Rural energy drives Obama ag policy | TSLN.com

Rural energy drives Obama ag policy

Chris Clayton
DTN Ag Policy Editor

DTN photo by Chris ClaytonBarack Obama was elected the 44th president of the U.S. Tuesday evening.

OMAHA (DTN) – Rural America could see a great deal of new investment in energy and infrastructure under President-elect Barack Obama’s administration, but the trade-off means larger farmers likely will see higher taxes and livestock producers could face more regulations as well.

The alternative-energy investment spurred under the Bush administration will actually grow even more under Obama, according to Obama’s agricultural advisers. Obama said last month in a Time magazine article that his “No. 1 priority” will be to create an alternative-energy economy.

“There is no better potential driver that pervades all aspects of our economy than a new energy economy … That’s going to be my No. 1 priority when I get into office,” Obama told the magazine.

Coupled with the Democrat’s emphasis in Congress to address climate change, rural America will spearhead the development of wind and solar farms, as well as push the next generation of biofuels. Too often, the focus of climate change has been on the dire consequences if we don’t do something, but that mindset has to be changed to think of a new 21st-century economy and agriculture, said former Iowa Gov. Tom Vilsack.

“For the first time in a long, long time, agriculture is a key player,” Vilsack said. “We are not moving away from agriculture, we are trying to integrate it, right? I think ag is at the center of that discussion in terms of what our future policy is going to be and how we are going to continue to produce energy in a way that responds to the climate-change challenge, but at the same time provides opportunities to rural parts of the country.”

Vilsack, whose name has been mentioned as a candidate for agriculture secretary, co-chaired a task force on climate change earlier this year for the Council on Foreign Relations. His background as a farm-state governor leads him to see almost unlimited potential for rural states to become a stronger economic engine with renewable energy. Obama’s presidency will accelerate energy research and development, particularly in second-generation biofuels, he said.

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“As soon as you create a market, pricing-market mechanism for pricing carbon, you have created tremendous opportunities for the emergence of new industries and I think rural communities will benefit from this,” Vilsack said. “I can see a circumstance where unproductive agricultural land can become very productive in terms of raw materials and feedstocks for second-generation biofuels. I can see waste products that don’t have much value being converted into something significantly more value-added.”

Tom Buis, president of the National Farmers Union, also pointed to the positive impact on rural America and farmers with an emphasis on the various renewable-energy industries.

“Regardless of which one it is, it’s going to be done in rural America, which is good for jobs, which is good for keeping rural communities viable and will be good for farm incomes as well,” Buis said. “I think those are real positives.”

Obama’s other agricultural stances also remain largely in the mainstream of those backed by commodity farmers across the country, said Buis, who also is mentioned frequently as a possible agriculture secretary.

“I think you will see a much more friendly advocate there as president,” Buis said. “I also think you will see someone who really understands what rural states go through. You know, Illinois is a big rural state as well as a big urban state. Anyone who represents rural states naturally has a better grasp of the issues.”

Buis, however, isn’t looking at everything in an Obama administration with rose-colored glasses. The next administration and Congress also will be facing a record budget deficit that will have to come under control. That likely means Obama will recommend cuts in spending in his budget despite the wish list to invest more in energy and rural development.

“I don’t think we can be so naive to think agriculture is going to get a pass if they are serious about getting the budget under control,” Buis said.

As was repeated frequently in the final weeks of the campaign, Obama is proposing to provide tax cuts for people making $200,000 or under while raising taxes for those making more than $250,000. In the most recent data on farm income, a report from the IRS last year said there were 59,774, or three percent of the Schedule F filers, who had adjusted gross income above $250,000. Those farmers had average incomes of $930,962. However, most of these higher-income people did not rely on farming for the bulk of their income. In fact, taxpayers with $250,000 or higher AGI were nearly three times more likely to report a net farm loss instead of a profit in 2004. Still, these higher-income farmers are likely to see their taxes increase under Obama.

In recent weeks Obama also had incorporated more discussion about infrastructure in his speeches and when talking to the press. He mentioned increasing broadband to bring businesses to rural America, as well as more emphasis on the electric grid with increased development of wind and solar energy.

“We have to rebuild our infrastructure,” Obama said last week in an interview on MSNBC. “You look at what China’s doing. Their trains are faster than us, their ports are better than us. They are preparing for a new 21st century economy, and we’re not.”

Obama said that is one of the most frustrating aspects of the budget deficits in recent years was that there is not “anything to show for it.” If the country is going to take on debt, he said, the money should go to capital projects.

“If you are going to run deficit spending, then it better be in rebuilding our bridges, our roads, our sewer lines and water system, laying broadband lines,” Obama said on MSNBC. “One of the most important infrastructure projects we need is a whole new electrical grid because if we are serious about renewable energy, I want to be able to get wind power from North Dakota to population centers like Chicago.”

Beyond renewable energy and farm programs, the world is facing an international food crisis that demands a greater U.S. response, Vilsack said. Further, increased food aid from the U.S. early in an Obama administration would reflect the country is taking a greater interest in global humanitarian issues.

“Given Sen. Obama’s concern for the use of soft power, the global food crisis is something USDA has to be involved in, from taking a look at how we might be able to increase food exports to seeing how we might be able to reform the current food-assistance programs and get food where it needs to be as quickly as possible,” Vilsack said.

Among potential changes next year could be an overhaul of USDA. Some in Congress, notably House Agriculture Committee Chairman Collin Peterson, D-MN, also want to look next year at reorganizing USDA and streamlining programs and the bureaucracy. Coupled with that, Rep. Rosa DeLauro, D-CT, and others want to merge and toughen the food-inspection responsibilities at USDA and the Food and Drug Administration.

With the not-so-subtle encouragement of Senate Agriculture Committee Chairman Tom Harkin, D-IA, there also will be a heavy emphasis to ensure full funding for private conservation projects, which translates into dollars for the Conservation Stewardship Program and Environmental Quality Incentives Program.

Lobby groups in Washington also are expecting increased regulations in various forms with a larger majority of Democrats in Congress and an Obama administration. Missouri Farm Bureau President Charles Kruse raised concerns about environmental rules in an interview with DTN two weeks ago. Kruse was a McCain supporter.

“If you just think about all of the regulations that come down on our heads today in agriculture on both the federal and the state level, it’s pretty frightening to think about who may be running the EPA in an Obama administration,” Kruse said.

One area likely to see more regulation is the livestock feeding industry. Confined animal feeding operations, according to Obama’s campaign website, will likely face an Environmental Protection Agency that “will strictly regulate pollution from large CAFOs and fine those that violate tough standards.”

Buis, when asked about the potential of being agriculture secretary, said such talk is “purely speculation.” Vilsack, who is teaching a class this fall at Harvard University on risk management in government, said when asked last week that it was a topic he was uncomfortable discussing.

“People far, far away from where I’m sitting are making these kinds of decisions,” Vilsack said late last week. “Obviously, if the president of the United States asks you to do something and you have an opportunity to serve your country, that creates a compelling duty that most Americans would respond to. I don’t think that I am any different in that respect.”

chris clayton can be reached at chris.clayton@dtn.com