October 18, 2019

Swine Flu Issues; Food Security; Budget; Climate Change; Biofuels- CARB Decision; and Other News

Swine Flu Issues

The Associated Press reported yesterday that, “[P]ork futures sank on the Chicago Mercantile Exchange amid rising concerns surrounding the global swine flu outbreak. Consumers are worried about catching the virus from the pork, analysts said, even as U.S. pork producers maintained that their product is safe and Americans cannot catch the virus while they cook their pork properly.

“Multiple countries are increasing their screening of pig products from some U.S. states and Mexico, while China and Russia have issued outright bans on pork from affected areas and Indonesia is blocking all pork imports.”

Bloomberg writer Wing-Gar Cheng reported yesterday that, “China, Indonesia and the Philippines banned pork imports from Mexico and the U.S. on concern about the spread of swine flu even as health agencies said consuming the meat remained safe if properly cooked.

China, the top pork consumer, barred direct and indirect imports of swine or pork products from Mexico and the states of Texas, California and Kansas, according to a statement from the General Administration of Quality Supervision, Inspection and Quarantine. The agency has also recalled entry permits already issued for swine and pork products from those regions.”

And Bloomberg writers Jeff Wilson and Tony C. Dreibus reported yesterday that, “Soybean prices tumbled the most in two months, and grain futures fell on speculation that a swine- flu outbreak will curb demand for livestock feed and pork…Hog and pork-belly futures plunged 3 cents a pound, the most allowed by the Chicago Mercantile Exchange.”

The Bloomberg writers stated that, “Soybean futures for July delivery fell 37 cents, or 3.6 percent, to $9.97 a bushel on the Chicago Board of Trade. The drop was the biggest for a most-active contract since Feb. 17. The price has dropped 25 percent in the past 12 months.

Corn futures for July delivery declined 5 cents, or 1.3 percent, to $3.8075 a bushel. Earlier, the price fell as much as 4.1 percent. The grain has declined 36 percent in the past year.”

A University of Illinois Extension article from yesterday (“Crop Markets React to Swine Flu,” by Darrel Good) stated that, “In the first trading session following the announcement of incidences of swine flu in Mexico and the United States, corn, soybean, and wheat futures declined sharply. Market participants reportedly are concerned that the threat of swine flu will reduce pork demand, stimulating further liquidation of hog numbers and result in reduced feed demand.

“Such a negative reaction is typical with episodes that create so much uncertainty. Russia reportedly announced restriction on pork imports from Mexico and selected origins in the United States. Restrictions by other importers would not be surprising. Health experts indicate that swine flu is not transmitted to humans through properly prepared pork. The hope is that the initial knee jerk reaction will be followed by more thoughtful responses. The extent of reported cases of swine flu will be important in determining the depth of demand worries.”

A Dow Jones News article from yesterday (article posted at DTN, link requires subscription) reported that, “Foreign markets have no excuse to ban U.S. pork even though there have been 20 confirmed human cases of a new form of swine flu in several states, U.S. Department of Agriculture Secretary Tom Vilsack said Monday.

“‘The discovery of this virus in humans is not a basis for restricting imports of commercially produced U.S. pork and pork products,’ Vilsack said in a prepared statement. ‘Any trade restrictions would be inconsistent with World Organization for Animal Health (OIE) guidelines.’”

Lester Aldrich reported in today’s Wall Street Journal that, “Ron Plain, agricultural economist with the University of Missouri, said the lost export markets for pork could back up product on the U.S. market to pressure prices even if the U.S. consumer doesn’t react.

This, in turn, could be expected to take beef and poultry prices lower as well.

“Independent livestock trader Dan Norcini said swine-flu worries don’t bode well for the pork-demand outlook if the public equates the term ‘swine’ flu with pork.”

And Lauren Etter noted yesterday at The Wall Street Journal Online that, “The Mexican government is testing hogs on Smithfield Foods Inc. farms in Mexico but the big U.S. meat company says its pork is not related to the swine flu outbreak.

‘We are very comfortable that our pork is safe,’ Smithfield president and chief executive Larry Pope said in an interview. ‘This is not a swine issue. This is a human-to-human issue.’”

The U.S. Department of Agriculture has released a “Q and A” on swine flu issues, and a news release issued yesterday by Sen. Tom Harkin’s (D-Iowa) press office indicated that, “Senator Tom Harkin (D-IA), Chairman of the Labor, Health and Human Services, Education, and Related Agencies Appropriations Subcommittee, has called an emergency hearing on the so called ‘swine influenza’ (H1N1)” that will occur today at 1 PM EDT in room 138 of the Dirksen Building.

Food Security

Bloomberg writer Aya Takada reported yesterday that, “Japan, the world’s largest grain importer, will help local companies invest in agricultural production and distribution overseas to ensure stable supply as global food demand increases.

“Japan is considering providing loans from a government- owned bank for companies to purchase and lease farmland abroad, Munemitsu Hirano, counsellor at the international affairs department of the Ministry of Agriculture, Forestry and Fisheries, said. The government may also use foreign aid to improve infrastructure such as storage and port facilities in developing countries, he said.

Food importers such as South Korea and Saudi Arabia are taking steps to increase overseas agricultural investment to ensure food security after prices of corn, wheat and rice surged to records last year. Japan relies on imports for 60 percent of its food and last year purchased almost all its corn requirements from the U.S., the world’s largest exporter.”

In a related article, an update posted last week at the Southwest Farm Press Online reported that, “U.S. agriculture subsidies may get lambasted by the international press for suppressing farm prices abroad, but a study by Texas Tech University economists finds that developing countries are equally, if not more, prone to protecting their agricultural sectors.

“Researchers in Texas Tech’s Cotton Economics Research Institute studied the agricultural subsidies and protection applied by 21 countries to seven major crops: corn, cotton, rice, sorghum, soybeans, sugar and wheat.

“The resulting report, Crop Subsidies in Foreign Countries: Different Paths to Common Goals, found that while policy tools employed by governments may differ, agricultural support is increasing not only in industrialized countries such as the U.S. or Australia, but in developing economies such as those of China or Brazil.”

Meanwhile, Karen Kaplan reported in today’s Los Angeles Times that, “Scientists have engineered vitamin-fortified corn designed to boost consumption of three key nutrients that are sorely lacking in the diets of millions of people in developing countries, according to a study published today.

“The genetically modified African corn has bright orange kernels, reflecting the 169-fold increase in beta carotene, a precursor of vitamin A. The corn also has six times the normal amount of vitamin C and double the usual level of folate, researchers reported in the Proceedings of the National Academy of Sciences.”

Budget Developments

The Associated Press reported yesterday that, “Congressional Democrats sealed an agreement Monday night on a budget plan that would help President Barack Obama overhaul the health care system but allows his signature tax cut for most workers to expire after next year.

“Senate Budget Committee Chairman Kent Conrad, D-N.D., announced the agreement and key details in a statement.”

The AP article added that, “Under Capitol Hill’s arcane rules, the annual congressional budget produces an outline for follow-up tax and spending legislation. Most importantly, the measure would allow Obama’s health plan to pass the Senate by a simple majority instead of the 60 votes that are needed for plenty of other legislation.

“Democrats and independent allies control 58 Senate seats.

Democrats hope the House will adopt the budget on Tuesday and the Senate on Wednesday, which marks Obama’s 100 days in office.”

Walter Alarkon, writing yesterday at The Hill Online, reported that, “The budget agreement includes language that explicitly prohibits the use of the reconciliation rules to pass climate change legislation, Conrad said. Senate Republicans and Democrats from energy-producing states had called on the conference to prohibit the use of the expedited process to pass such legislation. If Democrats had opted not to use the reconciliation rules for healthcare and education reform, they would have had the option of using them for a climate change measure such as a cap-and-trade plan, which Republicans consider to be a broad-based energy tax.”

Climate Change

In more specific news regarding climate change legislation, Jared Allen reported yesterday at The Hill Online that, “The House may not vote on a climate change bill this year, according to a high-ranking Democratic leader.

Rep. Chris Van Hollen (D-Md.) told The Hill on Monday that leaders could opt not to bring a climate measure to the floor if the bill has little chance of passing the Senate.”

The Hill article stated that, “‘The first thing we need to do is see whether we can come together around a consensus position in the committees in the House, and that’s what we’re working on. And then, of course, if we were able to arrive at that, the question is whether you would take it to the floor, or do you wait to see if anything develops on the Senate side,’ Van Hollen said.

“‘The chances of doing cap-and-trade in the Senate are much more difficult. We recognize that,’ he added.

“For a Democratic Caucus that has made the enactment of climate change legislation one of its highest priorities — [House Speaker Nancy Pelosi (D-California)] has called climate change the issue of her generation — the admission from a Democratic leader that the House may not vote on a long-awaited but controversial cap-and-trade bill this year is significant.

But it also speaks to how politically difficult a cap-and-trade vote could be. And it is a reflection of a reality in Congress: a cap-and-trade bill doesn’t have the votes to pass. While that could change in the months to come, few — if any — on Capitol Hill believe it has the necessary 60 votes in the Senate.”

And yesterday’s Hill article also pointed out that, “A Democratic aide close to the climate debate noted that the Energy and Commerce Committee is still on schedule — even after having to delay its cap-and-trade markup until next week — and doing everything it can to build a consensus.

“‘It’s premature to be talking about contingency plans on the eve of a markup,’ the aide said.

“[Henry Waxman (D-California)] is looking to approve a bill out of his committee by the Memorial Day recess.”

Recall however, that the executive branch has the potential to act on important climate change issues independently of Congress.

John M. Broder provided additional perspective from the executive branch on climate change in an article published in today’s New York Times, where he reported that, “After eight years largely on the sidelines of the international policy debate on climate change, the United States is prepared to lead negotiations toward a new global warming treaty, Secretary of State Hillary Rodham Clinton said Monday.”

According to a transcript, Sec. Clinton stated yesterday that, “Climate change is a clear and present danger to our world that demands immediate attention. Second, the United States is fully engaged and ready to lead and determined to make up for lost time, both at home and abroad. The President and his entire Administration are committed to addressing this issue and we will act.”

Meanwhile, DTN Political Correspondent Jerry Hagstrom reported yesterday (link requires subscription) that, “While President Barack Obama and congressional Republicans continue to spar over whether climate change legislation to reduce greenhouse gases is good or bad for American agriculture, House Agriculture Committee Chairman Collin Peterson, D-Minn., plans to publish the views of more than 200 agriculture leaders on the subject before coming up with a Democratic position.

“Peterson has been reserved so far in his comments on climate change, but in a March 11 letter, Peterson asked leaders to respond by April 10 to a climate change questionnaire that he posted on the committee website. As soon as the committee staff has reviewed all 200 responses, Peterson will send them to the Government Printing Office for publication, a committee spokeswoman said last week.

“‘No decisions on hearings or other steps will be made until the staff review is finished,’ the spokeswoman said.”

Biofuels- CARB Decision

Reuters news reported on Friday that, “California’s new low-carbon fuel rules may be a violation of NAFTA and World Trade Organization provisions because they would unfairly limit exports of crude from Canada’s oil sands to the state, a prominent Canadian trade lawyer said on Friday.

“California adopted a first-ever rule on Thursday requiring refineries, producers and importers of motor fuels sold in the state to reduce the ‘carbon intensity’ of their products by 10 percent by 2020, with greater cuts thereafter.”

The Reuters article added that, “However, the state may have no business imposing such rules on oil produced in other countries, a Canadian lawyer said, and the provisions may violate international trade treaties.

“‘There’s definitely a NAFTA case and a WTO case. There’s no doubt in my mind about it,’ said Simon Potter, a partner at the McCarthy Tetrault law firm whose practice includes trade and competition law.

“‘This is California deciding they are going to treat oil differently depending on … where it comes from. It’s an obvious violation of the requirement for national treatment.’”

Additional News…

HSUSJoseph Curl reported in today’s Washington Times that, “Rush Limbaugh’s new pet project — fighting animal cruelty for the Humane Society of the United States — is riling sportsmen from coast to coast, prompting fears that the talkster typically supportive of gun rights is aiding a group they say has a secret agenda to end all hunting in America.

“Twenty-eight groups representing millions of hunters and sportsmen are demanding that the conservative radio commentator end his collaboration with the HSUS and stop ‘helping them to mainstream their image in the minds of reasonable people.’”

PeanutsTyron Spearman noted in the latest edition of Peanut Grower magazine that, “We’ve got too many peanuts and even world supplies are up as the world economy worsens. The salmonella issue will linger, and consumers will be slow in returning. A 25 to 30 percent acreage reduction is needed, even though some buying points/shellers may get orders from manufacturers. And then there’s the weather, still dry in most locations as irrigation moves to corn production.”

CFTCZachary A. Goldfarb reported in today’s Washington Post that, “President Obama’s pick to head the federal agency in charge of policing commodities futures is languishing in the Senate despite the troubles in the market and planning for new financial regulations.

“Gary Gensler, a former Goldman Sachs banker and Treasury Department official in the Clinton administration, was nominated on Dec. 18 to lead the Commodity Futures Trading Commission.

“In March, his nomination cleared the Senate Agriculture Committee, which oversees the CFTC, but the full Senate hasn’t held a vote because Sen. Bernard Sanders (I-Vt.) is blocking his appointment. He said Gensler isn’t the right man for the job because as a Clinton official he sought to exempt derivatives known as credit default swaps from regulation. Sanders blames this absence of regulation for the collapse of insurer American International Group and the government’s subsequent rescue of the firm ‘in the largest taxpayer bailout in history.’”

Cuba– The AP reported today that, “The farm lobby is using President Barack Obama’s easing of some travel restrictions to Cuba as an opportunity to push for increased sales of rice, meat, vegetables and other goods to the island nation.

“Congress cleared the way for Cuba to buy U.S. agricultural commodities in 2000. But groups such as the USA Rice Federation say a 2005 interpretation of the law by an arm of the Treasury Department, requiring payment before goods were shipped, severely restricted sales.”

EU-CAP– The German Marshall Fund of the United States will be hosting the European Commissioner for Agriculture and Rural Development, Mariann Fischer Boel, at an event scheduled for May 6 in Washington, D.C. Complete details are available here.

Keith Good

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