Washington Insider -- Thursday

By DTN's Washington Insider

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

Cuba’s Trade Minister: Obama Can Do More to Ease Trade

Cuba’s Trade Minister Rodrigo Malmierca met with US officials on Feb. 17 to review the latest round of regulatory changes that the Obama administration made to ease business and travel between the two countries despite a U.S. embargo. Malmierca also met with Commerce Secretary Penny Pritzker to explore how Cuban importers can get access to credit, particularly for food products.

Despite Cuba’s push for changes, Obama administration officials say they have gone as far as they can under the restrictions Congress has put in place over the last 50 years.

Malmierca told business leaders and reporters at a U.S. Chamber of Commerce event on Feb. 16 that Cuban leaders disagree with the Obama administration’s assessment. “The last package of measures from President Obama mentions the possibility of access to credit, not for food products, but for other things,” Malmierca said, adding that President Barack Obama has the authority to “expand and make more comprehensive” changes.

Via changes that took effect Jan. 27, the Obama administration said Cuba would not have to pay cash in advance for most U.S. goods authorized for export since Obama began easing restrictions. But Cuba must continue to pay cash for U.S. food exports, which were authorized in 2000 with that restriction.

Officials from the U.S. and Cuba also were expected to discuss the credit issues and the unwillingness to let Cuba use U.S. dollars in financial transactions with the United States or foreign companies or institutions. Cuba cannot use dollars as a reference currency for pricing goods although it is an internationally recognized currency. Financial institutions that handle US dollars from Cuba say they run the risk of large fines and charges of money laundering.

The two countries also signed an aviation deal on Feb. 16 that will allow commercial air flights between the United States and Cuba. U.S. air carriers could fly up to 110 daily round trips, but they must apply by March 2 for U.S. review and approval.

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ERS: Climate Change Projections Show US Crop Declines and Shifts

U.S. crop acreage is projected to decline through at least 2080 and the regional composition of crops is expected to shift based on the estimated effects of global climate change, the Economic Research Service (ERS) reported.

ERS modeled its crop acreage projections based on nine different climate change scenarios and different crop sectors. On average, through 2080, ERS sees U.S. acreage of rice, hay and cotton increasing, while acreage of corn, soybeans, sorghum, wheat and silage are expected to see declines over the 60-year period studied.

Acreage response to climate change varies by crop, ERS noted, depending on the sensitivity of crop yields to changes in precipitation, temperature, and atmospheric carbon dioxide. Also, the agency said that other factors that will affect the acreage response include resulting changes in relative crop profitability, the coincidence of climatic shifts with geographic patterns of crop production and variables related to the extent of crop reliance on irrigation.

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Washington Insider: Agricultural Environmental Issues Intensify

While the Waters of the U.S. proposed rule that is being hotly contested in the Courts tends to attract the most national attention, it is far from the only environmental case on the horizon concerning ag producers. For example, the Food and Environment Reporting Network recently highlighted the Iowa lawsuit by the Des Moines Water Works in a discussion with Neil Hamilton, director of the Agricultural Law Center at Drake University. Hamilton has written extensively about the case for the Des Moines Register and AgLaw, and his comments were featured by the Network.

Hamilton notes that instead of pursuing individual farms, the utility is suing three county drainage districts, contending that they need to either require farmers to pollute less or install better safeguards for the water released into the Raccoon River, which provides drinking water for part of the city of Des Moines. “The city now spends $1 million a year to remove nitrates, and, expects to be forced to invest at least $100 million to upgrade equipment and raise customer fees by an estimated 10%,” Hamilton told the Network.

The drainage districts argue that they don’t have the authority to police farm pollution and that nitrogen runoff should be managed through voluntary programs, not regulation. Agriculture Secretary Tom Vilsack recently expressed a similar view.

Hamilton says the case is complex and could have far-reaching impacts. First, the Water District will attempt to prove that the drainage districts are a “point-source” for pollution as defined by the Clean Water Act. This has typically been considered in terms of a specific outlet like a pipe from an industrial operation, and EPA has exempted normal farming activities from some CWA regulations on the grounds that they were not a “point-sources,” although it says some livestock farms are and are required to obtain permits.

In the Iowa case, Hamilton says, the Water District is arguing that the drainage districts are artificially created and maintained, and so should be considered “point-sources.” In addition, the District also will need to show that the water in question isn’t surface water, which also is exempt. The District is arguing the water flowing into the drainage ditches is actually groundwater being released by underground drainage tiles a few days after each rain, Hamilton says.

He notes that Iowa is extensively tiled with about 10 million of the State’s 25 million acres of crop land served by subsurface tiles.

Thus, a win for the Water District might not focus on fertilizer use as much as on land-management practices, Hamilton thinks.

As a result, a central question is whether the drainage districts have the authority to require farmers to clean up pollution. That issue has recently been certified by the US District Court to the Iowa Supreme Court to be answered before the case can proceed.

The districts say they were created solely for the purposes of improving drainage, not to tell people what can be drained. The Water District responds that granting the districts absolute immunity doesn’t fit within the public interest, Hamilton says, although he notes that the actual lawsuit is fairly specifically tied to Iowa’s system of drainage districts and subsurface drainage, which isn’t particularly common across agriculture. However, he also thinks the case is important because it involves a broader conversation among several parties about agriculture’s impact on water quality.

In fact, Hamilton suggests that whether or not the District wins isn’t necessarily important to whether the case has meaning. “It has already changed the discussion around water quality and agriculture and what government organizations are going to do about it.” There’s no question Iowa has a water-quality issue, and that it’s getting worse, he says, and suggests that it will be difficult to “kick the issue down the road with relatively minor levels of state funding and pilot projects. This litigation has been a catalyst to bring the matter to a head.” he says.

Thus, it is clear that much of the nation’s environmental program is in the courts, to one degree or another these days. However, to the extent that pollution becomes an important pocketbook issue affecting both urban and rural voters, water concerns are attracting attention nationwide and can be expected to continue to generate political responses.

Most of agriculture prefers voluntary programs to deal with pollution problems, as Secretary Vilsack does, but that is increasingly being called into question, a trend that producers should watch carefully as it emerges, Washington Insider says.

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