HARVEST AND WINTER wheat planting have come to an end in most areas, and now a battle for crop acreage in 2011 will begin. .............................................4
FARMERS SHOULD use consumers’ interest in food to help them understand farming because some “illinformed” state initiatives threaten ag, according to a USDA official. .............5
PASSAGE OF FREE TRADE agreements with Korea, Colombia, and Panama should be Congress’ “first, second, and third priorities,” says a former U.S. ag negotiator. ...7
Monday, November 15, 2010
Two sections Volume 38, No. 46
E15 lawsuit aimed at reining in corn prices? BY MARTIN ROSS FarmWeek
Periodicals: Time Valued
A number of national livestock groups have joined in a “farm and food” lawsuit to block E15’s entry into the domestic fuel market. In a suit filed with the U.S. Court of Appeals for the District of Columbia Circuit, groups including the Grocery Manufacturers Association, the American Meat Institute, and the National Pork Producers Council argue the U.S. Environmental Protection Agency (EPA) exceeded its legal authority in approving a Clean Air Act waiver allowing use of 15 percent ethanol fuel in cars built after model year 2006. The coalition asserts EPA may grant a “fuel additive” waiver only if it “will not cause or contribute to a failure of any emission control device or system.” Based on EPA’s limited waiver, groups argue E15 is “compatible only with certain, later-model automobile and other types of engines.” Tom Buis, CEO of the biofuels group Growth Energy, stated ethanol critics “are now turning to the legal process to slow progress on renewable fuels.” “Big food companies
gouged consumers while trying to shift the blame to America’s ethanol producers and farmers, so we’re not surprised by their actions,” Buis stated. Ethanol’s alleged impact in boosting corn prices has spurred resistance among some livestock groups. Frazer Frost, an ag business consulting firm, accompanied pork producers from across the U.S. in seeking Senate Ag Committee Chairman Blanche Lincoln’s (D-Ark.) support to “step away from E15, so there would be no additional pressure on corn usage,” Daniel Peregrin, Frazer Frost co-managing partner told FarmWeek. “It went on regardless ... It’s going to push prices,” Peregrin said. Mark Gold, managing partner with Chicago’s Top Third Ag Marketing, acknowledged “playing with the numbers in the blending” could have some impact on corn prices. However, as “a very strong proponent of ethanol,” he views biofuels as a net plus for producers and
the economy overall. Virginia Tech University economist David Kohl sympathizes with livestock operators, noting the current economic “imbalance” between grain and livestock sectors. At the same time, he questions the notion that slowing
ethanol progress alone would significantly rein in domestic feed prices, given the current market environment. Kohl noted “insatious” grain demand from Brazil, Russia, India, and China as well as the impact of a weak U.S. dollar on exports (see page 7).
“Granted, the ethanol industry’s eating up a lot of our corn supply,” he said. “But you do have the Asian demand. You also have the devaluation of the dollar. On its own, (curbing ethanol development) is not the total answer.”
BALING STALKS
Travis Winter of Glassford in Peoria County, who works for Ryan Smith, last week was baling cornstalks on an 18-acre field near Glassford. The stalk bales will be used to feed Smith’s 80 cows and 200 feeder cattle. (Photo by Ken Kashian)
Bankers: Estate tax saps growth capital “Community” bankers agree small business offers key opportunities to jumpstart the nation’s economic engine. Estate tax reform thus was a crucial bottom line issue for farm and rural lenders and financial advisers last week at the American Bankers Association’s (ABA) annual North American Agricultural Lenders Conference in Omaha, Neb. As Congress geared up for a post-election “lame duck” session, producers amplified concerns about the potential Jan. 1 return to a pre-2002 $1 million estate tax exemption. “Neither party wants that outcome,” ABA Executive Vice President Floyd Stoner told the U.S. and Canadian bankers. The estate tax was repealed temporarily last Dec. 31 at a $3.5 million exemption level,
under soon-to-expire 2001 Bush tax cuts. Expiration of tax measures also means an increase in Americans’ income tax withholding as of Jan. 12. Amid that added pressure, Stoner suggested the lame duck Congress may restore the estate tax at the 2009 exemption level while extending existing tax cuts for one or two years. ABA Chairman Stephen Wilson, an Ohio banker, views “the ability to pass from generation to generation the work you’ve done” as the driving force in the small business/small farm sector. Congress must set a high enough exemption “to allow capital to remain in the business,” Wilson told FarmWeek. “If you close down small businesses or farms because they can’t pass to the next gen-
FarmWeek on the web: FarmWeekNow.com
eration, you’ve done a great disservice to our economy,” he argued. “You need capital to create jobs and run a business. If you walk in at the change of every generation and remove that capital, you’re killing the ability for that business to grow and thrive.” From the small-town banker’s perspective, estate tax relief is crucial in helping “keep these balance sheets and these farmers in these communities,” said Kim Greenland, market president with Iowa’s Great Western Bank and vice chairman of ABA’s Agricultural and Rural Bankers Committee. Bob Childress, tax specialist with an ag accounting firm, has seen the undeniable impact of estate tax uncertainty on his largely livestock industry
clients, noting “there’s such a range in where we are today, where we were in 2009, and where we could be in 2011.” Moving from 2009’s $3.5 million exemption to $1 million would be particularly traumatic, Childress warned. “Somebody who owns land or heavy equipment is very likely going to hit See Estate Tax, page 3
Illinois Farm Bureau®on the web: www.ilfb.org