Monday February 4 Ag News

Priority Bills and Legislation Formed by Nebraska Cattlemen

Tax exemptions, brand permits, and tricomoniasis headlined the recent meeting of the Nebraska Cattlemen (NC) Legislative Committee.   Members of the committee reviewed and discussed over 250 Nebraska Legislative bills and resolutions paying close attention to how proposed language can affect Nebraska beef producers.  For each piece of legislation, the committee compared NC’s member developed policy with the bill’s language to determine a position of support, oppose or monitor for each bill.

An important part of this process is the selection of priority bills by the committee, which the association plans to devote their efforts. This year the committee designated five bills for priority work.

The first priority issue is changes to tax provisions and the elimination of certain sale tax exemptions, corporate and individual income taxes, and the franchise tax. The bills related to this issue include LB 405 and LB 406.  “Opposition to 405 and 406 were prioritized because of our policies concerning sales tax exemption reductions and the resulting financial consequences these bills would have for our members”, said Robin Coulter Lapaseotes of Bridgeport, chairman of the NC Taxation Committee.

Other priority bills include LB 544 would require notifications of tricomoniasis, LB 435 would provide out of state brand permits under livestock brand act, and LB 613 which would create the tax modernization commission. “LB 613 was prioritized because it has the potential to address Nebraska’s current tax problems”, said Lapaseotes.

“I would like to commend the efforts of Nebraska Cattlemen staff and volunteer leadership who came together last week to review proposed legislation bills and develop Nebraska Cattlemen’s position.  We look forward to working with our State Senators as these bills move through he unicameral”, said Jeff Rudolph of Gothenberg, chairman of the NC Legislative Committee.



Marketing Assistance Loans and Loan Deficiency Payments Continued for the 2013 Crop Year

The marketing assistance loan (MAL) and loan deficiency payment (LDP) provisions authorized in the Food, Conservation and Energy Act of 2008 (the 2008 Farm Bill) have been extended for the 2013 crop year with the passage of the American Taxpayer Relief Act of 2012.

MALs and LDPs provide financing and marketing assistance for wheat, rice, feed grains, soybeans and other oilseeds, peanuts, pulse crops, cotton, honey and wool. Assistance is available to eligible producers beginning with harvest or shearing season and extending through the program year. The 2013 mohair crop is not eligible for MALs or LDPs because mohair provisions were suspended by the Consolidated and Further Continuing Appropriations Act of 2012 and the Continuing Appropriations Resolution, 2013.

MALs provide producers interim financing at or after harvest to help them meet cash flow needs without having to sell their commodities when market prices are typically at harvest-time lows. A producer who is eligible to obtain a loan, but agrees to forgo the loan, may obtain an LDP if such payments are available.

For more information about marketing assistance loan and loan deficiency payments, please visit your FSA county office or FSA’s website at http://www.fsa.usda.gov/pricesupport.



Open-Outcry Trade in KCBT's HRW Wheat Contracts to Shift to Chicago

CME Group Inc. plans to close the trading pits of the Kansas City Board of Trade in late June as part of the futures-exchange giant's 2012 acquisition of the regional grain market.

Open-outcry trade in the KCBT's flagship hard-red winter wheat contracts will shift to CME's Chicago-based trading floor as of July 1, according to a statement Monday from the company. The move requires regulatory approval.

The shift signals an end to nearly 160 years of grain trading in Kansas City, Mo., where the exchange began as a series of daily auctions held on the banks of the Missouri River.

CME struck a deal in October to acquire the KCBT for $126 million, bringing a greater swath of U.S. grain trade under control of the CME, which maintains global benchmark contracts tracking the price of wheat, soybeans and corn.

About 87% of all trading in the KCBT's main wheat contract already takes place electronically, the majority of deals having moved to screens in 2008. As part of the acquisition, CME pledged to keep the floor open for at least six months.

CME on Monday committed to provide an "electronic trading center" on the KCBT floor until the end of September 2013, so Kansas City-based traders can continue to place trades through CME's electronic Globex platform.

CME also aims to shift clearing of trades in KCBT contracts to CME's own clearinghouse on April 15, pending regulators' approval.



Agriculture Groups Unite to Relaunch Farm Policy Facts Education Campaign

A diverse coalition of agricultural organizations that came together during the 2008 Farm Bill debate under the name Farm Policy Facts announced today that they are stepping up education activities during the 113th Congress.

Those groups, which include the American Sugar Alliance, Minnesota Corn Growers Association, National Association of Wheat Growers, National Cotton Council, and USA Rice Federation, also announced two new members of the coalition: National Crop Insurance Services and Southwest Council of Agribusiness.

“The unifying messages we will rally behind, regardless of Farm Bill politics, is the positive role that agriculture has and will continue to play in the economic recovery, the huge return on investment taxpayers see from farm policy and the disproportionate funding cuts that agriculture has already shouldered,” said former House Agriculture Committee Chairman Larry Combest, who works with the coalition.

Farm Policy Facts will communicate with the media and members of Congress via regular email alerts that will include a mix of farm policy news, detailed analysis and case studies of farm policy in action. Former journalists and legislative experts – including Rene Pastor, a longtime commodities reporter with Reuters, and Tom Sell, a former Hill aide and USDA official and cofounder and managing partner of Combest, Sell & Associates, LLC. – will be regular contributors.



Biodiesel Leaders Advocate for Fuel Diversity to Accomplish U.S. Energy Independence

The U.S. biodiesel industry will reach a major milestone in Las Vegas this week when its national trade association celebrates their 20th anniversary. But the National Biodiesel Conference & Expo will offer more than a retrospective for thousands of producers and aficionados gathered at the Mirage Hotel Conference Center on Tuesday through Thursday; U.S. Secretary of Agriculture and local Nevadans will help launch a new era as  America's advanced biofuel gains increasing momentum.

With the domestic industry producing more than a billion gallons of fuel each of the past two years, biodiesel is poised to begin a substantial ascent that will allow it to occupy a significant proportion of the diesel market in the next decade. And, according to the National Biodiesel Board, this major diversification of the transportation fuels sector is exactly what is needed to deliver on the green fuel's promising role in U.S. energy independence.

"We are in the midst of a domestic oil boom," said Joe Jobe, NBB CEO. "And that's good for American jobs and our trade balance. But isn't it interesting that all that increased domestic supply of petroleum, hasn't significantly eased fuel prices to the consumer, especially on the diesel fuel side, which moves the freight that drives the economy.  That is because petroleum is not a regional commodity with regional pricing relationships.  Petroleum prices are set globally by political factors in the most politically unstable region in the world and by nationalized oil companies of totalitarian regimes.  This is primae facia evidence that simply drilling more domestic petroleum is not our answer for energy independence."

The only way to protect fuel consumers and the US economy from these flagrant market distorting factors is to diversify our transportation fuel supply, Jobe said. And biodiesel production is rapidly ramping up to play a significant role in that diversification.

Since the turn of the century, the biodiesel industry has overcome many obstacles to become one of the best-tested fuels in history - the only alternative fuel to have successfully completed the EPA's emissions and health effects testing - and the first commercially available advanced biofuel in the market. As result, NBB has seen its own membership soar, from only a few dozen 10 years ago to several hundred across the country today.

"As an industry, we are growing up now," Jobe said. "And we're looking forward to the growth, development and innovation that the coming decade will bring."

Speakers at the conference include USDA Secretary Tom Vilsack and former U.S. Senator and recognized energy expert Byron Dorgan. And on Wednesday, local Las Vegas residents are invited to a free "public day" at the conference, where they can learn more about biodiesel and see some of the exciting new vehicles running on America's advanced biofuel in the Mirage expo hall.



USDA Dairy Products December 2012 Production Highlights

Total cheese output (excluding cottage cheese) was 949 million pounds, 2.0 percent above December 2011 and 3.8 percent above November 2012.  Italian type cheese production totaled 409 million pounds, 0.1 percent below December 2011 but 6.4 percent above November 2012.  American type cheese production totaled 378 million pounds, 2.6 percent above December 2011 and 4.2 percent above November 2012.  Butter production was 173 million pounds, 4.4 percent above December 2011 and 20.9 percent above November 2012.

Dry milk powders (comparisons with December 2011)
Nonfat dry milk, human - 157 million pounds, up 4.7 percent.
Skim milk powders - 38.1 million pounds, up 4.3 percent.

Whey products (comparisons with December 2011)
Dry whey, total - 88.6 million pounds, up 6.6 percent.
Lactose, human and animal - 87.6 million pounds, up 3.1 percent.
Whey protein concentrate, total - 38.6 million pounds, down 1.9 percent.

Frozen products (comparisons with December 2011)
Ice cream, regular (hard) - 49.1 million gallons, down 2.9 percent.
Ice cream, lowfat (total) - 23.8 million gallons, down 12.5 percent.
Sherbet (hard) - 2.52 million gallons, up 5.5 percent.
Frozen yogurt (total) - 3.16 million gallons, down 22.0 percent.



Johnson Calls on Administration to Uphold COOL Intent

U.S. Senator Tim Johnson (D-SD) Friday called on Agriculture Secretary Tom Vilsack and Trade Ambassador Ron Kirk to uphold mandatory Country of Origin Labeling (COOL) as they develop corrective measures required by the World Trade Organization (WTO). Senator Johnson and Sens. Tester (D-MT), Enzi (R-WY), and Grassley (R-IA) led a bipartisan group of 31 senators in fighting to ensure that no changes are made to the program that contradict the intent of Congress.

"The COOL requirements agreed to by Congress provide valuable information for American consumers about where their food comes from, and promote the hard work of our farmers and ranchers," Johnson said. "I am glad that the WTO's decision upholds the law itself, which I authored, and will fight to ensure that as the regulations are reshaped to fit WTO requirements, its integrity and intent are not lost."

The WTO recently affirmed the legitimacy of COOL, but upheld complaints by Canada and Mexico that the program treats imported livestock less favorably than domestic livestock. Last month, the WTO announced that the United States must be in compliance with this ruling by May 23, 2013.

Johnson has worked for the last decade to implement COOL since he authored the provision in the 2002 Farm Bill. COOL passed Congress, and was signed into law again in the 2008 Farm Bill following roadblocks to implementation under the Bush Administration. The letter to Ambassador Kirk and Secretary Vilsack outlines key principles that the Administration should follow as it implements changes to COOL that will ensure the program is carried out as Congress intended.



R-CALF USA Applauds Senate COOL Letter

R-CALF USA applauded last week's action by a group of 31 U.S. Senators led by Senators Jon Tester (D-Mont.), Mike Enzi (R-Wyo.), Tim Johnson (D-SD), and Charles Grassley (R-IA). who sent a joint letter to Agriculture Secretary Tom Vilsack and U.S. Trade Representative Ron Kirk informing them that it was Congress' intent to provide reliable information to consumers "about where their meat and seafood comes from" when Congress enacted the mandatory country-of-origin-labeling (COOL) law after more than 10 years of deliberation.

With that introduction, the Senators proceeded to urge Vilsack and Kirk to focus only on a regulatory solution to address the recent ruling by the World Trade Organization (WTO) that the United States must change how COOL is implemented.

In addition to calling only for a regulatory fix to the rules that implement the COOL statute, the Senators urged Vilsack and Kirk to work with industry stakeholders and to ensure "that a regulatory fix provides accurate information about the origin of all meat cuts to consumers."

"We are very pleased that this large group of U.S. Senators has stepped to the plate to defend COOL," said R-CALF USA COOL Committee Chair Mike Schultz.

Schultz explained that while his group does not believe the WTO has any authority to infringe on United States' sovereignty by forcing the U.S. to change either its laws or regulations, he nevertheless agrees with the Senators request that a new rulemaking be initiated.

Last August R-CALF USA sent a letter requesting that Vilsack and Kirk initiate a new rulemaking to eliminate the loophole in the COOL rule that allows meat produced exclusively in the U.S. to be mislabeled with a multiple country-of-origin label.

Last September R-CALF USA joined in a lawsuit with the Made in the USA Foundation and other cattle and consumer groups that was filed in federal district court to challenge the WTO's authority to undermine U.S. COOL.

"We cannot leave any stone unturned in our fight to defend COOL and our chances of winning are now much better with this bipartisan group of Senators who have come to the defense of COOL," Schultz concluded.

The 31 Senators who signed the COOL letter include: John Barrasso (R-Wyo.), Mark Begich (D-Alaska), Richard Blumenthal (D-Conn.), Barbara Boxer (D-Calif.), Sherrod Brown (D-Ohio), Ben Cardin (D-Md.), Richard J. Durbin (D-Ill.), Michael Enzi (R-Wyo.), Dianne Feinstein (D-Calif.), Al Franken (D-Minn.), Kirsten Gillibrand (D-N.Y.), Charles Grassley (R-Iowa), Tom Harkin (D-Iowa), Martin Heinrich (D-N.M.), Heidi Heitkamp (D-N.D.), John Hoeven (R-N.D.), Tim Johnson (D-S.D.), Amy Klobuchar (D-Minn.), Mary Landrieu (D-La.), Patrick Leahy (D-Vt.), Carl Levin (D-Mich.), Claire McCaskill (D-Mo.), Jeff Merkley (D-Ore.), Barbara Mikulski (D-Md.), Lisa Murkowski (R-Alaska), Jon Tester (D-Mont.), John Thune (R-S.D.), Tom Udall (D-N.M.), David Vitter (R-La.), Sheldon Whitehouse (D-R.I.) and Ron Wyden (D-Ore.).



New DOE Research: RFS a Proven Economic Success with Minimal Impact on Food Prices or Land Use

A new research article published last month in the academic journal Biofuels concluded that the Renewable Fuel Standard (RFS) is producing significant positive economic effects in the United States. According to the paper, authored by researchers at the Department of Energy’s Oak Ridge National Laboratory (ORNL), the RFS is reducing crude oil prices, decreasing crude oil imports, increasing gross domestic product (GDP), and having only minimal impacts on global food markets and land use. In the future, full implementation of the RFS’ advanced biofuel requirements will substantially amplify these economic benefits, the study found.

Commenting on the ORNL findings, Bob Dinneen, President and CEO of the Renewable Fuels Association (RFA) said, “As Congress returns and hearings are scheduled, Big Oil and Big Food will undoubtedly ramp up their multi-million dollar campaign to smear the RFS. Rather than listening to well-heeled oil lobbyists or giving credence to sham ‘studies’ funded by grocery manufacturers, let’s allow independently funded, unbiased, third-party research — like this study from ORNL — to guide the debate.”

Dinneen continued, “The facts from the ORNL study are: the RFS is reducing oil prices, decreasing oil imports, and creating jobs and economic benefits without the rumored catastrophic effects on food prices and land use. In fact, as the study shows, the RFS barely affects food and land markets. The bottom line is the RFS is an unrivaled American success story. We can’t let profit-protecting fear mongers in the oil and snack food industries scare Congress into changing a flexible policy that is making important contributions to the American economy and environment every day.” The study’s key conclusions are summarized below.

Increased GDP: Using an improved, dynamic version of a popular global economic model known as “GTAP,” the researchers found, “…the net global economic effects of the RFS2 policy are positive with an increase of 0.8% in U.S. gross domestic product (GDP) in 2022…”(for context, 0.8% of current GDP is $121 billion). The positive impact on GDP stems largely from lower oil prices and reduced imports. According to the authors, “The economic benefits of conventional and advanced biofuels are primarily from their effects in reducing the imports and use of oil.” Logically, about half of the economic benefits derive from the conventional biofuel requirements of the RFS2, with the remaining half coming from advanced biofuels.

Reduced Oil Prices: In modeling the impacts of full implementation of the RFS2 targets by 2022, the researchers found, “[a]s expected, fossil energy prices, particularly oil, declined as biofuels replace increasing portions of liquid fuel use in the USA. The reduction in oil prices accelerated from -3% in 2015 to approximately -7% in 2022.” This leads to slightly reduced GDP in the Middle East and Africa, traditional oil exporting regions.

Minimal Food Price Effects: The results also showed the RFS has only negligible impacts on food prices. According to the study, “increases in food commodity prices under the RFS2 policy were less than 1% throughout the period from 2002 to 2030.” Prices for livestock, poultry, and dairy products were shown to remain stable, or even decrease in some years, under the RFS2. Prices for coarse grains and oilseeds were shown to increase by less than 1% as a result of the RFS2.

Negligible Land Use Impact: The researchers also examined the agricultural land use impacts of the RFS2, finding that the policy actually results in “…a slight [net] reduction in global land use for agriculture.” The modeling showed that any marginal increases in agricultural land use resulting from the RFS2 would be largely constrained to the United States and offset by decreases in land use in other regions. This result stands in stark contrast to previous modeling results suggesting the RFS2 would induce significant land use expansion outside of the United States. The study shows U.S. agricultural land use would be just 0.4% higher (less than 2 million hectares) in 2015 than would be the case without the RFS2 in place. However, slightly expanded land use in the U.S. is more than offset by reduced agricultural land use in other regions, particularly the Middle East and Africa, by 2022.

Benefits Shrink with Increased Biofuel Imports: The study examines a case where the long-term RFS advanced biofuel requirements are met with imported sugarcane ethanol rather than domestically produced renewable fuels. Logically, this case results in less economic benefit for American consumers. The authors write, “…a greater reliance on [biofuel] imports could reduce the benefits of advanced biofuels significantly…” because “…imported biofuels displace domestic production and, as with oil, increase payments for fuels to the [rest of the world]…”



Big Oil and co-conspirators continue misguided attacks on American-made ethanol

The Executive Vice President for the American Coalition for Ethanol, Brian Jennings released the following statement today in response to groups led by Big Oil calling for an end to the Renewable Fuel Standard (RFS).

Following last night’s heart-warming Super Bowl ad by Dodge, reminding the world who farmers really are, I was hopeful that more people would realize how important these providers of fuel are to our nation. Leave it to Big Oil, Big Food and their partners in misinformation to hold the latest Cheap Corn Coalition press even a day later.

The RFS is working. It is the most effective policy ever enacted by Congress to reduce foreign oil imports. When the RFS went into effect in 2006, U.S. oil imports stood at 60 percent. In 2012, net oil imports fell to less than 40 percent. Further, unlike oil, ethanol is not subsidized and wholesale prices of ethanol are still 40 to 50 cents per gallon less expensive than unleaded gasoline. Consumers would pay more at the pump if the RFS is repealed, and the U.S. would return to relying on the rest of the world for more expensive forms of fossil fuel.

Big Oil built the “blend wall,” by refusing to take any steps toward meeting the RFS while they instead spent millions of dollars on lawsuits and PR efforts like the one they staged again today. Even reporters ask if there is anything new in their message. There isn't - because big oil continues to spend its considerable financial and political capital to block the use of ethanol in gasoline. The RFS was enacted in-part to help break through the blend wall by enabling consumers to have access to more affordable and cleaner choices at the pump.

There also continues to be considerable rhetoric and time spent discussing E15 and small engines. It is illegal for small engines to use E15. EPA approved E15 for the majority of motor vehicles on the road today but did not approve the fuel for non-road engines in part because these engines are not advanced enough to take advantage of ethanol-blends. Small engine owners, including marine equipment owners, should not use E15.

Finally, corn production has expanded and become more efficient since enactment of the RFS. Even with last year’s drought, global grain production still reached one of the largest production totals ever, and ethanol is slated to use about three percent of that total on a gross basis, returning one-third of the corn we process to livestock producers as a valuable feed.

While these ethanol opponents continue to cast themselves as being concerned about all sorts of different issues, they simply want to eliminate competition for their products. The Cheap Corn Coalition lives to spread even more misinformation.



Jeep® and Ram Truck Brands Air Two-minute Videos 'Whole Again' and 'Farmer' During Super Bowl XLVII

Yesterday, the Jeep® and Ram Truck brands each introduced two-minute videos during Super Bowl XLVII.

Jeep® Brand's "Whole Again"
The two-minute spot, "Whole Again," is a heartfelt letter, read by Oprah Winfrey, from the Jeep brand and the American people to the service men and women of the six branches of the armed forces. It simply lets them know that Americans everywhere hold them in utmost respect and admiration for all they do in protecting American institutions and values around the world.

"It was an honor to lend my voice in support of those that serve us all," said Oprah Winfrey.

The Jeep brand's "Whole Again" was created in partnership with GlobalHue of Detroit. The broadcast spot can be viewed at the Jeep brand's website, www.Jeep.com/OSR, and YouTube site at www.youtube.com/jeep.

Ram Truck Brand's "Farmer"
The new Ram Truck spot, "Farmer," was inspired by the stirring "So God Made a Farmer" tribute delivered by legendary radio broadcaster Paul Harvey and used as an anthem in grassroots videos created by farm families over the past three decades.

The Ram Truck brand commissioned 10 noted photographers including National Geographic icon William Albert Allard and renowned documentary photographer Kurt Markus to document American farm life, yielding a beautiful and comprehensive catalog of farming images. Many of these artful and compelling still images provide the visual mosaic for "Farmer;" Harvey's passionate oration provides the narration.

In this latest extension of the brand's Guts, Glory, Ram campaign, the video uses slices of farming life to remind us of our shared identity and character, the greatness born out of perseverance and determination and the rewards that come from hard work.

"Farmer" was created in partnership with The Richards Group of Dallas, Texas. The broadcast spot can be viewed at the Ram Truck brand's website at www.ramtrucks.com/keepplowing and on the brand's YouTube site at www.youtube.com/ramtrucks.

"For the past two years, we have used the largest television viewing audience to highlight the pride, the resilience and the determination that form an integral part of the American character," said Sergio Marchionne, Chairman and CEO, Chrysler Group LLC. "Both the Jeep and Ram Truck brand's campaign videos express Chrysler Group's commitment to America and to helping build a better future for this great country."



Pfizer Spinoff, Zoetis, Raises $2.2 Billion in IPO

Shares of Pfizer Inc's animal health subsidiary Zoetis Inc., which sells drug products and other services for livestock and pets, closed up 20 percent to $31.01 in their New York Stock Exchange debut on Friday. Shares opened at $31.50 after the Madison, New Jersey-based company's stock was priced at $26, above an expected range of $22 to $25 a share.

Zoetis raised $2.2 billion in the largest initial public offering by a U.S. company since Facebook Inc's IPO in May. According to Reuters, the offering comes as Zoetis' parent firm, Pfizer, the world's biggest drugmaker, divests its nonpharmaceuticals units to focus on its core prescription drugs business.

Last April, Pfizer sold its infant nutrition business to Nestle SA (NESN.VX) for $11.9 billion.

Zoetis, which has annual sales of about $4.2 billion and 9,500 employees worldwide, is the largest player in the $22 billion animal health industry. It sells vaccines and diagnostics, among other medicines. About two-thirds of its sales are from products and services for livestock.

Pfizer will control roughly 80 percent of Zoetis after the IPO, which accounts for 413.9 million Class B shares. The drugmaker is expected to divest its stake within 18 months, and return much of the proceeds to Pfizer shareholders in the form of stock repurchases.



Hormel Closes Acquisition of Skippy

Hormel Foods Corporation announced the closing of its acquisition of the United States based Skippy peanut butter business from Unilever United States Inc., of Englewood Cliffs, N.J. This closing includes the Little Rock, Ark., manufacturing facility and all sales worldwide, except sales in China. Hormel Foods expects to close the acquisition of the China based Skippy peanut butter business by the end of its fiscal year 2013.

Total annual sales for the Skippy peanut butter business are expected to be approximately $370 million, with nearly $100 million of those sales outside the United States. The purchase price is approximately $700 million.

The Skippy peanut butter domestic line consists of 11 varieties of shelf-stable peanut butter products. The brand, first introduced in 1932, holds the No. 2 share in this growing center-of-the-store category and is the leading brand in the faster growing subcategory of natural peanut butter. Peanut butter is a $2 billion category with a 74 percent household penetration and is the second most popular sandwich behind ham in the United States.

Internationally, Skippy peanut butter is the leading brand in China and is sold in more than 30 other countries on five continents.

Unilever completed the sale of its global Skippy business to Hormel Foods, excluding the portion operated out of China, which remains subject to regulatory approval and is expected to close later this year.

On Jan. 3, the two companies announced the global deal for approximately $700 million, including the Skippy trademarks and two manufacturing facilities (in U.S. and China).