Jennifer Steinhauer reported in yesterday’s New York Times that, “Within [the farm bill signed by President Obamalast month] is a significant shift in the types of farmers who are now benefiting from taxpayer dollars, reflecting a decade of changing eating habits and cultural dispositions among American consumers. Organic farmers, fruit growers and hemp producers all did well in the new bill. An emphasis on locally grown, healthful foods appeals to a broad base of their constituents, members of both major parties said.”
The article noted that, “While traditional commodities subsidies were cut by more than 30 percent to $23 billion over 10 years, funding for fruits and vegetables and organic programs increased by more than 50 percent over the same period, to about $3 billion.
“Fruit and vegetable farmers, who have been largely shut out of the crop insurance programs that grain and other farmers have enjoyed for decades, now have far greater access. Other programs for those crops were increased by 55 percent from the 2008 bill, which expired last year, and block grants for their marketing programs grew exponentially.”
“The Food and Agriculture Organisation’s (FAO) price index, which measures monthly price changes for a basket of cereals, oilseeds, dairy, meat and sugar, averaged 208.1 points in February, up 5.2 points from a slightly revised January index of 202.9.
“Unfavourable weather conditions in the southern hemisphere and parts of the United States were the most important cause of the rises, FAO’s senior economist Abdolreza Abbassian said.”
“Strained shipments of grain from Ukraine, a major wheat and corn exporter, could lead to increased demand for U.S. crops from North Africa, the Middle East and China, according to the Washington-based trade group.
“The shipment difficulties couldn’t be independently confirmed. Any problems in Ukraine could benefit U.S. suppliers represented by the Grains Council, a nonprofit that develops export markets for U.S. corn, sorghum, barley and other products.”
* Fifth District- Richmond- “According to agriculture contacts, crop prices declined in recent weeks. Falling feed costs and higher cattle prices led contacts to believe it will be a good year for livestock producers. Also, farmers expect an increase in poultry production. However, a North Carolina respondent was concerned about an increase in swine virus in his region. A Virginia nursery owner stated that recent cold weather damage, if any, will not be known for a month or two; even so, he expects a ten percent increase in year-over-year sales this spring. A North Carolina agri-business contact reported that tobacco and vegetable producers in his region were cautiously optimistic for the year ahead. In South Carolina, recent ice storms have caused timber damage that is still being assessed.”
* Sixth District- Atlanta- “Recent rains improved soil conditions in parts of Florida and Georgia while portions of Alabama, Louisiana, Mississippi, and Tennessee experienced dry soil conditions. Meanwhile, freezing temperatures and cold winds had farmers and livestock producers taking precautions to mitigate damage to crops and livestock throughout much of the District. There were mixed reports of the impact on Florida crops with some indicating damage to vegetable and strawberry crops and others suggesting no damage to citrus. However, the Florida citrus crop continues to be adversely affected by citrus greening causing diminished production and increased expense battling the disease. On a year-over-year basis, prices paid to farmers for corn, soybeans, hogs, and broilers were down; while cotton, rice, oranges, beef, and eggs were up. The most recent domestic crop production forecasts for corn, rice, soybeans, oranges, and cotton were unchanged from a month ago. Similarly, pork and broilers projections were down moderately while beef projections were up slightly.”
* Seventh District- Chicago- “Severe winter weather disrupted the flow of agricultural products between farms and markets during the reporting period. Crops that were sold stayed on farms longer than intended as transportation problems delayed shipments. Contacts also reported shortages of trucks and drivers to deliver inventories from the large harvest last fall. Demand for crops has been better than expected, particularly for corn, pushing inventories lower and prices higher. Soybean prices drifted up as uncertainty regarding the harvest in South America weighed on markets. Concerns about high costs for land rentals were also widespread. Livestock producers reported improving bottom lines driven by higher prices for milk, hogs, and cattle combined with lower feed costs. However, some hog farms reported losses of young pigs because of disease. Dairy producers have seen a boost in demand from exports.”
* Eighth District – St. Louis- “Red meat production in the District for 2013 was 1.2 percent higher than in 2012. The production increase was driven by the District’s largest producers in Illinois, Indiana, and Missouri.”
* Ninth District- Minneapolis- “Conditions continued to soften for district farmers, while livestock and dairy producers remained in better shape. More than half of respondents to the Minneapolis Fed’s fourth quarter (January) Survey of Agricultural Credit Conditions said farm incomes decreased in the last three months of 2013, and two-thirds expected incomes to fall in the first quarter of this year. Cattle and hog producers continued to benefit from high prices and falling feed costs, as did dairy producers, according to survey comments. Informal survey results suggest that farmers are reacting to falling corn prices and intend to plant fewer acres of corn and a potentially record high acreage of soybeans this coming spring. January prices received by farmers fell from a year earlier for corn, wheat, soybeans, hogs and chickens; prices increased for cattle, milk, eggs and turkeys.”
* Tenth District- Kansas City- “Crop growing conditions deteriorated, while livestock prices strengthened since the last survey period. Slightly more than half of the winter wheat crop was rated in fair to poor condition as scattered snowfalls provided only marginal soil moisture. Crop prices edged up from recent lows due to an uptick in export demand and concern that South American corn and soybean production would be lower than previously expected. Feeder cattle prices rose further with historically low cow inventories, and strong export demand supported higher fed cattle prices. Hog prices rose amid an intensifying swine virus outbreak that was expected to constrain pork supplies. In addition, production costs for livestock feeders edged down due to lower feed prices. Agricultural bankers indicated that farmland price appreciation moderated from the rapid pace seen the past few years, and most expected values would level off in 2014.”
* Eleventh District- Dallas- “After gradually easing throughout the fall, district drought conditions worsened slightly in January and early February. Wheat crop and pasture conditions deteriorated somewhat due to lack of sufficient rainfall. Cotton prices have rallied since December, which may lead more farmers to favor cotton over other row crops when making planting decisions this spring.”
* Twelfth District- San Francisco- “Production in agricultural and resource-related industries expanded on balance. Demand was stable for most crop and livestock products. Concerns about water costs and availability may cause farmers in the California Central Valley to scale back planting. Contacts expect growers to allocate water to more permanent plantings, such as almond and walnut orchards, before allocating water to annual crops, such as corn. In addition, dairy and meat producers may face higher feed costs due to water shortages.”
Damian Paletta reported in today’s Wall Street Journal that, “The White House offered a tax and spending plan Tuesday that was largely absent of lofty new policy goals, acknowledging the limited ambition of both political parties to renew a fight over the budget with midterm elections looming.
“President Barack Obama’s $3.9 trillion budget for the year beginning Oct. 1 focused on targeted measures, many of which have been previously proposed, including tax increases on upper-income Americans and companies such as oil and gas concerns. It also called for spending increases for education, infrastructure projects, and research and development, and included proposals to aid low-income workers and the unemployed, such as expanding the Earned Income Tax Credit for more childless workers.” (Note that a brief overview of the budget proposal is available here, while remarks by Pres. Obama yesterday announcing the budget outline can be read here).
The Journal article explained that, “The president’s framework is constrained by a two-year deal on discretionary spending struck in December between House Budget Chairman Paul Ryan (R., Wis.) and Senate Budget Chairman Patty Murray (D., Wash.). The agreement came after last year’s government shutdown and a decision by many lawmakers to avoid another fight over the debt ceiling. Lawmakers are instead waiting to see how the congressional elections in November might change the capital’s political dynamic. And with fiscal fatigue setting in, it is possible both sides will forgo writing budgets in Congress this year since the spending levels already have been agreed to.”
Tony C. Dreibus and Neena Rai reported yesterday at The Wall Street Journal Online that, “U.S. wheat futures surged 4.6%, the biggest one-day percentage gain in more than 17 months, as traders fretted that Ukraine’s escalating crisis will slow grain exports from the eastern European country.
“Wheat prices jumped after Russia’s military appeared to tighten its control of Ukraine’s Black Sea region of Crimea. The tensions led traders to speculate that buyers of wheat and corn will shift purchases from Ukraine—one of the world’s biggest grain exporters—to shippers such as the U.S.”
From the viEUws webpage (Feb. 27)- “In this Brussels Briefing on GMOs, AGRA FACTS journalist Ed Bray provides an overview of the latest developments on the authorisation of genetically modified maize 1507 for cultivation in the European Union.
“Ed Bray says that the Commission is now poised to approve this genetically modified (GM) maize 1507 and it would become only the second GM crop currently grown in the EU. Member States voted on this GM maize on February 11. Bray reports how the voting result has put pressure on Member States to agree Commission plans aiming to give them legally-valid reasons for banning GM crops on their territory. Environment Ministers will discuss the plan on March 3 at the Environment Council.
“‘The United Kingdom has said it could back the plans, breaking a blocking minority with France and Germany. So, the Commission hopes that a deal may now be reached’, Bray argues.”
DTN Ag Policy Editor Chris Clayton reported late last week that, “Farmers won’t sign up for new farm programs until their 2014 spring crops are in the bin next fall, Agriculture Secretary Tom Vilsack said Friday.”
The article indicated that, “Under the timeline laid out by the secretary, producers who grow crops such as winter wheat would first be given the option of signing up for the new crop insurance program, the Supplemental Coverage Option (SCO), next fall. Then, before the November acreage reporting date, those farmers could opt out of SCO without paying the premium if they choose to enroll their wheat acres in the Agriculture Risk Coverage (ARC) program.
“‘It’s the best we can do, given the time the bill passed and the steps that have to be taken,’ Vilsack said.
“The decision is critical for producers because enrolling a commodity in ARC or the new target-price program, Price Loss Coverage, is irrevocable for the life of the new farm bill.”
DTN Ag Policy Editor Chris Clayton reported yesterday that, “USDA is faced with trying to sort out some complicated changes to commodity programs quickly with fewer staff to help walk farmers through all the various decisions, Deputy Agriculture Secretary Krysta Harden said Thursday.
“Harden got a chance at Commodity Classic to address her old employers as she talked about implementing the farm bill with members of the American Soybean Association. She also talked to members of the National Corn Growers Association about the farm bill.”
Gregory Meyer reported yesterday at The Financial Times Online that, “Hoarding by US corn farmers has pinched profits at some of the world’s biggest grain merchants, even as the nation wallows in its largest harvest in history.
“Analysts and executives had expected companies such as Bunge and Archer Daniels Midland to report huge profits from buying and storing corn this year. But quarterly results have been underwhelming, they say.”
The FT article explained that, “Merchants say US farmers are clinging to their 13.9bn-bushel corn crop after prices fell 35 per cent in the past year, setting up a test of wills as Brazil prepares to launch its own huge harvest on to the export market.”
Mr. Meyer pointed out that, “The biggest US trading houses, including ADM, Bunge, Cargill, CHS and Gavilon, a unit of Japan’s Marubeni, have added about 1bn bushels of US storage capacity in the past decade, bringing the total to more than 5bn, according to Sosland Publishing’s 2014 Grain & Milling Annual.
“But soaring cereals prices after the worst drought since the 1930s in 2012 enabled farmers to reinvest income in their own storage bins. US on-farm storage capacity totals 13bn bushels, 2bn more than 10 years ago.”
Tarini Parti reported yesterday at Politico that, “First lady Michelle Obamaunveiled a proposal Tuesday that would ban marketing junk food and sodas in schools — an unusually aggressive position for the administration that could draw the ire of school districts, food companies and conservatives” [transcript of remarks by Mrs. Obama here, and additional background here].
“Schools would no longer be able to house vending machines that sport images of their flagship sodas, as part of the updated school wellness policy crafted by the Department of Agriculture. They would be prevented from having posters that promote unhealthy food and drinks or using cups in cafeterias that market high-calorie beverages, among other forms of promotion,” the Politico article said.
Ms. Parti added that, “The proposal would require marketing of all food and drinks to fall in line with the same healthier standards that are expected to be required of foods sold during the 2014-15 school year. Both sets of measures, which go beyond the new school lunch and breakfast requirements, stem from the 2010 Healthy Hunger-Free Kids Act.
“Already, about 90 percent of school districts are meeting the updated school lunch standards, the first lady touted at the event, where she was introduced by Agriculture Secretary Tom Vilsack along with a parent and a 14-year-old boy who briefly talked about the benefits of Let’s Move!.”
Matthew Weaver reported yesterday at the Capital Press Online that, “Rep. Cathy McMorris Rodgers, R-Wash., says she’ll be watching implementation of the 2014 Farm Bill to make sure new rules and provisions will be workable for farmers in Eastern Washington. McMorris Rodgers anticipates providing more leadership for agriculture issues after Rep. Doc Hastings retires at the end of 2014.
“Rep. Cathy McMorris Rodgers represents Washington’s 5th district, which includes much of Eastern Washington. As chair of the House Republican Conference, she is currently the fourth highest-ranking Republican. She was first elected in 2004.”
The Capital Press article, which continued in a “Q and A” format, added that, “Within the farm bill, the crop insurance program is especially important to our wheat growers. They gave up direct payments, but we need to have that crop insurance safety net as they move forward,” Rep. Rodgers noted.
And on the issue of immigration, Rep. Rodgers indicated that, “Obviously within agriculture, we continue to have significant workforce needs. For Washington state, in any given year, we need between 80,000 and 100,000 people to help pick our product. Our current H-2A guest worker program will provide 5,000 to 10,000, so it doesn’t come close to meeting the need. It is very important that we are taking steps to fix what is a broken immigration system. I’m hopeful we’re going to continue to see more progress on this front in 2014. Several of these bills have passed the judiciary committee in the House, and I think we’re going to start seeing more of those bills come to the floor.”
A news release on Friday (“U.S. Sugar Producers Set Sights on Foreign Subsidies”) indicated that, “With a strong five-year sugar policy at their side, U.S. sugar producers are now setting their sights on addressing the foreign sugar subsidies that make U.S. sugar policy necessary. That’s according to Jack Roney, director of economics and policy analysis for the American Sugar Alliance (ASA), who spoke today at the USDA Agricultural Outlook Forum.
“‘U.S. sugar producers are among the most efficient in the world, and we would thrive in a global freemarket, if one existed,’ he explained. ‘But historically, sugar has been and continues to be the world’s most distorted commodity market because of foreign subsidization. Something must be done about it.’
“Roney says that sugar producers are so serious about addressing foreign subsidies that, even after passage of a five-year Farm Bill, they still remain willing to give up U.S. sugar policy if other countries will end their direct and indirect market-distorting policies.”
In part, today’s article noted that, “But just as a new industry for Iowa is about to take root, a proposed change in government policy could limit demand for ethanol and send new plants and jobs to other countries. Think Brazil, China or European nations…The U.S. Environmental Protection Agency has proposed reducing the amount of renewable fuel that must be blended into the fuel supply that powers American vehicles. The EPA says it’s bending to market realities: The mandates were too aggressive and hard to reach, given that autos have become more fuel-efficient.”
The Register article added that, “Using cellulosic ethanol in your tank is expected to reduce greenhouse gas emissions 86 percent when compared with gasoline, according to the U.S. Department of Energy. Corn-based ethanol, as it’s currently made, reduces greenhouse gases an average of about 20 percent.” (See related video below).
A recent report (Feb. 21) on WSET-TV (Lynchburg, Va.) indicated that, “ABC 13 also asked [Rep. Robert Hurt (R., Va.)] about the ‘Farm Bill’ the president recently signed, which aims to provide help to rural communities.”
“‘I don’t think there is anything in the farm bill more important than crop insurance and that is risk management,’ Hurt said. ‘Farmers across our district were glad we finally did get a farm bill passed.’”