January 27, 2020

Food Price Increases Slowing Down

FDA Rule; Farm Bill; Ag Economy; Regulations; and MF Global

FDA Rule: Antibiotics and Livestock

Gardiner Harris reported in today’s New York Times that, “Farmers and ranchers will for the first time need a prescription from a veterinarian before using antibiotics in farm animals, in hopes that more judicious use of the drugs will reduce the tens of thousands of human deaths that result each year from the drugs’ overuse.

“The Food and Drug Administration announced the new rule Wednesday after trying for more than 35 years to stop farmers and ranchers from feeding antibiotics to cattle, pigs, chickens and other animals simply to help the animals grow larger. Using small amounts of antibiotics over long periods of time leads to the growth of bacteria that are resistant to the drugs’ effects, endangering humans who become infected but cannot be treated with routine antibiotic therapy.”


Federal Reserve Beige Book: Observations on the Ag Economy

Yesterday the Federal Reserve Board released its Summary of Commentary on Current Economic Conditions.  Commonly referred to as the “Beige Book,” the report included the following observations with respect to the U.S. agricultural economy:

Sixth District- Atlanta: “While conditions improved in parts of the District, much of Georgia and Florida continued to experience varying degrees of drought. Contacts also reported that Florida citrus growers continued to fight greening disease. Prices paid to farmers for poultry and soybeans were up from the previous reporting period. Contacts continued to report concerns regarding available labor supplies in Georgia and Alabama, attributing this to the tougher immigration laws.”

Seventh District- Chicago: “Unseasonably warm weather has jumpstarted field work and corn planting in the District. There were reports of tight supplies of some agricultural chemicals, as well as some types of corn seed. Most of the District has sufficient moisture for a strong start to the corn crop. With spring planting taking place up to a month early, some corn will be harvested in August; combined with the potential of a record corn crop, concerns about corn stocks being low before the traditional harvest time diminished and corn prices moved lower. Soybean prices have risen in response to lower-than-expected harvests in South America. The increase in soybean prices relative to corn prices, as well as some acreage being removed from environmental protection restrictions, resulted in an increase in the number of acres that famers expect to plant in soybeans. Milk and hog prices decreased, while cattle prices continued to rise.”

Eighth District- St. Louis: “Monthly output of commercial red meat in the District for February 2012 increased 9.9 percent compared with February 2011. However, monthly output of commercial red meat declined 4.4 percent between January and February 2012. The number of chickens slaughtered and the total live weight also decreased by 4 to 5 percent between January and February 2012.”

Ninth District- Minneapolis: “Agricultural conditions remained strong. Cattle ranchers benefited from both high beef prices and strong export demand as well as ideal weather for the calving season. Drought conditions remained in Minnesota, the Dakotas and western Wisconsin, but were abated somewhat by recent rain and snowfall. Drier conditions may actually lead to increased corn plantings in the eastern Dakotas by making long- flooded fields available. Unseasonably warm weather has led to reports of early spring wheat plantings in some areas. Prices received by farmers for wheat, corn, dry beans, cattle, hogs, eggs and poultry increased in March from the previous month, while dairy prices fell for the month and the year.”

Tenth District- Kansas City: “Agricultural growing conditions improved since the last survey. Scattered rains increased soil moisture levels in many areas, although drought conditions persisted in some western areas of Kansas and Oklahoma. Winter wheat development was ahead of normal with most of the crop upgraded to good condition. Mild winter weather was favorable for calving and encouraged forage growth, reducing the need for supplemental feeding. Spring field work began early, and crop prices moved higher. Low cattle inventories trimmed beef production, and strong domestic and export demand pushed up cattle and hog prices. Operating loan demand declined as many producers used cash to buy crop inputs. Farmland values rose further and were expected to remain at record highs.”

Eleventh District- Dallas: “Rainfall continued to ease drought conditions in many parts of the District. West Texas did not receive much moisture, however, and the severity of drought there worsened over the reporting period. Prospects for 2012 crops are improved due to better soil moisture, and producers will have more flexibility with what to plant.”

Twelve District- San Francisco: “Final sales and orders were robust for a broad range of crop and livestock products, and recent precipitation has eased concerns in parts of the District about drought during the upcoming growing season. Contacts noted increases in the costs of some inputs, such as fertilizer.”