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Tuesday, December 20, 2011

Nitrous Oxide from Agricultural Sources: Potential Role in Greenhouse Gas Emission Reduction and Ozone Recovery


Kelsi Bracmort
Specialist in Agricultural Conservation and Natural Resources Policy

Gases other than carbon dioxide accounted for approximately 17% of total U.S. greenhouse gas emissions in 2009, yet there has been minimal discussion of these other greenhouse gases in climate and energy legislative initiatives. Reducing emissions from non-carbon dioxide greenhouse gases, such as nitrous oxide (N2O), could deliver short-term climate change mitigation results as part of a comprehensive policy approach to combat climate change.

Nitrous oxide is 310 times more potent than carbon dioxide in its ability to affect the climate; and moreover, results of a recent scientific study indicate that nitrous oxide is currently the leading ozone-depleting substance being emitted. Thus, legislation to restrict nitrous oxide emissions could contribute to both climate change protection and ozone recovery.

The primary human source of nitrous oxide is agricultural soil management, which accounted for more than two-thirds of the N2O emissions reported in 2009 (approximately 205 million metric tons CO2 equivalent). One proposed strategy to lower N2O emissions is more efficient application of synthetic fertilizers. However, further analysis is needed to determine the economic feasibility of this approach as well as techniques to measure and monitor the adoption rate and impact of N2O emission reduction practices for agricultural soil management.

As the 112th Congress considers legislation that would limit greenhouse gas emissions, among the issues being discussed is how to address emissions of non-CO2 greenhouse gases. Whether such emissions should be subject to direct regulation, what role EPA should play using its existing Clean Air Act authority, and what role USDA should play in any N2O reduction scheme are among the issues being discussed. How these issues are resolved will have important implications for agriculture, which has taken a keen interest in climate change legislation.



Date of Report: December 7, 2011
Number of Pages: 12
Order Number: R40874
Price: $29.95

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Document available via e-mail as a pdf file or in paper form.
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Anaerobic Digestion: Greenhouse Gas Emission Reduction and Energy Generation


Kelsi Bracmort
Specialist in Agricultural Conservation and Natural Resources Policy

Anaerobic digestion technology may help to address two congressional concerns that have some measure of interdependence: development of clean energy sources and reduction of greenhouse gas emissions. Anaerobic digestion technology breaks down a feedstock—usually manure from livestock operations—to produce a variety of outputs including methane. An anaerobic digestion system may reduce greenhouse gas emissions because it captures the methane from manure that might otherwise be released into the atmosphere as a potent greenhouse gas. The technology may contribute to the development of clean energy because the captured methane can be used as an energy source to produce heat or generate electricity.

Anaerobic digestion technology has been implemented sparingly, with more than 160 anaerobic digestion systems operating on farms nationwide. Some barriers to adoption include high capital costs, questions about reliability, and varying payment rates for the electricity generated by anaerobic digestion systems. Two sources of federal financial assistance that may make the technology more attractive are the Section 9007 Rural Energy for America Program of the Food, Conservation, and Energy Act of 2008 (2008 farm bill, P.L. 110-246), and the Renewable Electricity Production Tax Credit (26 U.S.C. §45).

Congress could decide to encourage development and use of the technology by (1) identifying the primary technology benefit, so as to determine whether it should be pursued in the framework of greenhouse gas emission reduction or clean energy development; (2) determining if the captured methane will count as a carbon offset; and (3) considering additional financing options for the technology.

This report provides information on anaerobic digestion systems, technology adoption, challenges to widespread implementation, and policy interventions that could affect adoption of the technology.



Date of Report: December
9, 2011
Number of Pages:
17
Order Number: R40
667
Price: $29.95

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Document available via e-mail as a pdf file or in paper form.
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U.S. Farm Income


Randy Schnepf
Specialist in Agricultural Policy

According to USDA’s Economic Research Service (ERS), national net farm income—a key indicator of U.S. farm well-being—is forecast at a record $100.9 billion in 2011, up 28% from the previous year’s total of $79 billion and easily surpassing the previous record of $87.4 billion achieved in 2004. Record revenues from strong crop markets, coupled with sharp gains in livestock revenues (also record high), are expected to offset a $34.4 billion increase in input costs to account for the forecast higher net returns.

The major drivers behind strong farm income projections are the outlook for record U.S. agricultural exports in 2011 (projected up 27% to $137 billion), and continued growth (mandated by federal usage requirements) in the U.S. corn ethanol industry. As a result, market prices for major program crops are approaching the record or near-record levels achieved in 2008, and have improved the earnings outlook in 2011 for most commodities, but especially for corn, wheat, cotton, and soybeans.

Government farm payments are projected down nearly 14% in 2011 at $10.6 billion (lowest total since 1997) as high commodity prices shut off payments under the price-contingent marketing loan and counter-cyclical payment programs.

Farm production expenses are forecast up 12% to a record $320 billion in 2011, led by higher fuel and fertilizer costs, and increasing outlays for crop insurance. Livestock producers face record costs for feed and replacement animals, which could diminish their net return prospects.

Farm asset values—which reflect farm investors’ and lenders’ expectations about long-term profitability of farm-sector investments—are expected to rise nearly 7% in 2011 to a record $2,340 billion following a 6% rise in 2010. Farm land cash markets in early 2011 suggest that land values will continue to see gains related to strong crop prices in 2011. The farm debt-to-asset ratio had been steadily declining since 1998’s value of 16% to a recent low of 10.4% in 2007, before rising to nearly 12% in 2008 and 2009. The ratio is expected to return to about 10.4% in 2011.

These data suggest a strong financial position heading into 2012 for the agriculture sector as a whole relative to the rest of the U.S. economy. However, there is substantial regional variation. In general, the increase in expenses will affect livestock producers more harshly than crop producers. Cash grain farmers in the Corn Belt and Northern Plains are experiencing record revenues. In contrast, livestock and poultry feeders are experiencing record high feed costs that have narrowed profit margins. In addition, a severe drought in the Southwest extending into the Central Plains and the Southeast has limited grazing opportunities and hay production for cattle ranchers in the affected regions and led to substantial herd liquidation.



Date of Report: December 5, 2011
Number of Pages: 28
Order Number: R40152
Price: $29.95

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Thursday, December 15, 2011

Farm Safety Net Proposals and the Joint Select Committee on Deficit Reduction


Dennis A. Shields
Specialist in Agricultural Policy

Randy Schnepf
Specialist in Agricultural Policy


Budget deliberations by the Joint Select Committee on Deficit Reduction in fall 2011 generated concerns that a farm bill to reauthorize farm programs expiring in 2012 might be written by budget negotiators rather than by the House and Senate Agriculture Committees. Various proposals emerged that recommend lower federal spending, including cuts to agriculture programs ranging from $10 billion to more than $80 billion over 10 years.

In response, Members of Congress, the Administration, and a number of farm groups put forward proposals to reduce government expenditures on farm subsidies and revise farm programs. Many of these farm program proposals were unveiled in September 2011 as the Joint Select Committee on Deficit Reduction began its deliberations on government-wide budget cuts.

Ultimately the joint committee failed to reach a bipartisan consensus on deficit reduction. As a result, it is likely that the 2012 farm bill will now follow a more traditional legislative process starting sometime in 2012. However, the joint committee process generated substantial movement toward reshaping the policy framework underlying the farm safety net and other major farm bill issue areas, such as conservation and nutrition.

Many proposed cuts and policy changes have been directed at commodity programs and crop insurance because these programs account for the bulk of agricultural funding (excluding conservation and nutrition programs, which are also considered part of the agricultural budget). Commodity programs, crop insurance, and the recently expired farm disaster programs comprise the so-called “farm safety net”—the federal government’s suite of programs designed to support farm income and help farmers manage risks associated with variability in crop yields and prices.

To generate budget savings and provide funding for proposed changes to the farm safety net, nearly all of the proposals either reduce or eliminate direct and counter-cyclical payments. Most proposals either leave the marketing loan program unchanged or retain it with modest modifications; however, it would be eliminated under two proposals. To facilitate comparisons, the various proposals are loosely grouped into five categories: (1) minor policy changes, (2) revised revenue programs, (3) enhanced crop insurance, (4) whole-farm insurance, and (5) other. The major policy features of each proposal are highlighted and briefly discussed.

These proposals and the work of Congress related to the joint committee might serve as a starting point for the farm policy debate that is expected in 2012, prior to expiration of the 2008 farm bill.



Date of Report: November 2
8, 2011
Number of Pages:
30
Order Number: R4
2040
Price: $29.95

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.

Monday, December 12, 2011

Agricultural Conservation: A Guide to Programs


Megan Stubbs
Analyst in Agricultural Conservation and Natural Resources Policy

The Natural Resources Conservation Service (NRCS) and the Farm Service Agency (FSA) in the U.S. Department of Agriculture (USDA) currently administer over 20 programs and subprograms that are directly or indirectly available to assist producers and landowners who wish to practice conservation on agricultural lands. The number, scope, and overall funding of these programs has grown in recent years. This growth can cause some confusion over which problems and conditions each program addresses, and specific program characteristics and performance. The programs are as follows:

  • Agricultural Management Assistance (AMA) Program 
  • Chesapeake Bay Watershed Program 
  • Cooperative Conservation Partnership Initiative (CCPI) 
  • Conservation Operations (CO); Conservation Technical Assistance (CTA) 
  • Conservation Reserve Program (CRP) 
  • CRP—Conservation Reserve Enhancement Program (CREP) 
  • CRP—Farmable Wetlands Program 
  • Conservation Stewardship Program (CSP) 
  • Emergency Conservation Program (ECP) 
  • Emergency Watershed Protection (EWP) Program 
  • Environmental Quality Incentives Program (EQIP) 
  • EQIP—Agricultural Water Enhancement Program (AWEP) 
  • EQIP—Conservation Innovation Grants (CIG) 
  • Farmland Protection Program (FPP) 
  • Grassland Reserve Program (GRP) 
  • Healthy Forest Reserve Program (HFRP) 
  • Resource Conservation and Development (RC&D) Program 
  • Voluntary Public Access and Habitat Incentive Program 
  • Watershed and Flood Prevention Operations 
  • Watershed Rehabilitation Program 
  • Wetland Reserve Program (WRP) 
  • Wildlife Habitat Incentive Program (WHIP) 
This tabular presentation provides basic information introducing each of the programs. In each case, a brief program description is followed by information on major amendments in the 2008 farm bill (P.L. 110-246); national scope and availability; states with the greatest participation; the backlog of applications or other measures of continuing interest; program funding authority; FY2011 funding; FY2012 funding; statutory authority; the authorization expiration date; and a link to the program’s website.


Date of Report: November 30, 2011
Number of Pages: 29
Order Number: R40763
Price: $29.95

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