US Farm Bill Void: Does it Matter?

2008 farm bill logoSince 1933, the US government has played a significant role in farm policy, agricultural markets, and public nutrition through the passage of successive farm bills.  The original Farm Bill of 1933 was controversial and the Farm Bill remains controversial today.  The current congress failed to reach a compromise between farm bills passed by the Senate and the House of Representatives, and the 2008 Farm Bill expired as of September 2013.  In the current climate of partisan political gridlock, passage of a compromise bill in the near term is highly unlikely.  One organization that works on behalf of family farmers sums up who will be impacted by the next Farm Bill this way: The Farm Bill affects everyone who eats, sells, buys or grows food. (

Given the deadlock in Congress over the Farm Bill, it is timely to examine what a failure to pass a farm bill means to various stakeholders.  This blog addresses the following questions related to the Farm Bill and our lack of a current one:

  • What are Farm Bills?
  • Why have Farm bills been politically divisive and controversial?
  • What groups will a new Farm Bill impact and how?

History of the Farm Bill

Congress passed the first farm bill in 1933 as one of the social safety net programs that Franklin Roosevelt’s New Deal created, (  During the Great Depression falling prices for crops were driving farmers to lose their family farms such that farm owners as well as tenants and sharecroppers were joining the growing ranks of the displaced and underemployed and, as a result of this suffering, causing considerable social unrest.  For the first time in US History, the 1933 bill called the Agriculture Adjustment Act (AAA) authorized the Department of Agriculture to do three things.  First, the AAA provided payments to farmers to reduce their existing acreage planted in specific crops.  Second, it authorized the government to buy excess grain from farmers to reduce surpluses and shore up demand to stabilize prices. Third, it created the precursor to food stamps to alleviate hunger among those in need. The money to fund these subsidies was to be generated through a tax on companies that processed farm products.  The full title of the 1933 Farm Bill was:

An Act to relieve the existing national economic emergency by increasing agricultural purchasing power, to raise revenue for extraordinary expenses incurred by reason of such emergency, to provide emergency relief with respect to agricultural indebtedness, to provide for the orderly liquidation of joint-stock land banks, and for other purposes. (

Each Farm bill since 1933 has contained a requirement for revision and reauthorization of the components within the bill called “titles”, thus Farm Bills come up for reauthorization approximately every 5 years.  Farm Bills have evolved to set policy and regulations for all the USDA policies, funding programs related to supplemental nutrition, land payments, crop insurance, environmental practices, some international trade, and research.  Different elements of the Farm Bill programs have supporters and opponents, but the most contentious is probably what has grown to be the most costly of the titles, the Supplemental Nutrition Assistance Program (SNAP, formerly food stamp program).  SNAP funding accounted for 68% of the 2008 Farm Bill.   Under Obama’s 2009 Economic Recovery Act provisions, SNAP benefits were temporarily extended and funding increased such that 15% of Americans currently receives some SNAP benefits.

The Previous Farm bill, The Food, Conservation, and Energy Act of 2008 expired at the end of September of 2013.  Although the Senate and the House of Representatives each passed a version of a new Farm Bill, the two versions have significant differences, and the two chambers so far have failed to reach a compromise to resolve the differences.  At issue is how deep to cut Farm Bill Programs to help reduce the federal budget deficit.

Both versions propose cuts to SNAP over the coming 10 years.  However, the Senate’s version specifies a $4 billion cut while the House version specifies a much larger reduction of $39 billion.    (, _Food, _and_Jobs_Act_of_2013_(S. _954; _113th_Congress)  It is interesting to note that the reduction proposed by the House would return SNAP benefits and costs to levels not seen since the reductions that were part of Welfare Reform and budget balancing in the late 1990s reached under the leadership of President Bill Clinton and the then Speaker of the House, Newt Gingrich.  (See Figure 1)

Figure 1:  Trends in the Cost of Food Stamps

Slide1:  Trends in the Cost of Food Stamps

Other than SNAP what else can’t Congress agree on?

The two chambers of Congress have narrowed their differences but critical issues remain unresolved.  Among these remaining differences is whether to base program support on whatever acres a farmer or landowner decides to plant in the future or on some historical base, or on some combination of the two.  How or whether this issue is resolved will have significant impact on continuing efforts to protect the environment and available natural resources as well as on world trade litigation.

A second issue requiring resolution is how high or low to set government “target” prices for various commodities.  Such targets determine when payments under certain commodity programs will be triggered.  A third issue is whether, given the myriad options that will be in the final bill, a farmer should be able to choose all options, and get paid whenever any of them trigger payments, or should be forced to choose a particular option and have access only to it over the next five years.  (, The Institute of Agriculture and Trade Policy)

Impacts on stakeholders: the poor

Both the expiration of the 2009 temporary extension and the failure of Congress to pass a Farm Bill have led to a reduction in SNAP payments to 47 M Americans, that began in November, 2013. (  It is sobering to consider the long-term impacts of more Americans going hungry more often.  Hungry people cause social unrest as experienced in the Great Depression and as seen outside Europe and the US more recently.  It remains to be seen whether the US will experience its own social unrest.

Impacts on stakeholders: farmers

Subsidies to farms growing commodity program crops (corn, cotton, wheat, rice and soybeans are heavily favored) have been funded through preceding farm bills.  Such subsidies represented the second highest funded title in the 2008 farm bill at approximately 12% of total spending.  Without a new Farm bill, many of the current Farm Bill programs revert back to 1949 permanent law as of January 1.  At that time, farmers weren’t supported with direct federal subsidies, but instead with several market tools that provided a price floor for many of the primary commodities.  Without a Farm Bill at all, government price supports will become even more confusing.  Some crops will no longer qualify, and commodity prices will become less stable than they currently are.

Many farm commodities are currently trading at higher-than-historical prices and the reversion to previous policies won’t impact these crops. The current price of corn is above the support price of $5.70. Wheat, on the other hand, is trading high, but is significantly below the pre-farm bill support price of $13.13. Permanent law would therefore require USDA to purchase U.S. wheat at $13.13, thereby keeping wheat prices at that high level.  Soybeans, as one example, weren’t grown much in the United States 60 years ago and were not considered a program crop. There will be no USDA support for soybeans without a Farm Bill.

Farmers will have an incentive to plant crops that receive price supports—wheat, rice, corn, sorghum, barley, oats and upland cotton, with particularly strong incentives for wheat and rice. Furthermore, three of the conditions that allowed price support policies to be effective in past decades—supply management, grain reserves and limited international trading of agricultural commodities—are no longer relevant.  At TerViva, we are working with farmers and agricultural companies to introduce a new oilseed tree crop, pongamia, on a commercially viable scale.  Public policies that add to farmers’ financial incentives to only plant a limited number of current commodities act as impediments to the adoption of new crops such as pongamia.

Impact on stakeholders:  consumers

Consumers will pay higher prices for various food products if federal agricultural stabilization policies disappear.  For example, the government will have to buy milk at higher than market prices, and thus milk prices to consumers could rise from $6/gal to $8/gal.  Disaster relief support for cattle ranchers has expired, therefore beef eaters could see higher beef prices following natural disasters such as droughts and unseasonal cold weather that kill herds.  (

Even though farm bill programs are focused on only a few commodities that people consume directly, the ripple effects are likely to cause many other food prices to increase.  Furthermore, high US prices will drive the food industry to seek global alternatives at lower prices. ( – sthash.JAsDIC3H.dpuf)

Impact on stakeholders: the environment

The adoption of conservation practices on private lands has been one of the quiet success stories of agricultural policy over the past 25 years.  Farmers have taken advantage of Farm Bill’s programs for conservation projects on farmland, particularly the Conservation Reserve Program (CRP). The CRP currently protects about 31 million acres of environmentally sensitive agricultural land. Without a Farm Bill, the USDA will no longer have authority and funding capacity to contract with farmers for conservation projects. ( The absence of a farm bill is likely to result in greater soil erosion and poorer water quality.


A 1985 USDA study ( on the impacts of a return to permanent law (i.e. when a Farm Bill expires) predicted an highly unstable agricultural economy.  Such unpredictability and fluctuations will hurt everyone who consumes, produces, or grows food and other agricultural products whether they live in cities or rural areas.  Informed citizens on both sides of the political spectrum agree that we the government’s role in agricultural policy requires significant attention.  However, given the current contentious political climate, it is unlikely we will achieve consensus in the foreseeable future. Congress might consider taking a lesson from early stage entrepreneurial companies like TerViva for whom doing nothing is often significantly worse than doing something that is flawed.  Flawed programs can be revised and improved.  No action at all is likely to lead to serious disruption of US agriculture.

For more information, see:‎

The Other Reasons the US Military Loves Biofuels

Jet Fighter

By:  Tom Schenk, Director of US Business Development, TerViva

To an outsider, hearing that the Department of Defense is interested in biofuels, it would be easy to conclude that the military’s interest rests mainly on concerns on the security of our energy supplies in wartime from not-so-friendly foreign countries.  While this is partially true, there is quite a bit more to the story than supply chain concerns or sustainability initiatives from a department of government that consumes about 8 billion gallons of fuel annually.

Fuel has occupied a critical part in modern military history. For example, in World War II, the German Luftwaffe ran their fighters on 87 octane fuel.  The British were at a continuous disadvantage with their slower Spitfire fighter aircraft until the US introduced 100 octane fuel plus a propeller modification.  This gave the British about a 30mph boost over the German fighters which allowed them to fly higher and faster in a dogfight and out-maneuver the German fighters.

Weight                                                                                                                                                                             In 2012, tests at the Air Force Research Laboratory at Wright Patterson Air Force Base near Dayton, Ohio came up with two compelling reasons for the US military to have an interest in biofuels. Special advisor to the Air Force on energy and fuels, Omar Mendoza, stated that one of the initial findings was that bio-based jet fuels have about 7% less mass than conventional jet fuel.  This lowered the weight of the airplane making it possible for jets to fly faster and farther as well as carry more of a payload – cargo or weapons systems. 

Bio jet fuels have about 4% more energy per mass than fossil-based jet fuel.  A 2012 Biofuels Digest article discussing this topic noted that for an F-18 taking off with a full load of armaments and the tanked topped off, the difference in the two fuels could be close to 1000kg. That warplane could carry an extra missile for that weight difference. With the superior energy/mass ratio, it could also fly farther, too.

Temperature                                                                                                                                                                                 The second major finding from the tests was that bio-based jet fuels can burn significantly cooler. Terry Yonkers, assistant secretary for installations, environment and logistics, stated that initial studies by the Air Force have shown that temperatures in the engine combustion chamber can be as much as 135 degrees Fahrenheit lower when biofuels are used instead of conventional (fossil-based) jet fuel. Fossil-based jet fuel contains numerous impurities whish do not completely combust in the engine.  This leads to soot deposits which cause high temperatures to radiate throughout the engine. Long periods of high temperatures can cause any metal to fatigue and fail.

In 2012 at a roundtable meeting in Washington DC jointly organized by the USDA and the DoE, Mendoza pointed out that, “At the temperatures that military jet engine perform at, an additional 25 degrees in temperature can shorten the life of the engine by half. Military showed data showed that engine parts could last up to 10 times longer, if the new high performance fuels were employed in place of conventional fossil fuels.” Mendoza pointed out that a roughly 10C drop in wall temperature results in doubling of the life of the hot section of a jet engine.

The weight and temperature components of biojet fuels mean economic savings in addition to its green footprint.  These facts have not been lost on commercial airline carriers.  KLM, Alaska, and United, just to state a few, have had many flights tests on biojet fuels.  The greatest challenge is producing the feedstocks for the refining of these fuels in sufficient quantities to transform these studies into a commercially viable reality.

At TerViva, our work in scaling pongamia oilseed tree plantations is making significant headway in this effort.  Because pongamia oil is a long-chain (C 18:1) carbon, it makes it an ideal non-food sourced feedstock for refining into jet fuel, diesel, as well as numerous biochemical compounds for industry.

It’s A Farm-Over: Walmart’s Admirable Ambitions in Sustainable Agriculture

Few corporations evoke envy or ire as much as Walmart.  In my opinion, one area where Walmart is making significant positive impact is in agriculture. In June 2010, Walmart announced a strong commitment to sustainable agriculture, in support of its broader leadership on a variety of environmental issues (

Walmart’s sustainable agriculture initiative has three focal components:

(1) Support farmers and their communities

(2) Produce more food with fewer resources and less waste

(3) Sustainably source key agriculture products

Walmart can rightly claim some success from its sustainable agriculture program.  A few highlights:  monitoring of the beef supply chain in Brazil to avoid deforestation for grazing or soybean cultivation; achieving third-party sustainability certification of 75% of in-store seafood.

“Wait, wait, you expected the Fresh-Over to help farmers?”

“Wait, wait, you expected the Fresh-Over to help farmers?”

But not all initiatives have gone perfectly. For example, an effort to double the amount of locally grown produce in Walmart stores (from 4% to 9%) was recently achieved, a few years ahead of schedule.  However, the benefits to small- and medium-size farmers have been questioned (; some farmers claim that Walmart is squeezing them on prices (shocking).

Recently, Walmart announced what I think is its most ambitious and important agriculture initiative to date:  fertilizer optimization for commodity agriculture grains (corn, soy, wheat) used in third party products on Walmart shelves (e.g., Kellogg cereal).  From the Walmart website:

Corn Flakes“Walmart depends on the American farmer to efficiently produce the key ingredients in many of our products and we want to do our part to help ensure this productivity continues.  You cannot grow food without fertilizer and it is a crucial component of our food supply.  However, over or improper use can negatively impact the environment and the grower’s pocketbook, making it a potentially costly element in food production.  The supply chain needs food companies (our direct suppliers) to signal unified interest, support, and demand for programs, tools, and information that can help producers continuously improve and optimize their fertilizer use, yield, and profitability.  That’s why we have directly engaged a dozen food categories and even more suppliers in a consistent, coordinated fashion to connect our suppliers to their farmer-partners and improve cost effectiveness, as well as helping them meet their own sustainability goals in ways they cannot do alone.”

This initiative reaches as deep as it sounds: Walmart is asking its suppliers to go to its suppliers to go to its suppliers to go back to the field and initiative fertilizer optimization protocols.  Walmart has created a framework to achieve the desired results (, using the very cool “Fieldprint Calculator” tools developed by the non-profit, Field to Market (

I’m guessing the Lake Erie algal blooms don’t help Walmart’s sustainable seafood initiative.

I’m guessing the Lake Erie algal blooms don’t help Walmart’s sustainable seafood initiative.

Why target fertilizers?  That’s a topic for another post, but in short:  fertilizers represent a significant portion of total agriculture production costs and fertilizer run-off has long been responsible for water quality issues.  In just the past few years, we have seen fertilizer run-off contribute to epic algal blooms that in turn wreck havoc on marine ecosystems.  For some startling imagery and links to more info, check out this National Geographic article: .

This Walmart fertilizer initiative is not the first time that it has pushed down on the agricultural supply chain to drive change.  In 2011 Walmart announced that by 2015 it would use only RSPO-certified sustainable palm oil in its private label products (  This may sound straightforward, but it’s quite complicated.  Palm oil is present in 50% of Walmart’s products. And yet, Walmart only uses 84,000 tonnes of palm oil (25M gallons), or only half a percent of global palm oil consumption — not exactly a massive amount – thereby limiting Walmart’s ability to influence in palm oil industry. On top of all of this, it’s not like consumers are clamoring for sustainable palm oil in their Great Value detergent.

Great ValueI view the nitrogen initiative as even bolder, given that Walmart is asking its suppliers (e.g., Kellogg) to increase nitrogen use efficiency for their respective products (as opposed to just for Walmart’s own products, like in the palm oil initiative). Walmart estimates that its suppliers can positively impact 10M acres of corn soy and wheat by 2020 (today in the US there are about 240M acres combined for all three).

Walmart should be commended for its efforts in agriculture sustainability.  They are bringing about real, difficult change.  They are not just looking to buy credits for sustainable palm oil (, they are actual buying segregated “clean” palm oil.  They are not just buying organic produce, they are demanding reductions in fertilizer use for regular food products.

One area where I would like to see more Walmart engagement:  biofuels, which is the intersection of agriculture and energy.  Walmart has already made an ambitious commitment to power its buildings with 100% renewable energy by 2020 (  Walmart operates one of the largest trucking fleets in the world and is consequently a large consumer of diesel fuel.   If Walmart combines its expertise in in sustainable agriculture with its commitment to clean energy, the impact could be huge. I can think of a company that would like to have a role in that initiative.

Naveen is the CEO of TerViva.  He can be found frequenting the snack food aisle of his local Walmart.

Are you fracking crazy?

The global debate on fracking continues to dominate much of the world’s energy press.  The US is currently benefitting from a boom in shale gas production which some commentators claim is one of the biggest reasons the American Eagle is still managing to dominate the Chinese Dragon.  In just a few years the US has gone from being a net importer to net exporter of gas.  This cheap liquefied gas is driving Brent crude prices down and breaking the US’s reliance on the OPEC countries output and price controls.  The US is currently opening up more than 10,000 new fracking wells each year and gas prices are three and half times lower than in the UK.

Fracking is far from new technology, Canada has been doing it since the 60’s and Germany since the mid 70’s.  France and Bulgaria have banned it, but the Netherlands and China are actively pursuing it.  China’s addressable reserves are claimed to be 50% higher than the current largest production centre, the US.


Some large scale shipping companies have started to convert their fleets to gas engines

The debate in the UK is fierce with many doubters claiming that the sheer physical difference between the landscapes of the US and the UK mean that a revolution of this scale is simply not feasible.  Many of the suitable fracking sites will be in urban centres or near potential vulnerable areas such as rivers.  However, cheap, instant energy, is a hard argument to resist, indeed PM David Cameron has already gone from stating that renewables are the way forward for the UK’s energy requirements, to fracking being the new solution, in less than a year.

As usual, all is not clear, the endorsement in the UK reeks of biased corporate interest with many of the Governments advisors having strong links in the burgeoning fracking industry, Lord Browne, ex Chief Exec of BP and now chairman of Cuadrilla, one the largest operating fracking companies in the UK, being the most prominent.  Is it a coincidence that The Royal Academy of Engineering had Lord Browne as its president while producing the final report on shale gas extraction, which is used as the backdrop to justify the safety of fracking, by the UK government?

US Fracking

Fracking on the Pinedale Anticline formation in Pinedale, Wyoming, where there are serious water shortages being reported

However, the current US gas prices are a big incentive unfortunately, there is no guarantee that the UK’s prices will follow the same pattern, or that the trend in the US is even sustainable.  Indeed, some researchers claim that the US bubble is already bursting.  Michael McElroy, who writes for Harvard Magazine, states that: “the economic momentum of the shale-gas industry can be sustained for the long term only by decreasing production (ultimately causing prices to adjust—a process that may be under way…) or by increasing sales of its product”.  Veteran Petroleum Geologist, Arthur Berman, wrote in 2011: “Facts indicate that most wells are not commercial at current gas prices and require prices at least in the range of $8.00 to $9.00/mcf to break even on full-cycle prices, and $5.00 to $6.00/mcf on point-forward prices. Our price forecasts ($4.00-4.55/mcf average through 2012) are below $8.00/mcf for the next 18 months. It is, therefore, possible that some producers will be unable to maintain present drilling levels from cash flow, joint ventures, asset sales and stock offerings.”

Do low gas prices provide an opportunity to reduce Carbon emissions?  Most claims, that shale gas will significantly reduce US carbon emissions in the future, are not currently based on any solid facts but rather on a certain amount of wishful thinking. That’s because those claims assume natural gas is replacing coal only, rather than replacing some combination of coal, renewables, nuclear power, and energy efficiency — which is obviously what will happen in the real world.  A separate study released this week from the International Energy Agency found“low natural gas prices will hamper the U.S.’s incentive to continue spending on energy-efficiency projects.”


A new study, from Stanfords energy modelling forum, “Changing the Game? Emissions and Market Implications of New Natural Gas Supplies Report.” suggests that use of Shale gas will have little or no effect on the reduction of CO2.

Is the lure of cheap natural gas just too great to resist and should it be pursued at the cost of other more sustainable technologies?  Is this the start of a sustainable movement towards better use of our natural resources or simply another boom and bust gold-rush to be exploited?

Matt Willis is Terviva’s Director, International Markets.

From Field to Processing Plant

If you’ve ever traveled through an agricultural area while having a snack, you may have had a moment in which the farm in front of you just happened to produce the kind of crop that went into making your snack. I had such a moment during a recent holiday weekend: driving through central California, munching on smoked almonds, and noticing a large grove of almond trees off to my right. That’s what got me thinking: many of us can recognize crops in the field, and most of us know what crops contribute to the food we eat, but how many of us know what happens between farm and table (or snack, or gas station, or consumer product)?


This is where harvesting and midstream processing comes in. In the developed world, there is an entire system behind carefully yet relentlessly getting at the most valuable products from the field, transporting them, processing them using physical, chemical, and/or biological means, and so on. A few steps later, they’re in your kitchen, car, or office.

Since the universe of crops, processing methods, and end products is so vast, let’s focus on one crop with which we’re almost all familiar: almonds. The state of California is the world’s largest producer of almonds by far. In 2011, its farmers produced almost 2 billion pounds (900 million kg) of shelled nuts from 760,000 acres of land, accounting for about 75% of global production and generating almost $3.9 billion in revenue.

For this post, we’ll focus on the process by which almonds – and several other types of nut crops, including TerViva’s own pongamia – can be removed from trees and taken to processing facilities. This harvesting process usually takes place between mid-August and October.

almond shaker

1. Shaking. Machines called shakers, essentially four-wheeled vehicles with a claw-shaped boom in the front or to the side, are used to physically shake each tree one by one. A good shaker, run by a good operator on a well-designed orchard, can shake an entire tree in as little as 30 seconds. This means that an entire acre of orchard, containing 110 trees on average, can be “shaken” in under an hour. The almonds are then left on the ground to dry for 7-10 days before the next step.

2. Sweeping. The shaking process gets the almonds off the trees and on to the orchard floor, but they still need to be picked up. However, because of the variation in morphology of each tree coupled with the subjectivity of the shaking process, the almonds are scattered all over the floor and would be difficult for an automated machine to pick up without additional assistance. This assistance comes in the form of the sweeping step.

flory v60 sweeper

The “sweeper” is a machine that looks like a cross between a combine harvester and a hovercraft from the front. Equipped with powerful fans capable of pushing almonds out of berms, it is used to blow and arrange the almonds into neat piles running along the center of each row.

3. Pickup (not shown). Next, it’s up to the rather generically-named “harvester” to pick up the almonds from the center of each row. This is done using a conveyor belt mechanism that picks up the almonds and flings them into a reservoir cart hitched behind the harvester.


4. Running. In many cases, the harvester operator simply keeps on going until the reservoir cart is full. However, this may be a less-than-optimal use of resources in the case of larger orchards. In such cases, having a self-propelled, human operated, bidirectional shuttle runner may be the way to go. These seven-tenths-scale “dump trucks on wheels” attach to the harvester, while facing backwards, and serve as a reservoir for when the harvester its doing its job. Once full, the shuttle runner detaches from the harvester with its load, “running” in the opposite direction to the staging area (at speeds up to 30 mph in both directions!), dropping off its load, and coming right back for more.


5. Transfer to Temporary Storage. The shuttle runner drops off its load on a combination “desticker”/elevator, which as the name suggests, removes sticks and other large pieces of debris before storing the nuts in open mounds or other temporary storage. The elevator is not unlike the baggage loading machine that you may have seen if you’ve looked out the window of a plane while at the gate.

almond utility trailer

6. Transport to Processing Plants. The almond fruits are transported in utility trailers to processing facilities. You might have seen trailers like these on the road while traveling through rural areas.

Hopefully this provides an appreciation for just the first step of getting almonds and similar nut crops such as pongamia off the trees into a processing facility. We’ll discuss the journey from the processing plant to one’s glovebox on the Interstate 5 (or fuel tank, or other suitable end use) at another time.

Until then, enjoy your snack!

Aniket Sawant manages downstream products and markets for TerViva.