FarmPolicy

February 22, 2020

Farm Bill Issues, and a Focus on the U.S. Ag Economy

DTN Ag Policy Editor Chris Clayton reported yesterday that, “After seeing USDA’s effort to redefine ‘actively engaged’ rules for farm payments, Sen. Charles Grassley, R-Iowa, is calling on President-elect Barack Obama and Agriculture Secretary nominee Tom Vilsack to better tighten eligibility for farm programs.

“A strong advocate of weaning non-farmers off commodity programs, Grassley said USDA did not make an effort to define how a person proves they provide ‘significant management’ on a farming operation in the payment-limit details USDA posted in the Federal Register on Monday.

“‘I’m disappointed they didn’t do exactly what we set out in the farm bill to do,’ Grassley said Tuesday in a conference call with reporters [MP3 audio replay available here]. ‘They didn’t take the opportunity to then make real changes to payment limit eligibility when they clearly had the instructions from Congress to do that.’”

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Commodity Price Volatility Impacting Producers

Scott Kilman and Roger Thurow reported in today’s Wall Street Journal that, “Benjamin Riensche has just come off two of his best years in farming. But like growers all over the globe, he is in the midst of a more turbulent era of sharply rising and then suddenly falling prices.

“Now the 47-year-old, who grows corn and soybeans across 10,000 acres in Iowa, fears he will incur losses in 2009 that would be his first red ink in 16 years. His revenue is falling, but the costs of seed, fertilizer and machinery have remained high. Mr. Riensche bought most of his supplies months ago, when grain prices were still high. Many of his suppliers are still trying to pass along the higher costs they absorbed in recent years for everything from metal and chemicals to natural gas. To lower his costs, he could idle land, but figures raising a crop at least gives him a chance to benefit if prices move back up, as some predict.

“‘I never thought the stakes could get so big,’ Mr. Riensche says. ‘We’ve gone from the nickel slots to world-class poker.’”

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Focus on Trade

David J. Lynch reported today at the USA Today Online that, “The unstoppable force has stopped.

“With economies in the United States, Europe and Japan slowing simultaneously, the World Bank says that global trade will shrink next year by more than 2%. That will mark the first time in more than a quarter century that the seemingly inexorable tide of globalization will be in retreat.

“‘Trade tends to be extra responsive to changes in income. When the world economy contracts, trade contracts even more rapidly,’ says economic historian Douglas Irwin of Dartmouth College.”

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Farm Bill, Administration Transition, and Ethanol

DTN writer Russ Quinn reported yesterday (link requires subscription) that, “USDA’s proposed change in the definition of an ‘actively engaged’ farmer is a step in the right direction, Sen. Charles Grassley, R-Iowa, said Tuesday in his weekly teleconference with members of the ag media [MP3 replay available here].

USDA released information Friday, Dec. 19, detailing changes in rules on payment limits, income eligibility and active role in the farm under the 2008 farm bill. USDA said the interim final rules would appear in the Federal Register sometime this week, though it did not specify which day. Once the rules are published in the Federal Register, farmers will have 30 days to comment on the new rules.

“Under the new rules, individual farmers and entities must be ‘actively engaged’ in a farm to collect payments and benefits. To be actively engaged in farming, a person must make ‘significant contributions’ to the farming operation through capital, equipment, land, or a combination; and personal labor or active personal management, or a combination.”

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ABARE on the Farm Bill

Categories: Farm Bill

A news release issued yesterday by the Australian Bureau of Agricultural and Resource Economics (ABARE) indicated that, “A report analysing The 2008 US Farm Bill: what is in it and what will it change? was released today by Phillip Glyde, Executive Director of ABARE.

“In May 2008, at a time of high market prices and record farm incomes for US farmers, a new US Farm Bill was passed. The Bill provides policy directives and sets down support prices and arrangements for the period from 2008 to 2012.

The 2008 Farm Bill strengthens US agricultural protectionism at a time when there was an opportunity for real reform. The Bill contains increased support opportunities for most major crops, greater certainty for disaster relief, extension of payment thresholds for dairy, and sugar arrangements that minimise imports.”

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Farm Bill, Ag Economy, and Trade Issues

Farm Bill

DTN writer Chris Clayton reported on Friday (“USDA Tightens Rules on Active Engagement in Farm Programs”- link requires subscription) that, “Farmers will have one month to comment on the effects of new USDA rules on payment limits, income eligibility and active role in the farm after USDA posts the interim final rule next week in the Federal Register.

“Under the interim final rule, USDA has spelled out new requirements that would prevent passive shareholders from collecting commodity or conservation payments.

USDA released information Friday afternoon detailing the changes in the 2008 farm bill for new income and payment limits affecting farmers in both commodity and conservation programs. Comments on the interim final rule must be submitted to USDA within 30 days after the publication in the Federal Register.”

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Cabinet Focus, and Food Prices – Food Stamps

Cabinet Focus

Associated Press writer Mary Clare Jalonick reported yesterday that, “Until the end of March, Barack Obama’s pick for agriculture secretary was registered to lobby for the country’s largest teacher union, whose issues include nutrition programs overseen by the Agriculture Department.

“But former Iowa Gov. Tom Vilsack did not lobby on nutrition or agriculture matters, a spokesman for the president-elect’s transition team said Thursday, and therefore has no conflict of interest problem.”

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Cabinet Nomination Reaction, Doha, and the Ag Economy

Cabinet Nomination Reaction

DTN Political Correspondent Jerry Hagstrom reported yesterday that, “Farm, agribusiness and consumer leaders praised President-elect Barack Obama’s nomination Wednesday of former Iowa Democratic Gov. Tom Vilsack to be agriculture secretary as a centrist choice who could represent all of agriculture. However, in Vilsack’s and Obama’s statements, there were signs of the conflicts that the new ag secretary and the administration will face as they try to press their priorities on agriculture, nutrition and energy policy.

“At a news conference in Chicago, Vilsack said he would put ‘nutrition at the center of all food assistance programs,’ an indication he will get involved in a congressional battle next year over reauthorization of child nutrition programs. Nutrition advocates want those programs to address child obesity and disease, but the meat, dairy and sugar industries are likely to fight changes that would reduce federal and school purchases of their products.”

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Vilsack to be Nominated for Secretary of Agriculture

Categories: Uncategorized

Recall that last month, on November 23rd, Philip Brasher reported at The Des Moines Register Online that, “Former Iowa Gov. Tom Vilsack today said that he won’t be the next agriculture secretary, ending speculation that an Iowan would snag the post important to a large swath of the state’s economy.

“In an e-mail, Vilsack said he had never been contacted by aides to President-elect Barack Obama about that position or any other.”

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Spring Acreage Allocation Decisions Draw Focus, IPC Study: Social Standards Linked to Biofuels, and Cabinet Issues

Spring Acreage Allocation Decisions Draw Focus

Yesterday, the U.S. Department of Agriculture’s Economic Research Service released their latest Feed Outlook report, which stated that, “The 2008/09 corn use forecast is lowered this month as financial and macroeconomic developments are continuing to weaken corn demand. Corn used to produce ethyl alcohol for fuel is lowered because of financial problems in the ethanol industry. Corn and sorghum exports are also lowered due to weak demand [see related graph highlighting corn production and corn exports]. Global 2008/09 coarse grain production is projected higher this month to a new record. World 2008/09 coarse grain ending stocks are now projected higher than beginning stocks. In previous months, forecasts showed global coarse grain stocks declining year-to-year. U.S. corn and sorghum farm prices are projected lower this month, …[T]he 2008/09 season average farm price for corn is projected at $3.65-$4.35 per bushel, down on both ends of the range from last month’s $4.00-$4.80 per bushel.”

Despite the projected reduction in corn used for domestic ethanol, this graph, which was included in yesterday’s ERS report, still indicates that ethanol is an increasingly important variable in determining the use of corn.

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Doha, and the Ag Economy

Doha

Bradley S. Klapper reported late last week that, “The World Trade Organization was set to admit Friday its failure to secure a new global commerce pact before the end of the year because of a row between the United States and emerging economies over agricultural and industrial goods, officials said.

“WTO Director-General Pascal Lamy had hoped to invite top trade negotiators to Geneva this weekend to work out the many issues hindering a deal designed to lift millions of people out of poverty and add billions of dollars to the global economy through lower trade barriers.

“Lamy pushed back the meeting earlier this week, and was to announce Friday that he would not recall ministers for crunch talks until perhaps sometime next year, officials said.”

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Crop Estimates (Corn Use for Ethanol Drops), Doha and Cabinet Issues

Crop Estimates (Corn Use for Ethanol Drops)

Yesterday, the World Agricultural Outlook Board released their latest World Agricultural Supply and Demand Estimates (WASDE) report.

With respect to wheat, the report stated that, “Projected U.S. wheat ending stocks for 2008/09 are raised 20 million bushels this month on higher imports and lower food use. Wheat imports are projected 10 million bushels higher as abundant foreign supplies of feed quality wheat and extremely low ocean freight rates provide incentives to import wheat for domestic feeding. Wheat food use is projected 10 million bushels lower based on the latest mill-grind data from the U.S. Bureau of Census…The all-wheat season-average farm price is projected 15 cents lower on both ends of the range to $6.40 to $7.00 per bushel.”

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ERS Income and Finance Outlook, Farm Bill, Cabinet, Doha, and the EC Addresses Food Prices

ERS: Agricultural Income and Finance Outlook

Yesterday, the U.S. Department of Agriculture’s Economic Research Service (ERS) released their annual “Agricultural Income and Finance Outlook” report.

In part, the report stated that, “The story for the farm sector in 2008 has two main themes: a large increase in the value of crop production [related graph] but rising costs of production as well. The value of crop production, at $181 billion, is forecast to exceed its previous record (set in 2007) by $30 billion, a 20-percent increase. Prices of major crops (corn, soybeans, wheat) were trending upward in late 2007 and continued doing so in the first part of 2008 during the marketing of the remainder of the 2007 harvest. These prices have declined in recent months as the 2008 harvests have occurred but are still high by historical standards. Consequently, with large harvests to sell at high prices, 2008 has proven to be another good year for the U.S. farm economy as a whole, driven by strong demand for feed crops, oilseeds, and food grains.”

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Reports: World Bank, FAO (Economic and Hunger Forecasts), Doha, and EU Climate Package (Biofuels)

World Bank, FAO Reports

Mark Landler reported in today’s New York Times that, “The world economy is on the brink of a rare global recession, the World Bank said in a forecast released Tuesday, with world trade projected to fall next year for the first time since 1982 and capital flows to developing countries predicted to plunge 50 percent.

“The projections are among the most dire in a litany of recent gloomy forecasts for the world economy, and officials at the World Bank warned that if they proved accurate, the downturn could throw many developing countries into crisis and keep tens of millions of people in poverty.”

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Doha (Squabbles Continue), and the Ag Economy

Doha

Reuters writer Jonathan Lynn reported today that, “Ministers are not yet ready to meet to seek a breakthrough in the World Trade Organisation’s (WTO) Doha round of trade talks because of stubbornness on the part of trade powers, diplomats said on Monday.

“The United States, China, India, Brazil, the European Union and other powers face a hectic week of further consultations, as WTO Director-General Pascal Lamy seeks to narrow the gaps and weighs the risks of calling a meeting this month, they said.”

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Doha (Revised Texts), Farm Policy Issue, and Cabinet Talk

Categories: Doha / Trade /Farm Bill

Doha (Revised Texts)

On Friday, Reuters writer Raymond Colitt reported that, “Brazilian Foreign Minister Celso Amorim said on Thursday a ministerial meeting to advance the Doha world trade round was practically certain this month and could produce a breakthrough if there was political will.

“‘It’s practically certain, it has to be,’ Amorim said about expectations World Trade Organization chief Pascal Lamy would call a meeting of ministers as early as next week.”

The article added that, “A deal in the Doha round could help resolve such trade disputes — including one Brazil won on U.S cotton subsidies earlier this year [related articles here and here]– Amorim said.

“‘With a satisfactory accord, why should we want to fight?’ Amorim said.”

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