FarmPolicy

November 19, 2017

Ag Census; Ag and Food Economy; Sec. Vilsack; House Ag Committee Hearing; and Trade Issues

2007 Census of Agriculture

The USDA’s National Agricultural Statistics Service (NASS) released its 2007 Census of Agriculture yesterday.

A news release issued yesterday by USDA provided a broad overview of the report, which is conducted every five years, and stated that, “The number of farms in the United States has grown 4 percent and the operators of those farms have become more diverse in the past five years, according to results of the 2007 Census of Agriculture released today by the U.S. Department of Agriculture’s National Agricultural Statistics Service (NASS).”

The release added that, “The 2007 Census counted 2,204,792 farms in the United States, a net increase of 75,810 farms. Nearly 300,000 new farms have begun operation since the last census in 2002. Compared to all farms nationwide, these new farms tend to have more diversified production, fewer acres, lower sales and younger operators who also work off-farm.”

The latest census figures show a continuation in the trend towards more small and very large farms and fewer mid-sized operations. Between 2002 and 2007, the number of farms with sales of less than $2,500 increased by 74,000. The number of farms with sales of more than $500,000 grew by 46,000 during the same period,” USDA said.

A video replay of yesterday’s Census release is available here; the event contains comments from Secretary of Agriculture Tom Vilsack and top NASS officials, including Joe Prusacki, the director of the Statistics Division for NASS. To listen to a brief audio clip from Mr. Prusacki’s presentation yesterday, just click here (MP3-three minutes).

Reuters writer Christopher Doering reported yesterday that, “While [Secretary of Agriculture Tom] Vilsack noted the favorable increase among small and large farmers, he said he was ‘deeply concerned’ about the drop among middle-sized operations. Operations generating income between $2,500 and $99,999 all posted declines in the number of farms compared to 2002.

“‘This is an issue that we have to deal with,’ he said, noting mid-size farmers could benefit from programs relating to climate change, such as carbon sequestration, and alternative fuels.

“The census report also showed the concentration of agriculture production has increased during the last five years. In 2007, 125,000 farms were responsible for 75 percent of the value of U.S. agricultural production compared to 144,000 farms in 2002 for the same share.”

NASS also provided an additional breakdown of the Census data in two very short reports. To view a four-page recap highlighting specifics associated with farm numbers, just click here. Likewise, an overview of Census economic data can be found here– the economic summary noted in part that, “U.S. farmers spent $241 billion to produce their crops and livestock in 2007, an increase of $68 billion – or 39 percent – from 2002. The steepest cost increases were for gasoline and fuel, up 93 percent, and fertilizer, up 86 percent.”

In more detail regarding production agriculture, NASS generated these helpful pictorial summaries of the U.S. spotlighting harvested acreage for: Corn, Soybeans, Wheat, Cotton, and Rice. An aggregate view of total cropland in 2007 can be viewed here.

Ag and Food Economy

In more current developments regarding U.S. farms, the Associated Press reported today that, “While people will put off buying houses and cars in a bad economy, they still need food. That means farmers may be better able to weather the financial storms.

“‘Yes, we have housing problems, but we’re not going to not feed our kids,’ said Fariborz Ghadar, director of the Center for Global Business Studies at Pennsylvania State University.”

The AP article noted that, “Consumers are likely to cut back on goods they perceive as more dispensable while continuing to purchase basic agricultural products containing corn, soybeans, wheat, butter or milk, said Daniel Sumner, director the Agricultural Issues Center at the University of California-Davis.

“‘The sort of core, staple food products may be doing fine but where I’m sitting right here talking to people in the wine industry or the almond or the pistachio industry, they’re saying, ‘Hey, we’re pretty sensitive to incomes,’’ Sumner said.”

Sumner said one aspect of the recession that is hurting farmers is the amount of credit available to them. Many growers and producers borrow money to pay for seeds or equipment, or to operate or grow their businesses,” the article noted.

In recent market developments for corn, Bloomberg writer Jeff Wilson reported yesterday that, “Corn prices fell to a seven-week low, extending the longest slump since October, on speculation that the U.S. recession is slowing demand for grain used to make ethanol and feed livestock.

“Archer Daniels Midland Co., the third-largest U.S. ethanol producer, said yesterday that the industry has shut almost 21 percent of the country’s capacity for making the alternative fuel.”

“Corn futures for March delivery fell 3.5 cents, or 1 percent, to $3.5825 a bushel on the Chicago Board of Trade, after touching $3.5575, the lowest for a most-active contract since Dec. 12. Prices fell for a fifth day, the longest slide since Oct. 2. Most-active futures have plunged 55 percent since reaching a record $7.9925 in June,” the Bloomberg article said.

In a more global look at agricultural commodities, Financial Times writer Jude Webber reported yesterday that, “[A]rgentina’s agricultural heartland is suffering the worst drought in nearly half a century.”

The FT article explained that, “The impact extends well beyond Mr Paparini’s [Sergio Paparini, who farms in nearby San Pedro] farm as Argentina’s drought is boosting the price of agricultural commodities and hurting food-importing countries from China to Egypt. The price of wheat, soya and corn has risen about 20 per cent in the past two months amid worries about Latin America’s harvest. Argentina is the world’s second largest exporter of corn, the third largest of soyabeans and the fourth largest of wheat, making it critical for global prices. Some countries are still struggling after last year’s food supply crisis. The only reason prices are not even higher, traders and analysts say, is because the global economic crisis has slashed demand.

“Late last year, before the drought hit, the US Department of Agriculture was confidently expecting a bumper 2008-09 Argentine season, helping to reduce global agricultural prices. Farmers now say the soya harvest could be 37m tonnes, down almost 20 per cent from last season.”

The article added that, “Corn and wheat crops will also be sharply reduced. Farmers expect to harvest 12m tonnes of corn, down 45 per cent, and the wheat harvest, already in, was about 8.3m tonnes, down 49 per cent. The outlook is similarly bleak in neighbouring Paraguay, where the government says it has lost 43 per cent of its soya crop because of the dry weather.

“The drought is bad news for Argentina’s economy. Agriculture is its top export earner, so a devastating year will worsen prospects for a country that some economists see plunging into recession after growth of 7.1 per cent in 2008.”

In a closer look at the financial condition of some U.S. food industry companies, Lauren Etter reported yesterday at The Wall Street Journal Online that, “Grain giant Archer-Daniels-Midland Co. reported a 24% jump in its fiscal-second-quarter net income despite a slowing global economy and losses in its ethanol business.

ADM executives warned investors Tuesday that the global slowdown could soon start affecting the Decatur, Ill., company. Already ADM has slowed production in some markets where demand for grain-based products has fallen, the executives said in a conference call with analysts.”

And Anjali Cordeiro reported in today’s Wall Street Journal that, “With consumers cutting back even on small purchases and trading down to cheaper private-label products, packaged-food companies Kraft Foods Inc. and Sara Lee Corp. both lowered their earnings guidance for the year.

“Kraft, the nation’s largest packaged-food producer, was hurt by slower orders as retailers, including behemoth Wal-Mart Stores Inc., work down inventory.”

The Journal article added that, “Kraft in recent months has cut prices on some products like cheese and nuts, although Ms. Rosenfeld [Kraft Chief Executive Irene Rosenfeld] said she is comfortable with where the company’s prices currently stand and doesn’t expect more price reductions.”

In a related news item, Philip Brasher reported earlier this week at the Green Fields Blog (The Des Moines Register) that, “The Grocery Manufacturers Association has joined livestock groups and other food industry organizations in an appeal to EPA’s new administrator, Lisa Jackson, to leave the ethanol-blending limit alone. The ethanol industry and its allies in Congress want the Obama administration to allow more ethanol to be blended into gasoline. The limit is now 10 percent.”

Mr. Brasher noted that, “In addition to GMA, the letter was signed by the American Bakers Association, American Beverage Association, American Frozen Food Institute, American Meat Institute, National Restaurant Association, Snack Food Association, National Chicken Council, National Pork Producers Council and the National Turkey Federation.”

Meanwhile, Tom Meersman reported earlier this week in the Minneapolis Star-Tribune Online that, “Corn ethanol is no better fuel than gasoline, and it may even be worse for air quality, according to a new University of Minnesota study.

The study, released Monday, is the first one to estimate the economic costs to human health and well-being from three different fuels — gasoline, corn-based ethanol and cellulosic (plant-based) ethanol — its authors say.”

Washington Post Highlights Secretary Vilsack

Jane Black reported in today’s Washington Post that, “When former Iowa governor Tom Vilsack was nominated as secretary of agriculture, many food policy activists, noting his reputation as a friend to corporate agriculture and ethanol producers, rendered a verdict that was swift and harsh: agribusiness as usual.

“But Vilsack, newly installed in his regal but still-undecorated office on Independence Avenue, is out to redefine himself and his vision. In an interview this week, he called for a ‘new day’ for the U.S. Department of Agriculture’s sprawling bureaucracy, which he believes should champion not only farmers but also everyone who eats.”

The Post article noted that, “‘This is a department that intersects the lives of Americans two to three times a day. Every single American,’ he said. ‘So I absolutely see the constituency of this department as broader than those who produce our food — it extends to those who consume it.’

It is a significant departure from the traditional view of the USDA, which historically has emphasized programs that support commercial farming, such as price guarantees for crops and marketing promotions for exports.”

Ms. Black indicated that, “At Obama’s bidding, one of Vilsack’s first challenges will be to improve child nutrition and food assistance programs, such as the $6 billion Special Supplemental Nutrition Program for Women, Infants and Children, which is up for renewal by Congress. Food activists have called for these programs to emphasize fresh fruits and vegetables, locally grown when possible, to improve the diet of low-income families.

“Vilsack said he supports such efforts: His first official act was the reinstatement of $3.2 million in grant funding for fruit and vegetable farmers that had been rescinded in the final days of the Bush administration. Though the dollar amount was small, Vilsack said it sent a message of his emphasis on nutritious food.”

And today’s Post article also stated that, “Even with a new mandate from Obama, Vilsack will remain under fierce pressure to protect corporate agriculture interests. At Vilsack’s confirmation hearing Jan. 14, Sen. Pat Roberts (R-Kan.) warned that he should not lose sight of the farmers who produce ‘the food and fiber for America and a troubled and hungry world.’

“Vilsack said he is sensitive to the ‘highly emotional experience’ of farmers whose business and way of life are threatened. He said he wants to expand farmers’ choices to include opportunities in energy — such as wind, solar and geothermal power — and in the growing market for organic and whole foods.”

House Ag Committee Hearing

A news release issued yesterday by the House Agriculture Committee stated that, “Today, the House Agriculture Committee resumed its series of hearings to review legislation addressing the transparency and oversight of derivative markets. For the second consecutive day, the Committee received testimony and asked questions of fifteen witnesses representing stakeholder groups about the Derivatives Markets Transparency and Accountability Act of 2009, draft language circulated last week by Chairman Collin C. Peterson of Minnesota.

“‘I thought it was important to call these hearings because we need to have this debate about the bill’s provisions out in the open,’ Chairman Peterson said.”

Opening statements from witnesses at yesterday’s hearing can be viewed here.

Dow Jones writer Sarah N. Lynch reported yesterday that, “Executives from Cargill Inc., instrumental last month in persuading House Agriculture Chairman Collin Peterson to change a provision in his derivatives legislation that would have hurt the company’s commodities hedging business, Wednesday played a central role at a U.S. House hearing where two top Cargill executives testified about the bill.

“Bill Hale, a Cargill senior vice president, testified that a proposal requiring custom derivatives products be settled through centralized exchange clearinghouses would hurt Cargill’s large number of over-the-counter hedging tools sold to farming companies. George Taylor, president of Cargill’s cotton unit, appeared on a separate committee panel to offer his support for Rep. Peterson’s bill.

Although Cargill, a privately-held international agriculture conglomerate, is based in Rep. Peterson’s home state of Minnesota, it is unusual for one company to have multiple representatives testify at a congressional hearing.”

The article added that, “The initial outline for Rep. Peterson’s bill, circulated in early January, sought to mandate clearing for all over-the-counter products, like credit-default swaps, with no exceptions. When he unveiled his draft last week, however, the plan included an exemption for some highly customized products like Cargill’s that don’t help set prices in the marketplace.”

Trade Issues

David Sanger reported in today’s New York Times that, “The Senate, at the urging of White House officials, agreed Wednesday night to water down some of the ‘Buy America’ provisions in its version of the $900 billion economic stimulus bill.

“The vote gave President Obama a victory in the first test of how he will balance his campaign promises to toughen protections for American workers against a storm of protests by American trading partners who have threatened retaliation.

“The White House had been seeking assurances that any requirements barring purchases from abroad did not significantly expand existing law or violate existing trade treaties. The language approved by the Senate said such provisions should be ‘applied in a manner consistent with United States obligations under international agreements.’”

And Reuters news reported yesterday that, “A world trade deal can be achieved if the United States and India agree on two outstanding issues holding up a successful conclusion, Prime Minister Gordon Brown said on Wednesday.

“Brown told the House of Commons that the deal would be on the agenda of the G20 meeting Britain is hosting in April. ‘There are only two issues left to decide,’ Brown said. ‘The first one is a safeguard clause if there is a surge in imports in any poor country and the second is the negotiations on sectorals, that is the different sectors of industry and how these could be concluded.’ Brown said the U.S. had agreed wording on the sectoral agreements, while India wants to make progress on the safeguard clause.”

Keith Good

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