Policy Journal

March 28, 2009 12:54 PM

Lawmakers Pan Budget Plan
President Barack Obama's budget plan for fiscal year 2010 contains more problematic details than most expected. At least one of the ag provisions is labeled dead on arrival. The provision: Deny direct payments to farmers with gross sales of more than $500,000—and shift those dollars to nutrition efforts. Lawmakers and others were quick to criticize the plan, noting that basing it on gross sales really isn't accurate since farmers' expenses for that volume of sales could be sizable, too.

"We're not doing it,” said House Ag Committee Chairman Collin Peterson (D-Minn.) during a recent exclusive interview with Farm Journal (see page 50). "We are not going to [re]open the farm bill. We are not going to go back into payment limits.” Even Senate Ag Committee Chairman Tom Harkin (D-Iowa), who doesn't like direct payments, signaled that he didn't back using gross sales as a tool.

USDA Secretary Tom Vilsack initially defended the plan, saying it boiled down to a choice between paying "rich farmers” and feeding poor people. However, as the criticism continued to well up, Vilsack changed his tune.

"I would point out that USDA, without any undersecretaries and a very limited staff, was called up to deal with the stimulus package and put together a budget in a short period of time,” he said.

Vilsack is no longer spelling out the specifics of the proposal, simply referring to it as "improved targeting of direct payments to those who really need support” and saying he's open to suggestions.

It's important to remember that an administration proposes, and Congress disposes. Given the opposition the direct-payment provision has generated, that one won't be in the final USDA spending plan for fiscal year 2010.

Boosting the Blend
The voices are now a choir when it comes to raising the ethanol blend rate from the current 10%. The advocacy group Growth Energy presented a petition to the Environmental Protection Agency (EPA) calling for an increase in the blend percentage to 15%. While EPA considers the request (it has 270 days to make a decision), Growth Energy and a host of others are urging an immediate boost in the blend percentage to 12% or 13%. USDA Secretary Tom Vilsack says he has had several conversations with EPA head Lisa Jackson and her team to encourage the agency "to take aggressive action on the blend rate,” saying a move to 12% or 13% now would be a good "first step.”

The agriculture directors of 10 Midwestern states sent a letter to President Barack Obama endorsing the acceptance of 15% or 20% ethanol blends, and House Speaker Nancy Pelosi (D-Calif.) said she hopes the blend percentage is boosted, as well.
President Obama said in mid-March that he believed the decision to boost the blend percentage may well end up on his desk. "As someone explained to me, nothing comes to my desk if it's easy,” he noted. "I suspect that this [the ethanol blend limit decision] will be reconciling a lot of different issues.”

The Renewable Fuels Association figures that roughly 2 billion gallons of ethanol production capacity is idled right now, and USDA projects about 15% of capacity will be offline for the 2009/10 corn marketing year.


Greenhouse Gas Monitoring
The Environmental Protection Agency (EPA) is seeking public comment on its plan to require the reporting of greenhouse gas emissions from a host of industries, including agriculture. Specifically, the agency wants emission reports from livestock operations with manure management systems that emit more than 25,000 metric tons of greenhouse gas emissions. EPA said that most nonlivestock farmers wouldn't have to report and that only 40 to 50 livestock operations would be affected.

In addition, EPA said it won't collect data on "emissions of methane from ruminant animals via enteric fermentation”—commonly known as cow farts. Lawmakers have already introduced legislation to prevent the imposition of a "cow tax” based on methane emissions in the future.

Ethanol plants would also be subject to the proposal, with EPA estimating that 86 plants nationwide (61% of the total) would have to
report greenhouse gas emissions.

Policy Briefs
Jim Miller of the National Farmers Union has been nominated to be USDA Undersecretary for Farm and Foreign Agricultural Services, and Dallas Tonsager of the Farm Credit Administration has been nominated to be Undersecretary for Rural Development.

The Congressional Rural Caucus is calling on President Barack Obama to establish a White House Office of Rural Policy. The request came after Obama announced he will set up an Office of Urban Policy.

Cuba trade provisions that are in the $400 billion fiscal year 2009 omnibus spending plan won't affect current rules on ag sales to Cuba, according to Treasury Secretary Tim Geithner. He says firms will still be required to get payment before shipment of any products.

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