FarmPolicy

November 1, 2014

Farm Bill; Ag Economy; CFTC Issue; Food Safety; Regulations; and Trade

Farm Bill Issues

Dan Piller reported yesterday at the Green Fields Blog (Des Moines Register) that, “The Iowa Farm Bureau’s policy conference reversed itself Wednesday morning. After lengthy debate and a multitude of motions, the group approved a resolution stating that compliance with conservation programs not be a condition for purchasing federally subsidized insurance programs.

“The new resolution reads ‘the Iowa Farm Bureau supports conservation compliance; however, eligibility for federal crop insurance should not be subject to farm program conservation requirements.’

“If federal direct payments to farmers are eliminated by congress, as is widely expected, federal agriculture and environmental regulators would be left without a compliance requirement if conservation compliance were not added to insurance eligibility. Such compliance was linked to farm insurance for decades but removed in 1996.”

Separately, Philip Brasher reported yesterday at the Green Fields Blog that, “In a historic move that changes the politics of farm policy, U.S. cotton growers have dropped their insistence that Congress preserve the existing system of farm subsidies. The National Cotton Council now is calling for shifting some existing subsidies into a revenue-based insurance program, a position that is similar to one that the Iowa Farm Bureau and other groups have been pushing.

“Up until now, cotton producers have lobbied to preserve the current system of fixed annual payments that farmers and landowners get regardless of what they grow or how good or bad a year they may be having. The group said it is changing positions because it is now ‘clear that future deficit reduction efforts will place unprecedented pressure on the existing’ subsidy system.”

Mr. Brasher noted that, “The Iowa Farm Bureau a year ago came out for shifting money from direct annual payments into some kind of revenue-based insurance program. The Iowa group has argued that the direct payments are difficult to defend to the public and serve to inflate land rents, increasing farmers’ costs.

“The direct payments are more valuable to farmers in areas that grow cotton than they are to Midwest farmers. Cotton producers receive about $53 per planted acre in direct payments compared to the $22 an acre that corn growers get, according to the University of Missouri’s Food and Agricultural Policy Research Institute.”

For a separate look at direct payments based on commodity, see this USDA- Economic Research Service graph for 2009/10.

And a news release earlier this week from the Iowa Corn Growers Association (ICGA) stated that, “Grassroots representatives from the [ICGA] reinstated expiring policies, debated and adopted new policies at the ICGA annual policy conference in West Des Moines on August 27, 2011.”

“The Iowa Corn Growers Association priorities for the 2012 Farm Bill are, in the following order: crop insurance cost-share, an improved ACRE program with a more local trigger, trade and market access, research, and conservation,” the release said.

With respect to dairy issues, a news release yesterday from Land O’Lakes stated that, “The elected dairy leaders of Land O’Lakes, Inc., recently confirmed the cooperative’s support of discussion draft legislation put forward by House Agriculture Committee’s ranking democratic member, Collin Peterson (D-MN), and Congressman Mike Simpson (R-ID).  The proposal is aimed at reforming U.S. dairy programs and is based on proposals developed by the dairy industry called Foundation for the Future.”

However, a news release yesterday from the International Dairy Foods Association (IDFA) stated that, “The [IDFA] takes strong exception to assertions made by the National Milk Producers Federation regarding the impact of proposed dairy policy reform on exports.  NMPF claims that eliminating the Dairy Product Price Support Program will provide more incentive for exports.  However, economic models show that the Dairy Market Stabilization Program (DMSP), included in draft legislation offered for discussion by Rep. Collin Peterson (D-MN), would have significantly lowered U.S dairy exports and hurt industry growth at a cost of thousands of U.S. jobs if it had been in effect in 2009, according to respected economists.”

In news regarding budget issues and the supercommittee, an update posted yesterday at Politico indicated that, “A day after Republicans on the supercommittee met for a daylong session on Capitol Hill, their Democratic counterparts chatted via a conference call that lasted under an hour.”

Dan Friedman and Billy House reported yesterday at National Journal Online that, “Aides to committee Democrats said they expect in coming days to announce one or more additional hires, a hearing schedule, the location of a committee office space, and transparency rules for the committee. Lawmakers in both parties have urged the committee to deliberate as openly as possible.”

And the USA Rice Federation recently released a summary document titled, “Farm Policy and the Federal Budget,” which put into context some aspects of federal farm spending within the parameters of the entire federal budget.

 

Agricultural Economy

The USDA’s National Agricultural Statistics Service released its monthly Agricultural Prices report yesterday, which stated that, “The corn price, at $6.62 per bushel, is up 30 cents from last month and $2.97 above August 2010 [related graph], the soybean price, at $12.90 per bushel, decreased 30 cents from July but is $2.80 above August 2010 [related graph] and The August all wheat price, at $7.56 per bushel, is up 46 cents from July and $2.12 above August 2010 [related graph].”

The AP reported yesterday that, “Prices for two of the nation’s biggest crops, corn and soybeans, have been high for several years because of growing demand overseas and in the U.S. to make ethanol. With corn prices pushing well past a once-unheard-of $7.50 a bushel and soybeans above $14 a bushel, the U.S. Department of Agriculture said this week that it expects farm incomes to rise 31 percent for the year. Land values also have risen.

But don’t expect to see farmers shelling out a lot of money for luxury items. They said they learned hard lessons from the 1980s, when many debt-ridden farms went under after land values suddenly plummeted. Most say they are taking advantage of the current good times by paying down debt and growing at manageable rates.

Some are also nervous about the nation’s broader economy and what its struggles might eventually mean for them.”

In news on recent hurricane damage, Reuters news reported on Tuesday that, “Hurricane Irene destroyed or severely damaged at least 1,100 homes and caused more than $71 million in damage in North Carolina’s seven hardest-hit counties, Governor Beverly Perdue said on Tuesday.

“The governor, who scouted the damage by air with Homeland Security Secretary Janet Napolitano and Agriculture Secretary Tom Vilsack, said the financial hit would rise by millions of dollars once agricultural losses were factored in.”

Patrik Jonsson reported yesterday at the Christian Science Monitor Online that, “With much of the coastal mid-Atlantic and interior New England embarked on a massive cleanup effort from hurricane Irene, farmers are starting to take stock of crop damages that ranged from potentially catastrophic to ‘could have been worse.’

“Agriculture Secretary Tom Vilsack toured heavy-hit areas of eastern North Carolina Tuesday, where some farmers have reported total losses in their tobacco fields [related news release, related photo].

“Some stranded dairy farmers in Vermont and New York reportedly have had to dump milk because tanker trucks couldn’t make their rounds across broken bridges and roads, and farm-stand and feed corn throughout the region took a heavy hit.”

The article pointed out that, “While the final tallies for crop losses could be weeks away, analysts say the storm’s impact on food prices, if any, likely will pale compared to the effects of the extreme drought gripping parts of the South and West, including Texas, which has seen a record $5.2 billion crop loss this year.”

In additional analysis on the drought, Ron Hays reported earlier this week at the Oklahoma Farm Report Online that, “Oklahoma Agriculture Secretary Jim Reese spoke on Tuesday at the Oklahoma Farm Bureau Drought Summit meeting focusing on the losses in agriculture across the state of Oklahoma.”

The update noted that, “Secretary Reese, with the help of the National Agriculture Statistics Service, presented the total losses so far for hay in the state at $294 million. The loss for cotton is $136 million, while wheat loss came in at $122 million. The overall crop loss approaches $1 billion for the 2011 year. However, Radio Oklahoma Network has been told that the Oklahoma State University Agricultural Economics department is also working on some drought numbers for loss as well. These numbers will be available in a few weeks.

“Reese also presented the loss when it comes to cattle for the past year. The number of cattle sold from January 1 to July 31 has increased by 45,757 head, a total of 5% increase. This comes up to a total loss of $1 billion for cattle in Oklahoma as well. The total amount of loss then for Oklahoma is roughly $2 billion for 2011. Reese says that while this is $2 billion lost in agricultural product that does not translate to $2 billion lost to Oklahoma producers.”

To listen to remarks on this issue from Secretary Reese, just click here.

From a global perspective, Tom Polansek and Caroline Henshaw reported in today’s Wall Street Journal that, “Russia is putting the brakes on grain cargoes snaking their way from the fields to a key port, underscoring doubts about the reliability of the country’s supplies.”

The article explained that, “Demand for Russia’s grain has surged since the export ban expired on July 1, putting heavy pressure on the country’s creaking Soviet infrastructure. Buyers have been eager to snap up cheap Russian wheat, snubbing U.S. exporters, whose grain comes with a higher price tag, in the process.”

“Stronger demand for wheat from the U.S. would support benchmark prices on the Chicago Board of Trade. Although U.S. wheat futures trade near three-month highs, traders say the recent intense competition in the export market has weighed on prices.”

And Matt Moffett reported in today’s Wall Street Journal that, “Argentina’s Congress is gearing up for a debate on a bill to limit the amount of farmland foreigners can buy, amid a surge of interest in land deals triggered by rising food prices.”

 

Commodity Futures Trading Commission (CFTC) Issue

The Wall Street Journal editorial board indicated today that, “As if U.S. financial firms needed another reason to move to Europe and Asia, Senator Bernie Sanders keeps trying: Now they can’t trust that confidential trading information will be kept, well, confidential.

“The Independent-Socialist from Vermont recently released to the media the trading positions of banks and other companies in crude oil futures and other commodities as of June 30, 2008. While Mr. Sanders acknowledged the move ‘may have upset Wall Street speculators,’ he said in a statement that ‘the American people have a right to know exactly what caused gasoline prices to skyrocket to more than $4 a gallon back in the summer of 2008.’

“Funny, we thought that question had been answered. In 2008 the Bush Administration instructed the Commodity Futures Trading Commission to study this very matter. The regulator concluded that overall price movements were determined by that old devil supply and demand and that, if anything, speculators were net shorts and put downward pressure on prices. The data Mr. Sanders released showed many firms had a neutral or short position in the market.”

For more perspective on this issue, see this letter from the Futures Industry Association that was recently sent to the Chairman of the CFTC.

 

Food Safety

The AP reported yesterday that, “A major fruit company’s lawsuit against the Food and Drug Administration could have a chilling effect on regulators’ efforts to get tainted food off the market.

Florida-based Del Monte Fresh Produce is striking back at the FDA with a lawsuit after the agency halted imports of its Guatemalan cantaloupes, saying they may be contaminated with salmonella. Such a lawsuit is extremely rare, and the threat of litigation could make officials more reluctant to tell the public about the possibility of contamination in food.”

 

Regulations

A Politico article that was reposted yesterday at The Inhofe EPW Press Blog (Sen. James Inhofe (R-Oklahoma), stated that, “The vast majority of the attorney fees doled out by the federal government in environmental lawsuits against the EPA have gone to green groups in recent years, according to a Government Accountability Office report that top Republicans in Congress are seizing on.

“The report, released Wednesday, prompted GOP lawmakers to accuse major environmental groups of profiting from taxpayers by suing the federal government.

“But greens say they’re acting in the public interest – and the fact that they’ve won fees means the courts agreed with them that the EPA was breaking the law.”

The Politico article added that, “National and local environmental and citizens’ groups received 75 percent of the $14.2 million in attorney fees that the Treasury Department paid in environmental cases against the EPA between 2003 and 2010, the GAO reported.

“Green groups received 84 percent of the $1.4 million in attorney fees paid by the EPA between 2006 and 2010, the report found.”

And a news release yesterday from the House Agriculture Committee stated that, “This week during The Ag Minute [MP3], guest host Rep. Martha Roby discusses the disparity between job growth in Obama’s regulatory agencies and the private sector. While taxpayers will spend more than $54 billion to support government regulators in 2011, the true cost to our economy is much greater. The American Action Forum estimates that since the beginning of this year, the Obama administration has imposed more than 47.2 million annual paperwork burden hours and $65 billion in compliance costs on businesses across the country. Rep. Roby explains that additional regulatory burdens impact the livelihoods of farmers, ranchers, and smalls businesses in rural America.”

 

Trade

The USDA released its Outlook for U.S. Agricultural Trade report yesterday, which stated in part that, “Fiscal 2012 agricultural exports are projected at $137 billion, the same as the 2011 forecast. Horticultural products are projected to increase sharply in fiscal 2012, due to strong demand from Canada, Europe, and Japan. Grain and feed exports are expected up as greater corn, feeds, and fodders outweigh a drop in wheat exports. Exports of livestock, poultry, and dairy products are up on strong pork, poultry, and animal by- products exports. Oilseeds are forecast down based on lower volumes. Cotton exports are forecast down on tighter U.S. exportable supplies and greater competition from foreign exporters.”

The forecast for 2012 imports is $105 billion—11 percent higher than 2011. The revised U.S. import bill for 2011 is $94.5 billion, a 20-percent jump from 2010. Although prices of some key imported commodities such as tropical oils, sugar, rubber, coffee, bananas, and beef have declined or flattened in recent months, they have been generally rising since 2009, and are expected to remain near current levels through fiscal 2012.

“Given that the forecast for exports is unchanged while imports are rising, the trade balance for 2012 is a surplus of $32 billion, which would be the third highest ever. The 2011 surplus, at $42.5billion, remains a record.”

Yesterday, Agriculture Secretary Tom Vilsack made a statement on data released this week showing record U.S. farm exports and farm income; he noted in part that, “We learned this week in the Farm Income report that both net cash income and net farm income are record in nominal terms and, adjusting for inflation, are at their highest levels since the early 1970s. Meanwhile, total farm debt declined nearly 2 percent.”

“Today, a new forecast of U.S. agricultural exports confirmed that ‘Grown in America’ products remain in high regard and high demand in the rest of the world. The current U.S. export forecast for fiscal year 2011 is $137 billion, $22 billion higher than the previous record set in 2008 and $28 billion above 2010.  And exports for 2012 will remain equally strong and help to support over one million American jobs. In fact, taken as a whole, the United States is in the midst of experiencing the three best years in our history in terms of agricultural exports.”

Keith Good

Comments are closed.