FarmPolicy

January 28, 2015

Farm Bill; Trade; Ag Economy; Regulations; and, Political Note- Wednesday

Farm Bill Issues

DTN Ag Policy Editor Chris Clayton reported yesterday that, “Corn farmers may not be looking as closely at the potential government payment for corn this year as some observers might think.

“Despite estimates of $70-per-acre payments for corn farmers in as many as 16 states for this year’s corn crop, the Congressional Budget Office released a new projection Monday showing only 37.5% of corn acreage will enroll in the new Agricultural Risk Coverage-County program.

The CBO forecast appears to run counter to the argument from Midwest agricultural economists that the Agricultural Risk Coverage-County program is the better option for corn farmers.”

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Policy; Ag Economy; Trade; Biotech; and, Regulations

Policy Issues

Jonathan Weisman reported in today’s New York Times that, “The federal budget deficit will continue to inch downward through next year, but even with the economy on an upward trajectory, the government’s red ink will begin to rise in 2017 and expand with an aging population, the Congressional Budget Office said Monday.”

Yesterday’s CBO report indicated that, “Mandatory spending for agricultural programs totaled $19 billion in 2014. The relatively high spending last year included significant payments for livestock disaster assistance for drought-related losses since 2012 and crop insurance payments for crop losses in 2013. Spending for agricultural support is projected to average $15 billion per year between 2015 and 2025 based on the assumption (specified in the Deficit Control Act) that the current programs that are scheduled to expire during that period will be extended” (at page 72).

“Technical updates led CBO to boost its projections of outlays for several other mandatory programs, by $4 billion for 2015 and by $48 billion over the 2015–2024 period. CBO now projects that spending for the agricultural programs of the Commodity Credit Corporation will be $18 billion higher over the 2015–2024 period than it projected in the August baseline, primarily because of lower estimated crop prices and higher estimates of spending for livestock disaster assistance” (at page 113).

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Policy Issues; Ag Economy; Trade; and, Biofuels

Policy Issues

A recent update at the Red River Farm Network Online indicated that, “Minnesota Congressman Collin Peterson, who is the ranking member on the House Agriculture Committee, says the heavy lifting is done for the 2014 farm bill. ‘We’ve got everybody on board now with a position that it is not going to be reopened so now the issue is making sure it is implemented correctly.’ While it won’t be reopened, Peterson says the farm bill will likely be subject to criticism once the costs become known. ‘I think people are going to be surprised at how much this is going to end up costing, which is what I was afraid of at the time we passed the bill,’ said Peterson, ‘For example, Iowa and, probably, Minnesota look like they’re going to sign up for the ARC so you’re going to have corn farmers that were getting $20 an acre in direct payments that are going to get $90 an acre and that will cause a commotion.’”

The full interview with RRFN’s Mike Hergert and Rep. Peterson is available here (MP3- 8:00).

The RRFN update also noted that, “South Dakota Senator John Thune was concerned about retaining the target price, which is now known as the reference price, program when the farm bill was written. ‘With commodity prices now falling, I think people may start farming for the farm program instead the market,’ Thune told RRFN [MP3], ‘I was concerned about that and I think that will increase dramatically the cost of the farm bill.’ Thune worries that may create the temptation to reopen the farm bill and ‘I’m very concerned about that.’”

And recall that late last week, Mike Hergert interviewed House Ag Committee Chairman Mike Conaway (R., Tex.), who noted in part that, “We’ll take an approach that says you want to spend $80 billion a year on food stamps? Let’s take a look at that and let’s see what works, what doesn’t work, and let’s understand the program. Let’s reevaluate how that program is considered successful by looking at how quickly folks can get off the program, back on their own two feet, taking care of their own families, as opposed to the current model that says, you know, it’s successful the longer you stay on it. So we’ll be going through that.”

Mr. Hergert’s full interview with Chairman Conaway is available here (MP3- 6:00); see also this photo from the House Ag Committee’s Instagram webpage with a caption that noted: “I had a blast talking with Mike Hergert with the #RedRiver #Farm Network. Ag reporters like Mike who ask good questions & get the facts right provide a service to our democracy & specifically to our #farmers & #ranchers. The farmers in #NorthDakota & #Minnesota are lucky to have Mike working for them

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Trade; Policy Issues; Ag Economy; Biofuels; Regulations; and, Biotech

Trade

Vicki Needham and Mike Lillis reported yesterday at The Hill Online that, “A trade war is erupting between Democrats and the Obama administration over efforts to pass ‘fast-track’ legislation that would smooth the way for two major trade deals.

Dozens of House Democrats are expressing deep reservations about the White House’s trade agenda, putting themselves on a collision course with President Obama over concerns that the deals will benefit big business at the expense of U.S. workers.”

The article noted that, “Speaker John Boehner (R-Ohio) said earlier this month that the legislation will need at least 50 Democratic votes since there will be some GOP opposition.”

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Video: House Agriculture Committee Organizational Meeting for 114th Congress

Categories: Uncategorized

From the House Ag Committee- Today, members of the House Committee on Agriculture met to formally organize and adopt the Committee’s rules for the 114th Congress.

“We have a very talented team of proven leaders whose impressive and diverse backgrounds will be a great asset in the Committee’s work this Congress,” said Chairman K. Michael Conaway (R., Tex.), who began his first term as Chairman this month. “I look forward to working with my colleagues to promote a strong production agriculture system and maintain a vibrant rural America.”

The Chairman’s full statement can be viewed here. Supporting documents can be viewed here.

See also this House Ag Committee tweet from today:

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Video: Crop Insurance Must be Viable

Categories: Farm Bill

From National Crop Insurance Services- Private companies are integral to crop insurance’s future because they shoulder risk that would otherwise be borne by taxpayers and because they maintain the system used to efficiently provide assistance to farm families following disasters.

However if the business does not remain viable, private-sector participation could wane, which would weaken America’s farm policy, according to a new video released today by National Crop Insurance Services (NCIS).

“Key to this viability is a reasonable rate of return for insurers on the infrastructure they built to deliver farmers’ most important risk management tool,” the video explained. “An adequate return on investment enables insurance providers to routinely reinvest in technology, infrastructure efficiency, and service improvements for farmers and ranchers. Unfortunately, adequate returns don’t always happen.”

Among the factors that have made crop insurance less viable in recent years:

· Weather disasters and crop price volatility since 2011 have resulted in record loss payments from crop insurance providers;
· $1.2 billion a year in federal funding was cut in 2008 and 2011; and
· Farm policy opponents are targeting crop insurance for further funding reductions.

The 2014 Farm Bill took steps towards improving crop insurance by expanding coverage, by bringing new customers into the system, and by providing new tools to continually minimize waste, fraud, and abuse.

Tom Zacharias, president of NCIS, applauded Congress’ actions and said it will be important to continue making improvements by reducing regulatory burdens, avoiding further funding cuts, and keeping crop insurance actuarially sound. And he believes that all Americans have a stake in the future of crop insurance.
“After all, not everyone farms, but everyone eats. So everyone depends on a strong farm policy,” the video concluded.

The NCIS video, which can be viewed here, is the last in a three-part series dedicated to the key policy attributes essential to crop insurance’s continued success. Previous pieces examined the importance of making crop insurance widely available and affordable to farmers.

Agricultural Economy; Trade; Policy Issues; Biotech; and, Regulations

Agricultural Economy

David Kesmodel reported in today’s Wall Street Journal that, “While many U.S. farmers grappled with lower grain prices last year, Mike Baker had an ace up his sleeve: sorghum.

“The grain, long overshadowed by more-plentiful crops, suddenly is in high demand [related graph] thanks to China’s soaring appetite for animal feed and a shift in its buying preferences away from foreign corn. A 15-fold increase in imports of U.S. sorghum by China over the past year has pushed its price above corn’s in parts of the U.S., a rarity that highlights how policy shifts by Beijing can have a far-reaching impact on the global grain trade.”

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Agricultural Economy; Trade; and, Policy Issues

Agricultural Economy

Marcia Zarley Taylor reported yesterday at DTN that, “Don’t expect much farmer economizing in production costs in 2015, but it’s not for lack of trying. Yes, growers can nickel-and-dime their remaining grain and soybean expenses, but most cannot recover the hundreds of dollars of gross income per acre that have vanished since 2012.

“A 2,500-acre producer from northeast Iowa has seen roughly $1.45 million ‘walk out the door’ since January 2013, just in reduced corn prices. ‘It’s hard to recover that much in lower production costs,’ he told DTN.”

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Policy; Trade (Cuba); Ag Economy; and, Regulations

Policy Issues

Michael Moss reported on the front page of today’s New York Times that, “At a remote research center on the Nebraska plains, scientists are using surgery and breeding techniques to re-engineer the farm animal to fit the needs of the 21st-century meat industry. The potential benefits are huge: animals that produce more offspring, yield more meat and cost less to raise.

“There are, however, some complications.

Pigs are having many more piglets — up to 14, instead of the usual eight — but hundreds of those newborns, too frail or crowded to move, are being crushed each year when their mothers roll over. Cows, which normally bear one calf at a time, have been retooled to have twins and triplets, which often emerge weakened or deformed, dying in such numbers that even meat producers have been repulsed.”

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Policy; Ag Economy; Trade (Cuba); Regulations; and, Biofuels

Policy Issues

Evan Halper reported on the front page of yesterday’s Los Angeles Times that, “The political clash over climate change has entered new territory that does not involve a massive oil pipeline or a subsidy for renewable energy, but a quaint federal chart that tries to nudge Americans toward a healthy diet.

“The food pyramid, that 3-decade-old backbone of grade-school nutrition lessons, has become a test case of how far the Obama administration is willing to push its global warming agenda.

“The unexpected debate began with a suggestion by a prominent panel of government scientists: The food pyramid — recently refashioned in the shape of a dinner plate — could be reworked to consider the heavy carbon impact of raising animals for meat, they said. A growing body of research has found that meat animals, and cows, in particular, with their belching of greenhouse gases, trampling of the landscape and need for massive amounts of water, are a major factor in global warming.”

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Cuba; Ag Economy; Policy Issues; Immigration; Biofuels; and, Regulations

Cuba- Trade Issues

Karen DeYoung reported on the front page of today’s Washington Post that, “The Obama administration announced new rules easing travel and trade restrictions against Cuba on Thursday, moving quickly to implement steps the president ordered less than a month ago when he said the United States would reestablish diplomatic relations with the island’s communist government.

“Freed from cumbersome requirements to obtain a Treasury Department license, individual Americans will be able to travel to Cuba provided they say the trip is intended to serve religious, educational or other approved purposes under the still-standing U.S. embargo. When they return, they can bring up to $400 in Cuban goods, including $100 worth of alcohol and tobacco.”

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Policy Issues; Agricultural Economy; Immigration; and, Regulations

Policy Issues

Todd Neeley reported yesterday at DTN that, “USDA is changing the way it funds conservation.

“Calling it a ‘historic moment’ in conservation, U.S. Secretary of Agriculture Tom Vilsack Wednesday pointed to the way $372.5 million in funding would be spent as something unlike anything USDA has undertaken. Funds approved for some 115 conservation projects in all 50 states are aimed at both national- and local-scale projects. Each project includes on average 11 partners, with some larger projects including as many as 46 partners.

“The announcement comes at a time when Des Moines Water Works in Iowa announced it was suing three nearby counties for ongoing nutrient problems in the city’s drinking water system. The DMWW has claimed those counties have not done enough to cut back nutrient runoff, costing the city’s water ratepayers some $7,000 a day to filter the water.”

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Federal Reserve Beige Book: Observations on the Ag Economy- January ’15

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- “District agribusiness contacts reported seasonal slowing since our previous Beige Book, although business conditions are better than last year at this time. Several farmers stated that planting and harvesting were finished for the year, although harvesting completion dates were later than usual. Farmers in South Carolina and Virginia reported no change in input prices in the past six weeks and said that output prices were generally unchanged.”

* Sixth District- Atlanta- “While the District experienced varying degrees of drought ranging from abnormally dry conditions to a few areas of severe drought, some areas of Alabama, Georgia, and the Florida panhandle saw some moderate improvement in drought conditions. Protein producers that rely on corn for feed reported improved margins because of continuing low corn prices. The most recent cotton and orange crop forecasts were slightly higher than last season’s production.”

* Seventh District- Chicago- “Corn and wheat prices rose during the reporting period, while soybean prices were flat. Wheat prices were up because of drought and cold snaps in areas producing winter wheat and because of limits by the Russian government on exports. The record harvest had created concerns about sufficient crop storage space, but reports indicated that enough space was available. Shipping delays eased too, allowing stocks to move more smoothly to end users. The late extension of beneficial tax deductions will give a boost to after-tax agricultural income in 2014. Low crop prices led farmers to focus on minimizing costs instead of maximizing output in 2015, so that they purchased fewer and lower cost inputs. In addition, rental terms for some cropland were under pressure because farmers would not make enough to cover their costs next year. Ethanol margins compressed with the drop in oil prices. Hog and milk output was higher than expected, leading to further price decreases. Cattle prices were little changed, but became more volatile.”

* Eighth District – St. Louis- “As of late November, about 96 percent of the District winter wheat crop was rated in fair or better condition. On average, 81 percent of the winter wheat crop had emerged across the District. A rate slightly below the 5-year average progress rate for this time of year. The majority of the slowdown was attributed to planting delays in Illinois because of wet weather conditions in October. Year-to-date red meat production in the District was 8.7 percent lower in November 2014 than in the same month last year. This decline was driven primarily by lower production in Illinois, Indiana, and Missouri, which collectively produce around 89 percent of the District’s red meat output.”

* Ninth District- Minneapolis- “Overall agricultural conditions remained mixed since the previous report, with livestock and dairy producers faring better than crop farmers. According to the Minneapolis Fed’s third-quarter (October) survey of agricultural credit conditions, 69 percent of respondents said farm incomes had fallen from a year earlier, while 63 percent reported decreases in capital spending. The fourth quarter outlook was weaker, as 81 percent of lenders expected farm incomes to fall, while 77 percent expected capital spending to decrease from a year earlier. Prices received by farmers in December decreased from a year earlier for corn, soybeans, wheat, hay, and milk; prices increased for cattle, hogs, eggs, and poultry.”

* Tenth District- Kansas City- “Agricultural growing conditions were generally favorable in December, and crop prices rose modestly. Although some western areas of Kansas and Oklahoma remained dry, scattered rains improved soil moisture in many parts of the District and the winter wheat crop was rated in mostly good condition. Wheat prices increased modestly amid global supply concerns due to limits on Russian grain exports and lower production estimates in Australia. Corn and soybean prices also rose modestly since the last survey period due, in part, to a slight downward revision in 2014 U.S. production estimates. In the livestock sector, weaker export demand for pork placed downward pressure on hog prices. High feeder cattle prices prompted some producers to feed cattle to heavier weights to boost profit margins.”

* Eleventh District- Dallas- “Agricultural conditions improved slightly, but large portions of the state remain in drought. Harvesting has wrapped up for all row crops, except cotton, which has been slow this year and is nearing completion. Winter wheat has been planted and some areas look good with ample moisture received, while other areas need more rain to yield a decent crop and good grazing conditions. Cattle prices have declined slightly but remain near record highs. Dairy prices are markedly lower due to increased global production.”

* Twelfth District- San Francisco- “Agricultural conditions in the District were mixed during the reporting period. Declines in petroleum prices contributed to reductions in the cost of gas and fertilizer. However, some farmers also faced lower prices for their commodities. In some areas, restaurants purchased fewer vegetables. Dairy farm profits increased significantly over the past year, but milk futures prices declined recently. Uncertainty regarding future water availability in California slowed new plantings of permanent crops.”

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Biotech; Policy Issues; Ag Economy; Regulations; and, Immigration

Biotech

Christian Oliver reported yesterday at The Financial Times Online that, “The EU has sought to resolve years of acrimony over the status of genetically modified crops by giving each of its 28 member states the final say over whether they can be grown within their borders.

“While GM crops are common in America and Asia, they remain divisive in Europe. Brussels has repeatedly insisted that US companies such as Monsanto will not be able to use a transatlantic trade deal under negotiation with Washington to push Europe to buy more GM crops.

At the European Parliament in Strasbourg on Tuesday, lawmakers voted that each national government should be allowed to ban the planting of GM crops, even if they had been declared safe by Brussels. This rare opt-out from Europe’s hallowed single market showed how intractable positions had become.”

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Ag Economy; Policy Issues; Biotech; Immigration; and, Regulations

Agricultural Economy

Gregory Meyer reported yesterday at The Financial Times Online that, “US grain silos are bulging with the most corn on record after last year’s huge harvest, adding to the drag on commodities markets suffering weakness from agriculture to oil.

“Government statisticians counted 11.2bn bushels (285m tonnes) of corn stocks in domestic storage as of December 1, up 7 per cent from a year earlier, the US Department of Agriculture said on Monday. The figure was slightly above a market expectation of 11.123bn bushels and Chicago grain futures fell.

“The US is the world’s biggest producer of corn, used in products from pig feed to ethanol fuel. A record crop of 14.2bn bushels last autumn has served to rebuild low inventories after several years of erratic weather. Ample stocks tend to damp market volatility, as consumers feel comfortable they will not run out of supply.”

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Policy Issues; Ag Economy; Immigration; Biofuels; and, Regulations

Policy Issues

Philip Brasher reported on Friday at Agri-Pulse Online that, “A top lobbyist for food and beverage giant PepsiCo Inc. who was formerly a top aide to Senate Agriculture Chairman Pat Roberts is taking over as the Agriculture Committee’s chief of staff as it prepares to rewrite federal child nutrition policy.

Joel Leftwich, a native of Wellington, Kansas, worked for Roberts, R-Kan., as deputy staff director for the committee before becoming senior director for PepsiCo’s public policy and government affairs team in March 2013.

One of the committee’s main orders of business this year will be to reauthorize the law that sets standards for school meals and the Women, Infants and Children nutrition program. The programs have a broad impact on the food and beverage industry. First lady Michelle Obama has made it a top priority to preserve higher school nutrition standards that USDA imposed under the expiring law, the Healthy, Hunger-Free Kids Act.

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