FarmPolicy

December 21, 2014

Ag Economy; Animal Agriculture; Food Safety; Climate Legislation; and Crop Insurance

Ag Economy

Ken Anderson reported yesterday at Brownfield that, “Sixty-one percent of farmers surveyed by Rabobank say they are very concerned or extremely concerned about the agricultural economy.

“The survey results break down this way: 30 percent very concerned and 31 percent extremely concerned, with another 34 percent saying they are somewhat concerned. And Rabobank says, regardless of acreage, U.S. producers are more distressed regarding their income. Approximately 40 percent of those surveyed believe their income will be worse next year. However, 27 percent of respondents have some optimism that their income will improve.”

In related news, the AP reported today that, “The struggling U.S. dairy industry must be restructured to avoid cycles of boom and bust, Agriculture Secretary Tom Vilsack said Monday, less than a week after Congress announced a $350 million dairy bailout.

“Dairy farmers benefited in recent years from higher milk prices and growing demand in countries such as China. But demand fell off with the economic downturn, and wholesale milk prices began plummeting last fall. At the same time, feed and other costs remained high.”

Today’s article added that, “The secretary also said he expects the Agriculture Department to look at its price support and marketing programs to see if changes can be made to help stabilize prices.

“‘We need to figure out what changes, if any, we need to make to our support programs, to our marketing programs, to who’s included in those programs, to see if there is any way we can create greater stability,’ Vilsack said.

“He noted dairy farmers have been selling some cows to help reduce the nation’s milk glut and bring production more in line with demand. He said he’s glad to see the sales managed in a way that does not harm beef prices.”

Vilsack told the farmers and ranchers that Congress and USDA officials recognize the dairy industry isn’t the only one hurting. He said the USDA is trying to help hog farmers by buying additional pork for programs that feed poor people, encouraging other federal agencies to buy more pork, and promoting the sale of pork to other nations,” the AP article said.

Meanwhile, a news release issued yesterday by the American Farm Bureau Federation (AFBF) stated that, “Retail food prices at the supermarket decreased slightly for the fourth consecutive quarter and are significantly lower than one year ago, according to the latest American Farm Bureau Federation Marketbasket Survey. The informal survey shows the total cost of 16 food items that can be used to prepare a meal was $46.03, down $.26 from the second quarter of 2009 and $4.18 lower or about 10 percent less compared to one year ago.”

The news item added that, “AFBF’s third quarter marketbasket survey tracks closely with the federal government’s August 2009 Consumer Price Index (www.bls.gov/cpi) report for dairy and related products, which showed a slight decline (-.4 percent) for the ninth consecutive month.

As retail grocery prices have increased gradually over time, the share of the average food dollar that America’s farm and ranch families receive has dropped.”

In news regarding other aspects of the agricultural economy, Robert Pore reported yesterday at The Lexington Clipper-Herald Online (Nebraska) that, “With beef exports to Japan picking up, Rep. Adrian Smith, R-Neb., would like to see that trend continue for American agricultural products.

Last week Smith, who is a member of the House Agriculture Committee, sent a letter requesting a committee hearing on developing new overseas markets for U.S. farm products.

In the letter to Rep. Mike McIntyre, chairman of the House Agriculture Subcommittee on Rural Development, Biotechnology, Specialty Crops, and Foreign Agriculture, Smith specifically called for testimony from the U.S. Department of Agriculture’s Foreign Agricultural Service.”

Yesterday’s article indicated that, “‘With so much uncertainty coming from Washington, agriculture producers are feeling extremely strained and uneasy,’ Smith said. ‘Whether it is new environmental regulations or volatile energy prices, the cost of doing business for farmers and ranchers is on the rise.’

“According to a recently released report by the Federal Reserve Bank of Kansas City, Smith said, U.S. agriculture producers will need to reach more and more foreign customers in order to restore profits.”

And with respect to trade activity, Alan Beattie reported yesterday at the Financial Times Online that, “Comparisons between the global financial crisis and the Great Depression in the 1930s have been a staple of the international commentariat ever since financial markets froze last year.

“Such parallels have seemed a little overblown for some measures of output, such as industrial production.”

Mr. Beattie stated that, “However, a tracking comparison by Barry Eichengreen at the University of California and Kevin O’Rourke at Trinity College Dublin shows the volume of world trade falling about twice as fast as during the Depression.

“In the 15 months after the peak in the global economy in June 1929, commerce fell by around 10 per cent; in the same period after the recent turning point in April 2008, global trade was down by 20 per cent.”

Animal Agriculture

Sarah Muirhead reported yesterday at Feedstuffs Online that, “‘Eat food. Not too much. Mostly plants.’ Those are the seven simple words author Michael Pollan advocates as the ‘short answer’ to how people should eat ‘to be maximally healthy.’

“While there certainly could be some debate on the ‘appropriate’ amount of meat and dairy to consume in relation to plants, Pollan’s advice to eat fewer processed foods and more whole, fresh foods is one on which most all likely would agree.

The parting of ways for agriculture, however, comes when the discussion turns to ‘how’ food should be produced and ‘by whom.’”

Yesterday’s article noted that, “Pollan also claims industrial meat production is notoriously brutal to animals and extravagantly wasteful of resources such as water, grain and antibiotics;” and added that, “As for the responsibility of U.S. farmers to ‘feed the world,’ Pollan said that argument is nothing more than an effort by large agribusinesses to make farmers feel guilty and to get them to continue to buy more product and technology. Pollan advocates that the world instead be allowed to feed itself.”

DTN Ag Policy Editor Chris Clayton penned an article regarding Michael Pollan on Friday entitled, “Why Does This Man Hate Commercial Agriculture?” (link requires subscription), where he reported that, “To Pollan, modern livestock production stems from overproduction of corn, as does ethanol. Packaged food stuffed into grocery stores is created by scientists developing synthetic ingredients from corn and soybeans that separate people from ‘real food.’

“‘All roads pointed to a corn field in Iowa. I was really amazed how the corn and soy crop is really at the base of the American food chain,’ Pollan explained. ‘Whether I was writing about a fast-food meal, a processed-food meal, meat — any number of meats — if you wanted to find the real source of that, the photosynthesis that created that carbohydrate, you had to go through a corn field in Iowa.’

“Cheap food worked for a long time, but now is damaging the environment and health of Americans through higher rates of obesity, diabetes and heart disease, he says. The country needs to adapt to policies that promote quality over quantity and improve the environment, even if it means we’ll have to pay more for that food, adds Pollan.”

Food Safety

Dow Jones writer Jay Miller reported yesterday that, “The U.S. Department of Agriculture and the Food and Drug Administration will work together to develop safety rules for fresh produce.

“The House of Representatives, at the behest of U.S. President Barack Obama, in late July passed a bill that would give the FDA broader authority in the wake of a wave of illnesses involving peanuts, spinach, hot peppers and other foods. A version of that bill awaits a Senate vote.

“Through the initiative, the FDA is gathering information and seeking feedback from the fresh produce industry, including small and organic farmers. In addition, USDA and FDA officials have been meeting together with farmers and local food safety officials.”

Meanwhile, in response to an article that was published in Sunday’s New York Times (“E. Coli Path Shows Flaws in Beef Inspection”), Sec. of Agriculture Tom Vilsack issued a statement yesterday, which noted in part that, “The story we learned about over the weekend is unacceptable and tragic. We all know we can and should do more to protect the safety of the American people and the story in this weekend’s paper will continue to spur our efforts to reduce the incidence of E. coli O157:H7. Over the last eight months since President Obama took office, USDA has been aggressive in its efforts to improve food safety, and has been an active partner in establishing and contributing to President Obama’s Food Safety Working Group.

“Protecting public health is the sole mission of the USDA Food Safety and Inspection Service. FSIS has continued to make improvements to reduce the presence of E. coli O157:H7 and the agency is committed to working to reduce the incidence of foodborne illnesses caused by this pathogen.”

Climate Legislation

Mike Allen reported yesterday at Politico.com that, “Two coalitions of top U.S. corporations are using Washington visits and more than $1 million in advertising to prod the Senate and White House to accelerate work on an energy and climate bill.

“Executives from the groups tell POLITICO that they will argue they need certainty to plan for the future. And although some companies disagree, these executives contend that many businesses, and the overall economy, would eventually benefit from the new law.”

Mr. Allen explained that, “[I]n a new open letter to President Barack Obama and the U.S. Senate, two dozen major brands — ranging from eBay to HP to Gap to PG&E — declare: ‘We are business leaders from companies of all sizes and many sectors calling for your leadership. We call on you to enact comprehensive legislation. … Now it’s time for the United States Senate to act.’

To make the case, more than 150 business leaders from utilities, manufacturers and clean-energy companies plan to ‘swarm’ Capitol Hill on Tuesday and Wednesday. The fly-in is being organized by We Can Lead, an umbrella business organization.

The CEOs will hold a news conference at the Capitol at noon Wednesday. They are scheduled to eat dinner with Interior Secretary Ken Salazar on Tuesday, and to hold a White House meeting with Energy Secretary Steven Chu and Commerce Secretary Gary Locke on Wednesday morning. Lobbying meetings are scheduled in 35 Senate offices.

In a related article, Jim Snyder reported yesterday at The Hill Online that, “Apple announced Monday it would leave the U.S. Chamber of Commerce because of the group’s stance against climate change as the nation’s premier business lobby continued to hemorrhage members.

“Apple is the fourth company to leave the Chamber over global warming. A fifth, Nike, withdrew from the Chamber’s board but remains a member of the group.”

The Hill article added that, “In response to the departures last week, Chamber President and CEO Tom Donohue released a statement clarifying that the group supported climate legislation that would not hurt the economy and required international participation.

“‘The U.S. Chamber of Commerce continues to support strong federal legislation and a binding international agreement to reduce carbon emissions and address climate change,’ Donohue said. He called the Chamber’s position commonsense and mainstream.

In the same statement, the Chamber said it opposed a move by the Environmental Protection Agency to regulate carbon through the use of the Clean Air Act. The EPA announced last week its intention of regulating carbon dioxide and other greenhouse gas emissions for large power plants and industrial facilities.”

With respect to the executive branch and climate issues, Juliet Eilperin reported in today’s Washington Post that, “The federal government will require each agency to measure its greenhouse-gas emissions for the first time and set targets to reduce them by 2020, under an executive order signed by President Obama Monday.

“The measure affects such things as the electricity federal buildings consume and the carbon output of federal workers’ commutes.”

In an update posted yesterday at the Energy and Environment Blog (National Journal), Sen. Lisa Murkowski (R-Alaska) indicated that, “Only one idea, a carbon cap-and-trading scheme, has received significant attention on Capitol Hill. And yet, serious doubt has been cast on such a system’s ability to keep energy affordable and our economy strong while still achieving substantive emission reductions. Other policy options — a tax on carbon, massive investment in advancing clean energy technology, even geo-engineering — have largely been ignored.

“I recognize that time is short and that action is needed soon. But at what point did we decide cap-and-trade was the most effective way to address climate change? Setting politics aside, are there other approaches capable of achieving the same results at lower cost and with greater regulatory efficiency? Would the debate over climate policy benefit from an attempt to re-evaluate our options?”

In response to the question, the blog update included the opinion of six knowledgeable individuals on the issue, including Robert C. Sisson, President, Republicans for Environmental Protection, who stated that, “The single most important step that Congress must take to reduce greenhouse gas emissions is to put a price on carbon, either through a cap-and-trade system or a carbon tax.

Without a price on carbon, other strategies for reducing emissions would fall short.”

On the issue of a taxing carbon, Dow Jones writer Alessandro Torello reported yesterday that, “The European Commission will propose raising a minimum tax on energy products such as gasoline based on their carbon dioxide emissions, as part of a broader plan to reform energy taxation in the 27-nation bloc, a draft document obtained by Dow Jones Newswires showed Monday.

“The commission, the E.U.’s executive body, wants a minimum tax on energy products to be partly based on how much CO2 these products emit, rather than only on their energy content, the draft showed.”

Crop Insurance

A news release issued last week by National Crop Insurance Services (NCIS) indicated that, “[NCIS] is urging farmers with grain quality concerns to contact their crop insurance agent or company to determine coverage options in case of damage to crops from disease, weatherrelated events, or other causes.

“‘While we, like everyone, are closely monitoring the mycotoxin situation and potential frost,’ said Bob Parkerson, President of NCIS, ‘the key to protection is being proactive. Our job is to ensure that farmers have what they need to make informed decisions so that they can manage their risks and go about the business of farming.’

“Part of the information farmers need to understand is exactly what quality adjustment is under the Federal crop insurance program. NCIS is providing some general guidance on quality adjustment, but stresses that since details vary, farmers should contact agents and companies directly.”

Marcia Zarley Taylor noted on Friday at DTN’s Minding Ag’s Business Blog that, “As with aflatoxin outbreaks, your best defense is to ask for an adjuster to visit your affected fields before the combines roll. Crop insurance generally ends at harvest, so it is important that your insurer samples the crop prior to storage, insurers stress.

“‘We are not experiencing white mold on corn in northwest Indiana,’ e-mails Don Cunningham, a crop insurance specialist with Farm Credit Services of Mid-America in northwest Indiana. ‘However we are experiencing white mold in a large portion of soybeans in northwest Indiana. The damage seems to be around the lower levels 3-4 percent damage and they are being docked around 4 to 6 cents per bushel.’

“Once you contact your insurance company, adjusters will visit the fields and take photos. ‘There is not much they can do unless the entire field is so badly affected that the entire field is rejected, since MPCI crop insurance does cover the white mold as an insurable loss,’ he says.”

Keith Good

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