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Farm Subsidies: A Welfare Program For Agribusiness

t’s one of the most widely reviled federal programs. So why is Congress fighting to save farm subsidies? By The Week Staff | August 10, 2013 Most farmers are wealthier than the average American, with a household income of $87,289 in 2011 — 29 percent higher than the $67,677 average for all U.S. households Why is the farm bill so controversial? Critics contend that the subsidies it hands out are wasteful, illogical, and counterproductive — a welfare program for millionaires and giant agribusinesses. Over the last decade, the farm bill has cost taxpayers more than $168 billion. In theory, the program uses loans, price supports, and payments to protect family farmers from the fickle fluctuations of weather, price, and economic conditions, so that their businesses remain stable and Americans are ensured a steady supply of affordable food. In practice, the program keeps food prices high, costing consumers billions, while funneling most of its aid to giant agribusinesses and wealthy farmers. About 75 percent of total subsidies go to the biggest 10 percent of farming companies, including Riceland Foods Inc., Pilgrims Pride Corp., and Archer Daniels Midland. Among the “farmers” who get federal subsidies are Bruce Springsteen (who leases land to an organic farmer), Jon Bon Jovi (who owns bee colonies), former President Jimmy Carter, and billionaire media mogul Ted Turner. “The typical farmer has literally millions of dollars of wealth,” said Dan Sumner, an agricultural economist at the University of California, Davis. What about the average farmer? He’s doing pretty well too. Despite droughts and high temperatures, farmers have enjoyed record crop-production levels and prices, as well as double-digit increases to the value of their land for the third year in a row in 2013. In fact, most farmers are wealthier than the average American, with a household income of $87,289 in 2011 — 29 percent higher than the $67,677 average for all U.S. households. And yet many still get taxpayer dollars to protect their incomes. In fact, the farm bill pays some farmers not to grow crops — in order to avoid oversupply that would drive food prices down for the rest of us. “Only an evil genius could have dreamed this up,” said Scott Faber, vice president for governmental affairs at the Environmental Working Group. How did the program start? Subsidies originated during the Great Depression and the Dust Bowl catastrophe of the 1930s, when there was a genuine fear that the nation’s agricultural sector was on the brink of collapse. At that time, about a quarter of the country’s population lived in rural areas, and tens of thousands of American families found themselves literally in danger of “losing the farm.” So President Roosevelt pushed through the Agricultural Adjustment Act, which pegged crop prices to their historic highs and introduced the policy of paying farmers not to produce. It was supposed to be a “temporary solution to deal with an emergency,” as Secretary of Agriculture Henry Wallace put it. But in 1949 the Agricultural Act was made permanent, and — more than six decades later — a version of that same legislation still exists today. Why not reform the program? Congress tried that in 1996, with the Freedom to Farm Act, which removed price supports and grain management in an attempt to let the free market dictate prices. That reform didn’t last long. As commodity prices fell and farmers began to complain, lawmakers caved in and introduced several new programs that continue today. They include the much-criticized “direct payments” to farmers — checks written regardless of market conditions or the farmer’s crop yields — and the controversial crop insurance program, which critics say has encouraged widespread fraud. In that program, taxpayers pick up 62 percent of any farmer’s insurance premiums and help fund payouts if a claim for crop damage is made. Why not kill subsidies altogether? Politics. The farm lobby has immense power in Washington, thanks to its generous contributions to congressional campaigns and political parties, and to the large number of legislators from farm states — most of them Republican. Democrats have also traditionally supported the farm bill because it contains food stamp funding. This year, that partnership broke down, when House Republicans passed a version of the farm bill that strips the legislation of its food stamp provisions for the first time since 1973. President Obama responded by threatening to veto any legislation that doesn’t include food stamp funding. At the moment, the situation is at a stalemate. What’s likely to happen? A deal will probably get cut that will keep farm subsidies fairly intact. The House version of the bill, in fact, contains some of the most generous farm spending in history: While ending direct payments, the legislation channels $8.9 billion into an expanded crop insurance program, which already ballooned from $1.5 billion in 2002 to $7.4 billion by 2011. In the House bill, moreover, the farm subsidies that used to expire every five years are made permanent. “It’s hard to understand how anyone in the House who calls himself a conservative could support this, but many did,” said Chris Chocola, president of the free-market-oriented Club for Growth. “They’re locking in historically high commodity prices at taxpayer expense.” New York City’s ‘farmers’ New Yorkers wouldn’t know it, but they live in a city of farmers. Over the last decade, the farm bill has paid out millions of dollars in subsidies to more than 1,500 city residents — 374 on the plush Upper East Side alone. They aren’t receiving payments for farms in the city, but for property they own elsewhere. Recipients include Mark F. Rockefeller, a fourth-generation heir of the famous family who was paid $342,634 to not farm from 2001 to 2011, so that his land in Idaho could return to its natural state. Other top New York farmers include a managing director at Wells Fargo bank, and a neurologist in Queens. “Payments are going to people in Manhattan who simply have invested in farmland and are about as far away from farmers as one could imagine,” said Craig Cox, senior vice president for agriculture and natural resources at the Environmental Working Group. “That should really make people wonder what on earth has happened to the farm program.” Continue reading

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China, India to Drive World’s Growing Energy Use

July 25, 2013 RYAN TRACY ​ Enlarge ImageEnergy Department’s report Based on current government policies and a model that assumed continued growth in the world-wide economy, the report found that fueling that prosperity will take mostly traditional fossil fuels like oil, coal and natural gas. Those fuels will account for 80% of world energy use through 2040, the report projects. Consumption of natural gas is expected to grow faster than that of oil or coal, with the industrial and electric power sectors leading a shift toward burning more gas, which is being unlocked across the globe thanks to new extraction technologies. At the same time, the report predicts that renewable energy will be the fastest-growing source of the world’s electricity generation, driven by a huge increase in capacity of hydroelectric dams and wind farms. Fadel Gheit , an energy analyst for Oppenheimer & Co., cautioned that “projections are suicidal,” particularly in the energy sector, where technological advances have upended predictions. “Nobody had predicted five years ago that the U.S. would be self-sufficient in natural gas,” Mr. Gheit said. “Now we have gas that we don’t know what to do with.” While the U.S. has led the charge in producing more gas, the Energy Department projects it will have competition. The report says Russia will keep pace with the U.S. in boosting output, particularly in the Russian Arctic, and that China and Canada will increase production as well. By 2040, the U.S. and Russia are each expected to increase annual natural-gas production by about 12 trillion cubic feet from 2010 levels, according to the report. Much of the new production may be steered to meet growing demand in other countries. Russia is planning to transport more gas to China, while more than a dozen firms have proposed export facilities to ship gas from the U.S. to Europe and Asia. Separately, the Energy Department report predicts the world will be producing 116 million barrels of liquid fuel, which is mostly crude oil, in 2040. That is a much less aggressive estimate than an earlier projection in 2007 for 118 million barrels in 2030. “The difference between those two [projections] has more to do with demand than it does with supply,” Mr. Sieminski said. Fuel-efficiency standards, he said, are helping to tamp down demand in some places. In the U.S., regulations adopted by the Obama administration are expected to lower demand for gasoline by 1.5 million barrels per day by 2030. The Energy Department report says that trend could expand to other counties amid high oil prices, which are expected to rise to $163 per barrel world-wide in 2040 from $105 in 2013. That increase could drive consumers to use less or seek alternatives. “The greatest potential for altering the growth path of energy use is in the transportation sector,” the report says. Burning more fossil fuels will increase the amount of carbon dioxide produced world-wide: The report projects that emissions of carbon dioxide, the most common greenhouse gas that scientists have linked to climate change, will increase 46% by 2040. Andrew Steer, president of the World Resources Institute, a think tank that focuses on climate policy, said that result “would be an exceedingly bad outcome for the environmental health of the world,” but it would also mean “we’re not using resources more efficiently, so we’re not benefiting economically from the huge gains that all analysis demonstrates that energy efficiency [provides].” The amount of electricity generated from nuclear power is also expected to more than double from 2010 to 2040. The report says that uncertainty around atomic power has grown since the 2011 nuclear meltdown in Japan, but predicts China, India, Russia and South Korea will move ahead with new nuclear plants. The world will also use more oil and coal in the coming decades, the report projects, though the growth rates are projected to be slower that other energy sources: an average of 1.1% per year for liquid transportation fuels including oil, and 1.3% per year for coal. That compares to projected annual growth rates of 1.7% for natural gas and about 2.5% per year for renewable energy and nuclear power. Continue reading

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US Renewable Energy Use Soared In 2012 – Report

Last updated on 19 July 2013, 11:45 am Wind made up 42% of newly installed electrical generation capacity in 2012, with solar and gas also increasing share The US Wind Energy Association estimates 15 million homes can be powered by 45,100 wind turbines (Pic: Flickr/Bonita-La-Banane) US use of renewable energy soared in 2012, according to data published by the USA government funded Lawrence Livermore National Laboratory (LLNL). Wind turbines, solar panels and natural gas saw sharp rises in popularity, contrasting with coal, which continues to lose market share. In a statement LLNL energy systems analyst A.J. Simon said low gas prices had seen it gradually replace coal in the electricity generating sector. He added that the growth of renewables was tied to falling costs of solar and wind systems, together with government incentives to invest in clean energy. Renewables provided 49% of new electricity capacity in the US in 2012, and form a key part of President Barack Obama’s new climate action plan . Existing coal and gas plants are likely to face tougher pollution limits set by the Environmental Protection Agency (EPA), a move Obama says will help the US to meet its pledge to cut emissions 17% below 2005 levels by 2020. American Wind Energy Association (AWEA) statistics reveal there are 45,000 turbines currently operating in 39 US states, generating enough power for 15 million US homes. According to the International Energy Agency (IEA) renewables are the “fastest-growing power generation sector” and could make up 25% of the global energy mix by 2018. “As their costs continue to fall, renewable power sources are increasingly standing on their own merits versus new fossil fuel generation,” said IEA Executive Director Maria van der Hoeven in June. “This is good news for a global energy system that needs to become cleaner and more diversified, but it should not be an excuse for government complacency, especially among OECD countries.” Technology advances The LLNL said “larger more efficient turbines” have been developed in response to government-sponsored incentives to invest in renewable energy. Each year, the Laboratory releases energy flow charts that track the nation’s consumption of energy resources. The LLNL also revealed the US used used 2.2 quadrillion British Thermal Units (BTU), or quads, less in 2012 than the previous year. A BTU is a unit of measurement for energy; 3,400 BTU is equivalent to about 1 kW-hr. LLNL figures reveal the majority of energy use in 2012 was used for electricity generation (38.1 quads), followed by transportation, industrial, and residential consumption. However, energy use in the residential, commercial and transportation sectors decreased while industrial energy use increased slightly. Figures from the US Energy Information Agency (EIA) released yesterday indicate that coal still underpins the US electricity sector, and suggest it may be making a comeback. Total coal consumption was up 11% in first-quarter 2013, compared to the same period in 2012. It has provided 40% of total generation over the past five months, up from 32% in April 2012, when gas prices hit a record low. – See more at: http://www.rtcc.org/…h.IdrM4Ng8.dpuf Continue reading

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