FarmPolicy

September 18, 2019

Policy Issues; Ag Economy; Biotech; and Regulations

Policy Issues

Ron Hays reported yesterday at the Oklahoma Farm Report Online that, “The money continues to flow from Crop Insurers to farmers and ranchers as 2011 rapidly comes to a close. According to the latest statistics of indemnity payments that have been made nationally, $7.938 billion has paid to farmers for losses to their 2011 crops- based on data through the close of business December 27, 2011.

“More than a fourth of that money has been handed over to Texas farmers who have received $2.213 billion with likely more claims yet to be paid. For every dollar paid into crop insurance for the 2011 crops in Texas- $2.04 has been paid out to date.

“According to Scott Bulling with the Oklahoma Farm Bureau, Oklahoma’s share of Crop Insurance payments now totals $381,789,941, with a loss ratio of $1.89 paid out for each dollar that was paid in. Bulling believes there are still a significant amount of claims to be paid to Oklahoma producers for the 2011 crop year, and that the final indemnity total for the state could approach or exceed $400 million.”

Mr. Hays added that, “At this point, fully one third of the national Crop Insurance Indemnity Payments have gone to farmers in these two states that faced exceptional drought a large portion of the growing season from spring into fall.

“In contrast to the loss ratios in the southern plains of more than a hundred, the loss ratio for the major corn belt states is a fraction of the payments to date. Illinois has paid out nineteen cents for each dollar paid in- and Iowa farmers have seen seventeen cents in indemnity payments for each dollar paid in.”

Yesterday’s update pointed to this recent Risk Management Agency summary from December 19.

Also yesterday, Tom Steever reported at Brownfield that, “Those who grow specialty crops are trying to hold on to the role they had in forming 2008 farm policy. National Potato Council CEO John Keeling, who co-chairs the Specialty Crop Farm Bill Alliance, points out that specialty crops are half of U.S. plant agriculture in terms of farm gate value.

“‘It makes sense, if we’re going to try to build a vibrant agriculture in this country, that we look at and address the needs of that 50 percent that are specialty crop producers in the same positive way that we look at addressing the needs of the corn, wheat and soybean guys also,’ said Keeling, in an interview with Brownfield Ag News.

“The 2008 farm bill provided specialty crop growers with support, not in direct payments, but in research, pest management and infrastructure, said Keeling. He’s aware that spending cuts will be made, but he suggests that consideration be given to shifting some farm bill money to the benefit of specialty crop growers.”

Meanwhile, Rod Smith reported yesterday at Feedstuffs that, “Eight groups representing livestock and poultry producers have urged Congress to reject the agreement on hen housing reached by The Humane Society of the United States (HSUS) and the United Egg Producers (UEP). [Note: Related background available here and here].

“In a letter to House Agriculture Committee chair Frank Lucas (R., Okla.) and ranking member Rep. Collin Peterson (D., Minn.), the groups said the agreement would impose ‘costly and unnecessary animal rights mandates’ on the U.S. egg industry. The groups said the agreement’s prescriptive nature would ensure that ‘Congress will be in the egg business for years to come’ by requiring all egg producers to adopt specific hen housing standards.

“The agreement calls for egg producers to transition from conventional cage housing — in which 95% of all eggs are produced today — to ‘enriched’ colony cages by 2029, with the transition enforced by federal legislation in the form of an amendment to the U.S. Egg Products Inspection Act. The amendment is to be jointly sought by HSUS and UEP.”

 

Agricultural Economy

Gregory Meyer reported yesterday at The Financial Times Online that, “Corn prices touched a near six-week high, lifting other grain futures as a dry spell in Argentina threatened output in the world’s second-largest exporter.

Argentina’s corn crop has entered its crucial pollination stage, making stalks vulnerable to punishing weather.

“Scanty rainfall in important growing areas could reduce corn yields at harvest time early next year.”

The article explained that, “A smaller than expected crop could ripple through agricultural commodity markets as corn stocks remain low and farmers decide which grain to feed livestock to meet rising global meat demand.

“Argentina is expected to supply a fifth of the the world’s corn exports, trailing only the US in market share, according to the US Department of Agriculture.

Dry weather also could also reduce corn production in Brazil, another leading exporter.”

Emiko Terazono, also writing yesterday at The Financial Times Online, reported that, “Peanuts no longer cost peanuts. The price of the bar snack has leapt to a record high on the back of scorching weather and severe drought in key growing regions.

“Prices in 2011 have almost tripled in the US, while in Europe, the largest importer, they are up 60 per cent as the global peanut industry, worth about $18.5bn a year, is hit by lower supplies in India, the second-largest producer, Argentina, a leading exporter, and the US.

“The peanut price jump has been felt most acutely in the US, where it has forced retailers to push through large increases in the price of peanut butter – a staple of kitchen cupboards and food banks.”

Yesterday’s article noted that, “US food manufacturers including Kraft – which owns the Planters brand – and Jif peanut butter manufacturer JM Smucker last month increased their peanut butter prices by 30-40 per cent.”

The FT article pointed out that, “Two years of drought conditions in the peanut-growing areas in the US have dramatically reduced the quality of peanuts used in snacks and confectionery as plants have withered before maturity or produced very few peanuts.

US production is set to be 12 percent lower this year, according to the Department of Agriculture, driving global peanut inventories to their lowest levels in 14 years.

“‘Not only was the ground dry at planting time because it was the second year of dry weather, but the rainfall we did get evaporated due to the high temperatures,’ said Don Koehler, executive director of the peanut commission in Georgia, which produces almost half of America’s peanuts.”

In other news, as the Iowa Caucus edges closer, some news articles have focused on the state of the agricultural economy and federal policies that have an impact on Rural America.

Bloomberg writer Alan Bjerga reported earlier this week that, “‘You’ve got people buying new machinery, new pickups and cars,’ said [Gordon] Wassenaar, 75, who raises corn and soybeans. ‘You don’t hear the doom and gloom in the rural areas.’

That separates these Iowans from voters elsewhere, who rate the U.S. economy as a top concern in opinion polls. For rural Iowans, boosting ethanol production and promoting free trade loom as the prime issues, according to farmers, state officials and analysts.”

The article noted that, “Across the nation, though, farm profits are at a record and agribusinesses are thriving. Shares for Terra Nitrogen, a Deerfield, Illinois-based fertilizer-maker, are up 49 percent this year.

“Iowa has seen record incomes as the nation’s top producer of corn, soybeans, pork and ethanol. Its state and municipal bonds had a total return of 11.7 percent through yesterday, trailing only Wyoming, Illinois, California and Montana, according to Barclays Capital. Unemployment is 5.7 percent, compared to 8.6 percent nationwide.

One in six Iowa jobs are tied to agriculture, according to a 2009 study by Iowa State University economist Dan Otto. Minneapolis-based Cargill Inc. in March took over a flagging ethanol plant in Fort Dodge, Iowa. Pioneer Hi-Bred, the seed division for DuPont Co., is headquartered in Johnston, Iowa.”

The Bloomberg article added that, “Land prices at an average of $5,600 an acre in Iowa are more than triple what they were a decade ago. Pork, crop and ethanol producers are prospering in part because of exports. U.S. shipments of pig meat were up 22 percent this year through October, while one of every four rows of soybeans is sent straight to China.”

Scott Horsley noted yesterday on National Public Radio’s All Things Considered program that, “Iowa farmers are enjoying high prices for their corn and soybeans. But no matter how many hay bales or bucolic barns you see in the candidates’ carefully crafted photo ops, the Iowa economy is not all about farming.

“Economist David Swenson of Iowa State University says even in the best of times, agriculture and all the related industries here account for about 20 percent of Iowa’s jobs.

“‘That sounds like it’s a great big part of the economy and it is. But it can’t do much more than it’s already doing. It’s doing as well as it ever has, historically, so to expect anything more out of it is asking way too much,’ said Swenson.”

And Alex Guillen reported yesterday at Politico that, “Ethanol and wind are getting the bum’s rush in the Iowa primary.

“Energy issues — historically ethanol but increasingly wind — used to be a centerpiece of the first-in-the-nation caucuses, providing a national platform for a state that prides itself on excelling in renewable energy.

“But the vast cornfields and wind-swept plains of the Hawkeye State, while important to the local economy, have taken a back seat this year.”

The Politico article indicated that, “In the past, ethanol was a hot topic in the Iowa caucuses, but in 2011, most of the GOP field came out against ethanol subsidies and greater numbers of Iowans seem to agree with them as larger, more pressing issues such as the economy and the budget take over.”

 

Biotech

The AP reported yesterday that, “One of the nation’s most widely planted crops — a genetically engineered corn plant that makes its own insecticide — may be losing its effectiveness because a major pest appears to be developing resistance more quickly than scientists expected.

“The U.S. food supply is not in any immediate danger because the problem remains isolated. But scientists fear potentially risky farming practices could be blunting the hybrid’s sophisticated weaponry.”

The AP article added that, “When it was introduced in 2003, so-called Bt corn seemed like the answer to farmers’ dreams: It would allow growers to bring in bountiful harvests using fewer chemicals because the corn naturally produces a toxin that poisons western corn rootworms. The hybrid was such a swift success that it and similar varieties now account for 65 percent of all U.S. corn acres — grain that ends up in thousands of everyday foods such as cereal, sweeteners and cooking oil.

“But over the last few summers, rootworms have feasted on the roots of Bt corn in parts of four Midwestern states, suggesting that some of the insects are becoming resistant to the crop’s pest-fighting powers.”

 

Regulations

The “Washington Insider” section of DTN reported yesterday (link requires subscription) that, “Some members of Congress have been at war with the Environmental Protection Agency in recent years over what they see as regulatory overreach by the agency when it comes to enforcing provisions of the Clean Air Act and Clean Water Act. To date, opponents have sought to roll back regulations largely through the appropriations process, denying EPA funding to carry out rules that they consider to be too onerous. That piecemeal approach may be about to change.

“Republicans on the House Energy Committee say they want to begin a process in either 2012 or 2013 that would result in amending the Clean Air Act in ways that would meet their objections.”

The DTN item added that, “The Clean Air Act, which was signed into law by President Nixon in 1970, has not been subject to any major amendments since 1990, and Republicans such as Rep. Edward Whitfield of Kentucky, chairman of the committee’s Energy and Power Subcommittee, say it is long past time for a review of the law.

“Whitfield recently told the press that unlike the 1990 amendments to the Act, which took years to develop, that won’t be the case this time around. ‘It’s not going to take years of discussion to change it,’ he said, adding that legislation would be on the table by 2013 ‘for certain.’”

Yesterday’s Talk of the Nation radio program (National Public Radio- NPR) featured a story titled, “Proposed Child Labor Rules Could Alter Farm Life.”

An NPR summary of the show stated that, “The Department of Labor has proposed regulations that would limit the kinds of work children can do on farms. Opponents feel the rules would hurt family farms and fundamentally alter farming life, while proponents say the changes would help keep kids safe.”

Keith Good

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