News Clips November 25, 2015



1. U.S. EPA expected to nudge higher biofuels mandates -sources

2. USDA forecasts 38% drop in farm income

3. API wants to protect the blend wall

4. Obama to meet with leaders of China, India at climate summit

5. Putting the chicken before the egg


1. U.S. EPA expected to nudge higher biofuels mandates - sources


Chris Prentice

Nov. 24, 2015


The U.S. Environmental Protection Agency (EPA) is widely expected to increase requirements for biofuels use through 2016 due to higher total fuel demand, when it publishes a final Renewable Fuel Standard (RFS) rule in the coming days, sources said.


The environmental regulator is expected to announce requirements on its plan for the program, on or by Monday, Nov. 30, when global climate change discussions are set to start in Paris. Some said they expect news ahead of the U.S. Thanksgiving holiday. The policy has been in place for two administrations.


The EPA is broadly expected to raise the mandates for quantity of biofuels that fuel companies must blend into motor fuels some 400 million to 500 million gallons for 2016, bringing the total renewable fuels required to nearly 18 billion gallons, four sources said this week.


The RFS is meant to reduce U.S. dependence on foreign oil and utilize cleaner, domestic energy sources. Criticism of the policy has mounted amid lagging development of advanced fuels, worry over infrastructure changes and regulatory delays.


The EPA in late May proposed requiring 17.4 billion gallons of renewable fuels to be blended into motor fuels next year, up from 16.3 billion gallons this year. The proposal pleased few, drawing ire from both Big Oil and Big Corn alike.


"They have no choice but to raise the numbers," said one source.


The expectations of an increase stemmed in part from a jump in miles driven in the United States as fuel prices tumbled. The U.S. government has raised its forecasts for fuel demand in recent months. Also, sources cited a recalculation in the EPA's export estimates for 2014 that could translate to higher numbers.


The EPA has vowed to get the program "on track" after years of delays that have drawn criticism and lawsuits.


Oil companies, biofuels makers and environmentalists have ratcheted up lobbying and advertising spending, heightening focus on questions over ethanol's environmental impact in the weeks and days ahead of the announcement and the start of Climate Change talks in Paris.


Oil companies and some environmental groups like the Environmental Working Group say corn-based ethanol, which represents the bulk of U.S. biofuels output, increases dangerous emissions. Biofuels groups disagree.


The announcement is expected to prompt lawsuits from biofuels and oil companies, which have criticized the EPA for delays and for targets that do not go far enough to address concerns.


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2. USDA forecasts 38% drop in farm income

The Wall Street Journal

Jesse Newman

Nov. 24, 2015


Net U.S. farm income will drop 38% this year to $55.9 billion, the lowest level in more than a decade, reflecting depressed crop prices and softening dairy and hog markets, federal forecasters said Tuesday.


The Agriculture Department said net farm income will decline to the lowest since 2002 on a nominal and inflation-adjusted basis. Last year, U.S. farm income totaled $90.4 billion, and in 2013 it reached a record $123 billion.


The USDA lowered its farm-income forecast from August, when it projected a year-over-year decline of 36%. The projected drop would mark the second consecutive decrease since 2013, driven in part by large corn and soybean crops this autumn and a projected 8.7% decline in crop receipts.


Lower prices for milk, hogs, broiler chickens and cattle also have pressured farm incomes, the USDA said.


The futures price for corn, the nation’s largest crop by value, has fallen nearly 8% this year as largely benign weather benefited growers during the summer. Prices for the grain have plunged more than 50% since a severe drought in 2012 sent them to an all-time high of more than $8 a bushel. Prices for soybeans have dropped 15% this year and are down by more than half since 2012.


Earlier this month, the USDA estimated that the nation’s soybean harvest will be a record 3.98 billion bushels. The government also forecast the nation’s third-largest corn crop in history, totaling 13.65 billion bushels.


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3. API wants to protect the blend wall


Nov. 25, 2015


Falling gasoline prices are giving the EPA room to hike the mandate levels on ethanol related to their coming announcement on the Renewable Fuel Standard. With greater gasoline demand due to lower prices, the EPA could raise the requirements for ethanol use without exceeding the 10 percent blend wall.


American Petroleum Institute’s Bob Greco says he’s concerned the agency will go through the blend wall.


Greco is expecting a final decision on the volume obligations right at the end of this month.


He is concerned that the EPA might rule in favor of higher volume levels and that would force more ethanol than consumers want or can use in their vehicles.


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4. Obama to meet with leaders of China, India at climate summit

Associated Press

Nancy Benac

Nov. 24, 2015


President Barack Obama is hoping to generate early momentum for international climate talks in Paris next week by holding one-on-one meetings there with the leaders of China and India.


While in Paris, the president also will meet with the leaders of island nations at risk from the effects of global warming, the White House said Tuesday.


The president's meetings on the opening days of the United Nations climate change talks are aimed at underscoring a need for rich and poor nations alike to embrace the fight against climate change, and to project a sense of urgency about the effort. The climate conference is expected to last two weeks.


Deputy National Security Adviser Ben Rhodes said the opening-day meeting between the leaders of the U.S. and China, the two largest emitters of carbon dioxide, "sends a strong message to the world about their shared commitment to combat climate change and see an ambitious agreement achieved."


Ahead of Paris, Obama struck major climate deals with China, hoping that a commitment by the world's largest polluter to cut emissions would make it impossible for other developing nations to avoid making promises of their own. China, which is still building coal plants to fuel growing power consumption, plans to max out its carbon emissions around 2030, if not sooner.


Obama's meeting with the islanders will include leaders from the Seychelles, Kiribati, the Marshall Islands, Papua New Guinea, St. Lucia and Barbados. It's meant to highlight "the existential challenge that these countries face from rising sea levels," said Rhodes.


Rhodes added that while Obama will be in Paris for just the first two days of the conference, other top administration officials will remain to push for a strong agreement. Those officials include Energy Secretary Ernest Moniz and Agriculture Secretary Tom Vilsack.


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5. Putting the chicken before the egg

The New York Times

Stephanie Strom

Nov. 23, 2015


A decade ago, a couple running a dairy business in Northern California visited a Mennonite farm where the owner had used a flock of laying hens to teach his children business principles and instill values like responsibility and care for nature.


They returned home and bought 150 hens for their boys, Christian and Joseph. “My parents told us, you and Joseph are in charge of keeping these 150 birds alive,” recalled Christian Alexandre, who now heads the family’s egg business.


What started as a parental effort to instill solid values has become the mainstay of Alexandre Family EcoDairy Farms. Within five years, Christian and Joseph were tending 1,500 hens and had a deal in place to supply eggs to Whole Foods stores in Northern California. Christian remembers Walter Robb, co-chief executive of the grocery retailer, showing up at one of his football games.


The rusty red chickens foraging in the fields outnumber the cows 10 to 1 — and the roughly five million eggs they will produce this year command prices that make organic milk look cheap. “The egg business has kept the dairy going for several years,” Blake Alexandre, Christian’s father, said.


Alexandre Kids Eggs produces pastured eggs, which on their farm means that the hens live in housing that allows them to spend much of the day in open pasture. While still a minuscule portion of the roughly 75 billion eggs produced in the United States each year, pastured eggs like theirs are one of the fastest-growing category of eggs in America today.


Consumers have grown more aware of the conditions under which many of the nation’s laying hens live, thanks to undercover videos from animal welfare advocates and, more recently, photos of hundreds of thousands of dead birds being tossed out of hangar-size barns after outbreaks of avian flu.


Pastured eggs from hens allowed to roam about help to address some of those concerns about how foods are produced and the impact such systems have on the environment, animal welfare and health and nutrition.


“The egg market for probably the last 30 years has been a very sleepy category,” said Betsy Babcock, a proprietor of Handsome Brook Farm, a pastured egg business with operations in 41 states. “What we’ve seen over the last year or so, though, is a revolution, with pastured eggs going from being a niche-y segment in the natural food market and Whole Foods to being a thriving business in places like Kroger.”


Not all eggs labeled “pastured” are the same — there are no federal regulations governing use of the terms “pastured,” “free range” or “cage-free” on egg cartons.


Thus, the Babcocks’ production regimen for eggs labeled “pastured” is somewhat different from the Alexandres’, which in turn is different from the operations of Vital Farms, another large pastured-egg supplier.


Hens producing pastured eggs may indeed live in lush pastures — or they may merely have access to a patch of dirt outside their barn. Eggs labeled “cage-free” typically means the hens that laid them were free to move about inside a barn kitted out with an aviary system of roosts, nests and feeding stations — but with no outdoor access at all.


“There’s quite a range of operations among businesses that label their eggs pastured,” said Mark Kastel, co-founder and senior farm policy analyst at the Cornucopia Institute, which publishes the Organic Egg Scorecard, a ratings system.


Cornucopia is updating its egg report, thus Mr. Kastel and his team have recently visited egg farms around the country, hoping to clarify the terminology used on egg cartons. Its highest rating will go to egg businesses like the Alexandres’, where most of the hens are outside in mobile housing during the day with access to fresh pasture.


“To get the very best eggs, consumers need to do their homework,” Mr. Kastel said. “Despite federal organic law that requires access to the outdoors, many of the leading organic brands come from giant henhouses with as many as 180,000 birds, offering nothing more than a tiny screened porch.”


In 2008, California voters passed a ballot measure requiring egg producers to provide more spacious living conditions for laying hens. Eggs imported to California from other states also must come from hens housed to the same standard.


In the meantime, major food businesses like Taco Bell and Panera Bread have made commitments to require the eggs they use to come from cage-free environments, which are a step beyond the colony cages that are the minimum needed to meet the California regulations.


Finally, after the avian flu epidemic that killed tens of millions of laying hens this year, some major egg producers decided to replace at least some of their conventional housing with cage-free systems.


Costco began reducing its sales of conventional eggs in 2007, according to Craig Wilson, its vice president for food safety and quality assurance. “It just seemed to us at the time that battery cages were going to go away, and anyway, they’re not a good thing,” Mr. Wilson said.


In August and September of this year, which are not particularly big months for egg sales at Costco, the grocery chain sold 516 million eggs, he said.


Just 39 percent of those eggs came from birds housed in conventional systems. About 30 percent came from hens housed in colony cages, and the rest were from birds in cage-free systems or raised organically, free range or pastured.


Only 1.5 million eggs sold in August and September were from pastured operations like the Alexandres’, who have been Costco suppliers since 2014. “Could we rely on that kind of production for the nation’s egg supply?” Mr. Wilson said. “No. But our members just love them and so we do our best to support their desires.”


Costco, in fact, has inspired the Alexandres to double the number of laying hens they have over the next year.


Their egg production system lives side-by-side with the milk business that Blake and Stephanie Alexandre started with when they bought the first 572 acres here, just eight miles south of the Oregon border and about a mile from the Pacific Ocean on land where giant redwood trees once grew.


The mild climate — the temperature fluctuates by only 11 degrees throughout the year — is ideal for outdoor hens, and rotating chickens and cows in pastures has a number of benefits for livestock and soil. Chickens, which are natural foragers, peck at cow patties to extract fly larvae and in the process help distribute manure around a field (as well as keep the fly population to a minimum). “They’re our best manure spreaders,” Christian Alexandre said.


That helps fertilize grass for the family’s 3,500 dairy cows, which are managed organically, to graze on. Vanessa Alexandre, who graduated last summer from California Polytechnic University, is immersing herself in the dairy business and recently struck a deal to provide milk from the family’s herd of 100 percent grass-fed cows to a large grocery business for its private label yogurt, which is made from milk from grass-fed cows. She plans to increase the number of cows raised solely on grass, rather than on grass and feed, as well.


The farm has nine chicken flocks, each typically numbering about 3,500 birds. The flocks are somewhat smaller now after a bout of cholera wiped out about a third of the hens last spring.


The flocks are rotated to new pastures every Tuesday and Friday, leaving behind a section of field shaved as close as a chin in the morning. The pasture then is left alone for a month or so to allow grass to regrow before cows are returned to it.


The hen barns, made from tin reclaimed from the farm in Southern California where Mrs. Alexandre grew up, and heated by solar panels on the roofs, move around on wheels. Christian Alexandre designed the barns, basing the design on the picturesque caravanlike coops he first saw as a boy on the Mennonite farm.


The barns are split in the middle and separated, to give the birds ample room to walk in and out. Nesting boxes hover over a wide canvas belt that catches the eggs as they are laid. Some of the farm’s 85 employees turn hand cranks each morning to move the belt, collecting the eggs at one end and delivering them to a facility where they are washed, inspected and packed.


Roosts for the birds slope up to the rafters of a barn. Very few birds were inside the barns on a recent visit, but they all return at night. “The best thing about chickens is you don’t have to herd them,” Blake Alexandre said.


The eggs sell for as much as 53 cents each — Christian Alexandre declined to reveal the profit margin. Costco sells 18 of them for $9.49 and is working with the family to reduce the price.


Handsome Brook, which grew out of a bed-and-breakfast farm that the Babcocks opened after they retired from the health care business, contracts for eggs with about 50 farms in 41 states that have some 250,000 hens in total. Its production, about 82 million eggs this year, dwarfs the Alexandres’ — and it plans to have 120 farms under contract next year, more than doubling its production.


Each farm houses an average of 5,000 birds in a barn on a 12.5-acre pasture, Ms. Babcock said. The chickens are fenced off in a section of that pasture until they have pecked the grass down to dirt; then they are moved to another section.


“We’re seeing 100 percent year-over-year growth in sales in the stores where our eggs are sold,” Ms. Babcock said. “We think we’re just at the beginning of what’s going to be a very big business.”


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