FarmPolicy

May 30, 2017

Farm Bill; Ag Economy; Animal Agriculture; Trade; and Budget Issues

Farm Bill Issues

Ron Hays of the Radio Oklahoma Network reported yesterday at the Oklahoma Farm Report Online that, “The Chairman of the House Agriculture Committee was back in his home district, tending to the folks on a community by community basis. [GOP] Congressman Frank Lucas of Oklahoma’s Third Congressional District held a total of 14 Field Hearings during four days of the Easter Congressional break.

“His last stop was El Reno, the county seat of Canadian County. During the hour session, Congressman Lucas took the first fifteen minutes and talked about the federal debt and the upcoming debt to raise the debt ceiling, about Libya and about the process of his Committee preparing to write the next farm bill. About 50 citizens showed up, and they offered commentary and asked a few questions on subjects like Healthcare, Social Security and Medicare.”

Mr. Hays added that, “After his hour before the folks, we retreated for a conversation about a variety of agricultural issues, including what ramifications the upcoming debt ceiling vote may have on farm program spending- both this year as well as in the future.”

The full audio interview with Mr. Hays and Chairman Lucas, which covered a variety of issues, is available here, while a short clip featuring comments from Chairman Lucas on budgetary and Farm Bill issues can be heard here (MP3- 3:54).

Meanwhile, in news regarding federal nutrition programs, Alexandra Zavis reported in today’s Los Angeles Times that, “With many families struggling to feed themselves, Los Angeles County officials announced new efforts Tuesday to encourage eligible residents to apply for federal nutrition benefits.

“The efforts include an outreach campaign next month and a new online application form, Philip L. Browning, director of the Department of Public Social Services, said at a Los Angeles County Board of Supervisors meeting.”

Today’s article added that, “More than 1.7 million L.A. County residents were at risk of hunger in 2009, more than in any other county in America, according to research published recently by Feeding America, the country’s largest network of food banks.

“Nearly 1 million county residents receive food stamps, but participation in California has lagged behind most other states. Just half the eligible Californians were receiving the benefit in 2008, the most recent year for which federal estimates are available. The national average is 66%.”

In other news regarding SNAP benefits (food stamps), USDA’s Economic Research Service (ERS) released a report yesterday titled, “Food Security Improved Following the 2009 ARRA Increase in SNAP Benefits.”

An ERS summary of the report indicated that, “The American Recovery and Reinvestment Act of 2009 increased benefit levels for the Supplemental Nutrition Assistance Program (SNAP, formerly known as the Food Stamp Program) and expanded SNAP eligibility for jobless adults without children. One goal of the program changes was to improve the food security of low-income households. We find that food expenditures by low-income households increased by about 5.4 percent and their food insecurity declined by 2.2 percentage points from 2008 to 2009. Food security did not improve for households with incomes somewhat above the SNAP eligibility range. These findings, based on data from the nationally representative Current Population Survey Food Security Supplement, suggest that the ARRA SNAP enhancements contributed substantially to improvements for low-income households.”

An update posted yesterday at The Atlantic Online noted that at the magazine’s Food Summit yesterday, “[Deputy Secretary of Agriculture Kathleen Merrigan] took a strong stance on the federal government’s Supplemental Nutrition Assistance Program (SNAP), colloquially known as the food stamps program, criticizing Congress for considering a Republican budget plan that would cut SNAP benefits significantly. Obama’s economic recovery plan, she pointed out, boosted participants’ SNAP benefits by $80 per month, and the USDA has recently helped develop policies that encourage SNAP enrollment in more than 20 states. Merrigan added that according to a policy report released today by USDA economic research, fewer Americans went without food in 2009 than in 2008—a sign that things have been moving in the right direction.”

And in other news regarding federal nutrition programs, a news release yesterday from USDA stated in part that, “Today, Agriculture Under Secretary Kevin Concannon announced that USDA’s child nutrition programs are implementing new rules designed to encourage use of local farm products in school meals. The final rule, published in the Federal Register, will let schools and other providers give preference to unprocessed locally grown and locally raised agricultural products as they purchase food for the National School Lunch, School Breakfast, Special Milk, Child and Adult Care, Fresh Fruit and Vegetable, and Summer Food Service programs. The rule is part of the Healthy, Hunger-Free Kids Act of 2010 signed into law by President Obama and one of the key provisions to bolster farm to school programs across the country.”

Meanwhile, the AP reported yesterday that, “Federal agriculture officials are seeking comments about a proposal intended to help farmers, producers and retailers meet food quality and safety requirements.

“The U.S. Department of Agriculture wants to hear from the public about what’s being called the National Leafy Green Marketing Agreement.

“Agriculture officials say the voluntary agreement would help the industry more effectively comply with quality and food safety requirements.”

 

Agricultural Economy: Planting Concerns

Scott Kilman reported yesterday at The Wall Street Journal Online that, “Unusually rainy and cool weather is delaying many Midwest farmers from launching the planting boon that food executives are banking on to replenish tight grain supplies.”

“Agricultural analysts said Tuesday that Midwest farmers still have weeks to get their seeds in the ground in order to reap bumper harvests. Indeed, U.S. corn farmers were even further behind in the spring of 2008, yet managed to produce what was then their second-biggest corn harvest ever.”  (Note– See related article from Brownfield: “Meteorologist: 2011 setting up like 2008.”)

The Journal article explained that, “Food and textile executives are paying close attention to weather across the Farm Belt this planting season because strong demand and tight supplies of key crops are pushing their ingredient costs to high levels. Prices of Midwest corn, Southern Plains wheat, and cotton have doubled from a year ago; soybean prices are up 40%. Food makers and meatpackers are counting on a planting boon to replenish supplies and push down crop prices.

“Meteorologists say the stormy Midwest spring is being fueled by the same La Nina weather phenomenon that is behind the drought gripping Southern Plains states such as Texas and Oklahoma, where the wheat crop planted last fall is shriveling from thirst even as Minnesota fields are too muddy and cold to plant with seed. According to the USDA, 72% of the Texas wheat crop is in very poor to poor condition.”

Philip Brasher reported yesterday at the Green Fields Blog (Des Moines Register) that, “With grain supplies unusually tight, Pioneer Hi-Bred is trying to keep farmers from switching unnecessarily to lower-yielding seed varieties because of the cool, wet weather that has delayed planting. The seed giant’s 4,000 sales representatives are urging their farmer-customers to wait a couple of weeks before changing seed varieties, Pioneer President Paul Schickler said today.”

An update yesterday from USDA’s Daily Radio News Service noted that, “While corn planting may be behind at this point in the season, it doesn’t automatically mean lower yields” (audio, about one minute).

And an update posted yesterday at AgriMoney Online noted that, “It is too early to abandon hope for the US corn crop, the world’s biggest despite delays to sowings, which have progressed at one-third of the average pace, hampered by a wet spring.”

Meanwhile, an update posted yesterday a the Delta Farm Press Online stated that, “Arkansas growers trying to finish spring planting will be playing a waiting game amid forecasts for flooding in the coming weeks.

“‘Just when you thought high commodity prices were going to give farmers a break, Mother Nature steps in,’ said Rick Wimberley, Cross County Extension staff chair for the University of Arkansas Division of Agriculture. ‘We only have about a third of the rice in the ground. Anticipated rainfall will put us about a month behind in rice planting.’”

 

Agricultural Economy: Supply- Demand Dynamics, Food Costs

Chris Clayton reported yesterday at the DTN Ag Policy Blog that, “DTN’s Washington Insider touched upon some of the crop challenges today citing some comments by Agriculture Secretary Tom Vilsack regarding corn production that ‘should’ meet the demands this year.”

The update added that, “[Sec. Vilsack] correctly pointed out that the expectations are for a jump in acres planted to corn. And, he optimistically commented that Corn Belt flooding has been less than expected — so far. He thinks planting density will be higher, reflecting the higher prices, and that yields will be better, perhaps because they were below normal last year. Trade sources noted that his optimism seemed somewhat forced given market uncertainties.”

Dave Russell reported yesterday at Brownfield that, “With the price of corn rallying to new contract highs, for both old and new crop, traditional thinking might be that once the price gets high enough, demand will drop, but Illinois ag economist Darrel Good says as of yet, there’s still nothing to signal that the price of corn is slowing demand.” (Related audio interview available here).

A related news article cited in yesterday’s “Commodity News for Tomorrow” report implied that some government mandated reductions in crop use may be beginning to occur in China: “China will limit alcohol, biofuel and other non-animal-feed projects that use grain and edible oils as raw materials in an effort to secure grain supplies, China’s top economic planner said.

“Corn is used to make non-feed products ranging from ethanol to starch and sweeteners, which consume about one-third of China’s corn output. This consumption diverts supply from animal feed millers in the world’s most populous country, raising the prospect of corn shortages, as consumption is expected to grow much faster than output.

“The government will also limit corn starch projects with processing capacity of less than 300,000 metric tons a year, and eliminate those projects with annual capacity of less than 100,000 tons, the National Development & Reform Commission said in industrial guidelines published on its website.”

Meanwhile, Bloomberg writer Tony C. Dreibus reported yesterday that, “Global food prices may rise 4.4 percent to a record by the end of the year, driven by demand for meat, oilseeds and grains used to make ethanol, adding to costs that mean inflation is accelerating from the U.S. to China…[W]orld Bank President Robert Zoellick said April 16 that the world is ‘one shock away’ from a crisis in food supply and prices.”

And Philip Brasher reported yesterday at the Green Fields Blog that, “Franz Fischler, who is a candidate to become director-general of the United Nations Food and Agriculture Organization, said the world would be better off if prices increased gradually over time. That would help farmers in developing countries make a living while doing little to harm people in rich countries who spend only about 10 percent of their incomes on food, Fischler said at a conference on food policy sponsored by The Atlantic magazine.

Fischler, who is a former agriculture commissioner of the European Union, pointed that just a few years ago low commodity prices were being blamed for hunger and poverty in developing countries. The low prices, it was said, kept poor farmers from making a living and feeding their families. Now, high prices are being blamed for increasing hunger especially in the cities.”

In other news regarding the agricultural economy, Paul Hollis reported earlier this week at the Delta Farm Press Online that, “Peanut producers are finding themselves in the middle of a ‘perfect storm’ as planting time approaches, says Marshall Lamb, research director for the National Peanut Research Laboratory in Dawson, Ga.

“‘From a total production standpoint, we have an adequate supply,’ said Lamb, speaking recently at a regional production meeting in Shorter, Ala. ‘But from an edible supply standpoint, the market is tight. The problem is that manufacturers are looking at the total supply. We’ve been to meetings with them, and they don’t seem to want to buy into this right now. They’re looking at the total supply, not the edible supply, and there’s a huge standoff right now between shellers and manufacturers.’”

Bloomberg writer David Wilson reported yesterday that, “Peanut butter may soon reach its highest price in more than a quarter century on U.S. supermarket shelves as manufacturers pass along cost increases, according to Judy E. Hong, a Goldman Sachs Group Inc. analyst.”

“Contract prices for peanuts harvested in October have jumped 40 percent to 50 percent from a year earlier, the report said, citing unnamed industry participants. Prices posted weekly by the Agriculture Department have surged 74 percent.

J.M. Smucker Co. ‘has the most to lose’ from these increases, Hong wrote, largely because peanuts are the company’s third-biggest commodity expense…[H]ershey Co., the maker of Reese’s peanut-butter cups, also may suffer financially because peanuts are the company’s fourth- biggest raw-material cost, the report said.”

 

Animal Agriculture

The New York Times editorial board opined today that, “A supermarket shopper buying hamburger, eggs or milk has every reason, and every right, to wonder how they were produced. The answer, in industrial agriculture, is ‘behind closed doors,’ and that’s how the industry wants to keep it. In at least three states — Iowa, Florida, and Minnesota — legislation is moving ahead that would make undercover investigations in factory farms, especially filming and photography, a crime. The legislation has only one purpose: to hide factory-farming conditions from a public that is beginning to think seriously about animal rights and the way food is produced…[F]actory farming confines animals in highly crowded, unnatural and often unsanitary conditions. We need to know more about what goes on behind those closed doors, not less,” the Times said.

 

Trade

A news release earlier this week from the International Dairy Foods Association stated that, “Outlining the need to regain full duty-free access to the U.S. dairy industry’s largest export market, IDFA strongly supports the proposed cross-border trucking agreement between the United States and Mexico developed by the U.S. Department of Transportation (DOT). The proposal addresses safety concerns and U.S. compliance with trade obligations to Mexico that will allow the two countries to fulfill their respective obligations under the North American Free Trade Agreement (NAFTA).

“‘This is an important step toward a solution that will put an end to the retaliation against our industry’s products,’ said Clay Hough, IDFA senior group vice president and general counsel. ‘Not only will this resolve a long-standing dispute, but the agreement will send a clear signal to trading partners that the United States is serious about the reciprocal fulfillment of trade obligations.’”

 

Budget Issues

Reuters writer Richard Cowan reported yesterday that, “They have met in almost total secrecy for months, holed up in an office on Capitol Hill: three Republican and three Democratic senators trying to hammer out a deal to reduce America’s vast deficit.

Now, with the ‘Gang of Six’ senators widely anticipated to deliver their proposal in early May, the air of expectation in Washington is acute.

“Many believe their efforts represent the only real chance — and a slim one at that — of the U.S. Congress reaching a deficit-reduction deal before next year’s elections. A sense of crisis over the $1.4 trillion deficit is gripping Wall Street and Washington, and it’s weighing heavily on voters.”

Manu Raju and Scott Wong reported yesterday at Politico that, “North Dakota Sen. Kent Conrad has spent the last year trying to make good on a promise he made 25 years ago when he first ran for the Senate: Cutting the budget deficit.

“Now he’s down to his final shot.

“The wonky Senate Budget Committee chairman, who is retiring at the end of his term next year, is facing a cross-current of political pressures that won’t make it easy as he looks to cut some $4 trillion over the next decade. Liberals are worried that Conrad will sell them out by pushing entitlement reforms. Republicans are attacking him for dragging his feet in releasing a fiscal 2012 plan that may raise taxes, and members of a bipartisan group of negotiators – known as the Gang of Six – don’t want him to undercut their own deficit cutting effort.”

The article noted that, “Conrad, considered a fiscal conservative among Democrats, suggests he will stake out the middle ground in between the visions of House Budget Chairman Paul Ryan (R-Wis.) and President Barack Obama. Conrad hopes his budget, which he might unveil in May, will ultimately emerge as the most viable bipartisan vehicle to start whittling down the national debt. But it will take deft political maneuvering to get that plan through the narrowly divided Senate – and would be a momentous task to reconcile his version with the Ryan plan that not a single House Democrat supported.”

Meanwhile, Damian Paletta and Janet Hook reported in today’s Wall Street Journal that, “Treasury Secretary Timothy Geithner said the idea of the U.S. government defaulting on its debt was ‘ridiculous,’ dismissing Republican lawmakers’ threats to block an increase in the federal borrowing limit.

The White House and Congress, however, remained far apart on how to find a common path to lifting the debt ceiling.”

And Jake Sherman reported yesterday at Politico that, “House Republican leaders know that raising the debt ceiling will be a heavy lift, so they’re reaching out to their conference and asking them to sign up for ‘listening sessions’ — a strategy that paid off during the 2012 GOP budget debate.

Tuesday afternoon lawmakers were told they should plan to huddle with leadership for an hour during the first two weeks of May both to bring them into the loop on the debt limit, and so that leaders can feel out what the Republicans are willing to vote for.

“The email, which went out late Tuesday afternoon, came with a stark message: ‘Leadership strongly recommends that our Members sign up for one of these sessions.’ The six meetings are described as ‘listening sessions focused specifically on the debt-limit.’”

Keith Good

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