FarmPolicy

November 15, 2019

Ag Economy; ACRE; Crop Insurance; Food Safety; Climate Change; and the White House Garden

Ag Economy

Clifford Krauss reported in today’s New York Times that, “Only a year ago, all the stars appeared to be aligned for American farm exports. China and other developing countries were fattening up growing herds of cattle on American corn, and they were importing record amounts of foods to meet the appetite of their expanding middle classes. A drought in Australia meant a shortage of wheat on world markets. The price of dairy products soared across the globe because of shortages.

Since then, all that has changed.

“The developing countries are slowing their food imports, it is raining again in Australia, and the price of dairy products is slumping. A strengthening dollar in recent months has made United States farm exports less competitive.

“‘What a difference 12 months can make,’ Joseph Glauber, chief economist of the Department of Agriculture, noted in Congressional testimony last week. ‘We have seen prices for most commodities fall 40 to 50 percent from their midyear peaks. The global economic slump has cast a pall on most markets.’”

The Times article noted that, “But government and academic farm economists are worried that if the world economy does not recover over the next year or so, prices for produce and farm incomes could decline sharply and ultimately lead to a drop in farm real estate values. A recent report by the Agriculture Department said that American farm income could decline to $66 billion this year, from a record $89 billion last year. It could even decline by as much as 33 percent, to $60 billion, according to the report.”

“In recent months, export volumes of rice have declined by more than 10 percent, wheat by more than 30 percent, corn by more than 40 percent and sorghum by more than 60 percent,” the Times article said.

Today’s article concluded by stating that, “‘The drop in volumes of corn exports will probably accelerate through the spring and summer months this year in comparison with 2008 because of a continued strong dollar and the weakened purchasing power of foreign currencies,’ said David Swenson, an economist at Iowa State University. ‘Most corn farmers in the Midwest are looking at a break-even year compared to fabulous returns they received in ’07 and ’08.’”

A USDA Daily Radio Newsline report from yesterday (“By Comparison the Farm Economy is Still Relatively Strong”) featured some comments on the U.S. agricultural economy from Dr. Glauber. A summary of this very brief audio report indicated that, “An expert says the recession may be severe, but the farm economy is holding up fairly well.”

Meanwhile, the World Agricultural Outlook Board issued its monthly World Agricultural Supply and Demand Estimates (WASDE) report yesterday.

In part, the WASDE report stated that, “The 2008/09 season-average farm price for corn is projected at $4.00 to $4.40 per bushel, up 10 cents on both ends of the range. This compares with the 2007/08 record of $4.20 per bushel…The U.S. season-average soybean price range for 2008/09 is projected at $9.25 to $10.05 per bushel compared with $8.85 to $9.85 per bushel last month…[and]…The 2008/09 season-average farm price [for wheat] is projected up 10 cents on the lower end of the range to $6.80 to $6.90 per bushel. This is well above the previous record of $6.48 per bushel in 2007/08.”

An overview of key statistical indicators for corn from yesterday’s WASDE update can be viewed here, while summaries for soybeans and wheat can be viewed here and here.

ACRE

A news release issued yesterday by USDA stated that, “Agriculture Secretary Tom Vilsack announced today that producers can elect and enroll in the Average Crop Revenue Election (ACRE) program beginning April 27, 2009. ACRE is a provision of the 2008 Farm Bill.

“‘The Average Crop Revenue Election program is an innovative alternative to the traditional farm safety,’ Vilsack said. ‘This new option presents an opportunity for producers to review both programs and decide which one will work best for their operation.’

Producers have until Aug.14, 2009, to make their decision for the 2009 crop.”

DTN Ag Policy Editor Chris Clayton reported on this development yesterday and noted that, “USDA has not posted a handbook on ACRE on its website or sent handbooks to county offices yet. Handbooks provide details on how USDA will interpret rules in certain instances. Nor has USDA released details on how it will establish production history for farmers who do not have five years of certified history from which to figure an Olympic average. Farmers who have learned about the program’s requirements have expressed concern about what FSA will accept as verifiable yield records.”

Mr. Clayton added that, “Despite the potential revenue protection, producers have raised questions about the potential record-keeping requirements and how far back a producer may have to provide paperwork for yields. For instance, ACRE uses a five-year Olympic average to establish the farm yield. USDA has told DTN that does not mean producers on a two- or three-year crop rotation would have to show proof of 10 to 15 years of yields to establish the ACRE benchmark.”

Yesterday’s DTN article pointed out that, “USDA has a webpage set up with some background information on ACRE and benchmark data on prices.”

In a statement from yesterday, Senate Ag Committee Chairman Tom Harkin (D-Iowa) indicated that, “I encourage farmers to consider enrolling in the ACRE program. ACRE is a new and creative alternative to the traditional direct and counter-cyclical program and will benefit many of our producers both in Iowa and across the country.

“Additionally, I was pleased when Secretary Vilsack announced last month that the deadline to enroll in the traditional program or the new ACRE program has been extended from June 1 until August 14. Since this is the first year producers can participate in ACRE, the extension will allow farmers extra time to consider program options and to discuss these alternatives with their lenders and with the owners of rented land.”

Crop Insurance

The Kiplinger Agriculture Letter reported yesterday that, “Expect a bevy of prevented planting claims as rain and floods delay seeding in the Red River Valley (N.D. and Minn.), the Gulf Coast area and elsewhere. Check the ’08 rules as a preview for this year’s claims at kiplinger.com/letterlinks/pp.

“Also, look for USDA to activate emergency loss procedures for fast reporting in the Red River Valley and other areas with losses that must be promptly adjusted. The procedures used in ’08 provide a guide…see kiplinger.com/letterlinks/emlosses.

“Note to risk management teachers: Grants to hold crop insurance classes for farmers will go to states where few farmers buy the insurance. They are: Conn., Del., Mass., N.H., N.J., N.Y., Pa., R.I., Vt., W.Va., Utah, Nev., Wyo. and Hawaii.”

Food Safety

Gardiner Harris reported in today’s New York Times that, “After decades of steady progress, the safety of the nation’s food supply has not improved over the past three years, the government reported Thursday. And, it said, in the case of salmonella, the dangerous bacteria recently found in peanuts and pistachios, infections may be creeping upward.

The report, from the Centers for Disease Control and Prevention, demonstrates that the nation’s food safety system, created when most foods were grown, prepared and consumed locally, needs a thorough overhaul to regulate an increasingly global food industry, top government health officials said Thursday.”

The Times article added that, “The report is likely to deepen tensions between the F.D.A. and the Department of Agriculture, which have long been rivals in overseeing food safety. An Agriculture Department campaign begun in 2006 to reduce salmonella contamination of meat and poultry has been successful, the report noted. But Dr. Robert Tauxe, deputy director of the C.D.C.’s division of foodborne diseases, suggested that whatever progress the department had made in improving overall food safety might have been lost by the F.D.A.”

Climate Change

An update posted on Wednesday at The Inhofe EPW Press Blog (Senator Jim Inhofe’s (R-Okla.) Senate Environmental and Public Works Committee Blog) stated that, “Over the next few days, EPW PolicyBeat will focus on the Waxman-Markey draft climate change legislation and several of the most interesting provisions therein. In our view, Section 336 is far and away the most interesting in the 648-page bill. Here the authors amend the citizen suit provision in Section 304 of the Clean Air Act. The Waxman-Markey bill authorizes a ‘person’ to ‘commence an action’ who has ‘suffered, or reasonably expects to suffer, a harm attributable, in whole or in part, to a violation or failure to act referred to in subsection (a).’”

The update explained that, “In other words, should the unfortunate happen and Waxman-Markey become law, courts could conceivably be flooded with lawsuits filed by environmental groups who perceive some risk—and they undoubtedly will perceive it—that is ‘associated with a small incremental emission’ of a greenhouse gas—whether from a coal-fired power plant, a manufacturing facility, or some other entity covered by the bill. This provision will further empower the eco-trial bar to fight the ravages of climate change and the businesses it dislikes, with no effect on the former and disastrous consequences for the latter.”

Tom LoBianco provided additional analysis on this issue in today’s Washington Times where he reported that, “Self-proclaimed victims of global warming or those who ‘expect to suffer’ from it – from beachfront property owners to asthmatics – for the first time would be able to sue the federal government or private businesses over greenhouse gas emissions under a little-noticed provision slipped into the House climate bill.

“Environmentalists say the measure was narrowly crafted to give citizens the unusual standing to sue the U.S. government as a way to force action on curbing emissions. But the U.S. Chamber of Commerce sees a new cottage industry for lawyers.”

The Washington Times article added that, “Regulating carbon dioxide has been a hard slog for environmentalists, and some energy analysts say that the Waxman-Markey bill and parallel efforts by the Obama administration constitute a multifaceted attempt to achieve the goal by regulation if legislative attempts fail.

An update posted yesterday at The Inhofe EPW Press Blog (Senator Jim Inhofe’s (R-Okla.) Senate Environmental and Public Works Committee Blog) noted in part that, “[T]he Waxman-Markey draft presents a classic Hobson’s choice by offering no real alternative: it replaces a very bad option—regulating carbon under the Clean Air Act—with another very bad option—a cap-and-trade bill wrapped in a sea of mandates that will burden every consumer in America with higher energy prices.”

The Wall Street Journal editorial board noted in today’s paper that, “Take the climate bill just offered by House powers Henry Waxman of California and Ed Markey of Massachusetts. The 648-page ‘discussion draft’ ducks the most important policy questions about what Democrat Ben Cardin calls ‘the most significant revenue-generating proposal of our time’ — namely, how the tax will be levied and the proceeds spent. But it does find space to impose thousands of new environmental regulations on the entire economy, all separate from cap and trade.

Right off, the bill mandates that 25% of U.S. electricity come from wind, solar, geothermal or biomass by 2025. Sorry, nuclear doesn’t count. This kind of renewable portfolio standard directly contradicts the putative flexibility of cap and trade, which is supposed to allow businesses to reduce CO2 how and where it is least expensive.”

The editorial added that, “[A]s early as next week the EPA will classify carbon as a dangerous pollutant under current clear-air laws…The Obama Administration claims it is flirting with this ‘endangerment finding’ and the economic havoc it would wreak only to force Congress into falling in line with its climate agenda.”

More specifically with respect to agriculture and climate change, Jim Tankersley reported today at the Los Angeles Times Online that, “Global warming could rob the U.S. economy of $1.4 billion a year in lost corn production alone, a national environmental group estimated in a report released Thursday.

The Environment America study, based on government and university data, projects that warming temperatures will reduce yields of the nation’s biggest crop by 3% in the Midwest and the South compared with projected yields without further global warming.

Iowa would be hit hardest, losing $259 million a year in corn revenues, followed by Illinois at $243 million. California, which leads the country in agriculture but doesn’t grow much corn, would take an estimated $4.7-million hit.”

The LA Times article noted that, “[The report] also says farmers can help fight global warming — and the government can encourage their efforts — in part by turning some of their land into wind and solar energy farms.

But the report stays silent on the fate of perhaps the most touted — and politically controversial — intersection of U.S. agriculture and global warming: corn ethanol, which proponents call a path away from fossil fuels but which critics say could cause as much global warming harm as good.”

White House Garden

An update posted yesterday at The White House Blog stated that, “Today the First Lady hosted Agriculture Secretary Tom Vilsack and students from Bancroft Elementary, in the White House Kitchen Garden on the South Lawn of the White House to plant the garden and highlight healthy eating.”

A related news release issued yesterday by USDA stated that, “Agriculture Secretary Tom Vilsack joined First Lady Michelle Obama and a group of 5th graders on the South Lawn of the White House today to talk about healthy eating, the availability of locally grown fruits and vegetables, and bees.

“‘Growing your own fruits and vegetables is one of the best ways to have healthy food,’ Vilsack said. ‘Working in a garden is a great way to stay physically active and maintain a healthy body. And, USDA is helping schools make sure that every student in America has a healthy and nutritious lunch to eat at school.’”

Jane Black noted yesterday at the Washington Post Online that, “The international press may have been exclusively interested in what Michelle Obama was wearing on her first trip abroad last week. But the first lady said that the world leaders she met were curious about something else entirely: ‘The number one question I got as the first lady from world leaders — they were excited about this garden,’ she told a group of students who had come to help seed the new 1,100 square foot plot on the South Lawn. ‘Every single person from Prince Charles on down, they were excited we were planting this garden.’

“The planting was the second event to publicize the new garden, which was first announced last month.”

Jim Snyder reported yesterday at The Hill Online that, “Michelle Obama planted an organic garden to promote fruits and vegetables as part of a healthy diet, but some chemical companies are worried it may plant a seed of doubt in consumers’ minds about conventionally grown crops.”

The article noted that, “But MACA [the Mid America CropLife Association], which represents agribusinesses like Monsanto, Dow AgroSciences and DuPont Crop Protection, is rather less thrilled about the fact that no chemicals will be used to grow the crops. The group is worried that the decision may give consumers the wrong impression about conventionally grown food.”

Keith Good

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