Note: I will be traveling on Wednesday (28th) to Washington, D.C. to attend the U.S Department of Agriculture’s 2007 Agricultural Outlook Forum. Assuming no technical difficulties, the regular FarmPolicy News Summary will return Thursday morning, March 1.

Jack Thurston, a Transatlantic Fellow at the German Marshall Fund of the United States, recently conducted a series of interviews with leading stakeholders from government, business, World Trade Organizaiton member governments, and NGOs regarding the Doha Development Round negotiations of the WTO.

Mr. Thurston conducted these nine interviews, including a conversation with WTO Director-General Pascal Lamy, at a recent retreat, “Realizing the Doha Development Agenda as if the Future Mattered.” The retreat was held in Salzburg, Austria, from February 16-20 and was convened by three non-profit foundations with global missions: theWilliam and Flora Hewlett Foundation, the German Marshall Fund of the United States and the Salzburg Seminar.

A news release from earlier this week summarized the retreat by noting that, “Participants came away from the retreat more optimistic about the prospects of obtaining a Doha agreement. Participants from Africa, Brazil, Europe, India, and the United States all said their leaders understand the economic and geopolitical importance of reaching a multilateral trade agreement, but they are not doing enough to convince their constituents back home. Participants departed with a commitment to return home to push their governments for a strong and timely conclusion to the trade talks, to talk to their citizens about the importance of a Doha agreement, and to build the necessary coalitions among diverse stakeholders to pass a final Doha agreement.”

All of the audio interviews conducted by Mr. Thurston can be viewed and downloaded by clicking here. The first interview, which was done on February 16, was with WTO Director-General Pascal Lamy and can be downloaded by clicking here (MP3).

In part, DG Lamy indicated that a “political side” of the negotiations has contributed to the difficulty of concluding the Doha talks. “Parliaments need to ratify the conclusion of these agreements, and Parliaments are places where interests and lobbies have their say, and in places like Washington or Brussels or Delhi, [there is] no way you can sort of clinch a deal without making sure that your Parliament, your political parties, your constituencies will accept it when they will have to ratify it.

“Most WTO Members are democracies, and democracies don’t always work with numbers, they also work with politics and that is the difficult side of it, especially when agriculture holds such a key position in the unlocking of the conclusion of the Round,” Lamy said.

DG Lamy went on to note that the politics of trade are not the same as they were ten or fifteen years ago, globalization has made people in some ways more “trade reluctant.”

Mr. Thurston also explored the consequences of success and the consequences of failure of the Doha Round with the WTO leader.

On February 20, Mr. Thurston spoke with Jim Kolbe, a former Republican Congressman from Arizona who is now a senior transatlantic fellow at the German Marshall Fund. Also joining this conversation was Linda Menghetti, a former chief minority staff counsel to the Senate Finance Committee. This interview focused on the role being played by the US Congress in the end game of the Doha Round. To listen, just click here (MP3).

With respect to the political atmosphere on trade in the U.S., Mr. Kolbe stated that, “This is going to be a very tough sell in Congress.” Nonetheless, Mr. Kolbe is encouraged by the fact that the possibility of agreement exists, “when six months ago the talks were suspended and it didn’t seem asthough we were going to see any agreement at all.”

Mr Kolbe also provided an excellent explanation of the importance of trade promotion authority. Both Mr. Kolbe and Ms. Menghetti pointed out that there are a lot of potential points of interest for Congressional members, districts and states in the Doha talks because they are so broad-based. Compared to a bi-lateral trade deal with one country, the Doha talks do provide for the opportunity for more Congressional members to have a constituent interest and reason for supporting the passage of a potential deal.

As noted previously, the other seven interviews conducted with Mr. Thurston can be downloaded from this webpage.

In addition to audio interviews, valuable background and briefing documents regarding the Doha talks have also been posted. Of particular interest: a briefing document, entitled, “The Doha Round Agriculture Negotiations: An Overview;” an easy to read bullet point summary, entitled, “Doha Round Overview – ‘What’s on the Table;’” and this briefing paper, “Concluding the Doha Round - The Reality Check.”

-Keith Good

I. Doha- EU and India
II. U.S. Issues- Cotton and Budget
III. Cellulosic Ethanol
IV. Stenholm

I. Doha- EU and India

Alan Beattie, writing in today’s Financial Times, reported that, “Private conversations among leading countries in the so-called ‘Doha round’ of global trade talks have produced constructive engagement but no broad agreement yet, participants say.

“Top negotiators from some of the leading countries in the talks including the European Union, the US, India and Brazil met last week in London to continue a series of bilateral conversations, particularly about the highly sensitive farm talks. Talks have centred on different categories of exemptions to the cuts in agricultural tariffs that will be permitted to rich and poor countries.

Peter Mandelson, European trade commissioner, yesterday told the FT: ‘What came out of last week’s senior officials’ meetings is a clear turning point in the negotiations. We now have a better negotiating relationship between the majors.’”

Mr. Beattie added that, “One of the welcome innovations of the past few weeks, participants in the talks said, was the active participation of India in the web of bilateral contacts. India largely stood aside from the meetings that led to the full resumption of negotiations in Doha agreed at the World Economic Forum in Davos at the end of last month.”

An article posted on Sunday at The Financial Express indicated that, “[WTO Director General Pascal Lamy], of course, says US should reduce its farm subsidies and EU its farm tariffs. But by how much? If any cosmetic reduction is done, it would not prompt the developing world to open up their markets. [Indian agriculture minister Sharad Pawar], while suggesting an open export-import regime in farm goods, had said the developed countries’ subsidies should be reduced and that commerce minister Kamal Nath was trying his best for it.”

The article concluded by saying, “India has already suffered on opening up for imports of vegetable oils and cotton. Thus the developing world should move with caution on the issue of opening up of agriculture, till global trade is free from any distortion.”

Meanwhile, John Zarocostas reported in yesterday’s International Herald Tribune that, “Even as top trade negotiators were seeking ways to lower farm tariffs to help save global trade talks, the average duty on farm goods coming into the European Union rose in the past year, according to a report released Monday by the World Trade Organization.

“At the same time that Europe was trying to protect farmers, the WTO study found, the EU share of global manufacturing declined — largely because of relocation of production to lower-cost countries.

“The WTO economists highlighted the fact that in 2006, the average applied tariffs for agricultural goods were far greater than the duties levied on imports of manufactured goods.

“‘Agricultural products are the most tariff-protected,’ the report said, with an average duty of 18.6 percent in the EU, compared to an average of 4 percent for non-farm goods. This represented an increase in the agricultural duties from 16.5 percent in 2004, while tariff for industrials posted a slight decrease from 4.1 percent two years earlier, the report by the WTO secretariat noted.”

The WTO report can be downloaded by clicking here, where a press release regarding the report noted that, “The report also notes that the European Communities is the world’s leading exporter and the second-largest importer of goods, and its economy has continued to support global growth by maintaining its market open, but trade barriers remain in a few but important areas, notably agriculture. Indeed, the report states that despite an increase in the exposure of farmers to world markets due to the implementation of the 2003 Common Agricultural Policy (CAP), further reduction of export subsidies and tariffs on agriculture are needed.”

And the Associated Press reported yesterday that, “European restrictions on banana imports will face a new challenge at the World Trade Organization next month when Ecuador asks the group to restart a decade-old dispute over what Latin American countries and the United States have previously argued amounts to unfair trade discrimination, officials said Monday.

“The WTO has consistently ruled against how the European Union sets tariffs for bananas, forcing the bloc to overhaul a system that grants preferential conditions for producers from African and Caribbean countries, mainly former British and French colonies.”

II. U.S. Issues- Cotton and Budget

With respect to U.S. agricultural issues and the WTO, cotton subsidies continue to be a focal point.

Forrest Laws, reporting yesterday at the Delta Farm Press webpage, indicated that, “National Cotton Council leaders have looked at a schedule of upcoming WTO events and decided they do not bode well for U.S. cotton.

“The NCC says the WTO has slated a compliance panel to hear oral arguments in the Brazil-United States Cotton Compliance dispute Feb. 27-28. Hard on the heels of that will be a ‘high profile’ March session on cotton at the WTO headquarters in Geneva.

“The two meetings focus too much attention on U.S. cotton at a time when WTO leaders obviously are trying to restart the suspended Doha Round negotiations, according to Jay Hardwick, chairman of the American Cotton Producers, the producer arm of the NCC.

“The timing of the sessions is ‘an unfortunate turn of events that can severely undermine the credibility of the WTO dispute settlement process,’ says Hardwick, a cotton producer from Newellton, La.”

Mr. Laws went on to note that, “Oxfam has been a thorn in the side of the U.S. cotton industry almost from the beginning of the latest round of WTO trade agreement negotiations in Doha, Qatar, in 2001. Oxfam has repeatedly blamed the U.S. cotton program for ‘impoverishing African cotton farmers.’

“[Former NCC Chairman Woody Anderson], a NCC board advisor and producer from Colorado City, Texas, also took issue with comments by French President Jacques Chirac who recently made similar claims about the U.S. cotton program.”

In a broader look at U.S. farm policy and the 2007 Farm Bill, Secretary of Agriculture Mike Johanns delivered public comments yesterday to America’s Second Harvest Food Research and Action Center National Anti-Hunger Policy Conference in Washington, D.C.

According to a transcript of his remarks, Secretary Johanns stated that, “You know I think the term ‘farm bill’ actually is quite misleading, because this legislation deals with so much more than farms. As I said, there’s a perception among some people that since they aren’t farmers, this policy could not possibly impact them. But of course that’s simply not true. School lunches, international trade, environmental conservation, supermarket prices, ethanol production– all of these are directly or indirectly impacted by what we call the Farm Bill.

“That’s why I have to be able to defend our proposals in the big cities and at the smallest farms. In order to do that, we followed four basic principles as we created our proposals. First, we wanted to make sure that the programs we had were predictable for people….Secondly, we wanted to distribute our support more equitably…Third, we wanted our farm programs to be better able to withstand challenges in the international arena….Fourth, we wanted to make wise and effective use of our taxpayer dollars…”

Secretary Johanns also pointed out that, “When you examine the agricultural economy today,you’ll see strong commodity prices for most program crops as well as record rates of production in yield. The debt-to-asset ratio for agriculture has now fallen to about 11 percent. Let me explain the significance of that number. That’s the lowest number we have ever recorded at the United States Department of Agriculture. We expect crop receipts to set a new record of more than $133 billion this year, driven by the growing interest in ethanol and other renewable fuels.

“Prices for farmland and corn I might add are also setting records. It’s an incredibly strong economic picture, and it gives us a chance to look at our programs within the larger context of government spending. By focusing on the effectiveness and the efficiency of our programs, I believe we can provide much needed services to the American people and still maintain fiscal discipline.”

Positive indicators from the farm economy, such as high market prices for some program crops, are also having a profound impact on the federal budget picture with respect to projected farm spending.

The “Washington Insider” section of DTN provided a cogent analysis of the budget issue yesterday (link requires subscription), explaining that, “At this early stage in the farm bill debate, a key issue is how much money will be budgeted for the new bill.”

Noting that the Congressional Budget Office will release their latest baseline projections in March, “Washington Insider” stated that, “The final estimate will be released next month, but the early figures suggest the baseline will be more than 40 percent lower than it was in 2002, because of the outlook for smaller safety net payments.

“However, members of the Senate and House Agriculture committees say the numbers are misleading and that funding of the new bill should be at least as great as the 2002 Act, regardless of expected needs.”

The DTN item noted that, “Congress actually can decide to add funds beyond the baseline estimates, but whether it will do so remains to be seen.”

“Washington Insider” also reported that, “Clearly, the prospect of a veto threat for a farm bill, especially if one emerges with strong support in Congress, is not for the politically faint hearted. However, based on early statements, Congress and the administration are far, far apart on a broad range of agricultural policy issues including level of spending. And, while it is very early in the debate, the White House just may find it necessary to resort to strong measures if it seriously intends to impose budget and policy disciplines this time around, Washington Insider believes.”

The DTN item also made reference to a Government AccountabilityOffice report that was released last week (“The Nation’s Long-Term Fiscal Outlook- January 2007 Update”); “In its report, GAO said it conducted two different simulations based on current law and on economic assumptions by the Congressional Budget Office and both found that the cost of meeting the existing long-term federal obligations would require severe tax increases or spending cuts. In fact, GAO said, closing the fiscal ‘gap’ would require an annual spending cut or tax increase of 3.6 to 7.5 percent of total U.S. output,” the DTN article said.

Along these lines, The Congressional Budget Office also released a recent report entitled, “Budget Options,” which as the title indicates, sets out some general options or changes in programs, and estimates how federal spending would be impacted based on these options.

With respect to federal farm spending, this CBO highlighted the Conservation Security Program on page 75, and the Conservation Reserve Program on page 77.

The discussion regarding general farm subsidy supports begins on page 81 of the report. There, CBO indicated that, “Spending for farm income-support programs, which extends through 2007 under the Farm Security and Rural Investment Act of 2002, is projected to decline from $18 billion in 2006 to $10 billion in 2007 because of higher crop prices caused by strong demand from abroad, increased demand for ethanol (a gasoline additive made from corn), and crop damage attributable to recent bad weather across the country. The decrease in spending for the farm income-support programs is partially offset by an increase in spending for the federal crop insurance program, as higher crop prices bolster the value of crops and insurance alike.”

Payment limitation issues are discussed on page 83, and an option to reduce payment acreage by one percent is discussed on page 85. Regarding this option, the CBO report explained that, “Direct and countercyclical payments to agricultural producers (described in Option 350-2) are expected to make up about 86 percent of the Commodity Credit Corporation’s (CCC’s) total spending for program commodities—wheat, feed grains, oilseeds, cotton, rice, and peanuts—over the next 10 years. Those payments are calculated as 85 percent of a producer’s base acreage times an assumed yield per acre times a payment rate per unit (bushel, pound, or hundredweight) of production. In general, a farm’s base acreage for each eligible crop is calculated as the average number of acres planted with that crop between 1998 and 2001. Direct and counter- cyclical payments are made regardless of what is currently produced on the farm; hence, those payments tend not to distort people’s decisions about production. Program participants may also receive benefits for those commodities through marketing-assistance loans, which are paid according to actual farm production.

“This option would reduce the eligible payment acreage for direct and countercyclical payments by 1 percentage point—from 85 percent to 84 percent. That change would lower the CCC’s outlays for farm programs by $13 million in 2008 and by $300 million over the 2008– 2012 period.”

In news regarding conservation program spending, Ben Shouse reported in today’s Argus Leader (South Dakota) that, “Clayton Dawson planted this farmland to grass 10 years ago, joining a government program designed to reduce erosion and build wildlife habitat.

“But next year, he expects that these 150 acres north of Hartford will again be planted to soybeans or corn.

“It’s part of a decline in the Conservation Reserve Program, which is losing 270,000 acres this year in South Dakota - 18 percent of the state total.

“Conservationists and state game officials worry about the effect on hunting and the environment.”

The article added that, “Recent changes in federal policy have made the decline of CRP acres inevitable. And as demand for biofuels pushes corn prices higher, it raises the possibility that ethanol will come increasingly from land once devoted to the state’s beloved hunting tradition.

“Some say President Bush’s latest proposals break his promise to expand the program. But farm groups say many CRP acres, such as Dawson’s, can be farmed with little negative effect.”

III. Cellulosic Ethanol

As ethanol use continues to impact market prices and the budget, much focus has turned to technological advancements in cellulosic ethanol production- where other feed stocks besides corn are used to generate ethanol.

The Energy Roundup Blog, which is a free blog published by The Wall Street Journal, noted yesterday (“Cellulosic Ethanol May Not Deliver”), that President Bush has been traveling the country touting the benefits of cellulosic ethanol, or biofuel made from switch grass and other non-corn plant material. But MIT’s Technology Review suggests in a new article that, ‘without loan guarantees and other incentives,’ the biofuels industry ‘will fail to emerge from the current demonstration phase to produce commercial-scale quantities of ethanol. And without that, it may be impossible to meet President Bush’s ambitious goal of producing 35 billion gallons of renewable fuels a year by 2017.’”

As noted above, a link to the MIT review article is available here and also notes that, “Cellulosic ethanol is attractive because the feedstock, which includes wheat straw, corn stover, grass, and wood chips, is cheap and abundant. Converting it into ethanol requires less fossil fuel, so it can have a bigger effect than corn ethanol on reducing greenhouse-gas emissions. Also, an acre of grasses or other crops grown specifically to make ethanol could produce more than two times the number of gallons of ethanol as an acre of corn, in part because the whole plant can be used instead of just the grain. That’s good news because many experts estimate that corn-ethanol producers will run out of land, in part because of competing demand for corn-based food, limiting the total production to about 15 billion gallons of fuel. (Already, corn-ethanol plants–existing and planned, combined–have a capacity of about 11 billion gallons.) The greater productivity of cellulosic sources should eventually allow them to produce as much as 150 billion gallons of ethanol by 2050, according to a report by the National Resources Defense Council (NRDC). That’s the equivalent of more than two-thirds of the current gasoline consumption in the United States.

“But it will take some time to reach these levels of production. Even producing enough cellulosic ethanol to meet the president’s 35-billion-gallon goal will be difficult. That will require that roughly 15 billion gallons would come from non-corn-grain sources such as cellulosic ethanol (about 5 billion gallons might come from biodiesel culled from oils in crops such as soybeans). And reaching 15 billion gallons by 2017 will be a challenge. Currently, according to the ethanol industry’s list of producers in the United States, none of the ethanol comes from cellulosic biomass.”

For a broader look at agriculture and energy production issues, see this Congressional Research Service report, “Agriculture-Based Renewable Energy Production,” which was written by Randy Schnepf and was published last month.

IV. Stenholm

Ian Swanson reported at The Hill webpage today that, “[Former Texas Congressman and Ag Committee Member Charles Stenholm’s] clients include the International Dairy Foods Association, the National Association of State Departments of Agriculture and a new client, the National Cattlemen’s Beef Association (NCBA), which represents cattle ranchers.

“‘The main thing that interested us about Charlie is, we know he understands our issues as well as anyone,’ the group’s vice president for government affairs, Jay Truitt, said. He describes Stenholm as a tactical thinker who will help NCBA look at policy issues affecting cattle producers in the short and long term.

“For example, a growing concern for NCBA is the cost of feed, which has been skyrocketing because of surging demand for ethanol. Stenholm is also representing oil producers, including the American Petroleum Institute and the Independent Petroleum Association of America, that are also worried about side effects of the ethanol boom.”

The Hill article added that, “Stenholm now finds himself lobbying on a farm bill with the man who chaired the committee when the last farm bill was approved in 2002. Former Rep. Larry Combest (R-Texas) is now a lobbyist for Combest, Sell and Associates.

“‘I would not be at all surprised if you were to see us working together on some issues sometime between now and the passage of the farm bill,’ said Stenholm, who described Combest as a good friend. When the two served as the top Democrat and Republican on the House Agriculture Committee, it was the first time one state had ever held those positions.”

-Keith Good

Philip Brasher reported in yesterday’s Des Moines Register that, “President Bush has a goal of restoring and improving 3 million acres of wetlands by early 2009, a goal that will benefit wildlife as well as enhance water quality.

“The key to doing that is a U.S. Agriculture Department program that buys easements on low-lying farmland and then helps pay all or part of turning the acreage back into wetlands. The wetlands provide valuable habitat for birds and other wildlife, control flooding and cleanse contaminants from groundwater.”

However, the article noted that, “The USDA had overhauled the way it appraises property for the Wetlands Reserve Program after an inspector general’s report accused the department of overpaying landowners by $159 million over a five-year period.

“In calculating what it would pay for easements, the USDA had failed to take into account that the restored wetlands would be quite valuable to the landowner for hunting.”

Mr. Brasher noted that under the new calculation methods, “In Bremer County, Ia., the offers the USDA made to landowners dropped an average of $400 an acre from 2005 to 2006.”

After explaining that some groups have asked the administration to change the new appraisal method, the article concluded by stating that, “The USDA plans to ask outside consultants to review the program this year to see what impact the new appraisal method has had.

“All this has put USDA officials in a predicament: On the one hand, they’ve got to keep the politically powerful wildlife and gun lobbies happy and increase wetlands restoration.

“On the other, they’ve got to ensure that well-heeled hunters and landowners aren’t using another farm program to rip off taxpayers.”

In a related article regarding wetlands, Jon Knutson reported at the In-Forum (North Dakota) webpage on Friday that, “A new federal program designed to convert cropland into duck nesting habitat is drawing little interest, at least in part because of rising crop prices.”

The article indicated that, “The U.S. Department of Agriculture launched its CP37 initiative last year.

“The program will pay farmers in five upper Midwestern states to convert up to 100,000 acres of cropland into duck nesting habitat.”

More specifically, the article explained that, “Strong demand for ethanol has pushed up corn prices 75 percent or more in the past year.

“Prices for crops such as wheat and soybeans have risen 30 percent or more.

“Farmers who enroll land in the program typically will receive $30 to $40 per acre per year in federal payments.

“Higher crop prices – and the higher profits they promise – make those rates less attractive.”

With respect to higher crop prices, Bloomberg writer Jeff Wilson reported yesterday that, “Farmland is rising faster in price than apartments in Manhattan and London for the first time in 30 years.

“Demand for corn used in ethanol increased the value of cropland from 16 percent in Indiana to 35 percent in Idaho in 2006, government figures show. The price of a Soho loft appreciated only 12 percent, while a pied-a-terre in Islington near London’s financial district gained 11 percent, according to Realtors.

“Farmland returns ‘will take a quantum leap over the next 18 months’ after corn prices surged to a 10-year high in February, said Murray Wise, chairman and chief executive of Westchester Group Inc. in Champaign, who oversees $460 million of land investments.”

In addition to impacting land values, higher market prices are also playing a role in production allocation decisions by producers. A Dow Jones news article posted on Friday at the DTN Ethanol Center webpage, reported that, “A planting intentions survey conducted by Doane Advisory Services shows farmers intend to plant more acres to corn andfewer to soybeans in 2007.

“According to survey results, farmers intend to plant 14.7% more corn in 2007 than was seeded the previous year, but soybean planted area will decline 12.5% in 2007, Doane said.”

As ethanol use continues to impact market prices, variables associated with the profitability of ethanol production, such as federal legislation and technological changes also warrant closer inspection.

Generally, the U.S. imposes an import tariff of $0.54 on each gallon of imported ethanol. This tariff is set to expire in 2009. A Dow Jones article posted at the DTN Ethanol Center reported on Friday that, “[Wally Tyner, agricultural economics professor at Purdue University in Indiana] said ‘those who felt the duty was implemented to protect the domestic industry want it continued.’ But others who support renewable fuels and don’t care whether they originate in the U.S., Brazil or elsewhere want the tax removed. U.S. East and West Coast ethanol users oppose the duty, he said, since they pay up for imports, while Central U.S. producers want to keep it. Tyner says Congress might extend the tariff in 2009, but with some alterations - maybe lowering it to 51 cents.

“Nicholas Burns, U.S. Undersecretary of State for Political Affairs, visited Brasilia, Brazil this month to discuss formalizing ethanol standards with government ministers there. Brazilian millers like the idea of an ethanol alliance, but remain anxious to see the U.S. duty removed.”

Another important variable in determining the viability of long-term corn-based ethanol use is technological changes associated with cellulosic ethanol production, a process whereby ethanol can be produced from alternative feed stocks such as wood or various kinds of perennial grasses. A variety of technological and market factors are currently limiting ethanol production derived from these sources, including a limited supply of feed stock, lack of infrastructure for commodity transport and storage, and prohibitively high costs of cellulosic ethanol production.

A news release issued on Friday from Texas A&M University noted that federal legislative developments associated with the 2007 Farm Bill could impact the types of commodities that could be used to make ethanol.

The news release stated that, “Farmers and ranchers could soon be looking harder at forage production as biomass crops become more lucrative and sought after by new biofuel plants popping up across the U.S.

“What U.S. Rep. Collin Peterson, D-Minn., doesn’t want to see happen are plants ready to go on line with no product to be found.

“‘If we don’t get feed stocks started now,these plants are going to be built and people are going to be looking for material with no (place) to go,’ said Peterson, chairman of the House Agriculture Committee at the 2007 Ag Forum Friday in Austin.

“As work continues on a new farm bill that looks to weigh heavily on energy and conservation, some of the most traditional practices on the nation’s farms could be changing, he said.

“‘I tell my people at home instead of growing sugarbeets, you might be growing switchgrass,’ Peterson said. ‘This (renewable energy) is the most exciting thing that has ever happened in my lifetime in agriculture.’”

William Pack, writing on Friday at the San Antonia Express News (Texas) webpage, provided this analysis of what Chairman Peterson’s comments on ethanol and the Farm Bill; “Demand for ethanol, particularly cellulosic ethanol that comes from woody plants, is revitalizing agriculture and should receive a funding boost in the new farm bill, the chairman of the Agriculture Committee in the U.S. House said Friday.”

The article stated that, “The House and Senate agriculture committees are working on a farm bill — establishing price supports for a variety of crops and financing the food stamp program — to replace the 2002 bill that expires this year. That bill created an energy entitlement for the first time, and officials believe funding for it will grow in the new bill, which may not be completed until late summer.”

According to the article, Chairman Peterson also addressed budgetary issues, “Farmers are worried that budgetary concerns and high crop prices, caused in large part by the demand for corn-based ethanol, could result in lower price supports in the new bill. Because higher crop prices have resulted in $60 billion in savings in price support programs, Peterson did not believe money would be taken out of the commodities programs for energy or other initiatives this time around.”

In additional news coverage of cellulosic ethanol production, Jerry Perkins reported in yesterday’s Des Moines Register that, “For five years or more, proponents have said the promise of making ethanol from biomass crops such as switchgrass and hybrid trees was just around the corner.

“That corner has yet to be reached, but last week it seemed a little bit closer when cellulosic ethanol producers and allied businesses spoke to the National Ethanol Conference.

“Robert Dinneen, president of the Renewable Fuels Association, host of the conference, said cellulosic ethanol will revolutionize the industry.

“‘Five years from now, the ethanol industry will beunrecognizable from what it is today, because of cellulosic ethanol,’ Dinneen said.”

The Register article also indicated that, “Getting farmers to grow new crops, developing harvesting equipment and delivering bulky biomass crops to the plant all must be dealt with before cellulosic production can become a commercial reality, [Anna Rath, director of business development at Ceres, a developer of energy crops for cellulosic production,] said.”

Dan Chapman, writing last week in the Atlanta Journal-Constitution provided an interesting look at renewable energy production and the feed stock used to generate fuel.

Mr. Chapman reported that, “The renewable energy revolution rolls into Plains [Georgia] today with the celebration of yet another alternative-fuel factory intended to help America kick its oil addiction, clean its air and boost rural Georgia’s economy.

“Alterra Bioenergy Corp.’s selection of Plains — the hometown of former President Jimmy Carter — for its 30-million-gallon biodiesel plant pushes Georgia to the forefront of the Southeast’s still-young renewable energy industry.”

The article noted that, “There’s only one problem with this energy-from-nature idyll. Plains rests in the heart of peanut country, holds a peanut festival each September and takes pride in its 13-foot-tall ‘Smiling Peanut’ statue, but Alterra won’t be using the goober to make the alternative fuel — at least in the short run.

“Instead, the company will use soybean oil from food-processing conglomerates in Valdosta and Gainesville to produce its biodiesel. Georgia peanut growers, who earned $368 million in 2005 for their crop, will be out of luck.

“‘Peanut oil is very expensive compared to [soybean oil], which is immediately and readily available,’ said [Alterra Bioenergy Corp.’s Chief Executive A. Wayne Johnson], a former Visa executive turned entrepreneur who hopes to eventually be able to use peanut oil when price allows. ‘But we concluded that central and South Georgia are ideal locations because of rail access and the utilization of fuels in these areas. And Plains just happens to be in the epicenter of oilseed production in the United States.’”

Mr. Chapman also noted that, “It didn’t take rising gas prices — Monday’s average for regular gas was $2.10 a gallon in Atlanta — or President Bush’s mention of biodiesel and ethanol in last month’s State of the Union speech for alternative-fuel production to explode. Nationwide, 105 biodiesel plants are running, according to the National Biodiesel Board, with another 77 being built and eight others expanding. Roughly 225 million gallons of biodiesel were blended in 2006, triple the previous year’s production.”

***

Beyond the issue of renewable energy, which has emerged as one of the most significant variables in the 2007 Farm Bill debate, broader editorial opinion on farm policy continues to be published.

An opinion piece by Philip Hayes, which was published at the High Plains Journal (Kansas) webpage last week, noted that, “Most big-city reporters don’t know the difference between sweet corn and corn sweetener. Yet, somehow they all think they’re experts when it comes to farm policy.”

Mr. Hayes went on to suggest that farmers, “Write a letter to Congress. Pick up the phone and call your Senator. Contact your local paper and author a positive story describing what farm policy means to your community, then send that article to Capitol Hill.”

The editorial indicated that, “The media coverage from Metropolis won’t be pretty, but you can take comfort in one thing: Lawmakers, not newspapers, write farm bills.”

A separate editorial, posted yesterday at the In-Forum (North Dakota) webpage, had a similar theme; “To hear critics of farm programs tell it, a huge majority of farm bill expenditures is being sucked up by big farmers who don’t need federal crop supports. From the editorial pages of urban newspapers in the East to ideologically driven politicians in Congress, farm legislation has become a routine whipping boy.”

The item stated that, “Recent studies by USDA and agencies such as the North Dakota Agriculture Statistics Service and the North Dakota Farm Service Agency reveal that the 2002 Farm Bill has been both a bargain for the U.S. Treasury and an effective economic safety net for farmers. When debate begins this year over a new farm bill, the efficacy of the major provisions of the 2002 bill must be recognized.”

***

Lawmakers and other stakeholders continued to hold regional meetings across the country last week on the future of U.S. farm policy. Here is a sampling of some of the coverage of these forums.

* Patrick Courreges. “Ethanol, cotton subsidies among Farm Bill topics at forum.” The Advocate (Louisiana). 2.23.2007- “Ethanol and concerns about federal aid for agriculture dominated Thursday’s farm forum hosted by two congressman representing the breadth of Louisiana’s coastal and near-coastal parishes from Mississippi to Texas.

“U.S. Rep. Charles Boustany, R-Lafayette, who began the idea of the Farm Day 2007 forum, and U.S. Rep. Charlie Melancon, D-Napoleonville, spent the day speaking and listening to invited speakers and farmers about concerns with the new federal Farm Bill proposal and opportunities offered by the booming alternative fuel market.”

“Both Boustany and Melancon said no matter what the administration puts forward, Congress will have the final say on how the bill is written.”

* William Pack. “Farm bill season is here.” San Antonia Express (Texas). 2.24.2007- “Rep. Henry Cuellar, D-Laredo, another committee member, said many farmers who testified at field hearings felt the 2002 bill worked well. The congressman said that bill could become the ‘fallback if we can’t reach a compromise.’”

“The administration already has submitted a proposal for a new bill that it says is fairer, provides new dollars for critical issues, is sensitive to world trade demands and costs about $10 billion less than the current bill.”

* Harold Reutter. “Smith says energy independence, farm bill issues important to district.” Grand Island Independent (Nebraska). 2.24.2007- “Smith said along with its numerous farmers and ranchers, the 3rd District also has large food processing companies such as Swift. He said his goal for the farm bill is to provide a ‘safety net’ so the country will have a good, sustainable domestic food supply.

“Smith said he does not want America to become dependent on foreign food the way the country is dependent on foreign oil.

“In talking about energy, Smith extolled the possibilities of ethanol, wind power and solar energy.”

* Ben Penserga. “Gilchrest to visit farmers for bill input.” The Daily Times (Maryland) 2.25.2007- “The U.S. Department of Agriculture’s 2007 Farm Bill proposals would spend about $10 billion less than the 2002 farm bill spent over the past five years, which is in concert with President Bush’s plan to eliminate the deficit in five years. Despite the cuts, these proposals would provide about $5 billion more than the projected spending if the 2002 farm bill were extended.

“During Gilchrest’s visits, he hopes to learn first hand what concerns farmers may have with the new proposals.

“‘We want to talk to those people directly affected by the Farm Bill and have their views on how it can be improved to help protect the family farm and keep agriculture viable here in the First District,’ he said.”

* Loren Genson. “Farm hands.” Chillicothe Gazette (Ohio). 2.24.2007- “‘Less than 1 percent of our annual budget is supporting agriculture,’ U.S. Rep. Zack Space, D-Dover, said Friday during a visit with Ross County farmers. ‘And the benefits are great - we get an abundant and safe source of food. I’m not sure a lot of people in the general public appreciate it.’”

“Another issue is the use of the Conservation Reserve Program, which offers farmers money not to farm on their land for a set number of years. The program is used widely in this area and, although it helped some farmers economically, it may have made it more difficult for younger farmers to buy land.”

-Keith Good