FarmPolicy

December 6, 2019

Food Security (WASDE); Biofuels; Farm Bill; Climate Change; Rural America; and Political Notes

Food Security (WASDE)

On Friday, USDA’s National Agricultural Statistics Service (NASS) released its Crop Production report, which indicated that, “Corn production is forecast at 12.7 billion bushels, down 4 percent from the September forecast and down 3 percent from last year’s record production of 13.1 billion bushels [related graph]. Based on conditions as of October 1, yields are expected to average 155.8 bushels per acre, down 6.7 bushels from the previous month and 8.9 bushels below last year’s record of 164.7 bushels.”

The NASS report added that, “Soybean production is forecast at a record high 3.41 billion bushels, down 2 percent from September but 1 percent above last year [related graph]. Based on October 1 conditions, yields are expected to average a record high 44.4 bushels per acre, down 0.3 bushel from last month but up 0.4 bushel from last year.”

Also on Friday, the World Agricultural Outlook Board (WAOB) released its monthly World Agricultural Supply and Demand Estimates (WASDE) report, which incorporated the NASS production report.

The WASDE report included this overview table of corn supply and demand variables, and stated that, “The season-average farm price [for corn] is projected at $4.60 to $5.40 per bushel, up 60 cents on both ends of the range.”

Likewise, Friday’s WAOB report included this overview table of soybean variables, and explained that, “The U.S. season-average soybean price range for 2010/11 is projected at $10.00 to $11.50 per bushel, up 85 cents on both ends of the range.”

With respect to wheat, Friday’s WASDE update added that, “The 2010/11 season-average farm price is projected at $5.20 to $5.80 per bushel compared with $4.95 to $5.65 per bushel last month.”

Bloomberg writers Jeff Wilson and Whitney McFerron reported on Friday that, “Grain and oilseed prices rose the most allowed by the Chicago Board of Trade after the U.S. government said supplies will be smaller than forecast last month, increasing the cost of producing food and fuel.”

“Corn prices are near the highest level in two years, after surging 41 percent since June, as unfavorable weather hurt crops in the U.S., the world’s largest grower and exporter. The jump in feed costs today sent shares of Tyson Foods Inc., the largest U.S. chicken processor, to its biggest drop since July 2009 and revived concern that food inflation will accelerate,” the Bloomberg article said.

Reuters writer Charles Abbott pointed out on Friday that, “Private consultant John Schnittker said USDA’s steep reduction in corn yields ‘is almost unprecedented’ and added that the stocks to use ratio ‘is pretty low, putting real pressure on acreage and yield next year.’”

Scott Kilman and Liam Pleven reported in Saturday’s Wall Street Journal that, “The government’s cut in its harvest projection is having such a big impact on markets because demand for grain is red hot, thanks in part to the accelerating economies of emerging nations such as China, which is expected to consume roughly a quarter of all the soybeans grown in the U.S. this year, and perhaps a third of all U.S. cotton. The drought that stopped Russia’s wheat exports this summer also is lifting U.S. grain exports.

Corn consumption is so high that the corn harvest now foreseen by USDA economists could leave the U.S. with the tightest reserves since the mid-1990s by this time next year. Unlike then, the U.S. doesn’t have nearly as much idled farmland to shove into production.”

The Journal article noted that, “‘The U.S. will have had its four biggest corn crops in the past four years, but supplies are still tight,’ said Luke Chandler, director of agricultural commodity research in the London offices of Rabobank, a large agricultural lender. ‘It’s almost becoming a precarious situation.’”

Gregory Meyer reported on Friday at the Financial Times Online that, “Fears of a global food crisis swept the world’s commodity markets as prices for staples such as corn, rice and wheat spiralled after the US government warned of ‘dramatically’ lower supplies.

“An especially hot summer in the US, droughts in countries including Russia and Brazil and heavy rain in Canada and Europe have hit many grain and oilseed crops this year. This has raising concern of a severe squeeze in food supplies and a repeat of the 2007-08 food crisis.”

A Reuters article posted on Friday at DTN (link requires subscription) stated that, “[The current WASDE estimate for corn] is still a sizable crop; the all-time high is 13.11 billion bushels, harvested a year ago. But corn demand has risen 12 percent since 2008, largely due to a billion more bushels of corn now being used to produce ethanol for fuel.

“‘My biggest concern is that people are going to start again finger pointing at the ethanol industry,’ [U.S. Grains Council president Thomas Dorr] said.”

Friday’s Reuters article explained that, “The ethanol industry now uses roughly a third of the annual corn crop to make fuel. Moreover, the Obama Administration as part of its push for renewable, non-oil energy may allow an ethanol blend of up to 15 percent in U.S. gasoline, from 10 percent now. That policy shift could come as early as next week.

“Dorr said that assessing ethanol’s effect on food prices is complex. Removing corn from the feed chain for livestock is one thing, he said, but ethanol production produces millions of metric tons of feed in the form of a byproduct called distiller’s dried grains (DDG).”

Meanwhile, Philip Brasher reported in yesterday’s Des Moines Register that, “The spikes in global food prices in 2007 and 2008 led to charges that U.S. policies were driving up the cost of food for the world’s poor by diverting crops to biofuels. But there also was a new commitment from the United States and other developed countries to help poor farmers increase their own food production.

“The Obama administration in 2009 pledged to spend $3.5 billion on agricultural development assistance through a program that will require developing countries to increase their own agriculture spending while reversing policies that are seen as hurting poor farmers.

“The administration’s Feed the Future initiative will fund a number of programs aimed at helping small-scale farmers, most of whom are women, learn better farming methods, obtain fertilizer and better seeds and gain better access to markets.”

Biofuels

Heather Zichal, the Deputy Assistant to the President for Energy and Climate Change, indicated in a White House Blog update on Friday that, “As Congress examines options for extending the biodiesel and ethanol tax credits, the Obama Administration believes in continued financial support for biofuels that can help us meet our energy security and environmental goals. Stakeholders have put forward reform ideas that would provide continued support for first generation ethanol and biodiesel, while simultaneously accelerating the development of infrastructure and research, development, and rapid deployment of cellulosic ethanol and other advanced biofuels, which will be increasingly important in the years to come. We share these priorities, and are in the beginning stages of engaging with key stakeholders to explore options for reform. At this point, no final policy decisions have been made, and we believe that the evaluation of any proposals should be informed and guided by a thorough understanding of what has been successful in the past as well as what is needed for the future. We look forward to an ongoing discussion to identify the policies that will help us achieve our long-term biofuels targets.

“Ultimately, we need a set of policies that will catalyze the tremendous potential of renewable domestic biofuels in order to provide more energy security, cut pollution, and create new opportunities for America’s farmers from coast to coast. Look for a speech from Secretary of Agriculture Tom Vilsack on October 21st for more details.”

Farm Bill

The Senate Budget Committee will be holding a field hearing today in North Dakota titled, “Writing the Next Farm Bill.” Commodity and organization group leaders are scheduled to testify.

Meanwhile, Kristen M. Daum reported yesterday at the Grand Forks Herald Online (North Dakota) that, “Work on the bill is already under way, with initial efforts that began earlier this year by House Agriculture Committee Chairman Collin Peterson, a Democrat who represents western Minnesota.”

The article noted that, “The current farm bill, which expires at the end of 2011, provides a solid foundation for advancing agriculture policy in the next session, [North Dakota Congressman Earl Pomeroy (D)] said.

“‘We’ve got a farm bill that’s working, I think, best ever,’ said Pomeroy, who sits as a senior member of the House Agriculture Committee.

“Particularly, Pomeroy said, he likes the strong crop insurance and disaster aid programs that provide stability for farmers in a volatile line of work.”

Yesterday’s item added that, “Pomeroy also would like to see reforms made to direct payments, an area he said could be a cost-saver when federal spending will be tight.

“‘The farm bill needs to be there when people have tough times,’ Pomeroy said. ‘I don’t think it needs to send checks when people are in good times. … I’m not talking about ending direct payments, but some alternatives to the program consistent with the budget concerns that the next Congress is going to have.’”

Anemona Hartocollis reported in Friday’s New York Times that, “Mayor Michael R. Bloomberg may face legal and political hurdles in carrying out his ambitious plan to bar food-stamp recipients from using their benefits to buy sugar-sweetened drinks, food policy experts said Thursday.

“New York City on Wednesday asked the United States Department of Agriculture for permission to conduct a two-year experiment barring the city’s 1.7 million users of food stamps from spending them on soda and other beverages with added sugar. But experts said that the Agriculture Department lacked the authority to grant such permission, and that the proposal would require Congress to change laws governing the food-stamp program.”

The article noted that, “Congress has considered the idea before, said Joel Berg, executive director of the New York City Coalition Against Hunger, who served in the federal Agriculture Department from 1993 to 2001. ‘They considered doing it and decided not to,’ he said. ‘What you can purchase and not purchase in the food-stamp program is described in extraordinary detail by federal law.’

“Mr. Berg said the definition of food for purposes of the food-stamp program had not changed since 1977: ‘any food or food product for home consumption except alcoholic beverages, tobacco, and hot foods or hot food products ready for immediate consumption.’

“The Agriculture Department would not say Thursday whether it would, or could, grant the mayor’s request. But it rejected a similar proposal from Minnesota in 2004 on several grounds, including a couple that might seem germane: that food-stamp rules would be inconsistent across state lines, and that it would perpetuate a stigma that food-stamp recipients are not capable of making buying decisions.”

Climate Change

Tennille Tracy reported on Saturday at The Wall Street Journal Online that, “The Obama administration’s move to curb greenhouse gases using the Environmental Protection Agency has drawn legal challenges from more than 90 companies and trade associations, giving the courts another opening to shape U.S. climate policy in the absence of legislative action.

“The most recent lawsuit attacking the EPA’s climate policy was filed Thursday by the California-based Pacific Legal Foundation. The conservative group is challenging EPA’s so-called endangerment finding, which concluded that greenhouse gases posed a risk to public health. The finding is the basis of proposed EPA regulations to cut carbon dioxide emissions using the Clean Air Act.”

The Journal article pointed out that, “EPA has denied numerous requests to reconsider its endangerment finding. The agency says its findings are rooted in science and claims ‘these types of arguments are based on a manufactured controversy and provide no evidence to undermine our determination,’ an EPA spokesman said.”

Ben Geman reported on Friday at The Hill’s Energy Blog that, “West Virginia Gov. Joe Manchin (D), who trails in recent polls in his Senate race, said Friday that President Obama is ‘dead wrong’ for supporting cap-and-trade plans to curb greenhouse gas emissions.

“Manchin — running in a state that Obama lost badly in the 2008 presidential election — has broken sharply with administration environmental policies he calls harmful to the coal-rich state.

“Two days ago, Manchin announced the state is suing the Environmental Protection Agency (EPA) over coal-mining regulations that he says usurp state powers and overreach.”

The Wall Street Journal editorial board indicated today that, “If Democrats take a drubbing in November, the Obama Administration is likely to turn to regulation to achieve its ‘transformational’ agenda. Which is all the more reason to cheer on Texas as it pushes back against the EPA’s illegal attempt to rewrite the nation’s clean air laws.

To wit, the Lone Star State is resisting the Environmental Protection Agency’s decision to regulate carbon under the clean air laws of the 1970s. These regulations will be damaging enough on their own. But the EPA and chief Lisa Jackson are also threatening to punish Texas and other green dissenters with a de facto moratorium on any major energy or construction projects. Just what the economy needs.

“Under the Clear Air Act, the EPA’s national office chooses priorities, but state regulators run the relevant programs and issue the necessary permits. When orders from HQ change, as with carbon over the last year, states get three years to revise their ‘implementation plans.’ But in August, Ms. Jackson decided that the law posed too long a climate wait and decreed that if these plans aren’t updated by an arbitrary January 2011 deadline, her office will override the states and run the carbon permitting process itself.”

Rural America

Alan Scher Zagier reported in yesterday’s Washington Post that, “Suzanne Feldman realizes that she’s an anomaly: a soon-to-be college graduate who wants to return to the languid rhythms of rural life rather than flee.

“The aspiring high school math teacher is a member of the inaugural class of the Ozarks Teacher Corps, a group of southwest Missouri teachers-in-training who receive $4,000 annual scholarships in exchange for a three-year commitment to work in rural school districts after graduation.”

The article explained that, “Faced with chronic teacher shortages and unable to compete with the higher salaries and greater social opportunities found in big cities and suburban districts, a growing number of rural school systems are turning to familiar faces to teach their students.

“They know teachers with rural backgrounds are more likely to stick around and not leave after a year or two.”

Political Notes

Neil King Jr. and Peter Wallsten reported in Saturday’s Wall Street Journal that, “Republican challengers are suddenly threatening once-safe Democrats in New England and the Northwest, expanding the terrain for potential GOP gains and raising the party’s hopes for a significant victory in next month’s elections.”

However, Mark Leibovich, in an article from yesterday’s New York Times, quoted House Speaker Nancy Pelosi as saying, “We’re not losing.”

With respect to the House Agriculture Committee, Tricia Miller reported on Saturday at Roll Call Online that, “Late in the election cycle, House Republicans are looking for more vulnerable Democratic incumbents to target, but a newly released poll suggests they won’t find one in California’s 18th district.

“Democratic Rep. Dennis Cardoza led Republican rancher Mike Berryhill by 16 points in a J. Moore Methods, Inc., survey taken Sept. 27-29. Cardoza got 53 percent to Berryhill’s 37 percent in the poll taken for the Congressman’s campaign.”

But the article added that, “The poll differs from a SurveyUSA poll taken Oct. 5-6. In that poll, Cardoza led Berryhill by a much closer margin, 50 percent to 44 percent. Taken for KFSN-TV in Fresno, the poll took opinions from 800 registered voters in both English and Spanish.”

Keith Good

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