The House Agriculture Committee approved H.R. 1573, “Extending the Deadline for Implementation of Title VII of Dodd-Frank,” on a straight party-line vote. The legislation would extend the July ’11 deadline for implementing Title VII by 18 months.
The legislation maintains the existing deadline for defining the key terms of derivatives regulations for end-users; requires additional forums for public input; and retains the existing timelines for reporting over-the-counter contracts, which will allow regulators to develop rules based on hard data instead of estimates.
According to Committee Chairman Lucas (R-OK), “(t)his bill does not repeal or modify the provisions of Title VII. It is a first step at improving the process to ensure the federal government is being responsive to the public and is held accountable for safeguarding the economy against unworkable or unnecessary regulation.”
General Farm Commodities Subcommittee Chairman Conaway (R-TX) said, “(i)n order to retain both confidence and a competitive edge in our financial marketplace a rational sequencing and implementation of rules as it relates to Dodd-Frank is not only justified, but vital. The legislation passed (May 5) by the Committee would encourage prudent behavior while allowing the CFTC and others sufficient time to move forward with the staggering workload handed to them by Congress last year.”
Following the Committee’s action, Ranking Member Peterson (D-MN) said,“The CFTC is taking the time to do this right. They have testified before the Committee on plans to review and address concerns expressed in public comments, garner additional input through public hearings and roundtables and extend comment periods as new information and new rule proposals come to light. Extending the law’s implementation would only add uncertainty to the rule-making process.”
The House Financial Services Committee is expected to consider H.R. 1573 as early as the week of May 9. A list of the bill’s co-sponsors and Chairman Lucas’ and Ranking Member Peterson’s opening statements are available at the NCC’s home page, www.cotton.org.
’11 Classing Fee Announced
USDA’s Agricultural Marketing Service (AMS) will maintain user fees for cotton producers for ’11 crop cotton classification services under the Cotton Statistics and Estimates Act at $2.20 per bale – the same level as in ’10. AMS also will continue a $.05 per bale discount for consolidated billing.
According to the announcement, this fee and the existing reserve are sufficient to cover the costs of providing classification services for the ’11 crop, including costs for administration and supervision.
US-Colombia FTA Progress Made
The Administration announced it is prepared to begin discussions with Congress on the draft implementing bill for the US-Colombia Free Trade Agreement (FTA). A similar announcement was made earlier about FTAs with South Korea and Panama.
“While Colombia still has important work to accomplish to address the objectives of the Action Plan before the President will formally submit this Agreement to Congress for consideration, we have determined that Colombia has taken the steps necessary, consistent with the April 22 milestones, to move to the next stage in the process,” US Trade representative Kirk wrote. “Accordingly, my office is prepared to begin technical discussions with Members of Congress on the draft implementing bill and draft Statement of Administrative Action.”
In a related development, Senate Finance Committee Chairman Baucus (D-MT) announced that he will support the US-Korea FTA. His endorsement came after the administration agreed to seek consultations on beef market access with South Korea and increase funding to promote US beef sales in South Korea.
USDA also announced that it has awarded $1 million in FY11 Market Access Program (MAP) funds to the US Meat Export Federation (USMEF) to be used to promote US beef sales in South Korea. USMEF announced a five-year, $10 million initiative to regain and expand US beef markets in South Korea, according to a USDA release. Under the initiative, USMEF will request from USDA the $10 million to promote beef trade through the USDA’s Unified Export Strategy (UES) program, according to the USDA.
The Finance Committee has scheduled on May 11 a Colombia FTA hearing at which Deputy US Trade Representative Sapiro and representatives from the Dept. of Labor and the AFL-CIO are expected to testify. That Committee tentatively has scheduled a hearing for May 24 on the US-Panama FTA and a hearing for May 26 on the US-Korea FTA, according to sources.
Sens. Coburn (R-OK) and Feinstein (D-CA) have filed an amendment that would eliminate the 45 cents/gallon blender’s tax credit and the 54 cents/gallon tariff on imported ethanol. Sen. Coburn said the credit costs $5 billion a year.
“Ethanol subsidies and tariffs sap our budget,” Sen. Feinstein said in a statement. “They’re bad for the environment, and they increase our dependence on foreign oil. It’s time we end subsidies that we cannot afford and tariffs that increase gas prices.”
Sens. Cardin (D-MD), Webb (D-VA), Burr (R-NC), Collins (R-ME) and Risch (R-ID) are co-sponsors.
In March, Sen. Coburn made an effort to introduce the legislation but was blocked by Senators who support the ethanol tax credits, protective tariffs and the consumption mandate. Majority Leader Reid (D-NV) reportedly then agreed to allow a vote on the proposal at a later date but with the condition that it will require a two-thirds majority for adoption.
The pending legislation in the Senate, a small business bill that would have provided the vehicle for the Coburn-Feinstein amendment, was pulled but the Senators are expected to renew their efforts later.
In February, the House adopted an amendment to a spending bill (H.R. 1) by Rep. Sullivan (R-OK) to prohibit EPA raising allowable ethanol levels in gasoline to 15% from 10%. The provision did not survive in the final legislation.
Sens. Grassley (R-IA) and Conrad (D-ND) have responded to calls for an end to support for ethanol by introducing legislation that would scale back the blenders’ tax credit while continuing other incentives through ’16.
Their bill would reduce the credit from 45 cents/gallon to 15 cents/gallon in ’13. After ’13, the credit would be pegged to the price of oil. There would be no credit if oil prices average at least $90/barrel in a given year and 30 cents/gallon if oil prices are $50/barrel or less. The current 54 cents/gallon tariff on imported ethanol would be reduced to 30 cents in FY12 and 15 cents from ’13-16. The bill would continue the tax credit for cellulosic ethanol at the current $1.01/ gallon through ’16. The alternative-fuel vehicle refueling property credit for equipment such as ethanol-blender or dispenser pumps would be increased to cover the entire cost of the equipment if it is used for ethanol blends of at least 20%. The credit, which expires this year, is now capped at 30% of installation cost.
House Considers Pesticide Uses, Endangered Species
At a joint hearing of the House Committees on Agriculture and Natural Resources, members questioned officials of USDA, EPA, the Fish & Wildlife Service (FWS) and the National Marine Fisheries Service (NMFS) about the impact of the Endangered Species Act (ESA) on pesticide use. Under the ESA, EPA is required to consult with NMFS or FWS (the Services) on pesticide registration decisions that could affect endangered species. After the agencies issue their biological opinions, EPA can take mitigation measures that include buffer zones around critical habitats where pesticides may not be sprayed or other restrictions.
Environmental groups in California and the Northwest have successfully sued EPA for failing to consult on endangered species. The courts have imposed onerous buffer zones and other restrictions on pesticide uses in these areas pending the completion of the consultations, which have been on-going for years. The biological opinions that have been issued by the Services have been criticized for their scientific integrity.
In the latest such suit filed in January in the US District Court for the Northern District of California, activists are seeking to require EPA to consult on the effects of more than 300 pesticides on 214 endangered species across the entire United States. The NCC and other agricultural groups have intervened in this case (the “mega-suit”) to have the right to provide input on any settlement agreement the agency might negotiate.
Debra Edwards, former director of EPA's Office of Pesticide Programs, said that the current consultation process is far too opaque, the biological opinions too inconsistent and the requirements as they now exist far too burdensome to be met by EPA or other agencies. She predicted it could be several years before the issue is resolved.
The process "needs attention, both from a scientific and a process perspective," Edwards said. "This complex, multifaceted pesticide use situation will require literally hundreds of thousands of analyses and decision points and, in my opinion, constitutes a significant resource challenge for the departments and the agency involved."
During the hearing, Congressional members urged EPA to halt further interagency consultations until the National Academy of Sciences (NAS) issues a study on streamlining the process. In March, EPA asked the NAS to examine a number of scientific issues that came up in recent consultations between EPA and the Services, including "the identification of best-available scientific data and information," consideration of cumulative effects and the use of models, but the letter did not mention economic considerations.
Rep. Costa (D-CA) asked federal officials at the hearing to commit to holding off on issuing future biological opinions until the economic impacts of the consultations could be considered, an issue that NAS potentially might address. Most Republican members of the committees also expressed their concerns about the economic impacts of the process.
Stephen Bradbury, director of EPA's Office of Pesticide Programs, responded on behalf of the federal witnesses that they would have to consult with their respective agency heads before making such a commitment.
Rail/Port Investments Planned for Cotton Areas
The Agriculture Transportation Coalition (AgTC) reports that the railroads now have plans to spend millions of dollars to expand rail and port capacity to handle agricultural exports in addition to their existing capacity to handle increasing Asia-sourced intermodal import traffic.
In their most recent newsletter, AgTC officials reported the following developments: 1)Union Pacific (UP) railroad announced a major transload facility in Yermo, about 100 miles outside of the Ports of Los Angeles and Long Beach that is designed to haul dried distillers grains and eventually other products in large volume from the Midwest, then transload into empty ocean containers at Yermo, to be brought to the ports; 2) Burlington Northern Santa Fe (BNSF) and UP will be investing in a facility at the Hanjin terminal in Long Beach, which apparently has room for on-dock rail transload capacity; 3) Shafter, CA, which for years has been discussed as a place to consolidate and aggregate import and export shipments, will have additional transload capacity due to plans by UP and BNSF; and 4) BNSF may be building a large transload facility in Amarillo, TX, which could handle a number of cargos, including grains, cotton, etc.
The AgTC officials say that while these plans are unconfirmed, just the fact that there is talk reflects what that organization has been saying for some time: “with imports being largely steady, and demand for U.S. agriculture and forest product exports growing, capacity will have to be built to handle the exports. The railroads are doing it and making major commitments; are the ocean carriers ready to ‘change directions’?”
Sales Weak, Shipments Surge
Net export sales for the week ending April 28 were -5,300 bales (480-lb). This brings total ’10-11 sales to approximately 15.7 million bales. Total sales at the same point in the ’09-10 marketing year were approximately 11.5 million bales. Total new crop (’11-12) sales are roughly 5.7 million bales.
Shipments for the week were 445,700 bales, bringing total exports to date to 11.6 million bales, compared with the 8.2 million bales at the comparable point in the ’09-10 marketing year.
Effective May 6-12, ’11
Adjusted World Price, SLM 11/16
153.18 cents
*
Fine Count Adjustment ('10 Crop)
1.00 cents
Fine Count Adjustment ('11 Crop)
1.05 cents
Coarse Count Adjustment
0.00 cents
Marketing Loan Gain Value
0.00 cents
Import Quotas Open
1
Limited Global Import Quota (480-lb bales)
217,208
ELS Payment Rate
0.00 cents
*No Adjustment Made Under Step I
Five-Day Average
Current 5 Lowest 3135 CFR Far East
170.02 cents
Forward 5 Lowest 3135 CFR Far East
143.02 cents
Coarse Count CFR Far East
NA
Current US CFR Far East
178.00 cents
Forward US CFR Far East
145.42 cents
'10-11 Weighted Marketing-Year Average Farm Price
Year-to-Date (Aug.-March)
81.39 cents
**
**August-July average price used in determination of counter-cyclical payment
