Agriculture Secretary Pick Vilsack to Face Farm Bill, Ethanol

Posted on December 17, 2008. Filed under: Hydrous Ethanol, Rural Development | Tags: , , , , |

Agriculture Secretary Pick Vilsack to Face Farm Bill, Ethanol

 

 

By Alan Bjerga

Bloomberg (December 17, 2008)

 

Tom Vilsack, who President-elect Barack Obama may name as his Agriculture secretary choice, will need to act quickly on unimplemented farm subsidies and lower crop prices, commodities and agriculture analysts said.

 

As the 30th head of the U.S. Department of Agriculture, the former Iowa governor, 58, would also be tasked with re-examining the nation’s biofuels policy. He replaces Ed Schafer, who has led the USDA since Jan. 28. Obama plans to make the announcement today at a news conference in Chicago, according to a Democratic official who spoke on the condition of anonymity.

 

Vilsack’s experience as a state legislator and leader of the nation’s largest corn-producing state makes him well-qualified to lead the third-largest Cabinet department in spending, said Senate Agriculture Committee Chairman Tom Harkin, like the former governor an Iowa Democrat. The USDA has a budget of about $100 billion and 110,000 employees.

 

“He knows production agriculture and he knows the changes needed to ensure its profitability and future,” Harkin said in an e-mail. Vilsack will join Obama at the news conference scheduled to begin at 10:45 a.m. Chicago time, where the president-elect may also designate Colorado Senator Ken Salazar as Interior secretary. Both posts are subject to confirmation by the Senate.

 

Vilsack was elected as Iowa’s governor in 1998, the first Democrat to win the office in 32 years. He was re-elected in 2002. Now an attorney at the Dorsey Trial group, he endorsed New York Senator Hillary Clinton during the Democratic presidential primary campaign after ending his own presidential bid in February 2007, before the first contest took place.

 

Overcoming Adversity

In his brief campaign, Vilsack offered his life story as an example of overcoming adversity to rise to high public office. The Pittsburgh native was orphaned at birth and adopted from a Catholic orphanage. He moved to Mount Pleasant, Iowa, his wife’s hometown, to practice law and raise their two sons. He was elected the town’s mayor in 1987 after a disgruntled citizen murdered the previous mayor. Vilsac would bring to the Department of Agriculture experience as the former chief executive of a state heavily reliant on agriculture and related industries. Along with corn, Iowa is one of the nation’s top producers of soybeans, hogs and eggs and is second in crop value to California among all states, according to government statistics.

 

As secretary, Vilsack would face immediate challenges putting into practice a politically popular yet harshly criticized farm bill and determining the direction of ethanol policy. He would also have to manage controversies over trade, food safety and animal welfare, agriculture and commodities markets analysts said.

 

‘Intense Volatility’

“We are in a period now of intense volatility in the agriculture industry,” said Clayton Yeutter, who held the top agriculture job under President George H.W. Bush and is a former U.S. trade representative, at a farm conference earlier this month. “Farmers here and in other countries are really struggling to figure out how to handle this.”

 

The $289 billion, five-year farm bill Congress passed in June over President George W. Bush’s veto largely remains unimplemented, with key decisions on how to tailor crop subsidy programs yet to be made, said David Kruse, a commodity trading adviser at Commstock Investments Inc., in Royal Iowa. The shape of a new subsidy based on farm revenue rather than crop price still hasn’t been determined. Depending on what formula the government chooses, farmers may decide whether to plant corn or soybeans based on how much support they may receive, Kruse said. Under one scenario, “you could receive $200 an acre for corn, and that’s significant,” he said.

 

Renewable Energy

Pressure to make subsidies generous is rising as corn, wheat and soybean prices plunge from records set earlier this year, he said. Farmers’ hopes for higher payments may run afoul of potential trillion-dollar budget deficits anticipated as Obama fights a global economic crisis, said Mark Maslyn, head of public policy for the American Farm Bureau Federation, the largest U.S. farmer group.

 

“Any Cabinet secretary is going to have the overarching problem of the budget,” he said, which may make it more difficult to fund Obama campaign promises such as $150 billion in renewable energy investment over 10 years. Biofuels subsidies themselves may come under attack should they be seen as budget-busters, making ethanol another key issue for the new secretary, he said.

 

Beyond the farm bill, the budget and biofuels, agriculture will continue to be a key part of the Doha round of international trade talks, Maslyn said. Also set for more prominence are food safety and animal-welfare standards, called into question after a series of high profile recalls involving Cargill Inc. beef, General Mills Inc. pizzas and the largest meat scare ever, the 143.4-million-pound Westland/Hallmark Meat Co. recall of February that involved animal cruelty.

 

How the new secretary handles these issues will go a long way toward determining whether the new administration will lead to a new direction for American food policy, said Jim Harkness, president of the Institute for Agriculture and Trade Policy in Minneapolis, Minnesota.

 

“We hope we will have a serious discussion that will be about more than tinkering at the margins,” he said.

 

Renergie was formed by Ms. Meaghan M. Donovan on March 22, 2006 for the purpose of raising capital to develop, construct, own and operate a network of ten ethanol plants in the parishes of the State of Louisiana which were devastated by hurricanes Katrina and Rita.  Each ethanol plant will have a production capacity of five million gallons per year (5 MGY) of fuel-grade ethanol.  Renergie’s “field-to-pump” strategy is to produce non-corn ethanol locally and directly market non-corn ethanol locally.  On February 26, 2008, Renergie was one of 8 recipients, selected from 139 grant applicants, to share $12.5 million from the Florida Department of Environmental Protection’s Renewable Energy Technologies Grants Program.  Renergie received $1,500,483 (partial funding) in grant money to design and build Florida’s first ethanol plant capable of producing fuel-grade ethanol solely from sweet sorghum juice.  On April 2, 2008, Enterprise Florida, Inc., the state’s economic development organization, selected Renergie as one of Florida’s most innovative technology companies in the alternative energy sector.  By blending fuel-grade ethanol with gasoline at the gas station pump, Renergie will offer the consumer a fuel that is more economical, cleaner, renewable, and more efficient than unleaded gasoline.  Moreover, the Renergie project will mark the first time that Louisiana farmers will share in the profits realized from the sale of value-added products made from their crops. 

 

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    Renergie created “field-to-pump," a unique strategy to locally produce and market advanced biofuel (“non-corn fuel ethanol”) via a network of small advanced biofuel manufacturing facilities. The purpose of “field-to-pump” is to maximize rural development and job creation while minimizing feedstock supply risk and the burden on local water supplies.

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