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.
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.
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.”
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.”
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.”
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.'”
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.”
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.
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.
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.
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”
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.”
Bloomberg writer Nick Turner reported yesterday that, “Wal-Mart Stores Inc., the world’s largest retail chain, will sell 100 percent cage-free eggs in the U.S. by 2025, joining an industrywide shift toward a practice that’s seen as more humane.
“As part of the transition, Wal-Mart and its Sam’s Club warehouse chain will require that its egg suppliers adopt United Egg Producers rules or an equivalent set of standards, the retailer said in a statement Tuesday. Compliance will be checked annually by a third party.
“Wal-Mart sells more groceries than anyone else in the U.S., and its decisions typically sway the rest of the industry. The Bentonville, Arkansas-based company has offered cage-free eggs since 2001, though not exclusively.”
Mr. Turner noted that, “The challenge for Wal-Mart is transitioning to cage-free eggs while keeping a lid on prices, something the chain said it can do with the 2025 deadline.”
Recall that other livestock producers are also increasingly listening to consumer demands when it comes to how animal protein is manufactured.
DTN special correspondent Elizabeth Williams reported this week that, “Cautious — that’s what the farmland brokers and rural appraisers termed their mood last week at the spring meeting of the Iowa Realtors Land Institute. It may look like business as usual as planting begins, but beneath the surface, financial stress is building in farm country, Iowa Concern Hotline director Margaret Van Ginkel with Iowa State Extension would add.
“The hotline, established in 1985 during the farm financial crisis, has seen an increase in call volume this spring. ‘Questions concerning tax consequences of selling machinery or land, what if they stop making payments on machinery, worries about whether a farm operation can support two or three generations. The vulnerability is there,’ Van Ginkel said.”
The DTN article explained that, “Iowa is a bellwether state for agricultural stress, given its rapid run-up in farm incomes, land values and cash rents during corn’s 2008-12 glory years. Some lenders think the commodity fall will be harder here. One sign is that Land Institute members think the state’s farmland prices tumbled 5% on average over the last six months, according to its March 1 survey. Since 2015, Iowa land values have fallen 8.7% across the state with top-quality cropland decreasing from $9,516 per acre to $9,146, the survey found.”
Ms. Williams also noted that, “Cash rents have softened a little, Iowa farm managers and rural appraisers reported at their statewide meeting, but rents are still strong in some areas. Waverly banker Willemssen said cash rents in northeast Iowa are still in the $300- to $400-per-acre range.”
Meanwhile, a news release from North Dakota State University this week stated that, “North Dakota land values declined for the second consecutive year in 2015. This follows an 11-year period (2003 to 2014) in which cropland values averaged an annual increase of 15 percent, the strongest sustained run-up in cropland values in the past 100 years.”
The release added that, “Based on the survey, North Dakota average cropland values declined about 4 percent during 2015. Swenson noted that a report by the North Dakota Chapter of the American Society of Farm Managers and Rural Appraisers indicated a greater decline, 9 percent, for 2015.”
With respect to the implications of the tightening financial outlook, Reuters writers Tom Polansek and Karl Plume reported this week that, “North Dakota farmer Randy Thompson plans to apply 30 percent less nitrogen fertilizer to his corn this year to save money in the face of crashing crop prices.
“In Minnesota, Andy Pulk is trucking crop nutrients to his farm from 350 miles (563.3 km) away because he found a better price than his local cooperative could offer. He has also halted purchases of machinery.”
The article noted that, “With more acres than ever before likely to be planted with soybeans and corn in the U.S. Midwest this year, companies including seed maker Monsanto Co and fertilizer seller CF Industries Holdings might have expected a windfall for earnings.
“But with grain prices near five-year lows and farm incomes at their lowest levels since 2002, growers are tightening their belts by reducing spending on everything from fertilizer to seeds to chemicals.”
And, Jacob Bunge and Lisa Beilfuss reported today at The Wall Street Journal Online that, “Monsanto said profit tumbled in its latest quarter as the St. Louis-based maker of Roundup weed killer continues to grapple with an unfavorable agricultural market.
“The company is struggling with a sharp downturn in the U.S. farm economy and pressures in overseas markets. U.S. farmers’ incomes are projected to fall to their lowest level since 2002 after grain and oilseed prices sagged for three straight years due to a string of bumper harvests. The strength of the U.S. dollar has meanwhile made Monsanto’s products more expensive overseas.”
The Journal writers pointed out that, “In its latest quarter, Monsanto’s revenue from seeds and genomics, its biggest business, fell 8.6% as sales of most seed types declined. Sales in its agricultural productivity segment slid 30% to $715 million.”
Christopher Doering reported on the front page of the business section in yesterday’s Des Moines Register that, “More food companies are voluntarily disclosing if their products contain genetically modified ingredients, the latest sign that consumer groups may be gaining ground in their campaign to get a nationwide mandatory label.
“In just the past few weeks, candy-maker Mars, General Mills, Kellogg and ConAgra all announced they would be voluntarily labeling their products. They joined Campbell Soup, which became the first major food company to disclose the presence of genetically engineered organisms in January.
“Food executives say they have no choice but to include the ingredients on labels, citing growing pressure from consumers to know what’s in their food, a failure by Congress to adopt a nationwide standard, and the fact that Vermont on July 1 becomes the first state to require labeling.”
Mr. Doering explained that, “Companies that overhaul their label now, rather than wait, not only benefit by earning the trust of their customers, but they can potentially have a larger influence over how future state labels will look, food companies said.”
The Register article added that, “Sen. Chuck Grassley, R-Iowa, said he was not optimistic Congress could reach a deal before Vermont’s law takes effect this summer.”
Secretary of Agriculture Tom Vilsack has also recently expressed his views on the labeling issue, and Politico’s Morning Agriculture indicated today that, “After the failed effort to limit debate on Senate Agriculture Committee Chairman Pat Roberts’ voluntary GMO labeling bill last month, the Kansas Republican and other supporters vowed to try again when they returned from the two-week spring break. Now that they’re back, can middle ground be found to lure enough farm-state Democrats and states’-rights Republicans to vote for the bill? Talks on how to move forward could start this week, especially given that there are fewer than 90 days before Vermont’s mandatory GMO labeling law takes effect.”
Nathan Kauffman, the Assistant Vice President and Omaha Branch Executive at the Federal Reserve Bank of Kansas City, indicated in a recent article (“Mounting Pressure in the U.S. Farm Sector“) that, “U.S. farm income has continued to decline, and is expected to remain low as planting season approaches across the country. The USDA projects real net farm income to be slightly less than a year ago; that projection would mark the second-lowest farm income total in more than 30 years (Chart 1). Prolonged weakness in the farm sector primarily has been driven by several consecutive years of low crop prices and persistently elevated input costs, while recent weakness in the livestock sector also has been a factor.”
The Fed update pointed out that, “The need for financing, and the potential for future financial stress, has continued to increase throughout U.S. farm country. Loan demand in the Tenth District is expected to increase again in the first quarter of 2016, which would be the third consecutive year in which lending needs in the farm sector increased relative to the previous year (Chart 3). Similarly, bankers responding to the fourth quarter survey indicated they expect loan renewals and extensions to continue to accelerate. Conversely, the rate at which loans are repaid at agricultural banks in the District was expected to soften further.
“Persistently strong loan demand at agricultural banks has been coupled with reports of increasing use of USDA Farm Loan Programs through the Farm Service Agency (FSA). From 2013 to 2015, FSA loan volumes increased more than 40 percent (Chart 4).”
The Fed update also noted that, “Despite strong loan demand and an increase in the federal funds target rate in December, interest rates on most farm loans have remained historically low. In fact, interest expenses for U.S. corn producers accounted for only 9 cents per bushel of production in 2014, the latest year for which data are currently available.”
Meanwhile, a recent update by Kevin Patrick, Ryan Kuhns, and Allison Borchers at Choices Online (“Recent Trends in U.S. Farm Income, Wealth, and Financial Health“) stated that, “The continued drop in farm sector income is expected to place downward pressure on farm asset values, which had appreciated during the previous several years. The resulting drop in liquidity from multiple years of lower income is also expected to increase the need for sector borrowing relative to the 2009-2013 period. As a result, the USDA predicts a decline in sector equity and an increase in leverage, which signals the potential building of financial stress within the farm sector. A portion of U.S. farm businesses are highly leveraged and are at increased risk of default. While measures of financial health are worsening relative to the profitable 2009-2013 period, they remain better than historic averages.”
And Rick Barrett reported in yesterday’s Milwaukee Journal Sentinel that, “Carrie Mess, like most dairy farmers, is losing money every time the cows are milked on her farm near Watertown.
“As farmers gear up for spring planting, those who sell crops on the commodities markets stand to lose buckets of money from low prices that are beyond their control.
“Simply put, what many farmers are paid for milk, grain or livestock now isn’t enough to cover their expenses. They’re taking out loans and tapping savings to remain in business, going to work every day knowing that it’s costing them money.”
With respect to other potential impacts of a slumping U.S. ag economy, the AP reported today that, “Kansas farm co-ops are feeling pressure to merge as shrinking farm incomes have producers looking for ways to cut their costs.
“In about six weeks, Farmers Cooperative Elevator in Garden Plain will vote on whether to merge with co-ops in Anthony and Kiowa. Andale Farmers Co-op voted in December to merge with Kanza Co-op, a large operation based in the Pratt County town of Iuka.”
Robert Pear reported in Saturday’s New York Times that, “Hundreds of thousands of people could soon lose food stamps as states reimpose time limits and work requirements that were suspended in recent years because of high unemployment, state officials and advocates for the poor said Friday.
“Liberal groups said that many unemployed childless adults with low incomes could be cut off, starting this month, as a result of the time limits, which date back to the 1996 welfare law.
“About 45 million people receive benefits in the food stamp program, now known as the Supplemental Nutrition Assistance Program, or SNAP. The Center on Budget and Policy Priorities, a liberal-leaning research and advocacy group, estimates that 500,000 to a million people will lose benefits this year.”
The Times article noted that, “‘Able-bodied adults without dependents are eligible for SNAP for only three months in any three-year period unless they are working or participating in qualifying education and training activities,’ said Kevin W. Concannon, the under secretary of agriculture in charge of food assistance programs.
“During and after the latest recession, which ended in mid-2009, most states qualified for waivers from the time limits. But the time limits will be in effect this year in more than 40 states. In 22 states, the limits are coming back for the first time since the recession.
“As the economy improves, the Food and Nutrition Service said, many places no longer qualify for time limit waivers.”
Mr. Pear indicated that, “The people at risk of losing food aid are 18 to 49 years old. People under 18 or over 49, pregnant women and people who are medically certified as ‘unfit for employment,’ because of a disability, are generally exempt from the time limits.”
Saturday’s article added that, “Participation in the SNAP program more than doubled from 2003 to 2012. In December of last year, 45.2 million people were receiving SNAP benefits. The number has fallen by 2.6 million since reaching a peak in December 2012.”
A news release yesterday from the USDA’s National Agricultural Statistics Service (NASS) stated that, “U.S. corn growers expect to plant 93.6 million acres to corn this year, according to the Prospective Plantings report released today by [NASS]. This is the first increase in corn planted acreage since 2012 and, if realized, will be the third largest corn acreage since 1944.
“Driven by the expectations of higher returns in 2016 compared with other crops, corn growers in 41 of the 48 contiguous states expect to either maintain or increase the number of acres they plant to corn. Growers in Illinois, Iowa, Kansas, and North Dakota expect to increase their corn acreage by 400,000 or more acres in 2016.
“In contrast, U.S. soybean growers expect to reverse the recent trends, which saw several record-high years. In 2016, growers expect to plant 82.2 million acres to soybeans, a less than one percent decrease from 2015.”
Jesse Newman reported yesterday at The Wall Street Journal Online that, “Struggling U.S. farmers plan this year to sow their fields with extra corn in a high-stakes gamble to counter sliding prices by selling even more of the grain…Many domestic farmers are grappling with the fallout from three years of declining crop prices and trying to grow their way out of the industry’s slump, even as farm income is expected to drop for a third year, with the forecast $54.8 billion less than half the record in 2013.”
The Journal article noted that, “Corn prices tumbled to a nearly three-month low, dropping 4.2% to $3.51 ½ a bushel.”
Ms. Newman also pointed out that, “The agency’s quarterly report on U.S. grain inventory said corn stockpiles on March 1 totaled 7.81 billion bushels, up from 7.75 billion bushels on the same date last year, and the highest in nearly three decades.”
Christopher Doering reported in today’s Des Moines Register that, “Agriculture remains mired in a stubbornly long period of low commodity prices that has left some producers struggling to cover their costs and forced many to cut back on inputs such as seed and fertilizer to save money. Other farmers have restructured loans or refinanced them against other equity resources so they have enough cash to operate.”
Iowa State University agricultural economist Chad Hart noted yesterday that, “Given trend yields of 168 bushels per acre for corn and 46.7 bushels per acre for soybeans, the projected acreage points to another round of massive crops. Corn production would reach 14.38 billion bushels, which would be another record corn crop. Soybean production would approach 3.8 billion bushels, which would be the 3rd largest soybean crop in history. And for markets already dealing with large supplies, these prospective plantings do not help. So the markets will be looking for Mother Nature to slow the supply train down.”
University of Illinois agricultural economist Darrel Good spoke about the USDA reports in a radio interview yesterday:
— Todd E. Gleason (@commodityweek) March 31, 2016
And, Dr. Good and Scott Irwin, also of the University of Illinois, held a detailed webinar looking into the yesterday’s USDA reports this morning.
Meanwhile, the Associated Press reported yesterday that, “Inflation-adjusted farm incomes in Minnesota fell to their lowest point in 20 years in 2015 despite record crop yields and this year’s outlook is also grim, according to an annual analysis released Thursday.
“A major factor was the continued decline in commodity prices, the report from the Minnesota State Colleges and Universities system and University of Minnesota Extension said. Unlike 2014, when livestock producers had a very good year, both crop and livestock farms struggled last year.”