Archive for May, 2011

More regulations are not needed, but more cooperation and more science will further water quality goals.

(A blog entry entitled “Enough is Enough” by Prof. George Rehm, director of Minnesota Discovery Farms, an on-farm water quality research project).

Minnesota is blessed with an abundance of natural resources and the large majority of its citizens, both urban and farmers, are deeply concerned about maintaining the quality of these resources. Therefore, it should come as no surprise that individuals, groups and/or organizations have proposed a wide variety of actions to maintain the quality of these resources–especially water. Many focus on activities and/or practices associated with farming.

Recognizing that the quality of the state’s natural resources is an issue now and has been for a number of years, I was curious about the number of statutes and/or rules that had been developed via legislative action in Minnesota. I found that a legislative analyst had prepared a summary in 2009. This report carries the title: “A Minnesota Lawmakers Guide to the Agri-Environmental Landscape”. There is a summary of 20 Minnesota statutes and executive rules that pertain to the relationship of farming to environmental issues.

They were divided into four categories: 1) manure, 2) cropping, 3) wetlands, and 4) general water quality. The number of statutes and/or rules by my count was 7, 9, 1, and 3 respectively. I’m not going to attempt a summary of each. They focused on a variety of farming practices ranging from chemigation to animal carcass disposal and everything in between. The report also provided a summary of six major Agri-Environmental regulations at the national level. It’s obvious that there are several statutes that pertain to farming practices and the environment.

As discussions about environmental quality, especially water quality, continue, farming practices frequently take center stage. Since farming practices are easily visible, they make good targets. There is also the FALSE perception that farmers are not at all concerned about environmental quality. With false perceptions and inaccurate information fixed in their minds, some have suggested that additional regulations of Minnesota are needed before improvements in environmental (especially water) quality can be achieved. Obviously, these individuals have not done their homework.

The suggestion for additional regulation is, in my opinion, a very narrow-minded and short-sighted approach to the issue. Clearly, the issues that revolve around the quality of the state’s waters will not be solved by a combative debate between the agricultural community and those who seek additional regulations. In fact, a combative stance only defeats any possibility of a reasonable solution. Further, a combative atmosphere does nothing more than create confusion.

Any improvement in the quality of Minnesota’s waters will be based on implementation of management practices based on sound science for which there is no substitute. Use of emotion and perception in support of a call for additional regulations will not solve any problems. One thing is clear to me: more regulations derived from emotion and perception are not needed in Minnesota. Several regulations that pertain to water quality are already in place. Enough is enough.

Our Take:
Some folks might wonder why we would talk about water quality in a blog about ethanol–hopefully we’re not belaboring the obvious to say that what impacts farms impacts farm-based energy. The public’s perception of water use and water impacts from farming becomes part of the discussion about whether ethanol is an appropriate choice as a transportation fuel.

Farmers do care about water quality and are at the forefront of efforts to reclaim the Minnesota River and other waters impacted by the whole range of human activities, including farming. Over the past two decades, thousands of Minnesota farmers have installed grassed waterways, grass filter buffer strips, sediment basins, rock-tile inlets for their drainage systems, not to mention restoring wildlife habitat and wetlands on their farms. The latest technologies gaining a foothold among farm operators are wood chip bioreactors that filter nutrients out of the water flowing from tile lines, and controlled drainage, which reduces erosion, sediment and nutrient transport and also makes more water available for crops at critical periods in the growth cycle.

So, if we are wondering which choice promotes better water quality, farm-based energy is the way to go. Do we need more offshore drilling, so we can risk more accidents that pour hundreds of millions of gallons of oil into the oceans? Do we need to give larger market share to the Canada tar sand oil producers, who are strip mining hundreds of square miles of northern forestland and using millions of gallons of groundwater to process the tar sands and capture the crude contained in them–resulting in lakes of toxic tailing refuse.

The choice is clear. Farm-based energy is the environmentally responsible way to go. When the public cooperates with farmers on projects like the Coalition for a Clean Minnesota River or CURE–Clean Up the River Environment–both organizations have many farm cooperators–then we all experience the benefits of a cleaner waterways with more abundant wildlife, more recreational opportunities and a natural treasure that we can pass on to the next generation. Working together is what brings this progress, whereas one-size-fits-all regulations will be counterproductive.

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Minnesota Grower dispels the myth behind label, “factory farmer”

Kandiyohi county corn producer Noah Hultgren scored a coup for conventional farm producers with a column featured last Friday on the business page of the Huffington Post, a blog site that is one of the most popular sites on the internet, visited daily by millions of readers.

Hultgren, a young farmer, took the time to explain to the general reader the essential distinction between farm revenues and profits, and what some like to call a “factory farm” is really just a small business. Though his farm operation’s gross revenues of a half million dollars a year put him in the top six percent of all US farms, he notes that it may cost most or all of that half million dollars to produce the crops that generate those sales. This makes farming, at times, a break even or losing proposition, sometimes a narrowly profitable one–he can plan on making $50,000 to $75,000 of income from that $500,000 revenue. Farming, even at his scale, is always a risky proposition–one so risky that most of the so-called ‘factory farmers’ like himself are family-run operations because big agribusinesses like Cargill and ADM wouldn’t come anywhere near a business proposition as risky as row-crop farming.

As Hultgren points out, a business with revenues less than $7 million a year is considered a small business, according to the definitions of the Small Business Administration of the US government. As he points out, the US farm program is aimed at keeping farmers like him, the definition of small businessmen and women, in business. And that’s a win for US consumers, who enjoy the most abundant, economic and safest food supply in the world.

Huffington Post is essentially a clearing house that features the work of dozens of bloggers from across the political spectrum and representing a whole continuum of different business sectors, interests and academic disciplines. In addition to farming, Hultgren serves as a director for Minnesota Corn Growers Association, a 6,000-member grassroots farm commodity organization with headquarters in Shakopee, Minnesota.

To read all of Hultgren’s column featured on the Huffington Post, go to

http://www.huffingtonpost.com/noah-hultgren/face-of-a-giant-agribusin_b_861502.html

Remarks of President Barack Obama

As Prepared for Delivery
Saturday, May 7, 2011
Indianapolis, Indiana

Hi.  I’m speaking with you today from the Allison Transmissions plant in Indianapolis, Indiana.  I came here because this is a place where American workers are doing some big and impressive things.

The hybrid technology they manufacture here already powers nearly 4,000 buses all over the world – buses that have already saved 15 million gallons of fuel.  Soon, they’ll expand this new technology to trucks as well.  That means more vehicles using less oil, and that means jobs – more than 200 new workers at this plant alone.

That’s important because even as the economy is growing after one of the worst recessions in our history; even as we’ve added more than 2 million new private sector jobs over the past 14 months; I still meet and hear from Americans struggling to get out of their own personal recessions.

A lot of folks are still looking for work.  And many folks who do have jobs are finding that their paychecks aren’t keeping up with the rising costs for everything from tuition to groceries to gas.  In fact, in a lot of places across the country, like Indiana, gas is reaching all-time highs.

So although our economy hasn’t been the focus of the news this week, not a day that goes by that I’m not focused on your jobs, your hopes and your dreams.  And that’s why I came here to Allison Transmissions.

The clean energy jobs at this plant are the jobs of the future – jobs that pay well right here in America.  And in the years ahead, it’s clean energy companies like this one that will keep our economy growing, create new jobs, and make sure America remains the most prosperous nation in the world.

Allison Transmissions is also part of the ultimate solution to high gas prices.  We know there are no quick fixes to this problem.  In the short term, we’re doing everything we can to boost safe and responsible oil production here at home – in fact, last year, American oil production reached its highest level since 2003.

But over the long term, the only way we can avoid being held hostage to the ups and downs of oil prices is if we reduce our dependence on oil.  That means investing in clean, alternative sources of energy, like advanced biofuels and natural gas.  And that means making cars and trucks and buses that use less oil.

Other countries know this, and they’re going all in to invest in clean energy technologies and clean energy jobs.  But I don’t want other countries to win the competition for these technologies and these jobs.  I want America to win that competition.  I want America to win the future.

Full transcript of the president’s remarks can be found at

http://www.whitehouse.gov/the-press-office/2011/05/07/weekly-address-clean-energy-will-help-us-out-compete-and-out-innovate-re

Our Take:
First we applaud President Obama for putting energy production back on the agenda, and talking about it in such a straightforward manner (i.e. Yes we need as much oil as we can safely produce)–as he points out, our economy, job security, environment all depend on our taking action and getting off the oil-price roller coaster. Ethanol is playing a major role in that effort.

We can see that the word “ethanol” now seems taboo for many politicians, and that the acceptable phrase, as heard here in the president’s speech, has become “advanced biofuels,” meaning ethanol or biodiesel fuel sourced from something other than grain or oilseeds.

So many elected officials have accepted the narrative that has come from critics that claims that farm-based energy means taking food from hungry people and using it for fuel. So, once again, we say it just ain’t so.

Farmers grow as much grain as market signals dictate. Wherever there is a consumer for grain, he will be able to purchase the grain that he needs. The energy market is added on top of other uses. It doesn’t ‘cheat’ anyone of grain. Further, energy production is firmly integrated with food production. Ethanol plants produce millions of tons of distillers grains, which provide nutritious protein, fiber and oil to cattle, hogs, poultry and other livestock.

America can only “win the future” if it plays to its strengths. Agricultural production is one of those. Grain-based biofuels provides the foundation for advanced biofuels–it is not an either/or relationship, but rather a complementary one. The first stage of advanced biofuels production will come out of ag waste like wheat straw and corn cobs, as well as farm-grown acreage of fast-growing poplar trees and switch grass.

The side-by-side growth of grain-based ethanol and cellulosic ethanol will ensure the future of green jobs in rural America, the prosperity of cash-grain farmers and the longterm vitality of America’s small towns.

Grassley bill would taper ethanol incentive, and then gear it to price of oil

Rather than forcing the American ethanol industry to give up blending credits abruptly when current funding sunsets, a bill authored by Sen. Chuck Grassley (R-Iowa) would cut the payments by more than half while extending them another two years, after which time the credit would be indexed to the price of oil on the New York Mercantile Exchange. Because ethanol tends to follow the price of oil upward, increases in the price of oil would drop the future ethanol credit stepwise, until it would disappear altogether at the highest price trigger.

In part, this bill answers a bill offered by Senators Dianne Feinstein (D-California) and Tom Coburn (R-Oklahoma) who want to end ethanol subsidies and trade tariffs altogether.

The Grassley legislation would drop the credit from its current level of $0.45 cents per gallon this year, down to $0.20 cents next year. In 2013, it would further reduce the credit to $0.15 cents per gallon. Starting in 2014, the credit would become linked to the price of oil. When oil costs between $50 and $59.99 per barrel the credit would be $0.24 cents. For every ten dollar increment above that, the credit drops by $0.06 cents per gallon, until oil hits $90 dollars a barrel, at which point the credit disappears.

Growth Energy and Renewable Fuels Association have both endorsed the Grassley approach.

“We think it’s a smart policy that allows the industry to evolve while it addresses the budget concerns of some on Capitol Hill,” said Matt Hartwig, a spokesman for the Renewable Fuels Association, an industry group. He added, “The variable credit provides the ethanol market stability against the volatility of oil markets.”

The bill also provides funding to share the cost of installing blender pumps that allow consumers who drive flexible fuel vehicles to choose what level of ethanol they want in their fuel, from 20 to 85 percent.

Sen. Kent Conrad (D-ND) co-sponsored the bill, and Minnesota’s Senators Amy Klobuchar and Al Franken, also Democrats, have endorsed the legislation.

Green Acres clarification ensures law’s usefulness in protecting farmland

Written by Jonathan Eisenthal

Modifications to the law known as the Green Acres law will help to maintain its usefulness in preserving farmland on the edges of Minnesota’s metropolitan areas, which have faced development pressure and taxation policies that led to the loss of agricultural acres. The changes were recently passed by the Minnesota legislature and signed into law by Gov. Dayton.

“I farm with two brothers, and we’ve utilized Green Acres for years for our land in Rice County. Dakota County has also made use of Green Acres for years, but it is a county-by-county thing and each county has its own particular set of issues, each county has a unique makeup in its tax base and that influences these policies,” said Bruce Peterson, who farms in rural Northfield, and serves as a director on Minnesota Corn Growers Association board. Peterson has followed the developments in the Green Acres amendments, as a member of MCGA’s government relations committee.

Peterson noted that development pressure has slowed down, and so have tax savings realized through Green Acres.

“But go a few years down the road and the housing market returns to a faster pace and you could easily get back to that kind of pressure,” said Peterson. “Five, ten years down the road, this could save us money again, so it’s good to have it in place.”

At the height of urban edge land development in the mid2000s, some farmers with land closer to the core participated in “IRS-1031” exchanges in order to take advantage of the worth of the land to residential and commercial developers. They sold such parcels and did so without undue tax liability because, under 1031, the proceeds can be used in the purchase of commensurate property–the farm producers were able to purchase more acreage by going farther out from the urban core.

Elizabeth Tanner, director of advocacy and strategic partnerships for MCGA, explained the changes to Green Acres: “The new law clarifies that the purpose of the program is to preserve farmland by mitigating the property tax impact of increasing land values due to nonagricultural economic forces….also, though it keeps the Rural Preserve program for class 2b land, it eliminates the requirements for landowners to sign a minimum 8-year covenant pledging the land will remain unfarmed and for landowners to prepare a conservation assessment plan.”

Though this didn’t go as far as was suggested in MCGA resolutions, it does refocus the law to its original intent and allow other conservation programs to cover land conservation in a way that makes sense for farm operations.

“The real estate market has calmed down for now, but it’s good to have Green Acres in place,” said Peterson. “The cost of land is still going up for farmers, but it’s the price of corn and beans that’s driving it, rather than home values, and that’s the way it ought to be for Minnesota’s croplands.”

VEETC in transition

(article by Jacqui Fatka, “Ethanol Can Survive Without VEETC”, Posted by FarmFutures)

The ethanol blender’s tax credit (Volumetric Ethanol Excise Tax Credit – VEETC) provides blenders and marketers with a 45-cent per gallon credit for every gallon they blend with gasoline. The measure was extended for one year in last year’s lame duck session.

On May 3, U.S. Sens. Tom Coburn, R-Okla., and Dianne Feinstein, D-Calif., introduced the Ethanol Subsidy and Tariff Repeal Act which would repeal both VEETC and the tariff on imported ethanol by no later than June 30, 2011. Livestock groups have supported the legislation.

The day after the legislation was introduced, livestock, poultry and meatpacking industries appealed to the bipartisan “gang of six” senators attempting to draft a budget compromise for 2012 to eliminate the ethanol tax subsidy. The groups note VEETC benefits oil companies and “a number of studies by well-respected economists have confirmed that eliminating the VEETC would only minimally impact the quantity of ethanol manufactured as the quantity relates to the Renewable Fuels Standard,” the groups added.

A bipartisan group of senators, led by Sen. Chuck Grassley, R- Iowa, introduced legislation that would reduce the current blender’s credit for a two year period before transitioning to a tax credit that would adjust based on the price of oil. This legislation would also improve upon current tax credits for the installation of blender pumps and ethanol fueling infrastructure. Additionally, the bill would extend tax credits for small ethanol producers as well as for advanced and cellulosic ethanol. 

A new CARD analysis found that the absence of VEETC would have lowered corn prices by only 4% from 2004 to 2009. In addition, with or without VEETC, corn prices would have still risen from 2005 to 2007 and declined through 2009.

The ethanol industry recognizes that the political climate has changed on support for ethanol subsidies, especially after this winter’s House vote against E15 implementation and blender pump funding.

Growth Energy has been in favor of eliminating ethanol support in exchange for increased infrastructure funding. Growth Energy Tom Buis criticized the Coburn bill because it does not adequately address ethanol within a wider energy policy.

In April, the National Chicken Council (NCC) recommended a plan be implemented that would reduce the Renewable Fuels Standard when the stocks-to-use ratio for corn drops to low levels, as the situation is now, industry executive Michael Welch said on NCC’s behalf at a hearing held by the Livestock, Dairy and Poultry Subcommittee of the House Agriculture Committee.

Welch urged Congress to adopt a contingency plan or “off-ramp” from the Renewable Fuels Standard, which is the law requiring that a fixed amount of ethanol be added to motor fuel every year.

“Unless there are perfect crop conditions this year to plant, grow, and harvest a record quantity of corn, animal agriculture will experience major disruptions while ethanol producers will continue to outbid non-subsidized buyers of corn,” he warned.

The mandate should be reduced to allow non-ethanol users greater access to corn, Welch said. Farmers should also be allowed to withdraw non-environmentally sensitive acres from the Conservation Reserve Program without penalty.

To comment on this story, go to:

http://farmfutures.com/blogs.aspx/ethanol/industry/can/survive/without/veetc/2270

Our Take:
The CARD report confirms what many others have reported–VEETC doesn’t affect the volatility of the commodity markets.

In regards to the comments of Welch and the Chicken industry, no one is expressing more concern about corn price impacts than corn producers.  They don’t want to see their number one customer–animal farm producers–hurt by feed prices that reach irrational peaks. The last peak in corn prices in 2007 provided its own “off-ramp,” and it was ethanol producers like VeraSun that went into the ditch, right alongside numerous livestock farmers.

Monkeying with RFS will not protect livestock producers. The market signals that would produce would lower corn production, not increase it.

What will protect animal agriculture is to work with corn and ethanol producers to a)assure that distillers grains can supply a major portion of what they need, and b) do what we can to keep crop markets strong, because this will speed the availability of promised seed technology that increases the water efficiency (i.e. drought resistance) and pest-protection in corn varieties. These technologies alone won’t assure bumper crops every season, but they will assure that bins will contain a good supply year-in and year-out so that the carryout can build back adequately.

Four incumbents re-elected to Minnesota Corn Research & Promotion Council

Written by Jonathan Eisenthal

MCR&PC election results:
District 1, 2 and 4: Dwight Mork
District 7: Richard Peterson
District 8: Jerry Demmer
District 9: Martin Amundson

The four farmers elected to the Minnesota Corn Research & Promotion Council represent some 27 years of collective experience and service to this organization which invests dollars generated by the sale of corn in Minnesota.

The Minnesota Department of Agriculture organized the MCR&PC elections and verified the results; Dwight Mork of Bellingham represents MCR&PC Districts 1, 2 and 4 in the western region of the state; Richard Peterson of Mountain Lake represents District 7 in southwestern Minnesota; Jerry Demmer represents MCR&PC District 8, in the southeast region of the state; and Martin Amundson represents District 9, in the east central area of Minnesota.

All four agree that the foremost issue for the Council is water quality. They support the ongoing research efforts into best management practices that maintain productivity while limiting environmental impact, and they see communication as a major priority with a focus on farmers’ commitment to water quality and environmental stewardship

Peterson, 68, returns for his fourth term on MCR&PC. He has also served in the past as president of Minnesota Corn Growers Association and has been a board member for National Corn Growers Association.

Peterson serves as liaison between MCR&PC and one of its major research partners, the Agricultural Utilization Research Institute–an organization established by an act of the Minnesota Legislature. One of Peterson’s aims is to continue to cultivate partnerships like the one with AURI, which leverage MCR&PC funds and make them go farther by sharing the cost of projects with partners.

In particular, Peterson hopes blender pump ethanol infrastructure will be a main focus for MCR&PC this term.

Peterson attended a recent meeting hosted by the American Lung Association of the Upper Midwest, in which US Secretary of Agriculture Tom Vilsack addressed a group of elected officials, clean air supporters and agricultural commodity organizations to reiterate the Obama administration’s support for ethanol. In particular, Vilsack announced that USDA’s FSA-Rural Development agency would serve as a conduit for cost share money that would pay part of the cost of installation of blender pumps. The administration has set a goal of 10,000 blender pump installations in the next five years, each allowing motorists to choose their own blend of ethanol and gasoline, from E10 to E85 and a number of intermediate blends.

Senator Amy Klobuchar, Gov. Mark Dayton and Minnesota Agriculture Commissioner Dave Frederickson were among the elected officials in attendance.

Another MCR&PC veteran, Jerry Demmer, 58, a farmer in Clark’s Grove, Minnesota, continues at the Council with nine years of service to his credit. Demmer feels that in addition to work on the water quality issue, ethanol remains a top priority, which must focus on educating the public that corn-based ethanol is not merely a transitional fuel but will play a continuing role as a high quality, domestically-produced, renewable fuel. Other fuels can be added as choices, too, but ethanol remains the foundation, both to assure energy independence and to keep American agriculture a prosperous enterprise. This in turn keeps rural communities throughout the country vibrant.

“Water quality and ethanol are top issues,” said Demmer. “We also need to be good partners with the livestock industry, to be as supportive as we can with them on any research. Both growers and livestock farmers win when we continue to improve the quality, usefulness and low cost of the ethanol co-product DDGS and how that works nutritionally and economically. In our efforts to educate the public about farmers, we need to communicate our values. The land is a resource for everyone, but no one depends on it more than farmers. We want to do the best job we can to protect that for future generations. We can’t just look out a year or two ahead, but have to look out toward future generations. As we move forward we use the knowledge we have on farm practices. That knowledge continues to evolve. You can see it in the growing adoption of minimum tillage practices for row crops.”

Dwight Mork, who farms about 10 miles from the South Dakota border in Lac Qui Parle County, has served three years representing his region on the Council and he hopes this term to encourage the spread of a program Lac Qui Parle growers have been trying out, getting students and adults from the town out to the farm to ride in the farm equipment and see firsthand what today’s agricultural producers are up to.

Mork has just this past November been named to NCGA’s Trade and Biotechnology Action Team, joining MCR&PC Rep. David Ward, an experienced member of that national committee.

“The seed companies come and connect with the Trade and Biotechnology committee and discuss ideas for traits, how to set up the refuges that prevent resistance, and ideas for new input products,” said Mork, who feels he is just beginning to learn the work of that committee. “We come from all different parts of the country, and they all contribute their different ideas, so these agribusinesses that serve farmers get a bigger picture of the needs out there.”

Martin Amundson, 31, has represented the east central region for three years and sees firsthand the controversy over water quality and the impact of agriculture on the waters of Lake Pepin. He is hopeful that research underway with farmer support can show exactly what is coming from farms and what management practices would offer water quality benefits. Farmers have been working on these issues for many years, Amundson points out, so that one of MCR&PC’s key roles is to publicize information about what farmers are doing as stewards of the land.

“Promotion and communication with the public is a never-needing process,” said Amundson. “As time goes on, it gets to be more and more important to connect with the friends who are not farmers to let them know how we are keeping food healthy, economical and in good supply. We are supporting research to increase production while we reduce our carbon footprint each year. Another important message is that farmers are working hard to continually increase production so we will be able to feed a world population that will nearly double in just a couple of generations.”

Amundson also hopes that MCR&PC supported communications also speak to the farmers themselves. As a young farmer, Amundson knows that recruiting the next generation of agricultural producers is another necessary role for MCR&PC and other farmer organizations. He said, “We are some of the most efficient farmers in the world and deal with one of the most challenging climates for raising crops here in Minnesota. We have success with a diverse range of products in livestock and crops. Opportunities are there for young farmers if they are willing to take the risk and get into it.”