FarmPolicy

May 30, 2016

Rep. McGovern Address Hunger Issues

Categories: Farm Bill /Nutrition

Rep. Jim McGovern (D., Mass.) addressed issues associated with hunger in America on the House floor yesterday.  A transcript of his remarks follows.

Mr. Speaker, thousands of people will gather in Washington, D.C., this weekend for Feeding the 5000, an event designed to bring awareness to the issue of food waste. Participants will be served a communal meal made entirely out of food that would otherwise have been discarded—in other words, wasted. Since 2009, Feedback, a global environmental organization working to end food waste, has hosted dozens of Feeding the 5000 events in cities across the globe.

I am pleased to see so many local partners—including government agencies, charitable organizations, NGOs, industry, and chefs—joining together to call attention to food waste, because the truth of the matter is we will need all of these partners working together to solve the issue of food waste.

Last year, the USDA announced their first ever food waste reduction goal, calling for a 50 percent reduction in food waste by 2030. USDA is working with charitable organizations, faith- based groups, and the private sector, and I believe this goal is 100 percent achievable.

American consumers, businesses, and farms spend an estimated $218 billion per year growing, processing, transporting, and disposing of food that is never eaten. Up to 40 percent of all food grown is never eaten; 40 to 50 million tons of food is sent to landfills each year, plus another 10 million tons is left unharvested on farms. This food waste translates into approximately 387 billion calories of food that went unconsumed. With 50 million Americans—including 16 million children— struggling with hunger every year, these are startling figures.

We know food waste occurs throughout the supply chain, from harvesting to manufacturing, to retail operations and consumer habits. But we must do more to reduce food waste at every stage, recover food that would otherwise have been wasted, and recycle unavoidable waste as animal feed, compost, or energy.

Thankfully, there is already a lot of great work being doing to raise awareness about the problem of food waste. Just last week, I attended a screening of the documentary film called ‘‘Just Eat It’’ at Amherst Cinema, organized by The Food Bank of Western Massachusetts. ‘‘Just Eat It’’ follows a cou- ple, Jen and Grant, as they stop going to the grocery store and live solely off of foods that would have been thrown away. Jen and Grant were able to find an abundance of perfectly safe and healthy food available for consumption that would have been thrown away.

It is exciting to see new partnerships forming to study food waste and find ways to use this perfectly good food to reduce hunger in our communities. One such private-public collaboration, ReFED, has brought together over 30 business, government, and NGO leaders committed to wide-scale solutions to U.S. food waste.

In March 2016, ReFED released a Roadmap that charts the course for a 20 percent reduction of food waste within a decade. The Roadmap calls for farmers to reduce unharvested food and create secondary markets for imperfect produce. It calls on manufacturers to reduce inefficiencies, make packaging adjustments, and standardize date labeling. It calls on food service companies to further implement waste tracking and incorporate imperfect produce and smaller plates into restaurants. It urges the Federal Government to strengthen tax incentives for food donations and consider standardized date labeling legislation.

The good news is that many in the industry are already taking steps to dramatically cut down on wasted food by implementing robust donation programs. For example, Starbucks recently announced it will soon scale up its successful food donation pilot program nationwide. In partnership with the Food Donation Connection and Feeding America, Starbucks will donate unsold food from more than 7,000 company-operated stores—salads, sand- wiches, and other refrigerated items— to the Feeding America food bank network. By 2021, that amounts to almost 50 million meals.

Our college campuses are also stepping up. Both the Campus Kitchens Project and the Food Recovery Net- work will work with college dining facilities and students to provide hunger relief in their local communities. In my congressional district, Becker College, Holy Cross College, Smith College, the University of Massachusetts Amherst, and Worcester Polytechnic Institute all have campus food recovery initiatives.

Over the past 35 years, Feeding America has demonstrated an outstanding commitment to ensuring food that would otherwise have been wasted makes its way to food banks across the country and into the homes of families in need. There are dozens of other in- dustry leaders also taking steps to reduce food waste by implementing manufacturing upgrades, maximizing harvests, and utilizing recycling initiatives.

I appreciate the efforts of the Food Waste Reduction Alliance in bringing together industry partners to reduce food waste, shrink the environmental footprint, and alleviate hunger in our communities.

Reducing food waste is one step we can take toward our goal of ending hunger in the United States and throughout the world. I am pleased to see so many partners at every level of the food supply chain taking action to reduce food waste, but there is still more that needs to be done. Let’s solve the problem of food waste, and let’s end hunger now.

Lackluster Farm Economy Could Impact Lenders

Reuters writer P.J. Huffstutter reported today that, “Leading U.S. agricultural lenders, including some commercial banks and the Farm Credit System (FCS), could be impacted by the souring farm economy, in part because growth in their loan portfolios in recent years has been heavily rooted in farmland appreciation, a report released on Tuesday by Fitch Ratings said.

“But while such institutions could see the quality of some of their assets deteriorate, the relative strength of the current Farm Credit System and a less volatile interest rate should ease any adverse impact on lenders, Bain Rumohr, director of Fitch Ratings, told Reuters.”

The article explained that, “While there are some parallels between this farm downturn and the agricultural crisis of the 1980s, the differences are significant enough that the result on the U.S. lending sector should be more benign, the report said.

“As a result, Fitch doesn’t expect the sector’s worsening conditions to affect the ratings of FCS or the individual banks in the system.”

Ms. Huffstutter added that, “Economic erosion continued to squeeze Midwest farmers’ capital expenditures and pressure farmland values and cash rents in the first quarter of 2016, according to quarterly reports on the agricultural economy released last week by the Federal Reserve Banks in St. Louis, Kansas City and Chicago. Repayment rates for non-real estate farm loans also continued to sour.”

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Federal Reserve Reports- Farmland Values- and Cash Rents- Decline

Wall Street Journal writer Jesse Newman reported last week that, “Real farmland values in parts of the Midwest fell at their fastest clip in almost 30 years during the first quarter, according to a regional Federal Reserve report on Thursday.

“Falling crop prices have weighed on land values from Kansas to Indiana over the past two years as farm income declined and investors who had piled into the asset at the start of the decade retrenched.

Three regional Federal Reserve banks all reported year-over-year declines in farmland values in their districts and said the drops would continue, though their forecasts were based on surveys taken before the recent rally in corn and soybean prices.”

Ms. Newman explained that, “The St. Louis Fed region that includes parts of the U.S. agricultural heartland in Illinois, Indiana and Missouri reported the steepest decline, with the average price of ‘quality’ farmland falling 6.4% in the quarter, the biggest decline since its survey began in 2012 [see related graph below].

The Chicago Fed said prices for similar land in its district fell 4% from a year ago, the seventh successive quarterly decline. Adjusted for inflation, prices in an area that includes parts of Illinois, Indiana, Iowa, Michigan and Wisconsin fell 5%, the biggest quarterly drop since 1987.

“Declines in the Kansas City Fed’s district, which includes Kansas and Nebraska, were less pronounced, but the bank said prices for nonirrigated cropland fell 4% in the quarter [see related graph below].”

The Journal article added that, “The drop in land values has been accompanied by deteriorating credit conditions, with more loans taken out to cover farm operations even as repayment rates fell on existing debt.”

Christopher Doering reported in Saturday’s Des Moines Register that, “Iowa was among the hardest hit states. Farmland prices as of April 1 dropped 5 percent compared with a year earlier, bringing the string of year-over-year declines in Iowa’s farmland to 10 quarters. During the first three months of 2016, land prices in Iowa declined 1 percent.

The decline is forecast to continue. David Oppedahl, senior business economist at the Chicago Fed, said nearly two-thirds of the 200 agricultural bankers surveyed expect values to drop in the second quarter, with the rest predicting them to remain stable.”

Cash Rents

With respect to cash rents (see additional background here and here), the St. Louis Fed noted that, “Table 2 indicates that cash rents for quality farmland and ranchland or pastureland also fell in the first quarter of 2016 compared with a year earlier. After falling by 9.5 percent in the fourth quarter of 2015, cash rents on quality farmland fell by an additional 7.5 percent in the first quarter (relative to a year earlier).”

The Chicago District noted that, “In 2016, the index of inflation-adjusted farmland cash rental rates was down more than the index of inflation- adjusted agricultural land values (see chart 2). Indeed, 2016’s real cash rental rates were 13 percent below their level in 1981, whereas real farmland values were still 38 percent above their 1981 level. Given the decrease in cash rental rates was larger than that in farmland values, the spread between their respective indexes widened for the seventh year in a row. This widening gap reflected relatively stronger demand to own farmland than to lease it, as land values did not fall as much as the earnings potential of farmland (represented by cash rental rates). Greater uncertainty about the profitability of crop production likely held down bids by farmers to rent farmland on a cash basis; there were reports of some farms coming up for lease again this year after initial rental arrangements fell through. Not surprisingly, the declines in crop prices of recent years seemed to lower farmers’ expectations for turning a profit on leased acres in 2016.”

And the Kansas City Fed stated that, “Although most costs associated with agricultural production have held firm, cash rents declined for all farmland types. After remaining positive through most of 2015, ranchland cash rents dropped in the first quarter, declining 10 percent from a year earlier (Chart 9).”

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U.S. Crop Prices Surge After Government Report

Christopher Doering reported in today’s Des Moines Register that, “Farmers in Iowa and across the Corn Belt struggling to reach profitability this year got some good news from the U.S. Department of Agriculture on Tuesday.

The USDA said producers are expected to grow a record 14.43 billion bushels of corn, and 3.8 billion bushes of soybeans, which would be the third best crop ever. While the bumper crops are likely to cap the possibility of a large rebound in prices anytime soon, the federal government surprised the market by increasing its estimates for feed usage and exports. Corn and soybean prices soared following the prospect of higher-than-expected demand.”

Mr. Doering added that, “USDA forecast average farm prices for corn and soybeans at $3.35 and $9.10 a bushel, respectively, in 2016. A year ago, cash prices for corn were $3.60 and soybeans $8.85. Iowa was the nation’s biggest producer of both crops in 2015.”

Today’s article noted that, “A prolonged slump in commodity prices has squeezed farm income, forcing some producers to cut spending or turn to their banks for help. Farm income this year is forecast to fall to $54.8 billion, its lowest level since 2002 and down 56 percent from the high of $123.3 billion just three years ago, according to the USDA.”

Jesse Newman reported in today’s Wall Street Journal that, “U.S. crop prices surged Tuesday, extending an unexpected run in agricultural prices that has drawn in big investors like hedge funds.

The gains promise much needed relief for a farm economy battered by the slump in prices for major row crops over the past three years.

“At the same time, they could mean higher prices for consumers going into the summer.”

Ms. Newman explained that, “The catalyst was a closely watched government report that said rising exports would eat into the glut in farm commodities by next year. The big surprise was a projection that U.S. soybean inventories would fall by a steep 24%.”

Corn futures rose 3.3% to $3.81 a bushel,” the Journal article said.

And Reuters writer Mark Weinraub reported yesterday that, “May 10 World and U.S. soybean supplies will be tighter than expected for the next two years due to reduced harvests in South America and rising global demand, the U.S. Agriculture Department said on Tuesday.

“The report jolted the soy market, with the most active Chicago Board of Trade futures soybean contract surging 4.5 percent and hitting its highest since August 2014. Soymeal futures rallied to a 16-1/2-month peak.”

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Iowa State University Survey- Cash Rents Down Slightly

A recent survey from Iowa State University (ISU) Extension indicated that cash rents in Iowa have decreased slightly in 2016.

More specifically, the ISU publication included the following table and map:

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Prices Received Improve, Slightly

USDA’s National Agricultural Statistics Service (NASS) indicated last month in its April Agricultural Prices report that, “The corn price, at $3.57 per bushel, is unchanged from last month but is down 24 cents from March 2015.”

The NASS update added that, “The soybean price, at $8.56 per bushel, increased 5 cents from February but is $1.29 below March a year earlier.”

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Waters of the U.S. Rule: Focus of Senate Debate, and Court Ruling

Categories: Regulations

A news release yesterday from Sen. John Hoeven (R., N.D.) indicated that, “[Sen. Hoeven] today spoke on the Senate floor ahead of a vote on his legislation to defund the Environmental Protection Agency’s (EPA) Waters of the U.S. rule, which would prevent its implementation. The senator stressed the rule’s severe impacts and excessive scope, as well as the agency’s lack of legal authority to issue such a broad regulation. The measure, which was offered as an amendment to the Energy and Water Development Appropriations bill, was supported by strong majority of the Senate, though it did not achieve the 60 votes required for passage; the final vote was 56 to 42.

“‘The EPA’s attempt to expand its reach through the Waters of the U.S. rule is the number one regulatory threat and a real problem for our farmers and ranchers,’ Hoeven said. ‘Further, there is a fundamental principle about how our government works at stake. The EPA has sought through administrative fiat to seize authority that legally belongs to Congress, not an executive agency. While I am disappointed that the vote failed, I will continue my work to stop this burdensome regulation through the appropriations process.'”

Also with respect to this amendment, Sen. Roy Blunt (R., Mo.) stated yesterday during the floor debate that, “Navigable waters have seemed to be a Federal responsibility since the 1840s in law, in bills that have passed the Congress. So in the early 1970s, the Clean Water Act was passed, and the EPA was formed. The Clean Water Act said the EPA will have jurisdiction over navigable waters. But with this outrageous waters of the United States rule, the EPA wants to now define ‘navigable waters’ as basically all the water in the country.

They want to say it is any water that can run into any water that can run into any water. I don’t know how many iterations of that there would be that can run into any water that eventually runs into navigable water. There is a case before the Supreme Court right now where the EPA is challenging a company in Minnesota based on navigable waters. The location they are challenging is 120 miles away, by no argument, from the nearest thing that anybody would truly consider a navigable water.”

Sen. Blunt added that, “In my State, anything that would meet the EPA definition of what could be the definition of their new sense of waters of the United States covers 99.7 percent of the State.”

On the other hand, Sen. Ben Cardin (D., Md.) provided this background on the issue yesterday: “It was for all those reasons that we passed the 1972 Clean Water Act. We understood the enforcement of the waters that were regulated under the 1972 Clean Water Act. It was based upon best science.

Science told us what we needed to do in order to have clean water—clean water for our environment, clean water for safe drinking water—and it was well understood until a Supreme Court decision. That decision in 2006, known as the Rapanos decision, was a 5-to-4 decision of the Supreme Court, which remanded the case, but it was a 4-to-4 decision on the merits of the case. Since that time, there has been uncertainty as to what bodies of water can be regulated under the Clean Water Act. So this was a situation caused by the ambiguity of the Supreme Court case. It is interesting that the decision on the merits was 4-to-4, as we are now debating whether we are going to have a full Supreme Court in order to make decisions that affect the clarity of law in this country.

“The Rapanos decision sent back to the lower courts a decision on how to decide this. Since that time, there has been uncertainty as to what bodies are legally regulated under the 1972 Clean Water Act. Remember, this was 2006. The easiest way to resolve this was for Congress to pass a law clarifying the Clean Water Act, but Congress has chosen not to do that. So the Obama administration has done what it should do, using its power to promulgate a regulation that would provide clarity as to which bodies of water are regulated. Guess what. They have done that in a way that is consistent with how the law was enforced prior to the Rapanos decision—without much complaint before the Rapanos decision. It basically goes back to best science and tells us logically what needs to be regulated. That is what this rule would do: Protect our clean water.”

And Sen. Richard Durbin (D, Il.) noted that, “Attempts to roll back the clean water rule will not only return us to a patchwork of water protections that make it difficult for businesses, farmers, and others to know whether water ways are covered by the law. It will also risk one of our greatest commodities that supports agriculture, recreation, tourism, and energy production.”

Separately on the Waters of the U.S. Rule, a news release yesterday from Sen. Heidi Heitkamp (D., N.D.) stated that, “[Sen. Heitkamp] pressed witnesses at a Senate hearing about the need for her bipartisan bill to do away with the Environmental Protection Agency’s (EPA) overbroad Waters of the U.S. rule.

“During a U.S. Senate hearing on the role of government regulators, Heitkamp underscored the need for Congressional legislative action to provide predictability to farmers and ranchers, like her bipartisan bill to fix the Waters of the U.S. rule. Heitkamp reinforced that to address the challenges with the Waters of the U.S. rule, Congress needs to legislate so that federal agencies have the direction they need to develop better regulations.

“Last year, Heitkamp helped introduce a strong and comprehensive bipartisan bill – which she worked with Republican and Democratic senators on since early 2014. Her bill offers a compromise fix by doing away with the harmful Waters of the U.S. rule and sending it back to the EPA for the agency to redo so it takes into account the concerns of farmers and ranchers.”

The judicial branch was also active on the Waters of the U.S. Rule yesterday.

Politico’s Morning Agriculture reported today that, “A federal appeals court stood by its decision that challenges to the Obama administration’s controversial water rule belong with it, rather than having to first go through district courts. The Cincinnati-based 6th Circuit Court of Appeals on Thursday denied petitions from states, industry groups and property rights activists opposing the Waters of the U.S. rule that asked that the court to rehear arguments on the question. Those groups argued that under the Clean Water Act, challenges to the rule must begin in district court. In February, a three-judge panel issued a splintered 2-1 opinion ruling that the challenges belong with it, although the concurring judge said he disagreed with the decision but felt bound by precedent. Opponents of the rule, also known as the Clean Water Rule, hoped that could open the door for a rehearing before the full court.”

The court’s decision from yesterday can be read here.

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Rep. Jim McGovern Addresses SNAP (Food Stamp) Issues

Categories: Farm Bill /Nutrition

Rep. Jim McGovern (D., Mass.), the ranking member of the House Agriculture Subcommittee on Nutrition, delivered a floor speech yesterday where he addressed issues associated with the Supplemental Nutrition Assistance Program (SNAP, or Food Stamps).

A transcript of Rep. McGovern’s remarks follow:

Mr. Speaker, on April 1, thousands of poor Americans started losing their SNAP, or food stamp, benefits.

All told, over the course of this year, as many as 1 million adults will be cut off from SNAP. That is because one of the harshest provisions in the 1996 welfare reform law says that adults working less than 20 hours a week or not enrolled in a job training program can only receive 3 months of SNAP in a 36- month period.

The problem is, however, that many areas of the country haven’t fully recovered from the recession. There are no open jobs, and worker training slots are all full.

The economic recovery has been uneven across the country, and for many individuals—through no fault of their own—getting back to work has been difficult.

At the height of the recession, Governors across this country, both Democratic and Republican, asked the U.S. Department of Agriculture to allow them to temporarily waive work requirements and provide SNAP benefits to unemployed, childless adults for longer periods of time.

But now some Governors are refusing to extend those work waivers even in areas of their States with high unem- ployment. For 1 million of the poorest Americans, to lose food assistance in the midst of this is unconscionable.

Mr. Speaker, we are talking about the poorest of the poor. These are childless adults whose income averages 29 percent of the poverty line, or about $3,400 a year, a year. No one can live on that.

Many face multiple barriers to employment, including disability, limited education, and chronic homelessness. Their employment can be sporadic, often cycling in and out of low-wage jobs with unpredictable hours that do not lift them out of poverty.

What is most appalling is that about 60,000 of those who will be cut off from SNAP this year are veterans. That is right. These are the brave men and women who stood up to protect our country, and now we don’t have the decency to help them put food on the table when they come home. We should be ashamed.

Mr. Speaker, let me be clear about something. The 3-month limit on childless adults receiving SNAP is not a work requirement, despite what some of my Republican colleagues say. It is a time limit. There is no requirement that States offer work or job training to those who are about to lose their benefit. There is nothing here that incentivizes work. Rather, it penalizes those who are struggling the most.

Work requirements and other Federal assistance programs typically require people to look for work or accept any job or job training slot that is offered, but do not cut people off who are willing to work and are looking for a job simply because they cannot find one.

But that is not the case with SNAP. So individuals who have been searching for a job for months, who have applied to every job posting they have seen, and who can’t get into a job training program because the wait list is too long are punished.

Study after study shows that the longer someone is unemployed, the harder it is to get hired. It is baffling to me that the Republicans’ answer to them is: Sorry. You are out of luck.

The Bureau of Labor Statistics estimates that it takes someone who is unemployed about 6 months of looking to find a job.

That is twice as long as the 3-month time limit. For the life of me, I can’t understand how making someone hungrier helps them find a job faster. We should be making people’s lives better, not harder.

This notion that some on the Republican side peddle that somehow SNAP is this overly generous program that people are just jumping to get into, it is ridiculous. It is false. The average SNAP benefit is $1.40 per meal per day. That is meager. It is inadequate.

And this idea that SNAP is the root of our budget problems is outrageous. New data released from the Department of Treasury just last week shows that SNAP spending is falling. In the first half of the current fiscal year, SNAP spending was at its lowest level since 2010. Not only that, but SNAP caseloads are falling, too. That is due to the improving economy.

SNAP operated like it was supposed to during the recession. It was expanded to meet the needs of the millions who lost their jobs, of middle class families who never imagined they would need food assistance in the first place. And now, as our economy improves, fewer people need the assistance. But we are not there yet.

Cutting 1 million of the poorest Americans off from food assistance is wrong. Increasing hunger is wrong. And I would say to the Republican leadership of this House, the narrative that you have put forward about those in poverty does not reflect the reality. Rather than demonize the poor and diminish their struggle, we ought to come together to help, not hurt, people. We ought to end hunger now. This war on the poor has to stop.

 

House Ag Subcommittee: Growing Farm Financial Pressure

Recall that recent news items regarding the agricultural economy have included phrases like, “Mounting Pressure,” and “There Definitely Could be Some Pain;” while the Federal Reserve Board indicated in its most recent Beige Book report that, “Some crop input prices, such as fertilizer and diesel prices, moderated from year-ago levels, but profit margins were expected to remain relatively weak due to suppressed commodity prices.”

The Fed added that, “A contact in eastern Montana reported that less- profitable farms were leaving the business, and more exits were expected.”

Yesterday, the House Agriculture Committee’s Subcommittee on General Farm Commodities and Risk Management held a hearing on the “growing financial pressures faced by U.S. farmers and ranchers. ”

A Subcommittee news release yesterday indicated that, “Conditions in farm country today contrast sharply with those during the formulation of the 2014 Farm Bill. While high prices for many farm commodities led to tremendous growth in net farm income through 2013, many of those prices have spiraled downward over the past three years. Witnesses spoke broadly about the factors that are driving current market conditions, the bleak outlook going forward, and the impact that both are having and could continue to have on our nation’s farmers and ranchers going forward. They also spoke to the vital role that farm policy and crop insurance are playing in helping absorb some of the shock, and they stressed the devastating impact that further reductions to these vital tools could have.”

Subcommittee Chairman Rick Crawford (R., Ark.) stated that, “Next year, we will head into a new Congress, and we will write a new Farm Bill. As we head into that long and difficult process, I hope our colleagues who are less directly involved in agriculture or farm policy will reflect on just how critically important farm policy is in responding to a crisis that can happen overnight.”

USDA Chief Economist Dr. Rob Johansson indicated at yesterday’s hearing that, “A strong dollar coupled with high-levels of global agricultural production leave U.S. producers facing commodity prices that continue to decline from record levels and a more difficult trading environment than last year. As a result there will be growing financial pressures on some producers this year, as expected revenue may not be sufficient to cover expected costs. Overall, USDA forecasts that net cash income will fall again in 2016.”

And Texas A&M agricultural economist Joe Outlaw pointed out yesterday that, “Cash rents have come down a little, but nowhere near the amount that commodity prices and returns have fallen. This is due in-part because some producers have multi-year lease agreements. However several cash lease tenants reported their landlord’s have been unwilling to lower cash lease rates.”

Dr. Outlaw added that, “[T]the current poor situation on farms across this country would be considerably worse if not for the safety net provided by both Title I commodity policies and federal crop insurance. There are some in agriculture who say that commodity policies are more important than crop insurance or vice versa. I believe they are equally important – especially during times of low prices. For example, lenders tend to view crop insurance as being more important because the insurance guarantee is ‘bankable,” meaning it is something on which they can base a loan. On the other hand, producers see the commodity assistance as the only chance they have of coming close to breaking even in a low price environment.

“And finally, in my opinion, the interest groups that continue to call for changes that would negatively impact these two key policy tools clearly either have no idea how difficult the financial situation is across agriculture or they simply do not care. Farmers in this country deserve better than to continually be threatened with changes that I consider a dismantling of the safety net.”

With respect to the price outlook for 2016, University of Illinois agricultural economists Scott Irwin and Darrel Good indicated recently at farmdoc daily (“Forming Corn and Soybean Price Expectations for 2016-17“) that, “Using new ending-stocks-to-use pricing models (farmdoc daily, April 6, 2016), we conclude that the probability of the 2016-17 marketing year average farm price of corn and soybeans to be below $3.40 and $9.00, respectively, appears to be quite low at this time. For perspective, substantially lower prices would require a demand environment even weaker than occurred during the Great Recession of 2008-09. A more interesting question revolves around the conditions required to increase the average price to levels that would be considered profitable for most producers. If overall demand remains weak, prospects of very small year ending stocks would likely be required to move averages above $4.00 and $10.00 for corn and soybeans, respectively, which would be helpful but would not represent a return to general profitability. However, there are factors that could improve the demand environment in the year ahead. These include crop production problems in other parts of the world that would extend the demand for U.S. corn and soybeans, a realignment of currency exchange rates that would favor U.S. corn and soybean exports, and policies that enhance the domestic demand for corn and soybeans. Recent dryness that poses, or may pose, some threat to the Malaysian palm oil crop and the second-season Brazilian corn crop are examples of production problems that would enhance export demand. The current biofuels policy that is supporting biodiesel production also has the potential to support soybean oil consumption at a higher level. It is interesting that the futures markets may already be anticipating some of these developments, as the markets are currently projecting 2016-17 marketing year average prices of about $3.70 for corn and $9.40 for soybeans.”

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Federal Reserve Beige Book: Observations on the Ag Economy- April ’16

Today, the Federal Reserve Board released its Summary of Commentary on Current Economic Conditions. Commonly referred to as the “Beige Book,” the report included the following observations with respect to the U.S. agricultural economy:

* Fifth District- Richmond– “Several District farmers reported that they have made limited capital purchases in recent weeks and project little change for the next six months. According to agribusiness contacts, input prices varied since the previous report. Chemical prices grew modestly while fertilizer prices decreased slightly and seed prices remained elevated. Crop prices stabilized on balance.”

* Sixth District- Atlanta– “Agricultural conditions were mixed, while most of the District remained drought free, there were some areas in Florida, Georgia, and Louisiana categorized as abnormally dry. Due to excessive rain and flooding earlier in the year, the USDA designated several counties in central and southern Florida as primary natural disaster areas. Florida’s orange crop forecast increased from the previous month but continued to be lower than last season. On a year-over-year basis, monthly prices paid to farmers for corn, cotton, rice, soybeans, beef, broilers, and eggs have declined.”

* Seventh District- Chicago– “Spring arrived early in much of the District, allowing fieldwork to begin. Corn, soybean, and wheat prices moved up, and fertilizer prices and land rents moved down. However, these changes were not large enough to appreciably improve crop farmers’ earnings prospects. Cattle prices edged higher, while hog and dairy prices were somewhat lower. The drop in dairy prices was large enough that many operations now face losses unless they had made forward contracts at higher prices.”

* Eighth District – St. Louis– “Still facing low crop prices, farmers plan to increase acreage to cover as much of their fixed costs as they can. District corn, cotton, rice, and soybeans acreage is expected to be higher last year. Concerns about December flooding impacting the winter wheat crop have been unfounded so far, as more than 93 percent of the crop is rated fair or better.”

* Ninth District- Minneapolis– “District agricultural conditions remained weak. A contact in eastern Montana reported that less- profitable farms were leaving the business, and more exits were expected. Reports indicated that District farmers intended to plant fewer acres of wheat but more acres of corn in 2016 compared with last year, and an early forecast pointed to a strong growing season in parts of the District this year. Logging in northern Wisconsin was slowed by a warm winter that made the ground too soft for equipment. Farm prices fell in February from a year earlier for corn, wheat, soybeans, hay, hogs, cattle, chickens, eggs, and milk; prices for turkeys increased from a year earlier.”

* Tenth District- Kansas City– “The District farm economy remained subdued since the previous reporting period, though crop prices improved slightly and growing conditions were mostly positive. Crop prices increased moderately in March, but were generally below previous-year levels. Some crop input prices, such as fertilizer and diesel prices, moderated from year-ago levels, but profit margins were expected to remain relatively weak due to suppressed commodity prices. Growing conditions for winter wheat in Oklahoma and Kansas were primarily rated between fair and good, but conditions deteriorated slightly from the previous month due to somewhat warmer weather and relatively little precipitation. Despite a brief rebound in March, livestock prices were significantly lower than a year ago, and profit margins at cattle feedlots remained soft, as livestock prices have decreased more than input costs over the past year.”

* Eleventh District- Dallas– “Row-crop farmers were busy preparing fields or planting, and the USDA Prospective Plantings report showed acreage increases in Texas for cotton, corn and soybeans this year versus 2015, and acreage declines for sorghum and wheat. Production prospects for 2016 crops are quite positive in light of healthy soil moisture and a favorable weather outlook. While crop prices generally increased slightly over the past six weeks, they remained low and contacts continued to mention stressful financial situations among many producers in the region. On the cattle side, prices increased over the reporting period, largely seasonally, and beef production was higher than a year ago.”

* Twelfth District- San Francisco– “Activity in the agriculture sector picked up over the reporting period. Growing conditions in California and other parts of the District have been bolstered by ample winter rainfall that has partially alleviated the challenges created by sustained drought. A seasonal improvement in domestic demand for timber products somewhat offset weaker foreign demand. However, contacts reported that the elevated dollar continued to weigh down exports for most products. Domestic sales of produce strengthened. Despite weak exports, herd costs fell, reducing losses in that sector. Contacts reported that capital spending plans were focused on productivity enhancements and replacing equipment rather than capacity expansion.”

Keith Good

GOP Proposes SNAP Funding Cut

Categories: Farm Bill /Nutrition

Pete Kasperowicz reported today at The Washington Examiner Online that, “House Republicans are looking to push through a Department of Agriculture spending bill this year that would cut the federal food stamp program by $1.2 billion compared to current year funding.

“The House Appropriations Committee released legislation Tuesday that provides $79.7 billion for the Supplemental Nutrition Assistance Program, or SNAP.”

The article noted that, “In March, USDA noted that compared to two years ago, there are 2 million fewer people using SNAP, informally known as the food stamp program.”

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GMO Acres Down 1% From Record, While Monsanto Prefers Federal Law Over State on Labeling

Categories: Biotech

Bloomberg writer Jack Kaskey reported today that, “Plantings of genetically modified crops fell for the first time last year as a commodity slump did what decades of activism couldn’t: slow the spread of biotech foods.

“About 179.7 million hectares (444 million acres) of so-called GMO crops were grown last year, down 1 percent from a record in 2014, the International Service for the Acquisition of Agri-Biotech Applications said in a report Wednesday. North America led the decline.

Low commodity prices prompted U.S. farmers to plant less corn and cotton, two of the most frequently engineered crops. Biotech plantings fell 3 percent in the U.S., the largest market for GMO seeds, which are produced by companies such as Monsanto Co. Cultivation also declined in Canada and Europe, where some nations opted to ban the planting of such crops last year.”

Today’s article added that, “Aside from low commodity prices, which have cut U.S. farmer incomes in half, biotech plantings also face challenges from a rapidly growing organic food industry and a Vermont food law that will require labeling products that contain GMOs starting in July.”

Andrew Pollack noted in today’s New York Times that, “With Vermont now set to require labeling of foods containing genetically modified crops, some big food companies like Campbell, General Mills and Mars have said they will start labeling all their foods nationwide. Del Monte Foods went even further, saying it would eliminate ingredients from genetically modified crops in many of its products.”

Meanwhile, Bloomberg writers Jen Skerritt and Alan Bjerga reported yesterday that, “Monsanto Co., the world’s largest seed company, says it would rather have mandatory federal labeling standards for genetically modified organisms instead of a patchwork of state rules that it says will raise food costs and disrupt trade.

“‘I think a federal standard would be the right path to bring that certainty for consumers and certainty for food companies,’ Jesus Madrazo, global corporate engagement lead for Monsanto, said in an interview at an industry conference in Winnipeg, Manitoba. ‘We need to strive for a reasonable approach that provides consumers what they need, but also doesn’t increase the cost of food or disruption on trade.'”

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Proposed Rule for Organic Livestock and Poultry Practices

Categories: Organic Farming

Kelsey Gee reported yesterday at The Wall Street Journal Online that, “The government Thursday unveiled stricter federal rules governing organic livestock and poultry farmers, capping years of industry fighting about the proper ways to raise chickens, pigs and other animals.

“The U.S. Department of Agriculture’s proposed regulations set requirements for animals’ space and ban certain rearing practices.”

Ms. Gee explained that, “The proposed rules lay out for the first time minimum indoor and outdoor space requirements for organic chickens, with many egg-laying hens needing the equivalent of 2 square feet per bird both inside and outside.

“The plan also defines outdoor access, in an attempt to ensure that animals are able to dust-bathe, peck or root in soil, with turkeys, broilers and other meat birds allotted a square foot of space for every 5 pounds. Some organic producers and consumer groups complain of farmers that provide only covered porches, attached to large, enclosed sheds, for outdoor access.

“The new requirements also bar practices such as debeaking poultry and docking cattle and hog tails, both used in conventional agriculture.”

AP writer Mary Clare Jalonick reported yesterday that, “In addition to clean water and direct access to sun and shade, the rules would require producers to design facilities to encourage all birds to go outside on a daily basis. The outdoor areas would have to have ‘suitable enrichment’ to entice birds to go outside, [Miles McEvoy, the head of USDA’s organic program] said.”

And Reuters writer Tom Polansek reported yesterday that, “The new rules would increase the cost of producing one dozen organic eggs by 3.6 percent, the USDA said. The nation produced about 166 million dozen organic eggs in 2014, according to the agency.

“Only about 36 percent of organic egg operations provide at least 2 square feet per bird of outdoor space, according to a survey cited by the USDA.

“And at least 50 percent of organic egg production comes from operations that exclusively use roofed enclosures, known as porches, to provide outdoor access to hens, according to the agency’s Agricultural Marketing Service. The porches have solid floors and no access to soil. Fresh air enters the porches through screens or netting.”

Mr. Polansek added that, “The egg industry has undergone a major shift toward cage-free production.”

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AgriTalk Transcript: Sen. Ag. Committee Chairman Roberts Discusses GMO Labeling

Categories: Biotech

Senate Ag Committee Chairman Pat Roberts (R., Kan.) was a guest on today’s AgriTalk radio program with Mike Adams, where in part, the conversation focused on GMO labeling issues.

Below is an unofficial FarmPolicy.com transcript of the AgriTalk discussion that focused on labeling (audio replay here (MP3- 7:00)):

Mike Adams: All right. Let’s get an update. Where do you stand on a GMO labeling bill? Are you and Senator Stabenow any closer to some kind of a compromise?

Chairman Roberts: Well, we’re trying to work it out. I have said for, you know, quite a few days after we failed to get cloture –that means we failed to get enough votes to even consider a bill that I put on the floor, which was a little different from the markup we had in the committee. We passed that bill 14-6, but there were several people that made some suggestions, my colleagues from the other side of the aisle, which we always like to honor that in the Ag Committee. We like to work in a bipartisan manner and usually we do, but that bill failed. And so, well, the bill didn’t fail. We just didn’t even get to consider it because of the 60 vote rule and all that mess that we get into here in the Senate, but that was very unfortunate.

We should have considered the bill, opened it up to amendment. We had Senator Merkley from Oregon who has really talked a lot about this over and over and over again [see Senate floor transcripts from March 2, March 9, March 10 and March 14] and he has a bill. We offered him a vote. He didn’t take it. Senator Stabenow was supposed to come with her version. We didn’t see it, and then when we came to the cloture vote, we lost that, but we’re going to try again. Our staffs met last night. I think that Senator Stabenow will be–I hope she will be doing this–show the bill. Let’s get some sunshine on her version, but right now, I’m opposed to mandating labels and with not enough time and certainly not enough options for the food industry to comply.

And let me point out, time is fleeting here. You know, time’s running out. We got that Vermont law taking effect in July. They have a labeling law. It’s interesting to note they exempted a lot of their home state products, and there’s 31 states that are considering this. This is going to be a mess with regards to our food industry and our farm to fork system that everybody is not aware of, but they sure take advantage of it. So this is a tough fight, and agriculture biotechnology is involved whether we continue that and certainly any sugarbeet grower or any corn grower or any soybean grower has to stop and figure out maybe demand for their product or who they’ve been selling to will stop selling and–or stop buying. And so, this is a very big issue. I would label this issue as probably one of the top issues we’ve considered in the last 25 years.

Adams: Already food companies are now saying they’re going to start labeling— have to–to protect themselves because their products could wind up in Vermont, and they would be subject to fines there. So how close are you? I mean, can this…

Roberts:  Yeah. $1,000 a day.

Adams: Yeah. I mean, do you see this getting worked out anytime soon? Do you feel optimistic? Have you made that much progress, or is there any chance even getting on the schedule the way things are right now in a presidential election year?

Roberts: Well, that’s a good point. There is a–oh, there is, I think, peddled around just –I hope it’s a rumor –that because of the election situation that some of the folks on the other side of the aisle that we’ve always worked with are just going to rope-a-dope this issue. That would do great damage to agriculture. I hope that’s not the case. I don’t think that’s the case. So we’re still working on it. It’s a tough issue, but I always say the farmer would never put the seed in the ground if he didn’t expect it to have a good crop.

So we’ll take that optimism that farmers always have, and we’ll keep working at it. I hope that Senator Stabenow can fill in the blanks on her new bill, and then most importantly, we, you know, can we get 60 votes for it on both sides of the aisle? And I think that our growers have to be involved. They have to see what this is because this could shut, as I say, it could shut down with regards to everybody that buys their crop.

Adams: What changed? It seemed like coming out of committee, there was a feeling, “Okay. The other–the Democrats maybe didn’t like that,” but they were saying, “Well, we’ll get the change done so we can move on with this.” But then something–it all broke down. Now, what broke down, and how do we fix that?

Roberts: Well, you got to–we inherited this challenge from Europe and about 25, 30 years ago. All of agriculture should have stepped up, and I’m talking about everybody involved–the food companies, the processors, the manufacturers, and obviously our farmers–but we have a whole generation of folks that somehow believe that GMO is not safe. We had a hearing months ago. We invited the EPA, USDA, and the FDA–all of those agencies–to come up. The best scientists that we got. And the bottom line that I asked, “Is our food safe?” Answer, “Yes.” “Are GMOs safe?” The answer, “Yes.” So this isn’t a health problem. This isn’t a safety problem. This is all about market share. This is all about certain sections in various advocacy groups who raise problems with GMO products, but basically they just want more share of the market. Now that’s pretty harsh on my part, but that’s the way I feel about it. And if this agriculture committee, the Senate Agriculture Committee, proved–and the House Ag Committee will do the same. They already passed a bill over in the House that our food is safe. There’s no human health problem. I think it’s market share, and that’s a sad state of affairs. We’re trying to educate the public as best we can.

I think the difference in the bills are that we prefer a more voluntary approach with more options for the food industry, especially the little guys or the small guys, and that we would have a longer period of time, and we would have an education effort. I think the Democrats prefer a mandatory system, much shorter time frame, and much fewer options. And let’s don’t forget that we have to preempt. We have to preempt Vermont  and any other state that’s going to do this, or you’re going to have a hodgepodge and shut down the food industry, and as I say, the historic farm to fork delivery system that we all take for granted.

Adams: Okay.

Roberts: It’s a tough issue.

Adams: Mr. Chairman, thanks. But nothing pending? Nothing about to happen on this right now?

Roberts: Well, I’ve got–I’ve got the same bill I have. I don’t know.

Adams: Okay.

Roberts: That seemed, you know, that was going away from the bill. It got 14-6. I think if enough pressure is put on those folks about 10-15 Democrats who also represent agriculture, that’d be the best thing we could do.

Adams: All right. Chairman Roberts, thank you very much. I look forward to seeing what happens with this. Thank you.

Roberts:  You bet. Thanks.

Wall Street Journal Info Graphic on GMOs

Categories: Biotech

The print edition of today’s Wall Street Journal included an interesting info graphic regarding GMOs- “What’s at Stake for U.S. GMOs?”

The item stated that, “Big food makers are bowing to a small state– Vermont – which is requiring many foods sold in the state to bear labels if they contain genetically modified organisms. GMOs include crops whose genes have been altered to imbue resistance to herbicides or crop-chewing pests, and have become ubiquitous on farm fields- and in many food products.”

The Journal item added that, “The bulk of the U.S. corn crop is made into feed for poultry and livestock as well as ethanol for gasoline, with just a small fraction used to make consumer food products. Also, nearly one-third of corn converted into ethanol yields an animal-feed byproduct known as distillers dried grains”

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Ag Economy: “There Definitely Could be Some Pain”

Gregory Meyer reported today at The Financial Times Online that, “US corn bins are well stocked, grain markets are in a funk and economists warn of struggles ahead for farmers.

“But Kent Kleinschmidt of central Illinois intends to sow corn on half his 1,200-acre farm this spring, same as always. ‘It’s not like anybody’s in panic mode,’ he says.

“His sangfroid is common among farmers in the Midwest, and bodes bearishly for the world’s most widely grown grain. US farmers in 2016 have indicated plans to plant the third most corn on record despite low prices.”

The FT article noted that, “The approaching caravan of tractors repeats a dynamic seen across commodities markets. Despite a collapse in prices, miners, oil companies and farmers have been slow to restrain output, prolonging their pain.

“When corn doubled between 2006-12, topping $8 a bushel at their peak, farmers banked cash. Prices are now about $3.50.

“‘At the end of this year, the financial reserves built up in that profitable period will be pretty much gone. Then we’ll being facing some really tough decisions,’ says Gary Schnitkey, a professor of farm management at the University of Illinois.”

With respect to production costs, Mr. Meyer pointed out that, “In Minnesota, total expenses for growing corn dropped 8 per cent between 2013-15 to about $750 per acre, according to the Center for Farm Financial Management at the University of Minnesota. On highly productive acreage in central Illinois, total non-land costs for corn will be $550 per acre this year, down from $615 in 2013, according to Prof Schnitkey.”

Today’s article also stated that, “Stephen Gabriel, chief economist at the Farm Credit Administration, which oversees the credit system, says farm lending institutions remained ‘very well capitalised.’

“For farmers, ‘input prices will drop; they’ll start working more efficiently.’ Mr Gabriel says. ‘But in the meantime there definitely could be some pain. We’re expecting to see some credit issues arise over the next few years in the grain sector in the Midwest.'”

Mr. Meyer also pointed out that, “Farmers are planting corn amid a darkening financial picture. In central Illinois, home to some of the best soil on earth, Prof Schnitkey forecast a net loss after land costs of $36 per acre from corn this year with corn prices higher than they are today.”

Meanwhile, Jacob Bunge, in an article today at The Wall Street Journal Online, quoted Cargill chairman and CEO David MacLennan as saying, “Barring weather events, we don’t anticipate a near-term improvement in market conditions for agriculture.”

The Journal article pointed out that, “A global surplus of major crops has kept prices low, pushing U.S. farmers’ incomes to the lowest level in more than a decade and forcing them to scrutinize spending on seeds, sprays and tractors, which is posing a challenge for Farm Belt mainstays like DuPont Co., Monsanto Co. and Deere & Co.”