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Conveyor Currents                              February 17, 2012
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In This Issue
Government Affairs Report
Push for 2012 Farm Bill Ramps Up
President's FY2013 Budget Cuts USDA by $32 Billion
Vilsack Tells Senate Ag Committee
Bloomberg Sees Corn Acreage Up
"Advanced" Ethanol Companies want Farm Bill Financial Support
BSE Meat Import Rule Changes Pushed
Payroll Tax Deal Reached
House Ag Approved Bill Protects Market End-Users
House, Senate Highway Reauthorization Bills in Limbo
In Memory of Lawrence Elfelt
Upcoming Dates



Feb. 24-25, 2012 - PCRA Annual Convention, Bernardus Lodge in Carmel Valley, CA

April 18-21, 2012 
 CGFA Annual Convention ~ The Hyatt Regency, Monterey, CA

May 16-17, 2012,  California Animal Nutrition Conference ~ Radison Hotel & Conference Center, Fresno, CA


January 16-17, 2013   Grain & Feed Industry Conference, Embassy Suites, Monterey, CA

April 24-27, 2013  CGFA Annual Convention ~ The Hyatt Regency, Huntington Beach, CA


January 15-16, 2014   Grain & Feed Industry Conference, Embassy Suites, Monterey, CA

April 23-26, 2014  CGFA Annual Convention ~ The Sheraton Resort, Maui, HI 

Government Affairs Report


New Wave of Bills Being Introduced


Hundreds of bills have been introduced since January when the Legislature came back for the second year of the two year session. Bill introduction deadline is next Friday, February 24th, so over the next seven days legislators are expected to introduce over a thousand more bills. A brief review of some of the bills impacting agriculture include:


AB 1516 (Alejo) Raises the weight limit on commercial agricultural vehicles to qualify for an exemption allowing them to be driven by drivers with a class C license. The limit would rise from 26,500 pounds to 28,000 pounds and extend maximum vehicle length to 75 feet.


AB 1518 (Perea) This measure would increase fees for scales and weigh masters specifically for the gravel and road materials industry and allow for unmanned scales. The author has asked if this is something the agricultural hay and feed industry would like to explore as well.   


AB 1581 (Wiekowski) This measure attempts to address unscrupulous marketing activities by out of state floral companies under cutting California flower shops and flower growers.


AB 1544 (M. Perez) Attempts to develop a state program to allow for the "legal" hiring of undocumented workers. Specifically requires EDD to make a finding that not enough "legal" residents are available to fill the ag jobs and then authorizes the department to provide a license to hire undocumented workers in agriculture.


AB 1616 (Gatto) This measure attempts to promote "cottage industry" food production by exempting some foods from food safety regulations addressing sanitation, packaging and labeling for small "cottage" products and producers.


AB 1623 (Yamada) This bill would authorize local county boards of supervisors to raise weights and measures fees to cover the local county costs.


AB 1625 (Allen) This bill would provide financial assistance to growers that are transitioning to organic production during the transition.


AB 1632 (Gordon) Directs CDFA to "assist in organizing and marketing" community supported agriculture.


SB 964 and SB 965 (Wright) Both these bills are intended to address regulatory reform at the regional water quality control board. Specifically the measures address ex parte communication with board members, align the conflict of interest provisions and address the adoption of regulation process.


Push for 2012 Farm Bill Ramps Up; USDA asks for "Flexibility" in Spending

While 82 national agriculture, food, conservation and research organizations told Capitol Hill this week a Farm Bill enacted in 2012 is a necessity, the chair and ranking member of the Senate Agriculture Committee - just before their kickoff Farm Bill hearing this week - told crop insurance companies they continue to view federally supported insurance as the core of risk management and income protection, the push for a 2012 bill is on and Memorial Day may be the drop dead date for getting a bill done this year. Complicating the formula, however, was the release this week of President Obama's FY2013 budget recommendations. Sen. Debbie Stabenow (D, MI) said the White House 10-year budget as envisioned in the Administration plan makes it even more important to do a bill this year.  


The Obama budget wants to cut $32 billion out of mandatory farm spending, and coupled with election year politics, skeptics doubt if Congress will fully reauthorize a four-year omnibus farm bill. Stabenow was joined by House Agriculture Committee Chair Frank Lucas (R, OK) in her displeasure with Obama's recommendation that $7.4 billion be cut from crop insurance over the next decade. The White House wants to cut premiums for catastrophic coverage and the federally subsidized reimbursement to crop insurance companies to cover administrative costs. Stabenow countered the White House by saying she and Lucas were able to slash $23 billion over 10 years in their deficit reduction package developed last fall without touching crop insurance, which has sustained well over $6 billion in reductions in the last three years. Lucas said the President's proposal reveals yet again a fundamental lack of "perspective and understanding" of how ag can contribute to overall federal spending cuts.  


Sen. Pat Roberts (R, KS), ranking member of the Senate ag panel, said the White House is ignoring farm state members of Congress and their constituents, and said several billion in cuts could have been taken out of nutrition programs through mandatory efficiencies without causing recipient pain.


President's FY2013 Budget Cuts USDA by $32 Billion; Ups FDA based on New User Fees


USDA's overall spending would be reduced $32 billion, including a cut in crop insurance of $7.4 billion, over the next 10 years under the FY2013 budget sent to Capitol Hill this week by President Obama. FDA would see an increase in its overall budget of about $11.5 billion, but nearly all of the actual spending increase - 98% -- is predicated upon $654 million in new user fees for agency programs, including new fees for all companies required to register with FDA under the new Food Safety Modernization Act (FSMA). FDA Commissioner Margaret Hamburg said this week if the President's budget is enacted, nearly 45% of FDA's overall spending would be based on user fee collection by 2013. For the Center for Veterinary Medicine, which regulates the feed industry and animal drugs, overall spending is reduced by about $4 million over FY2012 levels, but the FY2013 Administration proposal would seek collection of $15.09 million in user fees, including a new "food establishment registration fee" - strongly opposed by the feed, grain and other industries regulated by FDA - that is estimated to generate about $5.072 million dollars a year based on the more than 410,000 establishments likely to register, including feed mills, under FSMA. The other fees collected by CVM include $7.7 million in animal drug approval user fees (negotiated with industry as part of the Animal Drug User Fee Act (ADUFA)), $1.6 million in generic animal drug fees, and $24,000 annually in recall fees. The Administration is also targeting about $10 million in new spending to increase agency presence in China to improve the safety of imported foods, ingredients and drug components. At USDA, the Administration stopped short of recommending major user fee increases, with minor increases to cover the cost of inspecting meat processing plants after recalls linked to an illness outbreak, and $4 million to be collected from biotech crop applicants to cover department costs.



Vilsack Tells Senate Ag Committee: Give USDA Flexibility on Spending, Priorities

Saying he's head of a department facing major "challenges," Secretary of Agriculture Tom Vilsack this week told the kickoff Farm Bill hearing before the Senate Agriculture Committee lawmakers need to give USDA the authority to set priorities and direct federal dollars where they're needed. The flexibility push was part of USDA's recommendations on how to reinvent federal farm programs, and included a call for consolidating and streamlining programs and allowing the department to adjust programs to reflect regional differences. However, he also layered over these more progressive recommendations the oft-repeated calls by the Obama Administration for renewable on-farm energy programs, broadband internet access and off-farm employment opportunities. Vilsack said USDA has absorbed over $3 billion in operating cost reductions since 2010, his workforce has been cut through buyouts and he expects worker ranks will be reduced more over the next several years.

Bloomberg Sees Corn Acreage Up, USDA Sees Prices Down as Ethanol Settles Down

A Bloomberg survey of 36 analysts forecasts 94.329 million acres will be planted to corn next season, up 2.6% over last year. At the same time, USDA said this week that corn prices should average about $6.70 a bushel in 2011-2012, but drop below $5 per bushel for the next several years. The 2012-2013 corn price will average about $5, the department said, but bounce between $4.30 and $4.65 through 2022. The price decline is based on an assumption the 45-cent-per-gallon corn-based ethanol blenders' tax credit, the 54-cent import tariff and the $1-per-gallon biodiesel tax credit will not be reinstated. USDA said corn used for ethanol will be about 36% of production, but levels will drop below recent-year figures of closer to 40%, and corn for feed use will increase as prices drop and supplies increase.


"Advanced" Ethanol Companies want Farm Bill Financial Support

Having watched corn-based ethanol lose it blenders' tax credit and import protections, the cellulosic ethanol industry this week sent Senate Agriculture Committee Chair Debbie Stabenow (D, MI) and ranking member Sen. Pat Roberts (R, KS) a letter urging the committee to include extension of two "critical tax incentives" for non-corn ethanol production. The tax breaks - the cellulosic biofuels producer tax credit (PPT) authorized in the 2008 Farm Bill and the special depreciation allowance for cellulosic biofuel plant property - were emphasized by the Advanced Ethanol Council as key to development of advanced ethanol made from feedstocks that don't compete with feed and food industries.  


The council said the industry is making significant investment in advanced biofuels with the "expectation Congress will stay the course with regard to its commitment to the industry." In addition to the tax credit extensions, the council said it wants Congress to extend the USDA loan guarantee program for biorefinery projects but fix the program so it's easier for lenders to participate; support a USDA effort to "build out" the refueling infrastructure - more flexfuel gas pumps, etc. - and reform the Biomass Crop Assistance Program to encourage greater participation while reducing the risk of planting crops for advanced biofuels feedstocks.

BSE Meat Import Rule Changes Pushed


Thirty-one Senators this week asked the Obama Administration to finalize its long-pending rulemaking that would loosen restriction on imported beef that they say will help trade negotiations. The group was led by Sen. Ben Nelson (D, NE) and Sen. Charles Grassley (R, IA). The bipartisan group sent a letter to the Office of Management & Budget (OMB) urging release of a rulemaking first proposed by USDA in 2004. Grassley said it's tough for U.S. negotiators to talk to trading partners about following the science, "yet we fail to lead by example by adopting a comprehensive rule."


Payroll Tax Deal Reached

With GOP House and Senate members saying they are just doing the right thing by American workers and Democrats on both sides of the Hill saying the Republicans "caved," Congress this week is set to enact an extension of federal payroll tax reductions through the end of 2012. At issue was a GOP leadership decision to move forward with the extension without finding cuts in other programs to pay for the $100-billion cost, a move many feared would inspire insurrection among budget hawks in the House.  


The overall cost of the bill, including items unrelated to the payroll tax extension, is about $150 billion, with $50 billion of that offset through other cuts or revenue increases. The GOP scored a concession from Democrats by creating a tiered approach to limiting unemployment benefits. In states where unemployment is 9% or above, benefits would be available for up to 99 weeks, but would scale back to 73 weeks by the end of the year. Most states would see unemployment insurance limited to about 63 weeks. Other provisions of the bill include a Medicare physician reimbursement extension through 2012, and an extension of certain Medicare programs, and an extension of the Temporary Assistance for Needy Families program.

House Ag Approved Bill Protects Market End-Users

A bill - HR 3527, the Protecting Main Street End-Users from Excessive Regulation Act -- introduced by Rep. Randy Hultgren (R, IL) and approved by the House Agriculture Committee, would ensure legitimate commodity market "end-users," including farmers, ranchers and bona fide hedgers, that Commodity Futures Trading Commission (CFTC) rulemakings aimed at restricting market manipulation by Wall Street banks, will not fall on them. Hultgren's target is a pending CFTC rule requiring financial institutions to register under a new designation.


House, Senate Highway Reauthorization Bills in Limbo

Facing over 300 proposed amendments on its committee-approved package, House leadership this week split the federal highway reauthorization package into three separate bills. Meanwhile, the Senate grapples with how to pay for its package, and Congress this week decided to punt any votes on reauthorization of the federal highway infrastructure and urban commuter programs until after it returns from the week-long President's Day recess. The House is looking at a five-year bill, while the Senate is working on a two-year package, and while historically this package has been paid for by federal gasoline and highway use taxes - the so-called Highway Trust Fund - revenues from those sources have dropped, so the fight is on to figure out how to pay for the ambitious programs envisioned in both bills.  


The House took a small step forward this week when it approved a package of energy-related measures as part of the broader highway program effort. This package takes revenue from future fees paid by companies to develop oil and gas deposits as partial payment for the House highway bill. Among the amendments filed on the House bill is one to extend federal biodiesel tax credits for two years and another to guarantee funding for river/port dredging and port maintenance. Meanwhile, in the Senate, Majority Leader Harry Reid (D, NV) riled both Republicans and Democrats by deciding to call for a February 17 vote to cut off debate on amendments to the Senate's highway bill. Reid moved to cut off debate to force a deal on a "national freight policy" provision that's designed to encourage "multi-modal transport investments," by Sen. Frank Lautenberg (D, NJ). It's most likely Reid will wait until after next week's recess to hold a final vote on the package.


In Memory of Lawrence Elfelt

Lawrence DeHuff Elfelt, Jr.
10-28-18  -  2-12-12 


It is with saddened hearts that we report the death of Lawrence Elfelt.  Lawrence  was born and raised in Minneapolis, Minnesota, graduating in 1936 from Central High School. Always a strong advocate of education, he earned his degree in Business Administration at the University of Minnesota. He proudly served his country as a Commander in the U.S. Navy in WWII, and in December of 1942, married the love of his life, Theda Bringman, who was at his side for the next 61 years. With the war over, he was hired by Cargill and after several transfers, he arrived at the Los Angeles office in 1956, remaining until 1983 when he retired as a vice-president. He served as president of the  Grain and Feed Association and had a great camaraderie with his business associates, many of whom became lifelong friends.

After retirement, he was a daily attendant at mass and his strong faith helped him through many of life's obstacles. He was a humble person who found joy in quietly serving others through volunteering, donating and being there for family and friends. His upbeat, positive attitude, ability to tell a story and great laugh made him welcome anywhere. He and Theda loved to entertain and there door was always open to visitors. He was truly a shining example of a life well-lived. 


He is survived by his children: Mike (Carolyn), Patti (Mike) Mahoney, Tim (Gina), Mary (Paul) Reischl and John; devoted grandfather of Stephen, Patrick, Ryan, Kelsey, Emily, Anna, Elizabeth, Madeleine and Nicholas; great-grandfather of Isabella, Lucy, Abilene, Jace and Eliana. 
In lieu of flowers, donations may be made to: NARSAD, 60 Cutter Mill Road, Suite 404, Great Neck, NY, 11021, or the charity of your choice.  


Rosary 12:30 pm; Memorial Mass 1 pm on Saturday, Feb. 18  
Assumption Church, Pasadena
Cabot & Sons, Director