that because the determinations will be made on a case-by-case basis, the proposal creates a great deal of uncertainty about their future operations. EPA also issued an “interpretative rule” that tried to define farm practices that would be exempt from regulation, but that only made farmers think about what practices were not included and worry they would come under regulation.

The ensuing battle can be summed up in one word: ditches. Farmers and ranchers say EPA wants to regulate all their ditches that may fill up with water at some point during the year. The Republican-leaning American Farm Bureau Federation has called on McCarthy to “ditch the rule.”

On the trip to a farm in Missouri and in a speech to the Kansas City Agribusiness Council, McCarthy said she wanted to “ditch the myths” about the rule, but her critics weren’t satisfied. The farm federation reacted to her Missouri trip by sending Congress a document “decoding” point-by-point an EPA blog post that attempted to explain the rule. The Republican senators she met with issued a series of news releases saying they appreciated her visit but EPA should still withdraw the rule.

Bills have been introduced in Congress to require EPA to withdraw the rule, but they are unlikely to go anywhere, at least as long as Democrats control the Senate and President Obama backs the rule. In any case EPA and the Army Corps are under pressure from the courts to define their jurisdiction. That means EPA is likely to proceed with the rule, although McCarthy said she won’t finish it until next year after her staff has analyzed all the comments due by October and received a study from a scientific advisory panel.

In the meantime, McCarthy could work a bit on her own communication skills in rural America. EPA administrators tend not to come from the heartland, and McCarthy is no exception. A Boston native, McCarthy speaks with a strong New England accent and she seems not to suffer fools gladly.

In a telephone news conference before she left for Missouri, McCarthy said: “We’re hearing some concerns that are just ludicrous.… Some say EPA will regulate small, unconnected waters … including puddles on lawns, driveways, and playgrounds. That’s just silly. This proposal is all about protecting waters that science tells us have a significant impact to downstream water quality. No more, no less.”

And she concluded, “Some say that our proposal means you need a permit to walk cattle across a stream. That’s not true. If cattle cross a wet field or stream, that’s a ‘normal farming practice.’ All normal farming practices are exempt, period. We don’t shrink current exemptions—we expand them.”

McCarthy’s use of “ludicrous” and “silly” were not off the cuff, but included in the prepared remarks that her office later distributed to reporters. The words created more fodder for critics such as Sen. Pat Roberts, R-Kan., who said in a post-meeting news release, “Farmers and ranchers had hoped they would be able to persuade you to recognize the far reaching and negative impacts of the proposed and interpretive rules, but the reports back have not been positive. To hear that their concerns were categorized as ‘silly’ or ‘ludicrous’ is truly frustrating.”

In the interview, McCarthy said that she regretted only that people did not understand the context and that she used the terms “ludicrous” and “silly” to refer to statements mischaracterizing the rule that did not come from farmers and ranchers. “I want to make sure the agriculture community and every farmer realizes we take this really seriously. We need to focus on serious issues,” she said.

The strongest signal that McCarthy and EPA still have some explaining to do is that after McCarthy held a telephone conversation with the board of the Democratic-leaning National Farmers Union, the group signaled it was not satisfied by sending McCarthy a letter with eight questions it wants answered.

McCarthy said that she will answer the questions raised by both the farm bureau and the farmers union as soon as possible rather than wait for the formal comment period to end in October. “We need to answer those questions as we go along,” she said, noting that EPA has also updated its webpage on WOTUS to make it easier to understand.

McCarthy does have her rural defenders. The Theodore Roosevelt Conservation Partnership, which includes a wide range of hunting and fishing groups, has said Congress should not interfere with the comment process and that fish, wildlife, and people all need clean water.

The rule can be written so that “farmers and ranchers can farm the way they have and we can protect the waters,” McCarthy said.

But rural America will have to accept the fact that some ditches will be regulated. “We are talking about ditches that used to be streams and still act like streams. They may not have water running, but still act as a stream,” McCarthy said. Then she added, “I never expected to say the word ‘ditch’ this many times in my entire life and I hope to get away from that as soon as possible.”

This article appears in the July 28, 2014 edition of NJ Daily.

Ag groups want to limit rail costs with late cars (via AgWeek)

The North Dakota Farmers Union and North Dakota Corn Growers Association are among 23 organizations nationwide filing comments on rate case complaint procedures with the U.S. Surface Transportation Board. The action is “the largest combined filing by farm organizations in years,” according to the joint news release by the two groups.

NDFU President Mark Watne tells Agweek that while elevators and grain users traditionally filed STB cases, the comments are the first step to establish the right of farmers and ranchers to do the same. He says the case was initiated in Montana because delays in shipping by the Burlington Northern Santa Fe Railway and Canadian Pacific Railroad have been costing farmers 30 to 80 cents a bushel in increased market basis.

If allowed to file a case with the STB, the groups would ask for some mechanism that would prevent railroads from excessive increases in rail rates for grain at a time when service is poor. Watne says elevators will have to pay more of a premium in secondary markets to guarantee car availability. Those premiums are “going through the roof” at $7,000 to $8,000 per car, he says. The extra cost will mean farmers will be paid less for their grain.

Watne says railroads appear not to have the capacity to manage all of the products farmers need to move to market. He says the desired result is to “take some of the priority away from oil and put it back to grain,” but emphasizes the groups don’t want to shut down oil, either.

Producers are concerned about the ability and willingness of BNSF and CP to deliver last year’s crop to market in time for this year’s harvest, says Tom Lilja, executive director of the NDCGA.

“Timely corn deliveries are needed for ethanol production and for feedlots supporting livestock and meat production,” he says. “Thousands of shipments are behind schedule. Harvest and planting can’t wait for railroads to resolve their service problems.

”Farmers Union organizations from Minnesota, Montana, South Dakota and Wisconsin are involved. The National Corn Growers Association, and state organizations from North Dakota, Nebraska and South Dakota, also are involved, as are the Montana Wheat and Barley Committee, the South Dakota Wheat Commission, and the USA Dry Pea and Lentil Council.

Radio Interview: Thinking Regionally for a Stronger Whole

Minnesota’s whole economy is best served by thinking beyond the cookie cutter approach, says Dave Ladd of RDL Associates. Dave talks with Jim this week about why we should be thinking about the economy by region and beyond the standard industry silos.

The interview can be accessed by visiting http://ruralrealitymn.org/2014/07/18/think-regionally-for-a-stronger-whole/

Mapping the Size of Dairy Safety Net Programs: Comparing MILC and the Margin Protection Program (via Farmdocdaily)

In today’s article we will review the historical performance of the Milk Income Loss Contract (MILC) program using data provided by USDA Farm Service Agency (FSA). Then, we will demonstrate how the Margin Protection Program (MPP), by increasing production coverage to be more accommodating to all U.S. dairy producers, offers a larger safety net program and is capable of providing considerably more production coverage than the existing, and soon to be expired, MILC program.

Dairy Safety Net Programs

Historically U.S. federal dairy safety net support programs have been designed to provide milk price floors and counter-cyclical revenue support for dairy farmers. The MILC program enacted with the Farm Security and Rural Investment Act of 2002, and as amended in 2008, provides countercyclical revenue support to dairy producers on up to 2.985 million pounds of milk per fiscal year (approximately 140 cows). MILC makes payments to farmers when the USDA announced Boston class I milk price falls below $16.94 per cwt adjusted to reflect the prices of corn, soybeans, and alfalfa hay (see here).

However, consolidation and concentration in the dairy industry has resulted in an increase in the average size of the U.S. dairy farm and a decrease in the number of dairy farm operations (see here). Recent USDA livestock statistics estimate that the largest 5% of dairy operations (500+ cows) produced more than 63% of the milk in the U.S.; while the bottom 88% (<200 cows) produced 24% of the milk in the U.S. (see here). Due in large part to volatility in feed commodities, industry consolidation, and the inability of MILC to provide safety net coverage on a larger portion of the milk supply, the existing safety net programs are viewed to be inadequate to accommodate the modern scale economies of the US dairy sector.

In place of milk price and revenue support programs, the 2014 Farm Bill creates the MPP for Dairy Producers. MPP is a voluntary target-index safety net program that provides income-over-feed-cost (IOFC) margin protection at various farmer-selected margin levels and coverage percentages (i.e. from $4 to $8 per hundredweight and 25% to 90% coverage). The features of MPP have been covered comprehensively here on (farmdoc daily May 1, 2014). However, when comparing MILC and MPP, one of the appealing features of MPP is the increase in production eligibility constraints. Farms of all sizes can purchase IOFC margin protection on milk pounds equal to their historical maximum levels of milk production. Then in subsequent years the amount of milk eligible for coverage at the farm-level will be revised by USDA using trends in U.S. milk production.

Historical Performance of the Milk Income Loss Contract

A review of MILC participation over the 2009 to 2013 fiscal years revealed that over 47 thousand dairy operations participated in and received a payment from the MILC program, Table 1. MILC payments were made in 27 of the 60 months during the 2009 to 2013 fiscal years (see here). Over the analysis period 185.1 billion pounds of milk received MILC benefits, and government outlays totaled $1.6 billion dollars. The average return from the MILC program from 2009 to 2013 was $0.89 per hundredweight. Figure 1 maps the aggregate MILC benefits by county.

 

fig1.jpg

 

Due to the production cap, the amount of safety net protection and the effective support price under MILC declines rather sharply for farms that produce in excess of 2.985 million pounds per fiscal year. In order to estimate the proportion of the milk supply receiving MILC benefits U.S. milk production data from USDA was totaled during months in which a MILC payment was made. Then, the ratio of milk pounds receiving a MILC benefit and U.S. milk production during months in which a MILC payment was made was evaluated. Results indicate that during the 2009 to 2013 fiscal years MILC provided benefits for approximately 42% of the U.S. milk supply. As apparent in Table 1, the proportion of the U.S. milk supply covered by MILC declines with the number of payment months due to farms exhausting their production eligibility.

table1.jpg

At a state-level the percent of milk receiving MILC benefits was dependent on the farm profiles within the state. As demonstrated in Figure 2, states with a higher proportion of small to medium sized dairy operations have a higher percentage of the aggregate milk supply receiving MILC benefits; while states with large farm operations had a lower percentage. For example, during fiscal year 2013 and using only months in which a MILC payment was made, 5.7 billion of California’s 26.2 billion milk pounds (21%) participated in and received a MILC payment. This pattern is consistent in states with similar large-farm profiles such as Idaho (16%), Texas (19%), and New Mexico (13%). States populated with small to medium sized dairy farm operations such as Pennsylvania, New York, and Wisconsin had a larger percentage covered by MILC at 53%, 47%, and 55%, respectively. MPP was specifically designed to address this gap in safety net coverage.

fig2.jpg

MPP is All-Inclusive

MPP was designed to be more accommodating to all U.S. dairy producers by removing the production caps found under MILC and allowing farms of all sizes to receive the similar levels of income support. Under MPP, a participating dairy farmer may purchase income protection on milk pounds equal to their maximum calendar year production during 2011, 2012, and 2013. This production base will be revised annually by USDA to reflect trends in U.S. milk production. Famers may then cover up to 90%, but not less than 25%, of this milk production base during each calendar year.

In order to approximate the amount of milk eligible for participation in MPP USDA NASS state-level milk production data was collected for 2011, 2012, and 2013. Then, for each state the maximum level of calendar year milk production during this period was identified and the 90% coverage level was applied. By not evaluating farm-level milk production this calculation may over or underestimate the actual amount of milk eligible for participation; however, it is likely to be reasonably close. As an example, milk production for California was 41.5 billion, 41.8 billion, and 41.3 billion pounds during 2011, 2012, and 2013, respectively. Applying the MPP provisions, up to 37.6 billion pounds of California milk are eligible for MPP.[1]  Figure 3 maps the estimate of milk pounds eligible for MPP by state. As apparent in Figure 3 the pounds of milk eligible for MPP mirrors the distribution of milk production in the U.S.

fig3.jpg

As evident in Table 2, MPP provides the option to purchase more safety net protection than what was covered under MILC. On a national scale it is estimated that of the 202 billion pound production base, up to 182 billion pounds of milk are eligible to purchase MPP coverage during the first year. Meanwhile, during the 2013 fiscal year only 48.6 billion pounds of milk qualified for and received a MILC payment. In order to compare the coverage capacity of the two safety net programs the MPP production base of 182 billion pounds was adjusted to reflect the frequency of MILC payments during fiscal year 2013. Multiplying this total by 90% results in approximately 122 billion pounds of MPP equivalent coverage. This basic estimate of MPP coverage capacity represents a safety net increase of 151% over the MILC program.

table2.jpg

Summary

Over the 2009 to 2013 fiscal years the Milk Income Loss Contract (MILC) provided coverage on 185.1 billion pounds of milk and paid over $1.6 billion dollars to dairy farmers. Over 47 thousand dairy operations participated in the no-cost MILC program. However, MILC was limited by a benefit cap of 2.985 million pounds per fiscal year and provided a much smaller safety net for large scale dairy operations. Due to the production cap, approximately 42% of the annual U.S. milk supply actively participated in and received MILC safety net coverage during 2009-2013.

Due to feed price volatility, industry consolidation, and caps on benefit eligibility, MILC is now viewed to be inadequate to accommodate the modern scale economies of the U.S. dairy farm sector. As a replacement, the Margin Protection Program is designed to be all-inclusive by providing farmers the opportunity to voluntarily purchase coverage on pounds equal to their historical maximum levels of milk production.

In today’s article we mapped the safety net support provided by the MILC program and used data from USDA on state-level milk production to map the pounds of milk eligible to purchase MPP. We then compared the MPP coverage capacity to the historical performance of the MILC program to approximate the magnitude of the increase in the dairy farm safety net. Results of this analysis indicate that MPP is capable of providing considerably more production coverage, at 182 billion pounds, than the soon to be expired MILC program.


[1] Actual pounds eligible for MPP would be based on farm-level calendar year milk production.

Farm Bureau Decodes Water Rule Proposal, Asks EPA to Rescind

WASHINGTON, D.C., July 17, 2014 – The American Farm Bureau Federation last night released to Congress a comprehensive document that responds, point by point, to numerous inaccurate and misleading comments made about the Environmental Protection Agency’s latest clean water rule. Nancy Stoner, EPA acting assistant administrator for water, made the statements in a recent agency blog post.

AFBF’s document explains – with specific citations to the proposed rule and other authorities – how the rule would give EPA broad Clean Water Act jurisdiction over dry land features and farming practices long declared off-limits by Congress and the nation’s highest court.

“AFBF and several state Farm Bureaus have met with the EPA repeatedly, and each time agency officials have declined to grapple with the serious, real world implications of the rule,” AFBF President Bob Stallman said. “EPA is now engaged in an intensive public relations campaign, and we believe its statements are directly contrary to the reality of the proposed rule.

“We have therefore decided to take our arguments to a wider audience, as well. Farm Bureau is dedicated to communicating to farmers, their elected representatives and the public how the proposed rule will impose costly and time-intensive federal permitting regimes on commonplace and essential practices that our nation’s farmers and ranchers depend on. Agency inspectors and courts will apply the rule, not EPA’s talking points. It’s time for the agency to ditch this rule and start over.”

AFBF hopes this document will contribute to the ongoing discussion in Congress regarding the rule and its implications not only for farming, but for the U.S. economy more broadly.

The document can be found here: http://bit.ly/1mhsL2Z

A shorter sampling of some of the most important points can be found here: http://bit.ly/1rr8hdi

Editorial: The EPA’s outrage in the barnyard (via The Washington Times)

Barack Obama derided George W. Bush’s strategy of “going it alone” overseas as “cowboy diplomacy.” Going it alone is the way of this administration’s domestic policy, which ignores Congress and the courts whenever they get in the way. This president does what he wants, when he wants, and expects his flirtatious charm to substitute for vigor and judgment. Someone in search of a stereotype might call this “cowgirl diplomacy.”

The latest assertion of unilateral power comes from the Environmental Protection Agency, which quietly published a rule last week asserting its authority to bypass the courts and even intercept the paycheck of anyone accused of violating an EPA dictate. This would consolidate the bureaucracy’s vastly enhanced authority. The EPA writes the rules, decides who’s guilty and imposes wage garnishment as punishment “without first obtaining a court order.” Judge, jury, executioner and gravedigger.

The EPA cultivates a habit of inventing outrageous interpretations of federal laws. Anyone who exhales is a polluter, given the agency’s classification of carbon dioxide as a form of toxic soot. A toddler’s puddle in a suburban backyard becomes a “navigable waterway” inviting federal regulators to stop in for a visit.

That’s about what happened when a team of badge-wielding EPA bureaucrats descended on Lois Alt’s chicken farm in Old Fields, W.Va. She was told her poultry operation ran afoul of federal rules governing industrial operations. “Manure and other pollutants,” the agency claimed in its order, “would come into contact with precipitation during rain events and generate process wastewater that is carried into the nearby man-made ditches.”

Mrs. Alt points out that the agency made quite a stretch. Her chickens live indoors, safe from “rain events,” in eight large covered buildings. The EPA’s claim is that the incidental manure that one inevitably finds outside a chicken farm’s coop is carried away by rainfall hundreds of yards — uphill — into a tiny creek called Mudlick Run, which the EPA labeled “a water of the U.S.”

Under the threat of $37,500 in fines per day, she was ordered to submit to the EPA’s authority, inviting the bureaucracy to redesign her farm. Instead of complying, Mrs. Alt sued in federal court, convincing the judge that the EPA had twisted the words of the law to convert ordinary farming into a category meant for industrial operations.

The legal fight comes at a heavy cost. Instead of investing in her business, Mrs. Alt has been putting her lawyers’ children through college. The 4th U.S. Circuit Court of Appeals in Richmond heard oral arguments on the case in May and a decision is expected soon.

Those who can’t afford the high cost of justice in the courts are stuck with the EPA’s administrative hearings, where the EPA administrative judge holds all the cards. The Heritage Foundation notes that the new rule enables the EPA to decide unilaterally whether a debtor can present a defense, and, if he can, it’s up to the accused to establish his innocence. Fair play and due process would place the burden on the government to prove its case, but this administration regards itself above constitutional inconvenience.

If the EPA wants to find actual polluters, the agency would head to a courtroom and convince a judge that wage garnishment is appropriate. Government cowboys and even cowgirls sometime get the blues, and this time that’s exactly what they deserve.

 

EPA chief calls some concerns on waters rule ‘just ludicrous’ (via Agri-Pulse Communications)

EPA chief Gina McCarthy says that while some of the agriculture community’s concerns about the agency’s proposed Clean Water Act (CWA) rule are legitimate, others are “just ludicrous.”

In a conference call with reporters on Tuesday, McCarthy said categorically that EPA has no plan to “regulate small, unconnected waters…including puddles on lawns, driveways, and playgrounds,” adding, “That’s just silly.” She also said the proposal makes it clear that her agency won’t regulate all ditches, and that there is no plan to regulate groundwater.

“This proposal is all about protecting waters that science tells us have a significant impact to downstream water quality. No more, no less,” McCarthy said.

McCarthy commented in advance of a trip to Missouri on Thursday where she will tour conservation practices on Bill Heffernan’s 140-acre corn and soybean farm near Rocheport and talk with other growers. Heffernan, a retired University of Missouri sociologist, is perhaps best known for his work on concentration in American agriculture. McCarthy will also give a speech on the CWA rule at the AgriBusiness Council of Kansas City.

EPA and the U.S. Army Corps of Engineers in March released a proposal to define “Waters of the U.S.” that fall under EPA’s jurisdiction under the CWA as well as an “interpretive rule” that lists 56 common on-farm conservation practices that are exempt from requirements for CWA permits. The agency closed a public comment period for the interpretive rule on Monday, but comments on the Waters of the U.S. definition can be submitted until Oct. 20.

Several agricultural organizations, including the American Farm Bureau Federation (AFBF) and the National Cattlemen’s Beef Association (NCBA) asked EPA to withdraw its proposals, painting them as examples of unwarranted government overreach. Because the waters of the U.S. proposal includes connected streams and wetlands as part of a system that could affect “navigable” waterways, critics say the EPA could actually end up regulating ditches. AFBF put together a public relations campaign aimed at defeating the proposal called “Ditch the Rule.”

Yet, McCarthy maintained the EPA is “not expanding jurisdiction.” She hopes the trip to Missouri “helps us ditch the myths and misinformation and focus on facts,” taking a not so subtle swipe at AFBF’s campaign.

Among their many concerns, agricultural groups are worried that the listed conservation practices in the interpretive rule are considered exempt from needing CWA permits only if they comply with USDA’s Natural Resources Conservation Service (NRCS) technical standards.

Although McCarthy noted that NRCS compliance is among the “legitimate” concerns, she wants to “dismiss some of the myths” about the plan.

“We’re not narrowing exemptions” she said. “We’re expanding them and providing clarity so no one needs to worry,” she said. “The bottom line is that, if you weren’t supposed to get a permit before, you don’t need to get one now.”

In 2006, the Supreme Court case Rapanos v. United States resulted in a split opinion on the reach of EPA’s regulatory authority, specifically on whether a wetland or tributary is a “water of the United States.” Justice Anthony Kennedy wrote in his opinion that smaller waters could be regulated if they have a “significant nexus” to a “navigable water,” meaning that they must biologically and chemically affect the navigable water body. However, the interpretation of what constitutes a “significant nexus” remains controversial.

McCarthy said the Supreme Court opinions “told us we need a more science-based process to determine what waters are navigable and if (smaller bodies of waters) have impact on navigable waters,” hence the attempt to clarify waters of the U.S.

Although the EPA’s efforts have supporters in the farming community, they are being drowned out by the critics, McCarthy said. They include AFBF, the largest general farming organization, which claims language in the CWA proposal could mean that puddles, ponds, ditches, isolated wetlands and other “ephemeral waters” could be regulated by EPA. AFBF said the regulatory authority under the proposal gives EPA and the Army Corps “the power to dictate land-use decisions and farming practices” near these water features.

In NCBA’s comments to EPA on the interpretive rule, the group said the rule would make NRCS “a regulatory compliance agency, resulting in cattle producers putting less conservation on the ground.”

AFBF said the fact that since the interpretive rule went into effect months ago, when it was published in the Federal Register in April, that “precludes any meaningful public participation” in the recently closed comment period.

Additionally, NCBA, AFBF and a group of more than 90 agricultural organizations said in comments to EPA that the interpretive rule is actually a legislative rule that must go through notice and comment rulemaking, because it requires NRCS compliance in its language.

House Small Business and Agriculture subcommittees recently held hearings on the CWA proposal, where it found few supporters. During one hearing last month, Oregon Democrat Kurt Schrader called it the one of the “worst, egregious examples of government overreach” he’s ever seen.