By: Dennis Albiani, Legislative Advocate 

Governor Brown and Legislative Leaders Announce Drought Legislation

On Wednesday, Governor Brown, Senate Leader Darrel Steinberg, and Assembly Speaker John Perez announced legislation to immediately help communities deal with the devastating dry conditions affecting our state and provide funding to increase local water supplies.

The legislation provides $687.4 million to support drought relief, including money for housing and food for workers directly impacted by the drought, bond funds for projects to help local communities more efficiently capture and manage water and funding for securing emergency drinking water supplies for drought-impacted communities.

In addition, the legislation increases funding for state and local conservation corps to assist communities with efficiency upgrades and reduce fire fuels in fire risk areas, and includes $1 million for the Save Our Water public awareness campaign - which will enhance its mission to inform Californians how they can do their part to conserve water.

In addition to the funding provided by the legislation, the bill calls for the California Department of Public Health (DPH) to adopt new groundwater replenishment regulations by July 1, 2014, and for the State Water Resources Control Board and the DPH to work on additional measures to allow for the use of recycled water and storm water capture for increasing water supply availability.

The bill also makes statutory changes to ensure existing water rights laws are followed, including streamlined authority to enforce water rights laws and increased penalties for illegally diverting water during drought conditions. The bill also provides the California Department of Housing and Community Development with the greatest flexibility to maximize migrant housing units.

Several of the proposals included in this package were proposed in the Governor's January budget, but will now be expedited.

Highlights of the legislation include:

Enhancing Water Conservation and Improving Water Supplies

• $549 million from the accelerated expenditure of voter-approved bonds, Proposition 84 and Proposition 1E, in the form of infrastructure grants for local and regional projects that are already planned or partially completed to increase local reliability, including recapturing of storm water, expand the use and distribution of recycled water, enhance the management and recharging of groundwater storage and strengthen water conservation.
• $20 million transferred from the Greenhouse Gas Reduction Fund to the Department of Water Resources (DWR) for direct expenditures and grants to state and local agencies to improve water use efficiency, save energy and reduce greenhouse gas emissions from state and local water transportation and management systems.
• $14 million for groundwater management across the state, including assistance to disadvantaged communities with groundwater contamination exacerbated by the drought.
• $10 million transferred from the Greenhouse Gas Emissions Fund for the California Department of Food and Agriculture to invest in irrigation and water pumping systems that reduce water use, energy use and greenhouse gas emissions.
• $10 million transferred from the Greenhouse Gas Emissions Fund for the DWR to establish a grant program for state and local agencies to implement residential, commercial or institutional water efficiency projects that reduce water and energy use.
•  $15 million from the General Fund for Emergency Drinking Water Fund to address emergency water shortages due to drought.
• $13 million from the General Fund to augment the California Conservation Corps and local community conservation corps to expand water use efficiency and conservation activities and to reduce fuel loads to prevent catastrophic fires.

Assisting Californians Disproportionately Impacted by the Drought

• $25.3 million from the General Fund for food assistance, which will be structured to maximize the potential federal drought assistance that can be provided to provide food assistance to those impacted by the drought.
• $21 million from the General Fund and federal funds for housing related assistance for individuals impacted by the drought.

Assembly Members Salas and Gray Introduce Legislation to Fund Ag Ed, Career Tech

Assemblymembers Adam Gray and Rudy Salas introduced AB 2033 to ensure continued funding for Agricultural Education and the Future Farmers of America program in California.  "These programs offer tremendous benefits to a wide variety of students interested in careers in agriculture, and we must continue to incentivize schools with these unique state and local funding grants to continue to offer these programs" said Assemblymember Gray.

AB 2033 was introduced in response to a proposal contained in the Governor's budget that seeks eliminate the Agriculture Incentive Grant.  If enacted, schools offering Agricultural Education programs would no longer receive directed funding to support program standards and activities such as the Future Farmers of America program. 

In addition to continued Agricultural Education Incentive Grant funding, the bill also seeks to restore funding for all Career Technical Student Organizations that has been eliminated by prior budget actions.  With the emphasis on Science Technology, Engineering and Mathematics, these programs provide the opportunities for application of the highly successful "learn by doing" educational methods.

"The student organizations like FFA, FBLA, FHA-HERO and others promote and foster leadership development and personal growth in a way that is vitally important.  Career Technical Education is an area that has been ignored by state policy leaders for too long, and it's time to reinstate these important activities" said the Assemblymember, adding "We need to make this happen".

Bill Introduced to Assist Out of State Egg Farmers

A bill was introduced this week that would assists out of state egg farmers in complying with California's egg food safety requirements but also may create exemptions to the cage size requirements for some. 

Last year, California began enforcing food safety regulations for eggs being sold in the state.  Additionally, there has been legislation in 2009 that applied the Prop 2 standard to all eggs sold in California.  Out of state egg farmers are attempting to tie the two together with legislation stating that if you meet the food safety regulations, you meet the importation standards.  The challenge is that the two do not cover all the same eggs and there are exemptions from the food safety requirements for eggs that meet certain safety requirements such as pasteurization.  The association will be opposing the legislation. 

Corn prices will average $3.90 per bushel this crop year, down from over $4.50, USDA forecast this week.  Average wheat prices will also drop to $5.30 a bushel, while soybeans will average $9.65 per bushel.

The price forecast was part of a USDA 2014 Outlook Conference presentation this week by the department's chief economist, and reflects greater average price declines than last week's forecast due mainly to refiguring since the 2014 Farm Bill was signed by the President.  The forecast price levels also indicate the likelihood of higher federal payments under the new Farm Bill's Agricultural Risk Coverage (ARC) option.

The report shows reduced corn plantings in 2014 at 92 million acres, a drop of about 1.5 million from last week's numbers.  Part of this drop is attributed to the new acreage flexibility rules contained in the 2014 Farm Bill that indicate most corn acres will shift to soybeans. 

White House Moves to Speed Up California Drought Assistance

Legislation aimed at reinstating the biodiesel/renewable diesel $1-per-gallon federal tax credit, but shifting it to benefit biofuels producers not blenders, has been introduced by Sens. Charles Grassley (R, IA) and Maria Cantwell (D, WA).  

The bill seeks to put back in place for three years the tax benefit allowed to lapse at the end of 2013, but instead of the break going to the petroleum company blending the biodiesel with gasoline - oil companies would be barred from getting the credit - the tax break goes to the biodiesel producer.  Also, the credit would only be available to U.S. producers.

The bill would also increase the tax credit to $1.10 for the first 15 million gallons produced by a small entity, defined as a company with an annual capacity of less than 60 million gallons.  The definition of "biodiesel" is simplified to ensure that any biomass-based feedstock or recycled oils and fats qualify.

Grassley said industry growth stagnated when the credit was allowed to lapse in 2012; when the credit was reinstated in 2013, the biodiesel industry increased production from 1.1 billion gallons to over 1.8 billion.  

"Biodiesel is America's first biofuel, which can be made from a variety of feedstocks such as cooking grease and soybeans," Cantwell said. "This legislation gives business the certainty to invest in biodiesel."

The president of the Renewable Fuels Assn. (RFA) this week told the National Ethanol Conference in Florida the EPA proposed decrease in the renewable fuel standard (RFS) for corn ethanol is "an inexplicable step backwards to what has been an overwhelmingly successful program."  RFA President Bob Dineen told the meeting, "All we ask of Washington is one thing - keep your word. It's that simple," referring to mandatory RFS levels set in the 2007 law creating the RFS.

In related developments, recent statements by EPA Administrator Gina McCarthy and others within the agency indicate EPA is likely to adjust upwards RFS levels in its fall, 2013 proposal.  However, because the proposed RFS rule received over 22,000 comments, it may not be until late summer before any final RFS levels are announced to 2014.  

At the same time, RFA released a study showing the positive impacts of ethanol on the U.S. economy, including jobs, household income and foreign oil displacement. Dineen said the report should "silence the opposition," and also listed several non-corn ethanol and non-food biomass-based biofuel plants either just on line or about to come on line.

USDA's chief economist told the 2014 Outlook Conference meeting in Washington, DC, that ethanol production will continue to grow over the next decade to build exports and meet growing international demand.

FDA and USDA announced an agreement this week under which USDA's Agricultural Marketing Service (AMS) will have the authority to audit, register and certify animal feeds and pet food for export.  The agreement was modeled after the existing USDA/FDA agreement on egg exports.

The American Feed Industry Association (AFIA) and the Pet Food Institute, both intimately involved the in the evolution of the FDA-USDA agreement, praised the new AMS program.

The agreement does not cover all feed products and ingredients moving to all countries, but will be used on a case-by-case basis, AMS said.  Industry will work with AMS to identify which nations' requirements require the special AMS certification. When AMS is involved, the program covers feeds, pet foods and treats, dried distillers' grains with solubles, mixed ingredient feeds and feed additives.

The cooperative program was developed because an increasing number of foreign nations are requiring formal government certifications to meet internal requirements.  AMS was chosen because it's developed such U.S. certifications before.

"USDA's AMS has unique capabilities in working with stakeholders to develop export certification programs that meet the specific requirements of other countries. With years of experience certifying agricultural products for export, AMS will now expand its services to support the trade of animal feed and feed ingredients," said AMS Administrator Anne Alonzo.

Preliminary data from the 2012 Census of Agriculture released this week at the USDA 2014 Outlook Conference shows the number of U.S. farms has dropped, while existing farm size is holding fairly steady larger overall.  At the same, the average age of a U.S. farmer is creeping upward.

However, USDA cautioned the numbers may be a bit skewed given "the 2012 census was not conducted in a typical crop year, and drought had a major impact on U.S. agriculture, affecting crop yields, production and prices."

The U.S. had 2.1 million farms in 2012, down 4.3% from the 2007 census report, confirming the long-term trend in lower farm numbers. The average size of a U.S. farm increased from 418 to 434 acres.  The number of acres overall dedicated to farming declined from 922 million acres five years ago to 915 million acres in 2012.  

The value of ag products sold in the U.S. totaled $394.6 billion, up 33% from the 2007 report.  Crop sales outstripped livestock sales for only the second time in census history; crops accounted for $212.4 billion and livestock sales contributed $182 billion. The per farm average value of sales increase from $187,807 in 2007, to about $187,000 in 2012, the report said. However, 75% of farms had sales of less than $50,000 in 2012.  

The "principal farm operator" profile is shifting, with the average farmer age set at about 58, about 1.2 years older than in 2007, with a third of farmers over 65.  A small rise in the number of farmers 25 to 34 years old was recorded, and there were more minority farms operating in 2012 than in 2007.  

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