Corn Commentary

Happy Tax Day!

Seriously, who says that? Nobody, that’s who. Still, it’s one of those two sure things in life – but the other one only happens to us once while taxes happen every year!

apr15Taxes were appropriately part of the agenda last week during hearings and press conferences on Capitol Hill.

During a House Ways and Means Committee hearing on tax issues, American Farm Bureau President Bob Stallman testified that long-standing tax provisions should be made permanent, including Section 179 small business expensing which allows farmers and ranchers to expense certain purchases of assets. “Farm Bureau supports maintaining that with a cap of $500,000 per year. In other words, you could buy up to $500,000 worth of assets and be able to expense that amount in the first year, which would certainly help you bear the brunt of getting those assets to use in your business,” said Stallman.

That 500-thousand dollar break expired at the end of last year, along with many other provisions, but House Ways and Means Chairman Dave Camp of Michigan has said he is open to making some of them permanent. “We’re the only country in the world that has big pieces of its tax policy that expires, we now call those extenders,” said Camp. “We literally let them expire for a year, then we retroactively put them in place and then they go forward a year.”

During an Americans for Tax Reform press conference after that hearing, Camp indicated he thought the expensing provision should be among those to be made permanent. “Some items are very good, whether it’s the expensing issue or research and development tax credit,” he said. “I look forward to continuing to work on those and have markups in committee to see which of these policies we can make permanent.”

More “extenders” include tax credits for biodiesel, advanced biofuels and wind energy, which are now part of Senate legislation recently passed out of the finance committee.

The Littlest Ethanol Lobbyist

ace14-dc-ethan1Wearing a tie and sporting a “Don’t Mess with the RFS” button, 10-year-old Ethan Fagen was the youngest of the grassroots lobbyists at the recent American Coalition for Ethanol (ACE) Biofuels Beltway March on Capitol Hill.

Ethan came along with his grandfather, Ron Fagen of Fagen, Inc., and he was right in the trenches with him handing out materials and talking about the benefits of ethanol, like how good it is for the environment compared to fossil fuels. “Think in 200 years if you run ethanol there will be cleaner air for the next generation,” said Ethan, who is part of that next generation.

ace14-dc-fagensSitting in the front as the ACE Fly-in participants heard from government officials, Ethan caught the attention of Secretary of Agriculture Tom Vilsack, who thought it was “pretty cool” he was there for the event.

In my interview with Ethan, he told me that he would like to be a farmer someday and grow corn and have cattle. It’s interesting that if you add two letters to Ethan’s name, it becomes ethanol. That could be intentional, considering his grandfather is a pioneer in the ethanol industry! Interview with Ethan Fagen, ACE Fly-in Participant


2014 ACE Biofuels Beltway March photo album

Talking with Lawmakers on Capitol Hill

capitol-snowDuring National Agriculture Day and American Coalition for Ethanol Fly-in activities just two weeks ago, I was able to interview three farm-state lawmakers from the Midwest about issues important to agriculture.

All three are strong supporters for farmers and ranchers and all serve on their agriculture committees. I asked all of them about the Renewable Fuel Standard and we discussed several other issues like WRRDA, over-regulation, and rail delays.

Rep. Rodney Davis of Illinois discusses ethanol and the RFS, his experience working on the farm bill, and the water resources development bill.
Freshman Lawmaker Learns & Teaches on Farm BillInterview with Rep. Rodney Davis (R-IL)

Sen. John Thune (R-SD) talked about ethanol and the RFS, rail delays, farm bill implementation and livestock disaster aid.
Sen. Thune Talks Rail Delays and Livestock AidInterview with Senator John Thune (R-SD)

Retiring Senator Mike Johanns (R-NE) talks about the Renewable Fuel Standard (RFS), the problem farmer face with over regulation, and what his vision is for the future of agriculture.
Conversation with Sen. Mike JohannsInterview with Senator Mike Johanns (R-NE)

2014 ACE Biofuels Beltway March photo album

Energy Independence No Greased Pig Fantasy

There is an old saying…”make hay while the sun is shining.” Dating back to at least 1546 this traditional farmer logic translates into grab opportunity while you can. This has never been truer regarding the nation’s energy situation. A new report by the Energy Information Administration makes that abundantly clear. EIA says the greased pig fantasy of energy independence in the US is real.

We’ve reduced our dependence on foreign oil from 60 percent to 45 percent in the last few years. This is real, quantifiable progress brought on by smaller, high mileage vehicles, less driving due to a sagging economy, 15 billion gallons of ethanol capacity and domestic oil production on steroids.

Net oil imports to the U.S. could fall to zero by 2037 because of robust production in areas including North Dakota’s Bakken field and Texas’s Eagle Ford formation, according to this Department of Energy projection released this week.

Most days I am just numb about government studies and gasoline prices. I pull up to the pump, try to ignore the price and move on about my day. But there are other days too when I am angry about being held hostage by oil companies, and especially about their cavalier approach to crushing any real competition.

And that is exactly that they are trying to do with ethanol today.  So, here is a novel thought. Let’s take this time of energy abundance to think big and invest in a more sustainable energy future rather than waiting until the wolf is at the door. Because, rest assured petroleum remains finite and the next generation will wonder why we squandered this brief respite from oil piracy.

Oil imports have fallen to about 5 million barrels a day from a peak of almost 13 million barrels in 2006, thanks in part to advances in techniques such as hydraulic fracturing and horizontal drilling in shale rock. Despite this, we continue to spend $1 billion a day protecting our assets in foreign oil. And there is no getting around that gasoline is bad for our health and the environment.

make-hayNow would be a great time to call your Congressman and Senator and ask them to show some vision regarding biofuels and our energy future. The rapid growth in ethanol production has shown us the promise of a bio-based fuel future. It’s time to make hay!

 

 

 

Corn Farmers March for Biofuels in the Beltway

ace14-dc-alversonThere were over 25 battalions of ethanol troops on Capitol Hill last week as part of the American Coalition for Ethanol (ACE) sixth annual Biofuels Beltway March

ACE president Ron Alverson, a South Dakota farmer and board member for Dakota Ethanol, says the teams had appointments with the offices of more than 130 senators and representatives, and he thought they were well received, even in enemy territory. “We went into what we thought were going to be some pretty hard places – representatives from Alabama, Pennsylvania, Rhode Island,” he said. “They were very cordial and they listened well … we were really pleased.”

Their main weapon against ethanol foes was good information to defend against some of the more popular arguments against ethanol, such as food versus fuel and engine issues with higher blends. “We’ve got some really good arguments and good data…all we can do is go out and tell our story,” said Alverson.Interview with Ron Alverson, ACE president

ace14-dc-corn-teamOver 80 people turned out for the ACE event this year, the most ever, and the diverse group included ethanol producers, retailers, bankers, truckers, cattle ranchers, students – and a whole bunch of corn farmers. The team here consisted of (LtoR) Missouri farmer Gary Porter, Missouri Corn Growers public policy director Shane Kinne, and Minnesota farmers on the board of Chippewa Valley Ethanol Dale Tolifson and Dave Thompson.

I caught up with them as they were heading out of the Capitol after making their rounds and asked them each to give a brief impression of their visits. Interview with Biofuels March team


2014 ACE Biofuels Beltway March photo album

Dr. Borlaug to Join Statuary Hall

borlaug-statueNational Agriculture Day celebrations in Washington DC this year just happen to fall on March 25, the centennial anniversary date of the Father of the Green Revolution. As a fitting tribute, the State of Iowa will install a bronze statue of Dr. Norman E. Borlaug in the U.S. Capitol on that very day.

Each state is allowed to have two statues of notable citizens in the National Statuary Hall Collection at the U.S. Capitol Building. The statue of Borlaug will replace the statue of U.S. Senator James Harlan installed in 1910, which will be relocated to Mount Pleasant, Iowa. The second statue representing Iowa is of Governor Samuel Kirkwood, which was installed in 1913.

World Food Prize president Kenneth Quinn, chairman of the committee appointed by the governor of Iowa to develop the statue, says of all the people immortalized in that hall, Dr. Borlaug will be the only one honored for his work in agriculture. “The only real agricultural figure is going to be standing there amidst all of these presidents and generals,” said Quinn, who added that if you took all of the people in the hall and added all of the Nobel peace prize laureates “and you add up all of the lives that they all saved, they still won’t have done as much as Norman Borlaug did by himself.”

As the Father of the Green Revolution, Dr. Borlaug is credited with developing agricultural innovations that saved an estimated billion people around the world from hunger and starvation. Quinn likes to think that Dr. Borlaug’s presence in the nation’s Capitol will perform another great act for humanity by helping to bring politicians in Washington together. “During the most heated periods of recent politics, when Democrats and Republicans couldn’t agree on anything in our state legislature, the Republican-led House and the Democrat-led Senate in one day passed the resolution saying Norman Borlaug should be in Statuary Hall,” said Quinn. “He’s the one guy who can get them all in the picture.” WFP President Kenneth Quinn talks about Borlaug statue

More information about the statue is available at www.iowaborlaugstatue.org, and there will also be a webcast of the statue unveiling ceremony, which will take place on March 25 at 11 a.m. Eastern Time, at www.speaker.gov/live.

CARB Serves Up Murky Alphabet Soup

soupThe iLUC analysis by CARB for the LCFS was based, in part, on EWG recommendations and included GTAP, AEZ-EF, and GREET models, input from EPA and USDA, consideration of RFS2, and also looked at contribution of DDGS and significance of YPE.

Watching a webcast of a California Air Resources Board (CARB) workshop this past week detailing preliminary staff results on Indirect Land Use Change (iLUC) models and analysis for the state’s Low Carbon Fuel Standard (LCFS) was sometimes like reading teen text messages. OMG, like, I was LOL and SMH at these PPL wondering WTH?

carb-14-2The 84 slide presentation of details on how CARB arrived at the values they are now proposing for corn ethanol, sugarcane ethanol, soy biodiesel, canola biodiesel and sorghum ethanol was interspersed with dozens of questions from stakeholders and scientists present or listening in on the webcast. An overriding theme of the entire four hours was “uncertainty” – which pretty well sums up the whole concept of indirect land use change. Nearly a quarter of the presentation was devoted to “Evaluation of Uncertainty” and “Why Results Vary Between Studies.” Many times points were made that there is no scientific consensus on certain values, or that some variables may not be taken into account.

I thought it was interesting and had to wonder why they decided to represent indirect Land Use Change with a little i for indirect. Maybe it’s supposed to be like iPhone or iPad. But there was even uncertainty on how to pronounce it as a word by those at the workshop – i-Luck, i-Look or i-Luke.

CARB is asking for feedback on the preliminary presentation by the end of March and plans to schedule one or two additional workshops in the coming months before completing an Independent Academic Review and presenting final report to the board in the fall. “Thank you for attending the LCFS opening ceremonies,” said CARB Transportation Fuels Branch Chief Michael Waugh at the conclusion of the workshop.

It would be funny if what CARB ultimately decides about iLUC would not have such an important impact on the use of corn ethanol in the state that uses the most motor fuel nationwide. I’m no scientist, but in IMHO, it’s just NAGI.

EPA Official Talks about RFS Proposal

The man directly responsible for the EPA proposal to lower the 2014 volume obligations under the Renewable Fuel Standard (RFS) last week addressed members of the ethanol industry directly impacted by that plan.

nec14-grundler“I really wanted to provide you with some context and what our thinking was behind our 2014 RVO proposal,” said Chris Grundler, EPA Director of the Office of Transportation and Air Quality for the U.S. Environmental Protection Agency speaking at the National Ethanol Conference. “And it is a proposal,” he stressed several times.

First off, Grundler wanted to make it clear that EPA does support biofuels. “The most disappointing thing I heard in the reporting is that EPA no longer supports the development of biofuels, and I’m hear to tell you that’s wrong,” he said. “We know that if we’re going to achieve what science is telling us we must achieve in terms of greenhouse gas reduction … biofuels has got to be part of that solution set.”

Gundler says they came up with the proposal to address marketplace realities for biofuels. “Our overriding goal with this 2014 RVO proposal is to put the RFS in what we call a manageable trajectory while continuing to support the growth of renewable fuels in our transportation supply,” he said. “We have to address some of the practical realities that we see today in the marketplace.” Comments by Chris Grundler, EPA at National Ethanol Conference

During a brief press availability after his remarks, Grundler defined manageable trajectory as “steady growth in overall biofuels space … where the market is able to move those fuels and people use them.”

Grundler also said specifically that the EPA can definitely change the proposal Grundler stressed that the proposal is just that and it could be changed. He also noted that EPA received over 100,000 written comments during the comment period with 6,000 “unique” comments, and that the hearing held in early December was a record. He added that they do intend to try and meet the goal of finalizing the rule by the end of spring. Press Avail Chris Grundler, EPA

Would Someone Please Tax Me Like Big Oil?

oily bird picIt’s tax time again. You know that short window during the year when it’s ok to complain about being taxed. Given the number of people who remain unemployed it really is kind of bad form to complain the rest of the year.

So as you belly up to do your part to keep the skids of government greased here is a whopper of a tax tale to help you really get the bile out and make your complaining count. I am guessing that it will come as no shock to you that each year the average American pays more than 20 percent of their income in federal taxes. This does not include state and local taxes.

So this begs the question; shouldn’t an industry that makes $175,000 per minute pay at least that much? This is a real number reflecting the profits of the five largest oil companies. Together they earn more in one minute than 95 percent of Americans earn in a year.

However, Reuters news service estimates that Chevron, ConocoPhillips, and ExxonMobil pays effective federal tax rates of 19 percent, 18 percent, and 13 percent, respectively. Reuters noted that this is “a far cry from the 35 percent top corporate tax rate.” Likewise the tax bracket for the most successful Americans is 35%.

The petrol industry has prospered over the past decade, thanks to high oil and gasoline prices. The five largest companies — BP, Chevron, ConocoPhillips, ExxonMobil, and Shell — earned more than $1 trillion during this time. In the first nine months of 2013, these five companies realized a combined $71 billion in profits. Certainly, these companies can prosper without $2.4 billion in annual special tax breaks.

The Congressional Joint Committee on Taxation estimated that three tax preferences provide $24 billion per decade in annual benefits to these five companies. The “limitation on Section 199 deduction,” designed to encourage domestic manufacturing to remain on shore, costs the Treasury $14.4 billion per decade for these five companies. The foreign tax credit deduction saves the big three domestic oil companies $7.5 billion per decade. The “intangible drilling costs” deduction saved the five companies another $2 billion, according to the Wall Street Journal.

It also seems the oil and gas industry has been the largest beneficiary of federal financial support in the entire energy sector benefitting from nearly 60 percent of all federal energy support since 1950.   Shouldn’t the lion’s share of these dollars be spent on new, alternative, renewable sources to make us less dependent on something as finite and as devastating to the environment as oil?

Big Oil will argue that these breaks are critical to job creation, but recent data from the Bureau of Labor Statistics shows oil industry employment is off 10 percent. This is not nearly as bleak as it sounds given that nearly half of the direct jobs touted by big oil are service station positions.

Simply put, it’s time to end special tax breaks for BP, Chevron, ConocoPhillips, ExxonMobil, and Shell.

Overdue Farm Bill Passed

baby-farm-billAfter a what seemed to be a never-ending labor process, Congress has finally delivered a new farm bill – well past its 2012 due date.

National Corn Growers Association President Martin Barbre, like most farmers, was happy to see the long process come to an end. “While it’s not perfect, we’re pleased to see the bill contains many provisions we’ve been working hard for over the years,” he said.

There are definitely some changes included in the legislation. “This is not your father’s Farm Bill. It’s a new direction for American agriculture policy,” said Sen. Debbie Stabenow (D-MI), Chairwoman of the Senate Agriculture Committee.

Among the most notable changes for farmers is the option to participate in either the revenue-based Agriculture Risk Coverage program or a Price Loss Coverage program with fixed reference prices. Stabenow notes the legislation also includes “one of the largest investments in land and water conservation we’ve made in many years” consolidating 23 existing conservation programs into 13 programs.

As a nod to Stabenow’s tireless work on the legislation for the past two years, President Obama is expected to sign the bill in Michigan on Friday.



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