Washington Insider -- Friday

Genetically Engineered Salmon

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

Highway Bill House and Senate Pay-Fors May Be Combined

The Senate by voice vote sent a two-week extension of highway and transit programs to President Barack Obama, giving Congress more time to work out a longer-term reauthorization in conference. Current authorization expires today and the extension would give the House and Senate until Dec. 4 to agree on a long-term measure (HR 22). The House passed the short-term measure on Nov. 16.

Meanwhile, Senate- and House-passed pay-fors are being negotiated by conferees, which may decide to combine both variants into the final bill, Chairman of the Senate Commerce, Science and Transportation Committee Sen. John Thune, R-S.D., said.

A tax overhaul may still be on the table as well, Sen. Charles Schumer, D-N.Y., said. However, the focus of the House-Senate conference committee is likely to coalesce around the differences in pay-fors included in each chambers version of the legislation. The House bill included tapping into $40 billion of funding from the Federal Reserve, in contrast to the Senate bill which would reduce Federal Reserve dividend payments to its member banks and charge Fannie Mae and Freddie Mac higher guarantee fees.

“It’s a negotiation conference so there’s a give and take, a back and forth that has to occur, and that generates a significant amount of revenue. It may be that some of both get used. Maybe one gets used and the other doesn’t,” Thune told reporters. The Senator also noted that the two chambers were coming to an agreement on allowing a pilot program which would permit 18-year-olds to operate commercial trucks on interstates.

A five-year bill at the above baseline funding levels is acceptable, Senate Environment and Public Works Committee Chairman James Inhofe, R-Okla., who is also a conferee, noted. “What I want make sure is that we have enough to sustain, if it is five-year, all of the projects that we’ve talked about. I think we’ve gone far enough now that everyone has agreed that we do want to have the bill. We want to have the bill five or six years. It’s long overdue,” Sen. Inhofe said.

A measure to overhaul U.S. international tax laws which would then be used to fund the highway deal might be on the table, Sen. Schumer told reporters. He noted talks last week he had with House Speaker Paul Ryan, R-Wis., about such a plan, but that Speaker Ryan did not indicate he could get such a package through the House this year.

Reauthorization of the Export-Import Bank (Ex-Im Bank) is another issue that could be included in the final bill. “That bill was passed in the same form it was passed in the Senate, so that item ought not to be conferenceable, because both houses have passed it in the same form,” House Minority Whip Leader Steny Hoyer, D-Md, remarked about the reauthorization. Rep. Hoyer said if a measure to reauthorize the lapsed Ex-Im Bank is not passed via the Highway Bill by Dec. 4, a standalone reauthorization bill should instead be passed.

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ATA Supports Keeping Biodiesel Tax Credit for Blenders

American Trucking Associations (ATA) President and CEO Bill Graves recently urged members of Congress to keep the biodiesel tax credit at the blender level, saying that the incentive has been proven to lead to lower diesel prices at the pump. In a letter distributed to members of Congress, Graves makes clear that converting the blenders credit to a producers credit is bad policy for consumers.

“For the past 10 years, the biodiesel blenders credit has led to lower diesel prices at the pump. Given the critical importance of trucking and diesel fuel in moving our nation’s goods, lowering the cost of biodiesel not only makes fuel cheaper for fleets, but it subsequently makes goods more affordable for consumers,” Graves wrote.

“Reforming the biodiesel tax incentive into a producer credit would result in fuel retailers paying a higher price for biodiesel that would, in turn, be passed through to trucking fleets and higher pricing of consumer goods. This would also lead to a disincentive to purchase biodiesel in the US and hinder the nation’s efforts to utilize cleaner burning fuels.”

In July, the Senate Finance Committee proposed extending the biodiesel blenders credit retroactively through 2015, and beginning in 2016 converting it to a producers credit. Sen. Chuck Grassley, R-Iowa, offered the change in an amendment to the extenders package this July and the Senate Finance Committee approved unanimously. The measure would also extend the tax credit for two years, retroactive from Jan. 1, 2015, through Dec. 31, 2016. If signed into law as is, the incentive would move to a producer tax credit on Jan. 1, 2016.

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Washington Insider: Genetically Engineered Salmon

The Food and Drug Administration announced this week that it has approved a genetically engineered salmon, the first genetically engineered animal cleared for US consumption. The approval, according to the Washington Post, came in spite of many political and scientific obstacles.

The company that produced the salmon, AquaBounty, notes that there is no legal requirement to label it as genetically engineered, but it would like to label it as a premium product. However, it told the Post, “we’ll probably introduce it as Atlantic salmon.”

The advantages of the fish are primarily that it reaches market weight in about half the time taken by conventional salmon and requires 25% less feed to get there.

The FDA says the salmon is safe to eat and notes that it has been saying so since it concluded its preliminary work in 2010. It now has formally concluded that food from the genetically engineered salmon is as safe as food from any other Atlantic salmon and that there is “reasonable certainty of no harm” for consumers.

The escape issue, the Post thinks, is critical since escaped fish might outcompete or interbreed with native fish. AquaBounty notes that it has several layers of safeguards to prevent this and will raise the fish in land-based, contained facilities. Salmon grown for food (as opposed to breeding) are all female, and sterile. The FDA found that the Canadian and Panamanian facilities are sited where the environmental conditions are such that, in the event of an escape, the escapees would be unlikely to thrive and establish a viable population. The current FDA approval is for only those two facilities and new installations will require a new environmental assessment and separate approval.

A Canadian governmental risk assessment issued in 2013 similarly described the risk to the Canadian environment as “negligible” and the risk to human health as “low.”

Several food safety advocate groups, of course, hate the idea of genetically-engineered animals. For example, Consumers Union, responding to preliminary FDA findings, says the agency’s determination that escape was a remote possibility was built on “inadequate science and unfounded assumptions,” and expresses concern that the sterilization process isn’t 100% successful. It has criticized the agency for relying on research with “small sample sizes” and “inadequate analysis,” and raised questions about the allergenicity of the modified fish, a risk that FDA has found is no more likely than for unmodified salmon.

Some retailers are also expressing reservations, the Post says, including Whole Foods and Trader Joes who say they won’t sell it. Others, like Safeway and Kroger, have issued less definitive statements indicating that they are “not planning to stock the fish,” whatever that means.

All in all, FDA approval is unlikely to be the last hurdle the salmon faces.

The Post notes that, unlike other genetically engineered foods approved for use in the United States which mainly benefit farmers, the salmon has advantages that could “benefit all of us” by producing healthful fish in less time, with less feed. It sees benefits that include more affordable salmon and reduced feed requirements and less pressure on forage fish stocks.

The Post does express a kind of urban concern that is very different from those raised by food advocates. It says it worries “about raising fish in tanks.” It notes these are necessary to eliminate the potential for ocean pollution and the spread of disease and prevent escapes, but notes that they require both water and energy. Does that offset the efficiency of faster growth and better feed conversion?

AquaBounty says energy requirements vary widely by location, and it has not compared impacts on greenhouse gas emissions but has estimated cost impacts. “We have a lower cost per kilo than net pen production,” the company says.

The Post concludes that for the first time, there is the possibility of a genetically modified food that offers real advantages to people and the planet. It suggests that consumers will vote for the technology with their wallets.

Well, this advance has been a long time coming, but still carries considerable promise. However, so have other products like Golden Rice, which have been rejected in the past. So, the Atlantic salmon debate is still in its very early stages. It likely will be extremely intense and should be watched by producers as it evolves since its outcome could be important to producers as well as to consumers, Washington Insider believes.


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(GH/CZ)