Washington Insider - Wednesday

By DTN's Washington Insider

Here’s a quick monitor of Washington farm and trade policy issues from DTN’s well-placed observer.

Dinneen: EPA RFS Rule Boosts Conflicts for Biofuel Market Share

Reduced biofuel demand and a battle for markets share are the results of the Obama Administration’s decision to lower the amount of ethanol U.S. refiners must blend into gasoline, said Bob Dinneen, president of the Renewable Fuels Association (RFA) at the group’s annual State of the Ethanol Industry event on Feb. 16.

The Environmental Protection Agency in November said blenders and refiners must use 14.5 billion gallons of ethanol this year, less than the 15-billion-gallon target in a 2007 energy law. That volume requirement is stifling growth and pitting renewable fuels like ethanol and biodiesel against each other, according to Dinneen.

“EPA’s revisionist RFS policy would result in biofuels cannibalizing biofuels, fighting for a stagnant market,” Dinneen said. In the meantime, ethanol needs to find new pockets of growth, he said.

The US has capacity to produce about 16 billion gallons of ethanol annually, according to the RFA. That’s about 1.5 billion more than what the government now requires.

Producers will look to expand exports and promote ethanol’s benefits as an octane enhancer to regulators and car manufacturers, Dinneen said. Ethanol use stands to gain if minimum octane standards are raised.

Dinneen also said that the domestic ethanol industry remains strong and touted its ability to successfully navigate the vagaries of the markets and overcome the perils of policy uncertainty.

The strength of the U.S. ethanol industry is seen in its record production – 14.7 billion gallons, its record blending demand – 13.75 billion gallons, record feed production – 40 million metric tons, and record greenhouse gas reductions – 41.2 metric tons,” said Dinneen. “Those aren’t the stats of an industry in retreat, that’s an industry confident, defiant, and prepared to weather any storm.”

Dinneen called the U.S. ethanol industry the “cornerstone” of the rural economy, noting that it added $44 billion to the nation’s Gross Domestic Product and paid $10 billion in taxes last year. He drew a sharp contrast with what he characterized as the “boom and bust cycles” of oil extraction which, he said, can wreak havoc on economically vulnerable communities.

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Roberts Pushes Greater Outreach, Education to Counter Attacks on Crop Insurance

Senate Ag Chairman Pat Roberts, R-Kan., speaking at the annual meeting of the American Association of Crop Insurers and the National Crop Insurance Services, pledged to “preserve, protect, and defend” the crop insurance program against the challenges ahead.

Roberts praised the ability of the industry to work together to stave off cuts to crop insurance that were included in last year’s budget deal noting that agriculture can be a powerful force when it is united. “I’m proud of the way we all stood up and found a solution,” said Roberts. “Working with Chairman [Mike] Conaway in the House and what was nearly the entire agriculture industry, we were able to fix a shortsighted legislative cut to crop insurance.”

Roberts warned that more teamwork would be needed in the days ahead “as critics continue to attack this important risk management tool.”

Additionally, he encouraged crop insurers to double their outreach and education efforts stating that not all lawmakers in Washington understand farm policy. “My challenge is to find more allies, leave no stone unturned,” said Roberts. “We have to increase the number of voices defending crop insurance both inside the Congress and out in the countryside.”

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Washington Insider: USDA’s Public-Private Conservation Partnerships

USDA is well known for its traditional cost-share partnerships for investment in conservation—including support for many types of structures, practices and/or remediation. However, under a relatively new program that has largely been under the radar, Secretary Vilsack announced last week that “USDA and partners” across the nation will invest up to $720 million towards 84 projects in 2016 that will help communities improve water quality and achieve a number of other conservation objectives.

These projects make up the second round of the Regional Conservation Partnership Program (RCPP), a new effort authorized through the 2014 Farm Bill.

Sectary Vilsack took the occasion of the 2016 round announcement to emphasize that these days the program is attracting serious, local money and support. He said that through its 2015 and 2016 rounds, USDA and partners’ investments will add up to $1.5 billion.

The projects are selected on a competitive basis with local private partners required to at least match USDA’s commitment. For this round, the agency received 265 applications requesting nearly $900 million, or four times the amount of available federal funding, the Secretary said.

The Partnership Program not only attracts private support but joins public and private resources into “focused innovations on conservation problems” that neither sector could implement alone, the Secretary noted. He claimed credit for his administration for “record enrollment of privately owned lands in USDA’s conservation programs.”

He also claimed success for the program in drawing on local knowledge and networks that include businesses, universities, non-profits and local and Tribal governments to address both landscape- and watershed-scale projects.

As Vilsack announced the 2016 projects at Fort Stewart, Georgia, he also highlighted one RCPP partnership led by the US Endowment for Forestry and Communities to “accelerate and expand” forest health conservation practices in longleaf pine forests” involving six Department of Defense facilities in the Southeast. USDA will invest $7.5 million in the project and those funds will be matched by $10 million from 20 partners, including several military branches.

Vilsack took pains to emphasize the very broad reach of the program. “From the harmful impact of algal bloom in the Great Lakes region to the devastating effects of persistent drought in California, RCPP helps private landowners and producers develop solutions that work for them and meet the needs of their communities and local wildlife,” he said. “It’s encouraging to see so much interest in the program.”

USDA has long been interested in polishing its reputation as an agency that supports producers’ investment with both investment and technical assistance, in contrast to the Environmental Protection Agency that is widely seen as a regulatory agency—even though it, too, invests in local efforts. Nevertheless, this USDA local-federal partnership program does seem to be successfully levering private dollars—and, knowledge—into high priority conservation efforts, an area in which well-coordinated efforts are badly needed.

Certainly, environmental regulations have acquired a toxic reputation among land-owners in recent years, even as environmental problems including those that threaten urban health concerns have multiplied. If USDA now has a way to approach those problems systematically and cooperatively under its public-private partnership program, which will be good news indeed, Washington Insider believes.

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(GH/CZ)

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