FarmPolicy

November 21, 2019

Global Food Security; Animal Agriculture; Dairy Issues; Biofuels-Indirect Land Use; Climate Change; and Farmland Values

Global Food Security

Javier Blas reported on Sunday at the Financial Times Online that, “Only a short time ago, African farmland seemed of little interest to outsiders. But last year’s food crisis and water scarcity in many countries has changed foreigners’ appetite with the result being that fertile soil in Africa is now sought by international investors to the tune of hundreds of thousands of hectares.

“The first big report on the trend – branded by some as ‘farmland grab’, but seen by others as a huge development opportunity – concludes that food security, rather than commercial enterprise, is behind most of the deals sealed or negotiated.”

Quoting from the report, the FT article stated that, “‘Governments concerned about stability of food supplies are promoting acquisition of farmland in foreign countries as an alternative to purchasing food from international markets,’ the report says. ‘The food price hikes of 2007 and 2008 shook the assumption that the world will continue to experience low food prices.’

“Alarmed by exporters’ trade restrictions, food importing countries have realised that their dependence on the agricultural market makes them vulnerable not only to a surge in prices but, more crucially, to an interruption in supplies,” the FT article noted.

Sunday’s FT article indicated that, “Carl Hausmann, chief executive of Bunge North America, one of the world’s largest agricultural trading companies, echoed a view widely held among other executives and government officials at the World Agricultural Forum last week in St Louis.

“‘Many governments are rethinking their approach to food security and are saying we need more domestic production, we need to be domestically independent,’ he said. ‘I would argue the exact opposite approach is better. Without the free flow of trade in agricultural commodities and food products the health of any given country in any given year is at risk.’”

In a related Financial Times article, Michiyo Nakamoto and Javier Blas reported yesterday that, “Japan will spearhead a drive at the Group of Eight summit to prevent ‘farmland grabbing’ in developing countries and encourage responsible investing in agriculture.

“The move shows growing fears among leading nations that rich countries such as Saudi Arabia or South Korea, which are not self-sufficient in food production, are investing in overseas land, particularly in Africa, to boost their food security.”

This FT article indicated that, “Tokyo’s initiative, which would include a set of principles for investment, aims ‘to harmonise and maximise the interests of both host countries and investors’, in order to promote greater investment in agriculture, Japan’s foreign ministry said.

“While the initiative would also draw up a flexible methodology for monitoring the adherence of members to the principles, the main objective is to promote, not discourage, investment in agriculture, according to Tamaki Tsukada, director of the economic security division at the Ministry of Foreign Affairs. ‘The objective is to increase global food production,’ he told the FT.”

In other news on food security, Ian Berry reported in today’s Wall Street Journal that, “A year after prices soared to record levels amid panic over supply shortages, rice appears to be plentiful and the market is in the midst of a prolonged slump.

“The stalled global economy, large Asian crops and a move by governments to loosen their grip on stocks have conspired to keep prices under pressure for months, analysts said.”

The article noted that, “Looming over the market are large supplies in some Asian countries, which, unlike last year, are willing to part with some of it. Thailand is expected to unload some of its stocks into the market, with the U.S. Department of Agriculture projecting 2009-10 exports of 8.5 million metric tons after the country was a net importer in 2008-09. India is expected to end its export ban, as well as its ban on rice-futures trading.”

Animal Agriculture

As global food needs and staple commodity prices garner attention, issues impacting animal agriculture production have also been noted.

A news release issued on Friday by the Food and Agriculture Organization (FAO) of the United Nations stated that, “A new internet portal has been launched today by FAO that will serve as a one-stop-shop for individuals and organizations searching for the latest information about the welfare of livestock.

“The Gateway to Farm Animal Welfare is designed to provide a reliable information conduit on legislation and research findings in the sector, as well as on animal welfare standards, practices and policies. Expected users are farmers and government officials, lawmakers, researchers, the livestock and food industry and non-governmental organizations.”

The FAO news item pointed out that, “It will provide an important forum for animal welfare issues related to activities such as transport, slaughter and pre-slaughter management, animal husbandry and handling and the culling of animals for disease control.

Livestock production accounts for 40 percent of the value of world agricultural output and products of animal origin provide one-third of humanity’s protein intake. Animals also contribute income, social status and security to roughly one billion people, including many of the world’s poor.”

Also last week, the University of California announced that, “The University has established the UC Animal Welfare Advisory Council to review issues of animal welfare related to animal agriculture, and to promote the development of recommendations based on sound science to improve the welfare of livestock and poultry.

“The council, chaired by UC Vice President for Agriculture and Natural Resources Daniel M. Dooley, is comprised of veterinarians, animal science professionals, and other experts from the University of California system, the California State University system, Colorado State University and the private sector.”

Last week’s announcement noted that, “‘The UC Animal Welfare Council brings together broad perspectives and specialized expertise to address the humane care and treatment of agricultural animals, while supporting the efforts of producers to provide safe and healthy food products for society,’ said Bennie Osburn, dean of the UC Davis School of Veterinary Medicine and vice chair of the council.”

An editorial item posted on Thursday at the Capital Press Online (“Egg bill scrambles Constitution”) highlighted some specific issues associated with domestic animal food production, and noted in part that, “In November California voters approved Proposition 2, an ill-conceived, animal rights ballot initiative that, among other things, mandates that caged laying hens be given enough room to stretch their wings without touching the sides of their cage.

“California egg producers have rightfully howled that Prop. 2 will put them out of business. Bigger pens mean fewer hens in the available space. Out-of-state producers, who already have around 30 percent of the California egg market, would be at a competitive advantage and in a position to take more business.

The state Senate and Assembly have stepped in with a bill that would require all eggs sold in California, regardless of their origin, to be produced under conditions conforming to the yet-to-be written rules implementing Prop. 2.”

While noting that, “Generally, the courts have held that states can’t enforce measures that discriminate or impose undue burdens on interstate commerce;” the Capital Press editorial added that, “The Humane Society of the United States, one of the main backers of Prop. 2, gleefully endorsed the bill. It admitted it would force producers in other states to comply with the restrictions and push its influence beyond California’s borders. We think that’s the real goal of the bill’s supporters.”

Dairy Issues

A news release issued on Friday by the USDA stated that, “Agriculture Secretary Tom Vilsack today announced allocations under USDA’s Dairy Export Incentive Program for the July 2008 through June 30, 2009 period, as allowed under the rules of the World Trade Organization. The program helps U.S. dairy exporters meet prevailing world prices and encourages the development of international export markets in areas where U.S. dairy products are not competitive due to subsidized dairy products from other countries.

“‘These allocations illustrate our continued support for the U.S. dairy industry, which has seen its international market shares erode, in part, due to the reintroduction of direct export subsidies by the European Union earlier this year,’ said Vilsack. ‘The Obama Administration remains strongly committed to the pledge by the Leaders of the Group of Twenty to refrain from protectionist measures. Our measured response is fully consistent with our WTO commitments and we will make every attempt to minimize the impact on non-subsidizing foreign suppliers.’”

A news release issued by the House Agriculture Committee on Friday indicated that, “Agriculture Committee Chairman Collin C. Peterson expressed his appreciation for Agriculture Secretary Tom Vilsack’s decision to use the Dairy Export Incentive Program to assist U.S. dairy farmers who are suffering from record low prices nation-wide. Peterson strongly encouraged the Administration to take this action to provide relief to dairy farmers.”

Likewise, Senate Agriculture Committee Chairman Tom Harkin (D-Iowa), noted in a statement from Friday that, “I applaud Secretary Vilsack and the Administration on today’s announcement. It is clear that with prices as low as they are today, the U.S. dairy industry is struggling and federal action needs to be taken. A decline in overseas sales – caused partially by a direct export subsidy reintroduced by the European Union earlier this year – has hurt our dairy producers here at home. The allocations announced today will help address this issue, all within the bounds of our World Trade Organization obligations.”

Reuters writer Christopher Doering reported on Friday that, “Several years of strong demand and tight supplies had buoyed the U.S. dairy industry, pushing prices to their highest on record in 2007. But milk prices have since plummeted by 50 percent as consumers at home and abroad trimmed spending amid the economic downturn and a glut of world supply.”

And the AP reported yesterday that, “A collapse in milk prices has wiped away the profits of dairy farmers, driving many out of business while forcing others to slaughter their herds or dump milk on the ground in protest.”

With respect to the USDA action on Friday, Matt McKinney pointed out on Friday at the Minneapolis Star-Tribune Online that, “The news follows USDA efforts in March to shore up the falling price of milk by buying domestic supplies and sending them to food shelves. That program will lead to the purchase of some 5 million pounds of butter and 194 million pounds of nonfat dry milk by the end of this year, according to USDA estimates.”

While the USDA has taken these two actions to assist the dairy sector, a news release issued on Friday by the Georgia Peanut Commission pointed out that, “Despite the market issues faced by U.S. peanut producers, the salmonella recall and an oversupply of peanuts, U.S. government purchases of peanut butter have declined by 63 percent since peak purchases in 1992. The Georgia Peanut Commission is requesting assistance on behalf of Georgia’s 4,500 peanut growers and urging USDA to purchase peanut butter in the government feeding program.”

Meanwhile, the action taken by USDA on Friday regarding dairy exports has meet with criticism from both Australia and New Zealand.

The Brisban Times Online (Australia) reported on Saturday that, “US government plans to reintroduce dairy export subsidies are a ‘serious backward step’ towards protectionism and could lead to other nations following suit, the federal government says.

“The move to reinstate dairy export subsidies ‘flies in the face made by G20 leaders not to impose protectionist measures’, a joint statement between Agriculture Minister Tony Burke and Trade Minister Simon Crean says.”

Josh Gordon reported on Sunday at The Age Online (Australia) that, “The Australian embassy in Washington immediately registered its objection with senior US officials after the announcement. Australia will also demand urgent meetings between the US and other non-subsidising producers such as New Zealand.”

And, a New Zealand Press Association article from Sunday reported that, “Dairy Companies Association of New Zealand chairman Malcolm Bailey said he was frustrated and disappointed with the move, which would undermine confidence in the global market.

It would hurt New Zealand farmers who ‘rely on the world market rather than subsidies for their incomes’”.

Meanwhile in the EU, Bloomberg writer Rudy Ruitenberg reported yesterday that, “Dairy farmers from across Europe clashed with police in Brussels while others in France blocked factories of milk processor Danone SA, the world’s largest yogurt maker, in protest at falling milk prices.

“Farmers in the Belgian capital demonstrated outside a meeting of European agriculture ministers today, breaking through crowd barriers and parading a cow in the street. In France, 12,600 farmers blocked 84 dairy plants, said Arnaud Lemoine, a spokesman for the country’s Federation of Agricultural Producer Associations.”

Biofuels-Indirect Land Use

A news release issued on Thursday by Sen. Chuck Grassley (R-Iowa) stated that, “Senator Chuck Grassley today introduced legislation to ensure the biofuels industry is not penalized for the Environmental Protection Agency’s use of non-scientific data when determining greenhouse gas emissions. Grassley’s bill improves several provisions with the expanded Renewable Fuels Standard that were enacted in the 2007 Energy Independence and Security Act.

Grassley’s bill is a companion to legislation introduced last week by Collin Peterson, the chairman of the House Agriculture Committee.”

Thursday’s release explained that, “Among other things, the bill ensures that greenhouse gas calculations are based on proven science by removing the requirement to include indirect land use changes, and exempts from the lifecycle greenhouse gas reduction requirements any biodiesel plants that were in operation or under construction prior to the date of enactment of the Energy Independence and Security Act of 2007.”

On the same issue, The New York Times editorial board indicated on Sunday that, “Representative Collin Peterson is furious that the Environmental Protection Agency is doing its job. The Minnesota Democrat says the agency is trying to kill off the biofuels industry — to the dismay of the corn farmers and ethanol producers he represents. He has vowed to vote against any bill, including climate change legislation, that might require the involvement of the E.P.A.

“What inspired this tirade was an E.P.A. draft proposal showing how it intended to measure the greenhouse gas emissions from corn ethanol and other renewable fuels. The agency said it will not make any final rules until it completes further research, but its preliminary findings were not flattering to corn ethanol.”

The Times opinion item stated that, “Lisa Jackson, the E.P.A. administrator, can expect heavy pressure in the months ahead. The ethanol industry and its Congressional champions will argue that the science is unclear, that indirect effects cannot be measured accurately, and so on.

Ms. Jackson should stand her ground. Biofuels have an important role to play, and some will eventually be produced without pushing up food prices or increasing emissions. It is the E.P.A.’s duty to give the most unbiased accounting it can of their strengths and defects.”

In related news, DTN South America Correspondent Kieran Gartlan reported on Friday that, “In Brazil, soybean area has actually shrunk during the past five years from 58 million acres in 2004 to 53 million acres this season, while corn acres have remained unchanged.

“Furthermore Amazon deforestation has fallen for the past five years, from 10,588 square miles in 2004 to 4,620 square miles last year, according to figures from Brazil’s National Institute of Space Research (INPE).”

Gartlan added that, “Brazil’s Agriculture Minister Reinhold Stephanes recently claimed the country could easily triple its grain and beef production without having to cut down a single tree.

“Speaking at the BM&FBovespa 2009-10 Agricultural Outlook seminar earlier this month, Stephanes said Brazil’s grain production could be increased by transforming inefficient pasture land into crops.”

Climate Change

David A. Fahrenthold
reported in today’s Washington Post that, “As the [Waxman-Markey climate] legislation moves toward the House floor, Democrats are calling it a ‘jobs bill’ — because of new business activity they say the system would stimulate — and Republicans are labeling it a ‘light-switch tax,’ because energy costs would go up. But neither characterization does justice to its ambitions, or its unknowns. The proposal is far more complex than anything tried before in this country, and a close parallel in Europe turned out to be seriously flawed.”

With respect to the issue of carbon offsets (See Monday’s FarmPolicy.com update), the Post article indicated that, “Another potential problem is that the bill requires the EPA to begin seeing the future.

“It uses carbon offsets to expand the pool of available credits: Instead of buying an allowance to cover their pollution, a factory could buy an offset to negate it. An offset would be a certificate showing that, for example, emissions have been avoided, or taken up by newly planted trees, or captured and pumped underground.

“But this is the tricky part: how can one be sure an emission was avoided?

“‘That’s essentially unobserved, and fundamentally unobservable,’ said Robert Stavins, a professor of business and government at Harvard University. ‘I mean, who knows what you would have done?’”

Farmland Values

Dan Piller reported last week at The Des Moines Register that, “Iowa farmland values dropped an average of 7 percent between January and April, the second consecutive quarterly decline in a survey of bankers by the Federal Reserve Bank of Chicago.

“The first-quarter drop follows a decline of 6 percent in the fourth quarter of 2008. It also tracks a 7.6 percent decline in average farm values in Iowa between September 2008 and March of this year reported by the Iowa Farm and Land Chapter of Realtors.”

Meanwhile, Steve Jordon reported on Saturday at the Omaha World-Herald Online that, “The Midwest’s rural economy showed improvement for the third straight month but still has significant weakness, according to bankers surveyed this month by Creighton University.

“The 11-state region’s nonmetro areas are being hurt by declining farm income, cutbacks by rural manufacturers and the overall weak U.S. economy, said Creighton economist Ernie Goss.

“The MainStreet Index calculated from the survey was 36.2. An index below 50 indicates economic decline, and the index has been below 50 for 15 straight months.

“But the latest number was the highest since September and higher than the indexes for April, 21.7 and March, 18.7.”

Keith Good

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