FarmPolicy

Agricultural Economy; Farm Bill; and, EPA Issues

Agricultural Economy

Monica Davey reported in today’s New York Times that, “Across a wide stretch of the Midwest, sweltering temperatures and a lack of rain are threatening what had been expected to be the nation’s largest corn crop in generations.

“Already, some farmers in Illinois and Missouri have given up on parched and stunted fields, mowing them over. National experts say parts of five corn-growing states, including Indiana, Kentucky and Ohio, are experiencing severe or extreme drought conditions. And in at least nine states, conditions in one-fifth to one-half of cornfields have been deemed poor or very poor, federal authorities reported this week, a notable shift from the high expectations of just a month ago.

“Crop insurance agents and agricultural economists are watching closely, a few comparing the situation with the devastating drought of 1988, when corn yields shriveled significantly, while some farmers have begun alluding, unhappily, to the Dust Bowl of the 1930s. Far more is at stake in the coming pivotal days: with the brief, delicate phase of pollination imminent in many states, miles and miles of corn will rise or fall on whether rain soon appears and temperatures moderate.”

Today’s article stated that, “Some experts are less pessimistic, saying the fate of the nation’s corn crop, the largest in the world, cannot be known until later in the summer, after pollination, when it is clear whether kernels or empty spaces fill the ears of corn and whether enough ears appear at all. They note that the driest, hottest conditions have steered clear of some crucial Corn Belt states, including Minnesota, North Dakota, South Dakota and western Iowa, the nation’s most prolific corn producer. In those states, the crop appears healthy and strong — not to mention increasingly valuable. And while much of the nation’s corn is not protected by irrigation, some of it, especially in Nebraska and Kansas, is, though those areas have felt the effects of drought, too, requiring more water and, potentially, driving up costs.

“‘This is a moving target,’ said Darrel L. Good, a professor emeritus of agricultural and consumer economics at the University of Illinois at Urbana-Champaign. ‘But what we know is this: There’s been some permanent and substantive yield reduction already, and we’re on the cusp, depending on the weather, of taking that down quite a bit more.’ In its most recent assessment, released on Monday, the Department of Agriculture reported that 48 percent of corn crops nationally were in good or excellent condition, a drop from 56 percent of crops a week earlier. In some states, though, the circumstances were far worse. In Indiana, half of corn crops were designated poor or very poor, and in Illinois, another state among the nation’s top corn producers, only 26 percent of crops were considered good or excellent.”

Ms. Davey also indicated that, “American farmers had high expectations for corn this year, planting 96.4 million acres of it — a number 5 percent more than the previous year. High prices and an expectation of strong returns made this year’s planting the largest corn acreage in 75 years. Those were heady times in farm country, with farmland prices rising on and on, even as the recovery moved sluggishly in other realms. An uncharacteristically warm March in the Midwest sent hopes still higher, allowing farmers to plant corn weeks earlier than usual. For some crops, including some cherries in Michigan and apples in Indiana, unexpected April frosts then caused damage, but the corn, said Randy Anderson, a farmer in Southern Illinois, went right along beautifully.

“And then very little rain fell, and temperatures soared. By last week around corn country, scores of triple-digit heat records were being broken: Jefferson County, Mo., 111 degrees; Evansville, Ind., 107 degrees. That left corn, including Mr. Anderson’s crop, shriveling.”

An article posted Tuesday at CBS New Online reported that, “The costs are stacking up for Arkansas farmers and ranchers as they work to keep their crops and stock alive during a drought that keeps getting worse.

“Grower Jeff Keeter in Lincoln County has been burning through 8,000 gallons of diesel per week on his 5,000-acre farm.”

The article added that, “‘I’ve been irrigating corn since May 2 this year. I’m way ahead of schedule,’ Keeter said.

“About one-third of Arkansas is in extreme drought, with most of the rest in severe drought, according to the U.S. Drought Monitor. Precious little rain has fallen, despite the occasional small thunderstorm.”

John Jarvis reported yesterday at The Marion Star (Ohio) Online that, “Last year rain and mud kept Bruce Ackley and other Marion County farmers from getting into their fields as early as they would have liked.

“The Marion-Bucyrus Road man would like to transplant some of last spring’s wetness to this summer’s dusty agricultural landscape.

“‘If it keeps dry, we’re not going to have anything,’ said Ackley, who farms 1,300 acres, including 500 acres each of corn and soybeans, in northern Marion County. ‘We’re in real dry, bad shape.’”

Meanwhile, a CNBC article from yesterday provided an international perspective on some farm economic variables; the article reported that, “Corn and wheat prices may be trading close to ten-month highs but contrary to public opinion many farmers are not reaping fat profits.

“The stark reality is that growers’ margins are razor thin and many are even losing money because food crops are priced well-below the cost of production, former Australian farmer Paul Hickey explains.

“Hickey speaks from personal experience. Unable to contain spiraling losses, he stopped production last year at his 1,000-hectare farm in Howlong in New South Wales, ending more than one-and-a-half centuries of ‘continuous food production in Australia by our family.’”

The article pointed out that, “Ultimately, Hickey says, the end result is that farming isn’t considered a viable career option for many young Australians. ‘You won’t find many farmers in Australia under 40. Many have got up and got out.  Here in Australia they have gone to the mines, or like myself back to their old professional jobs,’ said Hickey, who holds an MBA and BA degree in Agricultural Sciences, and now works as an agronomist.

“Christopher Narayanan, Societe Generale’s head of agricultural commodity research, says aging farmers is a theme that’s resonating in the U.S. too.”

Farm Bill Issues

Don Steele reported on Tuesday at the Dodge City Daily Globe (Kan.) Online that, “The [Senate passed Farm] bill contains an amendment to help communities across the nation that are not currently eligible for various USDA funding programs because the definition of ‘rural’ excludes towns with populations larger than 20,000.

“‘USDA regulations remove a town when their second census tops 20,000,’ Cherise Tieben, assistant city manager said in an interview Monday.”

The article noted that, “The new bill will allow cities with populations up to 35,000 to participate in USDA programs.

“The Southwest Kansas Coalition, which includes Dodge City, Garden City and Liberal, sought an amendment to certain sections of USDA regulations. The amendment passed in the Senate exceeds their request, allowing developers and home builders in towns with populations under 35,000 to apply so long as they are at least 100 miles from the nearest metropolitan area.”

“The next step for the legislation is passage by the House of Representatives, where Rep. Tim Huelskamp [R., Kan.] will represent the area’s interests,” the Globe article said.

J.T. Rushing reported earlier this week at The Gazette (Cedar Rapids, Iowa) Online that, “Members of Iowa’s congressional delegation say they will be watching the [Farm] bill’s progress closely. Democratic Reps. Bruce Braley and Leonard Boswell, for example, will be pushing an amendment to promote rural energy jobs. Braley held 10 listening sessions across Eastern Iowa over the past month.

“The amendment would renew and expand agriculture programs that are intended to establish rural energy-based jobs, such as renewing a Rural Energy for America Program that provides financial assistance to agriculture producers and rural small businesses that invest and improve on renewable energy systems.”

The Gazette update pointed out that, “Sen. Tom Harkin, D-Iowa, who sits on the Senate Agriculture Committee, said he will be watching to ensure that the House doesn’t follow through on a threat to cut $37 billion from food stamps, which he called ‘heartless.’ He called the program his top priority to stay in the bill, followed by conservation programs.

“‘If the House insists on making these huge cuts to food assistance, it won’t fly over here,’ Harkin said. ‘It won’t fly with Democrats or Republicans in the Senate. We’ll have to see if the House is more reasonable.’

“Yet Republicans say that’s exactly the program they will be targeting for deeper cuts. Sen. Chuck Grassley, R-Iowa, for example, said the bill provides a disproportionate amount of funding for such programs.”

Meanwhile, San Francisco Chronicle writer Carolyn Lochhead reported yesterday that, “The U.S. Department of Agriculture does not collect data on what people buy with food stamps. Tobacco, alcohol, pet food and vitamins are banned, but candy, soda and ice cream are allowed.”

“One in 7 Americans and 1 in 10 Californians – or 3.7 million people in the state, more than half of them children – received benefits last year. The program accounts for more than 10 percent of all grocery spending,” the Chronicle article said; and added that, “Republicans on the House Agriculture Committee plan to cut $16 billion from the program over the next decade, almost four times more than the $4.5 billion cut in the Senate bill.”

Yesterday’s article indicated that, “Antihunger groups, working with the food industry and backed by the Agriculture Department, oppose restrictions on the food poor people buy. Last year, the USDA denied New York City Mayor Michael Bloomberg’s request for a waiver to ban soda purchases with food stamps.”

In other news, Jeff Gordinier reported in yesterday’s New York Times that, “Ask around, and it’s rare that you’ll find a leading light in the culinary world who doesn’t have a semi-secret fondness for at least one of these supermarket stalwarts, whether Hellmann’s mayonnaise or Skippy peanut butter, Premium saltines or Oreos or Cheerios, American cheese or generic ice-cream sandwiches.

“‘There is something to be said about all those things,’ said Dan Kluger, the chef at ABC Kitchen, whose Web site proclaims that the New York restaurant is ‘passionately committed to offering the freshest organic and local ingredients possible.’

“A lot of grocery-store staples ‘may not be organic,’ he added. ‘They may not be the best products in terms of our environment and G.M.O.’s and all those kinds of things, but we kind of grew up with them, and you can’t help but revert back to them in a pinch.’”

The article noted that, “Michael Chiarello is an organic vintner and a spirited advocate for the integrity of straight-from-the-soil California cooking, but if you were to poke around in his pantry in the Napa Valley, he said, you’d find, ‘behind the almond butter and the hazelnut butter and the organic peanut butter with two ounces of oil on the top you have to stir up every time you want a sammy,’ an aqua-topped jar of Skippy.

“As an avid cyclist who often depends on peanut butter sandwiches for sustenance on long rides, Mr. Chiarello has a grievance with organic peanut butter. He equates it to ‘swallowing chalk.’”

Mr. Gordinier also noted in yesterday’s article that, “Phil Lempert, an industry analyst who bills himself as the Supermarket Guru, sees some of the stringent focus on ‘only local, only organic’ as unrealistic, and out of step with how most people actually eat. ‘Unfortunately, in our food world, we think in terms of extremes,’ he said. ‘That if it’s on a supermarket shelf and commercial, it’s bad. If somebody’s making it in their basement, not adhering to any food-safety standards or whatever else, it’s got to be good. We’ve got to relax just a little bit. And understand that there’s something in between.’”

EPA Issues

A news release Tuesday from the EPA (Environmental Protection Agency) stated that, “The [EPA] today announced that it will not revise greenhouse gas (GHG) permitting thresholds under the Clean Air Act. Today’s final rule is part of EPA’s common-sense, phased-in approach to GHG permitting under the Clean Air Act, announced in 2010 and recently upheld by the U.S. Court of Appeals for the D.C. Circuit. The final rule maintains a focus on the nation’s largest emitters that account for nearly 70 percent of the total GHG pollution from stationary sources, while shielding smaller emitters from permitting requirements. EPA is also finalizing a provision that allows companies to set plant-wide emissions limits for GHGs, streamlining the permitting process, increasing flexibilities and reducing permitting burdens on state and local authorities and large industrial emitters.

“After consulting with the states and evaluating the phase-in process, EPA believes that current conditions do not suggest that EPA should lower the permitting thresholds. Therefore, EPA will not include additional, smaller sources in the permitting program at this time.”

With respect to the recent EPA ruling from the U.S. Court of Appeals for the D.C. Circuit, The Washington Post editorial board opined today that, “Last week, as the nation’s attention was on the Supreme Court and health care, the U.S. Court of Appeals for the District of Columbia Circuit issued a ringing ruling concerning America’s response to global warming that does two critical things. First, it emphatically dismisses arguments that the science is too uncertain to justify federal action. Second, it assures Congress that, if lawmakers don’t act on global warming, the courts won’t stop the Environmental Protection Agency (EPA) from doing so independently of Congress, using the powers the EPA has under the Clean Air Act. Both should persuade lawmakers to develop, at long last, a comprehensive response to climate change instead of leaving the job to the EPA’s command-and-control regulation.”

The Post opinion item added that, “Now that the D.C. Circuit Court has slammed the legal challenge to the EPA’s regulation of greenhouse gases, the agency is clear to continue clamping down on emissions. Under the Clean Air Act, that means a command-and-control approach that will be expensive but won’t reduce emissions enough. Congress has only one reasonable option to avoid that far-from-optimal outcome: enacting a more effective and efficient policy such as a carbon tax or a cap-and-rebate program that complements or preempts the EPA’s regulation. Lawmakers have ignored the problem for far too long.”

Keith Good

Posted by Keith Good • July, 5, 2012 • 3:30 am