Farm Bureau backs increase in ethanol blend and other measures

Jan 16, 2009
by WLJ
Farm Bureau backs increase in ethanol blend and other measures

Delegates for the American Farm Bureau Federation voted without debate to encourage an increase in the existing 10 percent ethanol blend allowed for most vehicles.

Farm Bureau delegates at the group’s 90th annual meeting in San Antonio, TX, stated they would back legislation or regulations to increase the E-10 blend to higher levels that would not require engine modifications to existing autos.

Analysts have projected the U.S. is headed toward an E-10 “blend wall” as more ethanol is produced as part of the Renewable Fuels Standard. The Department of Energy is studying the impact of increasing the blend levels and the effects such an increase would have on air quality as well as the impact on automobiles.

Members of Congress who back the ethanol industry also have put forward bills to incrementally increase the blending level by anywhere from 1 percent to 10 percent.

Farm Bureau members also voted to support the development of a comprehensive energy policy “that includes conservation, exploration, research” as well as the production of renewable and traditional energy. Delegates largely went through the Farm Bureau’s policy book without major debate on any one given topic, but they did make changes to a broad range of policies at their business meeting.

Beef checkoff

Farm Bureau delegates voted to support an increase in the $1-per-head fee sellers pay for the beef checkoff. The resolution to support an increase passed despite some concerns expressed that as a general farm organization, the Farm Bureau should not get involved in such a debate. Delegates did not make any effort to declare how much the checkoff should be increased.

Farm programs

On national farm policy, delegates passed changes in policy to state that USDA should recognize eligibility for all farm programs regardless of size. That stems from a change in commodity programs that would restrict payments to farmers with net farm incomes higher than $750,000 over a three-year average for a single farmer or $1.5 million if the spouse is also engaged in the operation. Farmers who meet those higher income thresholds lose eligibility for direct payments.

The farmer or couple would still be eligible for countercyclical or loan-deficiency payments. Farm Bureau also voted to maintain the current definition of “actively engaged.”

The rules for actively engaged are being changed by USDA under an interim final rule posted in the Federal Register that would require that all partners or shareholders in a farm operation provide “significant contributions” of capital, equipment, land or a combination; and personal labor or active personal management, or a combination. In the past, not every member of a business entity needed to meet this test. Labor and management contributions must be made regularly, be identifiable, be documentable and be distinct from any other partner or shareholder in the operation.

Marketing agreements

Farm Bureau policy was changed to “publicly urge all parties who have entered into commodity marketing agreements to fulfill those agreements, despite changes in the prices for the commodity.”

Jim Schielein, an Illinois Farm Bureau director from Dixon, IL, said the volatility of the past year translated into grain buyers no longer offering cash-delivery contracts or restricting the time frame for such contrasts to a limited number of days. Schielein also referenced issues with honoring contracts that have come up in “a particular bankruptcy” in a federal court district “where the judge may not quite understand the nature and dangers involved and the risks” of such contracts for farmers.

Schielein was referencing the VeraSun Energy bankruptcy case, which is being heard in the U.S. Bankruptcy Court in Delaware, even though most of the companies and farmers involved are in the Midwest. The bankruptcy judge allowed VeraSun to break its contracts for grain delivery with hundreds of farmers.

Farm Bureau also supported establishing legislation that would require payment in full within 30 days of sale for all agricultural commodities, unless otherwise agreed to by the seller, at all levels of the agricultural marketing chain.

Estate tax

It’s unlikely the estate tax will be repealed given that the new presidential administration and Congress will be looking for new sources of revenue to deal with the massive budget deficit.

President-elect Barack Obama’s advisers have referenced supporting a $3.5 million estate exemption that would be $7 million for a couple. Farm Bureau delegates voted that if the exemption levels are lowered, agricultural land and farm assets be excluded from estate-tax valuation.

Color coding

Farm Bureau delegates were big on finding the right color to fix problems. Farmers should back an industry-wide effort to standardize colors for seed treatments, delegates decided.

Farmers stated the lack of color identifiers on seeds have led to mistakes such as applying the wrong chemical applications for crops, sometimes destroying the field accidentally. Colors would help distinguish the “ever-increasing number of biotech seed traits.”

In another color-coding effort, delegates voted that fuel pumps for different biofuel blends should have standardized color-coded pumps so consumers know what they are putting in their vehicles.

No North American Union

After passing language last year opposing the formation of the North American Union, a subcommittee study during the year and a staff white paper on the topic, Farm Bureau delegates voted to eliminate language opposing the North American Union, citing that there is no effort to form such a union or any threat to U.S. sovereignty. — Chris Clayton, DTN