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House Bill Tightens Market Oversight

Following deals and compromises that ended only shortly before the hearing began, the House Agriculture Committee last week passed HR 3795 — more commonly known as the “derivatives oversight” legislation —by a bipartisan voice vote.

“This is the third time we’ve moved on this legislation,” said Rep. Colin Peterson of Minnesota, chairman of the committee, at the outset of the hearing. “This builds on the bill we passed in February, HR 977.

“We’ve made significant improvements, incorporated ideas from the (Obama) administration, and from a lot of other folks we’ve talked to. We have a bill here that will bring all these dark markets into regulation and transparency and preclude the kind of problems we’ve had in the financial system from happening in the future.”

The committee’s action, said Oklahoma’s Frank Lucas, ranking member of the committee, “is the next part of the process — most assuredly not the final step — in bringing a regulatory structure to an unregulated market. … Let’s finish this today so we can move to the next step and, ultimately, come up with a good piece of legislation that can be signed into law.”

While the legislation strengthens regulation of derivatives — an industry worth nearly $450 trillion — that are often pointed to as a chief villain in the current financial crisis, Peterson is sure to face criticism for exempting some of the transactions from tough scrutiny he’d promised in earlier hearings. By doing so, Peterson bucked the Obama administration and many in his own party who wanted all over-the-counter (OTC) derivatives to be under federal regulation, to pass through a clearinghouse or be traded on exchanges to ensure terms are public.

If the legislation is passed into law, transactions with “end users” — including airlines, manufacturers and utilities — would be exempt from clearing and terms allowed to remain in the shadows. End-users, said Peterson, weren’t responsible for the current financial situation, hadn’t been given federal bail-out funds and thus shouldn’t be held to the most rigorous oversight standards.

Peterson also insisted the exemptions wouldn’t apply to the vast majority of deals and were not loopholes financial market-players could exploit. To further shore up the market’s safety, the legislation calls for customized contracts to maintain higher margin and capital requirements than cleared swaps.

A statement from the House Agriculture Committee says the bill “institutes a clearing and trading requirement for all OTC swap transactions between dealers and large market participants that are accepted by a clearinghouse. Non-cleared swaps must be reported, with major participants and dealers adhering to strengthened capital and margin requirements. The bill exempts commercial end users who use derivatives markets to hedge their price risk from the clearing requirement.

To read the entire article, link here.

Cap and Trade — Consider the Risks

Whether writing for the Wall Street Journal or testifying before congressional committees, LSU economist Joseph Mason isn’t shy with his views regarding climate legislation.

In a recent study, Mason suggested a carbon tax should be considered alongside cap and trade. He also warned that a cap and trade system would be incredibly complex and could saddle the U.S. economy with unforeseen consequences.

To see the full study, visit The Economic Policy Risks of Cap and Trade Markets for Carbon Emissions.

Among other titles he holds, Mason is Hermann Moyse Jr./Louisiana Bankers Association endowed professor of banking at LSU. In late September, he spoke with Delta Farm Press about the EU’s experience with cap and trade, misconceptions about market oversight and why a carbon tax should be a part of the congressional debate. Among his comments:

To reset for our readers, could you talk about differences between cap and trade and the carbon tax and how both would theoretically serve to ameliorate climate change?

“The tradeoff between cap and trade and a carbon tax is between ‘benefit certainty’ and ‘cost certainty.’

“With cap and trade, you decide how much less carbon you want emitted and you allow the market, the price, to reduce the emissions. Therefore, you know there will be X amount of tons reduced — but you must let go of the price in order to achieve the X amount of reduction. That would produce ‘benefit certainty’ with price uncertainty.

“Of course, having let go of the price under cap and trade, you don’t know what the price will be to get rid of that X amount of tons. But you’re implicitly valuing that you want X amount of tons gone.

“With a carbon tax, you trade off that ‘benefit certainty’ for a price certainty. With a tax, you’d place a stable price upon the emission of carbon. You don’t know to what extent firms will reduce their emissions given that price signal. But you’d have price stability, price ‘certainty.’”

To read the entire article, link here.

Feeding Hay With Herbicide Residues

Many of you winter cows on corn stalks or other crop residues. Do you also sometimes feed grass or prairie hay to supplement those stalks? If you do, double check to learn if those hay fields were sprayed with herbicides before hay was cut earlier this year.

If your hayfield was treated with Milestone or ForeFront or Chaparral herbicide, residues of those herbicides will still be in the hay. It won’t hurt your animals but those herbicide residues will pass through your animals in their manure and urine.

So what, you ask? Well, if you plant that field to beans or alfalfa or another sensitive crop next spring, that herbicide residue may prevent those crops from growing wherever the manure and urine fell. Also, any of that hay that is not eaten but remains in the field also can release the herbicide residue and prevent crop growth. To prevent this problem, don’t feed treated hay to cattle while they are on potentially sensitive fields. And if they are already eating treated hay, stop feeding it three days before moving them on to sensitive fields so the residue has time to pass through the animals before being deposited in the fields.

To read the entire article, link here.

Count Your Many Blessings

harvest-pasture.jpg I'll admit that, as of late, I haven't been feeling exactly positive about the state of the beef industry today. What with the cold, wet weather conditions slowing up harvest and making muddy lots, it hasn't been the best of times this past month. And, I'll be frank and say that the market conditions don't exactly encourage a young person like me to jump into this industry with both feet. Yep, it seems like I had lost my enthusiasm for the cattle industry, and I wasn't sure when or if it was going to come back. However, yesterday I was out helping my dad do chores, and the sun was shining and the rain had finally stopped, and the only way to look was up. I couldn't help but smile as we watched the calves belly up to the feed bunks to eat, and I was excited to see combines out harvesting as we were moving cows to another available grazing spot. I realized that although the weather and market conditions may not be ideal for us right now, there is hope for the upcoming years, and I'm proud to be a part of this business.

Today, as we face the challenges of high moisture crops, muddy lots, low market prices and high input costs, we need to focus on our many blessings. Yesterday I bottled up that sunshine for future use, and I want to share it with all of you today. What are you thankful for? What keeps you enthusiastic and optimistic about the beef cattle business? Why do you love this industry? Leave your thoughts in the comment section. You never know, you could brighten up someone else's day, too. God Bless the American farmer and rancher!

BEEF Daily Quick Fact: Of the 3.3 million U.S. farm operators counted in 2007 Census, 30.2%, or more than 1 million, were women. (Ag Census)

Climate Change Bill: Few Farmers Benefit

“The one thing I hope for producers: that they understand if these carbon rules are put in place, the land will be saturated with carbon contracts and they won’t be able to get paid for carbon sequestration. So, if they want to work with the program, they want to do it when the prices are higher — but don’t wait too long.”

A late-summer study by the Agricultural and Food Policy Center at Texas A&M University shows the South would be worse off under proposed climate legislation. Actually, outside some Midwest grain farms, few farmers would benefit.

In September, Delta Farm Press spoke with Joe Outlaw, co-director of AFPC, about a recent study. Outlaw was careful to explain the parameters and assumptions of the report. Among his comments:

How long did it take to put this together at Chambliss’ request? Had you done any preliminary work on this prior to his asking?

“We’d been thinking about it and pulling together information on what it would take to get carbon credits under the voluntary program. But, as I told the folks on Capitol Hill, this isn’t what we normally do.

“It took us three months, or more, to put together the report. We’ve been doing this for about 20 years and this one was the hardest we’ve ever done.”

Do the findings surprise you at all?

“Everything we did was based on the EPA (Environmental Protection Agency) analysis. If they’re wrong, then our findings are completely wrong. We used their numbers for the prices used to drive everything — carbon prices, commodity prices, energy costs.”

“Your readers need to understand what we did. We assumed that the ranches would be left out completely and won’t get any benefits. But, as was stated in the paper, ranches can get in there. However, they must leave a lot of available forage to show they’re sequestering carbon and we didn’t think that would be an economic advantage for them. It wouldn’t be viable for them to cut back 30 to 50 percent of their herds to get carbon credits.

To read the entire article, link here.

This is No Time For Agricultural Community to be Divided

I would like to correct a few statements made by James Hellyer, of Johnstown, in the Oct. 12 issue of The Advocate. Hellyer's concern seems to start with the Constitutional change, a fact that should be addressed. By placing this board in the Ohio Constitution, Issue 2 gives Ohio voters the chance to make a strong statement in support of Ohio's livestock farmers and in support of responsible food production.

If you look closely at the Ohio Constitution, it already is home to several other boards -- including the state board of education, the Ohio tuition trust fund and the Ohio ballot board -- equally important boards to the state of Ohio.

The total cost of implementing this board is unknown, but burdening our fiscal budget by adding increasing taxes to consumers is unlikely. The proposal recommends that the Ohio Department of Agriculture house the board, which should offer some opportunity to leverage existing resources and save money.

The proposed board will definitely be made up of people involved in agriculture -- veterinarians, farmers and scientists will work together with consumers and Humane Society members to provide a combined expertise of backgrounds to ask questions and provide answers on important issues of how farm animals are treated and how our food is produced.

To read the entire article, link here.

Food Safety Programs Alter Farming

With food safety regulatory change on the horizon for U.S. producers, Rabobank recently found that approximately 40 percent of farmers have begun to alter their farming practices and methods.

According to a new Rabobank Farm & Ranch Survey, of those making changes, 64 percent are keeping better records, which is the first step toward better food safety.

“U.S. producers are aware that food safety issues are on the Obama administration’s agenda,” said Rabobank Food & Agribusiness Research and Advisory (FAR) Vice President Marieke de Rijke, who studies food safety issues. “They understand good record keeping will help keep them a step ahead of possible changes.”

In March, President Obama created the Food Safety Working Group to upgrade food safety laws, which govern the supply chain from gate to plate. With this in mind, U.S. producers are beginning to take steps before new laws are in place.

After keeping better records, other changes included researching information about better food safety practices by subscribing to topical publications (32 percent) or networking and meeting with other farmers (26 percent). Additionally, farmers are beginning to make changes to facilities (23 percent) and to processes (21 percent).

“Food safety outbreaks are a real threat to the well-being of the public. In addition they negatively impact the involved sector – in terms of image and sales,” said de Rijke. “Our survey shows that farmers and ranchers understand that information is a critical step to keeping consumers safe, while ensuring future business for U.S. producers.”

The True Unsung Heroes, Women in Agriculture

254w-and-253w-bull-twins.jpgWomen in agriculture are unsung heroes. When a woman vows to marry a farmer, she knows she is also marrying the operation, too, including the cattle, sheep, hogs, crops, hay and all of the work that goes with it. When marrying into farm life, she knows she will have a life full of blessings and a life full of trials. Yet, she takes it in stride, making it look easy as she balances things like off-the-farm work, home, family, food, bills, records, busy schedules, laundry, gardening, community service activities and the list goes on. However, despite how the farmwife manages to conquer the day-to-day tasks with ease, the one thing that is often forgotten is her. Today, I want to remind farm women how greatly appreciated they truly are.

heather-gessner.jpg That’s where Annie’s Project comes in. Annie’s Project is an educational program dedicated to strengthening women’s roles in the modern farm enterprise. This program is based on the life of a farm woman in Illinois, Annette (Kohlhagen) Fleck (1922-1997). Annie’s goal was to marry a farmer and she did. She spent her lifetime learning how to be an involved business partner with her farm husband. Of course, there were challenges including three generations living under one roof, low profitiability, changing farm enterprises and raising a family. Annie had to make many painful sacrifices that tested her conviction to be married to a farmer.

Last week, I attended a meeting of SASSY (Sustaining Annie's in South Dakota for Years to Come), an extension of Annie's Project. McCook County Extension Educator Heather Gessner hosts the five-part series for these women, and I had the opportunity to interview her. Listen to my interview below, and thanks to all the farm women out there. You are greatly appreciated!

BEEF Daily Quick Fact: The mission statement of Annie's Project is to empower farm women to be better business partners through networks and by managing and organizing critical information.

Taiwan Reopens to U.S. Bone-In Beef After 6-Year Ban

Taiwan will reopen its markets to U.S. bone-in beef most likely in November, ending a six-year import ban that was in place over fears of mad cow disease, and ushering improving ties with Washington, officials said on Friday.

Following other markets, Taiwan halted U.S. beef imports in response to the discovery of mad cow disease in the United States. As other markets reopened in recent years, Washington repeatedly urged the island government to let beef back in.

A deal to allow Taiwan to import bone-in beef imports signed by the island and the United States on Thursday in Washington is expected to ease overall relations, U.S. officials in Taiwan said.

"It removes an irritant that's been nagging for as long as I can remember," said Syd Goldsmith, a retired U.S. diplomat in Taipei who has been following the issue closely. "Why do anything that raises the noise level?"

The deal allows imports of all beef products from cattle under 30 months old. Imports from older cattle will be allowed later if meat from the younger ones is found safe, a U.S. official said.

Taiwan, which first issued the ban in December 2003, opened again to boneless U.S. beef in 2006, but kept the ban on bone-in beef such as ribs and T-bone steaks.

To read the entire article, link here.

Cattle on Feed Numbers Released

Nebraska: Nebraska feedlots, with capacities of 1,000 or more head, contained almost 2.2 million cattle on feed on Oct. 1, according to the National Agricultural Statistics Service, Nebraska Field Office. The inventory was up 3 percent from last year.

Placements in feedlots during September totaled 550,000 head, the same as last year.

Marketings of fed cattle during September totaled 395,000 head, up 1 percent from last year. These were the most marketed during September since the series began in 1993. Other disappearance during September totaled 5,000 head, compared with 10,000 head a year ago.

Iowa: There were 1,180,000 cattle on feed for the slaughter market in all feedlots in Iowa on Oct. 1, down 1 percent from Sept. 1, but up 1 percent from Oct. 1, 2008. Feedlots with a capacity greater than 1,000 head had 520,000 head on feed, up 2 percent from last month and up 9 percent from last year. Feedlots with a capacity less than 1,000 head had 660,000 head on feed, down 4 percent from last month and down 5 percent from last year.

Placements during September totaled 219,000 head, up 49 percent from last month and up 12 percent from last year. Feedlots with a capacity greater than 1,000 head placed 105,000 head, up 42 percent from last month and up 30 percent from last year. Feedlots with a capacity less than 1,000 head placed 114,000 head. This is up 56 percent from last month, but unchanged from last year.

Marketings for September were 227,000 head, up 44 percent from last month and up 39 percent from last year. Feedlots with a capacity greater than 1,000 head marketed 94,000 head, up 29 percent from last month and up 25 percent from last year. Feedlots with a capacity less than 1,000 head marketed 133,000 head, up 56 percent from last month and up 51 percent from last year. Other disappearance totaled 7,000 head.

Kansas: The number of cattle on feed on Oct. 1 in Kansas feedlots with 1,000 head or more capacity totaled 2.22 million head, up 3 percent from a year ago and up 8 percent from Sept. 1. The inventory included 1.21 million steers and steer calves, down 1 percent from the previous year. This group accounted for 55 percent of the total inventory. Heifers and heifer calves accounted for 1.01 million head, up 9 percent from 2008. Placements during September totaled 510,000 head, up 5 percent from a year ago but 7 percent below August 2009 placements of 550,000 head. Marketings during September totaled 330,000 head, 17 percent below September 2008 and 19 percent below August 2009.

To read the entire article, link here.