FarmPolicy

December 9, 2019

Farm Bill; Ag Economy; Trade; Food Safety; and Biotech

Farm Bill: Budget Issues

Alicia M. Cohn reported yesterday at The Hill’s Blog Briefing Room that, “Republicans in the House and Senate are working ahead of the formation of the bicameral deficit-reduction ‘supercommittee’ to guarantee increased transparency in the committee’s process.

“In a letter sent Wednesday to Senate Majority Leader Harry Reid (D-Nev.) and Minority Leader Mitch McConnell (R-Ky.), a group of six GOP senators requested that the supercommittee meetings not take place ‘behind closed doors.’

“The letter asks that Reid and McConnell, who each will appoint three members of the Senate to the 12-member committee, see that all meetings of the deficit-reduction committee ‘are done in a transparent manner through advanced public notification, public attendance and live television broadcasts.’”

The Hill item explained that, “Republican and Democratic leaders of Congress have until Aug. 16 to appoint six members from the House and six from the Senate to the so-called supercommittee. The panel will be tasked with crafting a $1.5 trillion deficit-reduction package that will be presented to Congress before Thanksgiving, with an up-or-down vote on the whole package required by Christmas.”

Mike Lear reported yesterday at Missourinet Online that, “Farm programs face no immediate cuts under the debt ceiling agreement signed by President Obama Tuesday. Program Director for the Food and Agricultural Policy Research Institute, Pat Westhoff, says the fate of those and all federal programs next hangs on the actions of a so-called ‘Super Committee.’

“The Committee will be made up of 3 Democrats and 3 Republicans each from the U.S. House and Senate. It must prepare a list of proposed cuts by Thanksgiving, or across-the-board slashing of federal programs will result. Either way, Westhoff says it is unlikely farm programs will go unscathed.”

Beyond issues associated with the yet to be appointed supercommittee, news articles illustrate where budget pressure points may be found in future ag spending decisions.

An article posted yesterday at the West Central Tribune Online (Willmar, Minn.) reported that Senator Al Franken (D-Minn.) “addressed hundreds of Farmfest attendees Wednesday during the second day of the event.”

The article noted that, “In addition to the radio interview in front of an audience under the Forum Tent at Farmfest, Franken spoke to the crowd there for about 15 minutes about various issues facing Minnesota farmers, including the 2012 Farm Bill that Franken said he hopes is actually completed in 2012.

Franken said that direct payments to farmers and agriculture research could ‘take a hit’ in next year’s legislation.”

With respect to agriculture research, an article posted earlier this week at Feedstuffs Online stated that, “A new report makes the case that agriculture and agricultural sciences are poised to drive economic growth and job creation to new heights — with the essential research and extension support of land-grant universities.”

On the same topic, Reuters writer Christine Stebbins reported earlier this week that, “Agriculture is poised to drive economic growth and job creation led by the dynamic north central region but proposed budget cuts may threaten that outlook, a study by an Ohio-based research firm said.

“‘Cuts are proposed in forthcoming budgets: cuts that will ripple through a system that leverages federal funding with state and local matching financial support,’ Battelle, a Columbus, Ohio, research group, said in the study.”

The article added that, “The report, sponsored by 12 large universities in the north central U.S. who benefit from publicly funded agricultural research, said Europe, India, China and Korea also see agriculture as a driver of economic development, investing in research to reach food security, including biobased projects.

“‘With funding challenges coming across multiple fronts we have a system at risk — a system in which the U.S. currently has a leading position and tremendous potential opportunities, but one that can be rapidly eroded by foreign competitors if the U.S. fails to support the system and its key institutions,’ the study said.”

In addition to direct payments and agricultural research, other groups are seeking additional allocations for local farmer market programs.

Karen Bouffard reported yesterday at The Detroit News Online that, “Farmers markets in Michigan have tripled over the past decade, according to a report released this morning at a farmer’s market on the Capitol lawn.

“The Union of Concerned Scientists cited U.S. Department of Agriculture figures showing the number of farmers markets in Michigan grew from 90 in 2001 to 336 in 2011. The group wants the federal government to invest more of its agricultural funding in local markets, rather than industrial farming.

“Nationally, farmers’ markets more than doubled between 2000 and 2010, growing from 2,863 to 6,132, according to the group.”

In executive branch perspective on Farm Bill Issues, Jerry Hagstrom reported in an article posted yesterday at AgWeek Online that, “Agriculture Secretary Tom Vilsack said during a visit to Kansas City, Mo., he would ask the White House Rural Council to try to reduce the number of federal government definitions of rural America and also encouraged Congress to take up the issue since rural officials have complained they have a hard time figuring out what programs they qualify for.

“After a participant in the Council on Foundations conference on rural philanthropy said that variations in qualifications for various rural development programs make it difficult for communities to participate, Vilsack said he would be glad to take the issue to the White House Rural Council, an Obama administration innovation composed of Cabinet officers and leaders of other federal agencies.”

The article noted that, “Vilsack jokingly asked the audience if they were bothered that USDA has 11 different definitions of rural America. The varying definitions, which depend on population and other characteristics, ‘provide a convenient excuse not to do something,’ he said.”

Mr. Hagstrom added that, “On Feb. 15, the House Agriculture Rural Development, Research, Biotechnology and Foreign Agriculture Subcommittee held a hearing on the definitions and their impact on rural development programs. At that hearing, Rep. Timothy Johnson, R-Ill., the subcommittee chairman, and other members grappled with the definitions, asked the Agriculture Department for more guidance on the issue and said it would be addressed in the 2012 farm bill.”

Testimony from the February hearing can be found here, while complete FarmPolicy.com audio replay of the hearing can be downloaded here.

At the House hearing earlier this year, Rep. Costa asked USDA Dep. Under Secretary for Rural Development Cheryl Cook, “Do you think that the varying definitions of ‘rural’ as they are applied to the Rural Development programs is a workable system, do you think it is need of some repair, or is about time that we look a brand new approach?”

To listen to this very interesting exchange from the Feb. hearing, just click here (MP3- 5:07).

And a news release yesterday from USDA’s Risk Management Agency indicated that, “Due to greater than expected livestock program sales so far this fiscal year, the USDA Risk Management Agency (RMA) has limited funding remaining for the program.

“According to the RMA, less than $1 million of funding remains available for livestock insurance sales for the rest of the 2011 fiscal year which ends on September 30. The Federal Crop Insurance Act authorizes expenditures for costs associated with all livestock pilot programs, to include applicable premium subsidy and administrative expenses, up to a combined total of $20 million per fiscal year. Due to increased livestock sales, all but a small amount of the funding allocated has been exhausted.”

The release added that, “RMA tracks total policy sales against available authorized funding using a real-time, Web-based program. While livestock sales occur throughout the year, insurance sales will cease when funding limits are reached.

In 2010, RMA insured a livestock value of $186 million. In 2011, the value of livestock insured rose to over $1 billion.”

 

Agricultural Economy

University of Illinois Agricultural Economists Scott Irwin and Darrel Good noted yesterday at the FarmDocDaily Blog that, “In the post on July 19 we examined trend-adjusted corn yields in Illinois in the 5 previous years since 1975 when the average July temperature and precipitation most resembled that of 2011 (average temperature above 77 degrees and below-average precipitation). The state average corn yields varied considerably in those 5 years, reflecting highly diverse weather conditions in August, but averaged well below trend. Barring extremely favorable weather conditions in August 2011, the analysis pointed to a state average corn yield in 2011 in the low- to mid-150 bushel range, 13 to 15 bushels below trend value.

Here we extend the previous analysis to Illinois soybean yields and also examine the trend-adjusted U.S. average corn and soybean yields in those same 5 years. The July and August weather data for Illinois for those 5 years, along with the trend-adjusted Illinois and U.S. average corn and soybean yields are presented in Table 1. Preliminary state average temperature and precipitation data for Illinois in July 2011 are also presented. That data indicate that July 2011 was tied with 1983 as the warmest since 1975, with average temperature 3.8 degrees above the 1975-2010 average. Precipitation was below the average for the 1975-2010 period, but exceeded our expectation of July 19 due to late-month heavy rainfall in the northern part of the state.”

After additional discussion, yesterday’s update stated that, “What about 2011? The analysis of analog years suggest that both Illinois and U.S. corn and soybean yields in 2011 will be below trend value due to unfavorable July weather, with the final magnitude of the shortfall to be influenced by August weather. Current expectations are that August temperatures will be above the 1975-2010 average. Precipitation is more difficult to forecast, but below average precipitation seems more likely than above average precipitation. Under those conditions, a U.S. average corn yield in the 150 to 154 bushel range and a U.S. average soybean yield in the 41 to 43 bushel range might be expected. The extremely high temperatures in July and widespread reports of corn pollination issues suggest that corn yields may be at more risk than indicated by the historical analysis.”

Yesterday, USDA’s National Agricultural Statistics Service (NASS) released its Land Values 2011 Summary report, which stated that, “The United States cropland value increased by $260 per acre (9.4 percent) to $3,030 per acre. In the Northern Plains and Corn Belt regions, the average cropland value increased 17.2 and 16 percent, respectively, from the previous year. However, in the Northeast and Southeast regions, cropland values decreased by 1.3 percent and 1.1 percent, respectively.”  (See related graphs, here and here.)

At page 10 of yesterday’s NASS report, cropland value by state was presented.  Dramatic increases in values were documented for Iowa (23.9%), Illinois (18.4%) and Indiana (9.1%).

A recent report from Purdue University noted that, “For the state [Indiana] as a whole, the 2011 survey found the average value of bare Indiana cropland ranged from $4,386 per acre for poor quality land to $6,521 per acre for top quality land. Average quality cropland had a value of $5,468 per acre.”

Meanwhile, Marcia Zarley Taylor reported yesterday at DTN’s Minding Ag’s Business Blog that, “As top Midwest cash rents roar past $300 an acre in 2012, Farm Credit lenders in 15 states have received words of caution about the potential for excess risks shouldered by their biggest grain customers. ‘The 5,000 to 15,000-acre commercial grain farmer is emerging as a major customer from Arkansas to North Dakota,’ Ross Anderson, senior vice president and chief credit officer for St. Paul-based AgriBank told DTN in an interview last week.

Anderson believes large-scale borrowers who rent most of their land pose big risks should markets turn abruptly and is urging Farm Credit institutions to give more scrutiny to their accounts.

“All farmers carry operating risk in terms of yields, grain quality, marketing and land cost. What’s different for Big Renters is the scale of what can go wrong is so large that it might impair the credit quality of their lenders. What’s more, this new business model relies so heavily on rented land, that banks don’t have the security of real estate collateral to back the credit like they do with more traditional owner-operators who have a high equity base. Anderson likens the situation to the financial leverage that decimated Young Tigers in the 1980s credit crisis.”

And, as drought conditions persist in Texas (related photo from today’s Washington Post), The New York Times reported today that impacts extend beyond agriculture: “In cities like Houston and Fort Worth, clay soil is drying up because of the blistering summer heat, bursting water pipelines, buckling house foundations and splitting asphalt roads.”

 

Trade

A news release yesterday from the Senate Agriculture Committee stated that, “Senator Debbie Stabenow (D-Mich.), Chairwoman of the U.S. Senate Committee on Agriculture, Nutrition and Forestry, and Senator Pat Roberts (R-Kan.), the committee’s Ranking Member, today urged U.S. Trade Representative Ron Kirk and Agriculture Secretary Tom Vilsack to work closely together in addressing barriers imposed by China and Japan regarding U.S. beef imports, in a joint letter signed by 39 Senate colleagues. The letter also follows up on and welcomes a pledge made by Ambassador Demetrios Marantis to meet with China and Japan to discuss the restrictions.

“‘We believe continuous high-level engagement by USTR and USDA is critical to making progress towards ending China and Japan’s unscientific restrictions to U.S. beef products,’ the letter states. ‘To maintain and expand the global market for U.S. beef, there must now be stronger, sustained outreach to China, Japan, and other countries that continue to limit access to our beef.’”

 

Food Safety

Bill Tomson reported in today’s Wall Street Journal that, “Federal officials warned Thursday that ground turkey tainted with an especially dangerous type of salmonella may still be in home freezers as they worked to prevent further illnesses from the nation’s third largest meat recall.

“The Centers for Disease Control and Prevention encouraged consumers to check their refrigerators for meat that is part of the 36 million pound recall this week by Cargill, Inc., one of the largest meatpackers in the U.S. The contaminated meat is blamed for 78 illnesses, including one death in California.”

 

Biotech

Bloomberg writer Jack Kaskey reported yesterday that, “Monsanto Co., the world’s biggest vegetable seed maker, said it will begin selling genetically modified sweet corn in the U.S. this year, the first product it has developed for the consumer market.

“The sweet corn seeds are engineered to kill insects living above and below ground and to tolerate applications of the company’s Roundup herbicide, Consuelo Madere, Monsanto vice president for vegetables, told reporters at company headquarters in St. Louis today. They will be introduced to growers serving the U.S. fresh corn market starting in the autumn, she said.

Monsanto previously sold only engineered crops that are processed into sugars and oils, used as animal feed or made into fibers. The new seeds will initially target the 250,000-acre market for fresh corn in the eastern U.S., Madere said. Monsanto is in discussions with companies that would can or freeze the corn, she said.”

Keith Good

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