Rich Pottorff, Doane chief economist & Washington analyst  |   March 20, 2012 resize text

The U.S. Senate defeated two amendments aimed at supporting the biofuels industries. The $1 per gallon biodiesel tax credit expired at the end of December and an effort to attach an amendment to reinstate it to the transportation bill failed. The Senate also defeated an effort to extend the $1.01 cellulosic producer tax credit and the accelerated depreciation allowances for biofuels production facilities.

There may be few opportunities to pass these bills to encourage production of biofuels this year and the lack of support could stymie increases in production and use. The Senate did approve amendments to the transportation bill that would exempt agricultural truck drivers from maximum driving limits during planting and harvesting seasons. In addition, the bill would exempt drivers of farm vehicles from obtaining commercial driver’s licenses. Similar legislation has been introduced in the House but not yet voted on.

You may now be required to obtain a permit if you are going to apply pesticides over or in the vicinity of flowing water. This is in response to a federal appeals court ruling that pesticides are regulated under the Clean Water Act as well as the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA). The permit process takes between 14 and 30 days. A permit may be required for anyone applying pesticides near or over streams, ponds or lakes.

Goals for a new farm bill were summarized this week by House Agriculture Committee Chairman Frank Lucas, R-Okla.

He says “First and foremost I want to give producers the tools to do what you do best; and that is to produce the safest, most abundant, most affordable food supply in the history of the world. To do this we must develop a farm bill that works for all regions and all commodities”.

He is saying that a one-size-fits-all program will not work. Lucas said a strong crop insurance program is the cornerstone of the safety net. He says he supports conservation programs but wants to simplify them so they are easier for farmers and ranchers to use.

Senate Agriculture Committee Chairman Debbie Stabenow, D-Mich., says she plans to stay within the structure of the $23 billion in cuts in farm program spending agreed to be House and Senate Agriculture Committee leaders last November. However the House Budget Committee may require bigger cuts when it develops the budget plan for fiscal 2013. House Budget Committee Chairman Paul Ryan, R-Wis., is expected to unveil the budget plan next week.

Last year Ryan proposed cuts totaling $30 billion for commodity programs and $20 billion for conservation programs over 10 years. The Senate does not plan to pass a new budget but will use the $1.047 trillion cap on all spending put in place in last summer’s budget deal.

The Congressional Budget Office forecasts a federal budget deficit of $1.2 trillion for this fiscal year, $93 billion larger than the last estimate. The increase in the size of the deficit is the result of the recently passed payroll tax cut. The CBO budget shows $770 million less spending for price support programs in fiscal 2012, but slightly higher spending on conservation programs. The CBO analysis and forecasts for farm program spending can be found at: http://www.cbo.gov/sites/default/files/ cbofiles/attachments/43053_USDAMandatoryFarmPrograms.pdf.

The Obama Administration is urging Congress to grant Russia permanent normal trade relations status. Russia is expected to join the World Trade Organization in the next few months and the U.S. will not see benefits from this development unless PNTR is approved.

Passing PNTR would double U.S. exports to Russia in five years, according to Senator Max Baucus, Chairman of the Senate Finance Committee. Senator Orrin Hatch, R-Utah, opposes the effort pointing to Russia’s corruption and human rights record. Congress probably won’t approve PNTR before Russia joins the WTO this summer.

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Texas  |  March, 20, 2012 at 07:56 AM

The federal government spent $24 billion on energy subsidies in 2011. Renewable energy and energy efficiency accounted for $16 billion of the federal support. Ethanol was the biggest recipient with $6 billion and wind was second. Fossil fuels received $2.5 billion in tax breaks. In 2010, subsidies per megawatt-hour of electricity produced were $0.63 for natural gas, $0.64 for coal, $52 for wind and $968 for solar. Unfortunately, Sen. DeMint's amendment to the highway bill to eliminate all energy subsidies was defeated. All 53 members of the Democrat Caucus voted "no". 26 Republicans voted "yes". www.newsandopinions.net