In part, yesterday’s report indicated that, “After early spring rains, emerging drought conditions wilted District farm income expectations during the second quarter. At the beginning of the quarter, precipitation in the southern portions of the District led to a rebound in winter wheat production and farm incomes. Yet, by the end of the quarter, intensifying drought conditions were cutting bankers’ expectations for farm income during the third quarter.
“Bankers reported that livestock producers were bearing the biggest burden from the drought. Higher feed costs and lower cattle prices from forced herd liquidations were cutting livestock profits. Several survey respondents noted that high crop prices would support crop incomes for producers able to harvest a crop and those that have crop insurance.”
(See related chart below, click on the chart for full view).
One of the author’s of yesterday’s Kansas City Fed report, Jason Henderson, was a guest on today’s AgriTalk radio program with Mike Adams.
In part, their conversation focused on farm income and issues associated with future production costs potentially resulting from this year’s drought.
Yesterday’s credit survey also discussed farmland values, stating that, “After surging at the beginning of the year, District farmland values rose less rapidly during the second quarter. District farmland values rose less than 3 percent during the second quarter, roughly half the rate of growth experienced at the beginning of the year. Nonirrigated cropland values rose solidly, while irrigated cropland values held steady and ranchland values edged up. The index of future farmland value gains declined sharply as more than three-quarters of survey respondents felt that farmland values would hold steady through the fall.”
(See related charts below, click on the chart for full view)
On AgriTalk today, Mike Adams and Dr. Henderson also discusses issues associated with farmland values:
Rep. Jim Costa (D., Calif.), who serves as the ranking member of the House Agriculture Rural Development, Research, Biotechnology, and Foreign Agriculture Subcommittee, was a guest yesterday (Wednesday) on KERN- 1180 radio (Bakersfield, Calif.) where he discussed the Farm Bill and the agricultural economy.
Below are excerpts of some of the remarks by Rep. Costa (pictured at right) from yesterday’s radio interview:
A lot of the new members are skeptical of a farm bill. Some believe that we should not even have a farm bill at all. Some are very critical of the dairy program and the sugar programs, and the nutrition programs, and would like to severely cut them back or eliminate them entirely.
And I think [House Speaker John Boehner (R., Ohio)] who served on the House Ag Committee has been critical of some of these programs in the past. Those years that he was on the Farm Committee he voted for, I believe one farm bill in 1996, that was dubbed the ‘Freedom to Farm Act’ that had a number of consequences that many in the agricultural community were not pleased with, and that ended up getting changed after enacted.
But Speaker Boehner realizes we need to have a farm bill.
Speaker Boehner, I believe, would like to have a farm bill. He was here in the Valley earlier this year telling a number of ag interests that if the Senate produced a farm bill that the House would do the same and we would go to conference…[H]ere we are and we’ve got two weeks of session left in September and we’re working hard to try to get the powers to be to work together in a bipartisan fashion for a farm bill, but it’s not looking good at this point.
I think that when we go back after September 10th we will see whether or not there is an interest among the house leadership. As I said, I think Speaker Boehner would like to produce a bill. I think certainly the farmers, ranchers, and dairymen that both Congressman [Kevin McCarthy (R., Calif.)] and I represent in Kern County count on us to come together on a bipartisan effort, we’ve done that in the past, to produce a farm program every five years to establish the priorities for American agriculture.
The Senate has indicated, when we addressed –that they weren’t going to take up the what I refer to as a Band-aid disaster relief proposal that the House passed in the last week of July– that they wanted to act on a farm bill. Now whether that remains the Senate’s position when we go back after September 10th will likely determine how we move forward, and whether or not Speaker Boehner and Majority Whip McCarthy and others decide– I think the Majority Leader Eric Cantor–that seems to be unwilling to schedule a vote for the farm bill, and he of course determines the schedule on the house floor, and I think that’s where the differences exist right now.
Some of the programs like the nutritional programs –and those who are critics of it– continue even if you don’t have a farm bill, so that’s kind of a misplaced target it seems to me for those who are critical.
I think the success that we’ve had in the 2008 farm bill that provided funding for a host of our fruits and vegetable efforts – not subsidies, but efforts to ensure that we can maintain our competitive edge is what we want to continue. And of course the insurance programs, the reform and the milk program to eliminate the support prices in the milk program and it instead provided insurance for federal milk marketing order I think is all part of good reform. So you know it’s frustrating I think for our farmers, ranchers, and dairymen.
I mean Ag has been pretty good in California the last several years and across the country, with the exception of the dairy industry, and right now we’re having bankruptcies at an alarming rate in California. We’ve had some significant dairies in Kern, Tulare, Fresno, Kings County that just in the last several weeks have filed bankruptcies.
And right now the dairyman are getting about $14…$14½ per hundredweight [cwt], that’s the measurement of what they get paid for their milk...the cost of producing the milk is at $15 to $18 per hundredweight depending upon the dairy and how much of the feed they have to buy on the open market. So if you’re getting $14…$14½ for hundredweight and your costs are $15 to $18 it makes it very difficult and a lot of the dairies lost much of their equity in the 2009/2010 bust cycle that existed across the country and here in California at that time.
And you couple that with the increase in corn prices with the drought conditions, in January to June of this year corn prices increased 63% and in the last weeks they’ve increased another 30 to 35% and so that— And of course I’m one of those who really believe, and I’ve got a bipartisan effort with Congressman [Bob Goodlatte (R., Va.)] to change the renewable fuel standard.
I don’t think we ought to be using corn to produce ethanol and its impact to feed stocks for dairy is significant, and so it’s driving a lot of these bankruptcies to beef cattle that depend upon corn, as well as to poultry and to pork. And so you’re going to see increases to consumers at the grocery story here in the next several months as a result of the impacts of this drought and the increasing costs of corn and its impacts to a host of beef stock industries that include dairy, beef, pork, and poultry.
I mean I think the majority of my constituents wanted me to go to Washington to solve problems and solve them on a bipartisan fashion, and they’re a lot less concerned and they get very frustrated with politics as usual in which one party or the other is trying to leverage one another for political gain and not for dealing with the important public policy. And in this case we’re talking about America’s agricultural production which is still one of the very strong economic leaders of America’s economy that every year provides a plus for a balance of payments with our trade issues and we ought to have a farm bill. I mean again it’s one of the most bipartisan efforts that we traditionally do in Congress and to see it get bogged down in the political food fight…well that’s good symbolism isn’t it…the farm bill. It’s frustrating to me I can tell you for sure.
A news release yesterday from the Friends of Family Farmers [FoFF] and the Center for Food Safety (CFS) stated that, “Today, in an effort to stop the Oregon Department of Agriculture (ODA) from an unprecedented expansion of industrial, genetically engineered canola production into the boundaries in the Willamette Valley, [FoFF], [CFS] and three Willamette Valley specialty seed producers jointly filed suit challenging ODA’s temporary rule that would irreparably harm the state’s organic agriculture production and specialty and clover seed industries.
“‘We had no other option than to go to the courts,’ said Leah Rodgers, Field Director for FoFF. ‘We have tried to work with the Kitzhaber administration to slow down this process and engage all stakeholders in public notice and comment, but ODA steamrolled producers and have rushed to open 1.7 million acres in the Willamette Valley to canola, a low-value crop with a huge, adverse impact on several high-value industries. This could mean disaster for Oregon’s seed and organic industries.’”
The release pointed out that, “The strong potential for genetically engineered (GE) cross-contamination of crops will critically harm the overall marketability and reputation of Oregon’s specialty seed industry, which has an international reputation for producing high quality, non-contaminated seeds.”
While concerns exist about cross pollination, as the devastating impacts of the 2012 drought continue to unfold, some corn farmers have noted that current seed technologies have served to mitigate the adverse impacts of high temperatures and lack of moisture on crop yields.
In the CNBC video below, a corn producer states that yields would be much worse on his Iowa farm this year if it were not for genetic advancements in seed technologies.
Meanwhile, the Associated Press reported yesterday that, “The nation’s largest agribusiness and biotech companies are pouring millions of dollars into California to stop the first-ever initiative to require special labels on foods made with genetically modified ingredients, a sign of their determination to keep the measure from sparking a nationwide movement.
“So far, farming giants such as Monsanto, Dupont Pioneer and Cargill have contributed nearly $25 million to defeat the proposal, with much of that cash coming in the past few days. It’s nearly 10 times the amount raised by backers of the ballot measure who say California’s health-conscious shoppers want more information about the food they eat.”
The AP article added that, “The food initiative, known as Proposition 37, is one of 11 statewide measures to go before California voters in November. It would require most processed foods to bear a label by 2014 letting shoppers know if the items contain ingredients derived from plants with DNA altered with genes from other plants, animals, viruses or bacteria.
“If the proposal passes, California would be the first state to require labeling of such a wide range of foods containing genetically modified organisms, or GMOs.”
Recall that during the Senate Farm Bill debate back in June, Sen. Bernie Sanders (I., Vt.) offered an amendment regarding GMO products and food labels.
A press release at the time stated that, “The Senate today rejected an amendment by [Sen. Sanders] to let states require clear labels on any food or beverage containing genetically engineered ingredients. The vote was 26 to 73.
“‘This is the very first time a bill on labeling genetically engineered food has been brought before the Senate. It was opposed by virtually every major food corporation in the country. While we wish we could have gotten more votes, this is a good step forward and something we are going to continue to work on. The people of Vermont and the people of America have a right to know what’s in the food that they eat.’”
A news release yesterday from USDA stated that, “As part of continuing steps by the Obama Administration to get assistance to producers impacted by the drought, Agriculture Secretary Tom Vilsack today designated172 additional counties in 15 states as primary natural disaster areas due to drought and heat, making all qualified farm operators in the areas eligible for low-interest emergency loans. To date, USDA has designated 1,792 counties as disaster areas—1,670 due to drought.
“Earlier this week, President Obama and Secretary Vilsack traveled to Iowa to announce USDA’s intent to purchase up to $170 million of pork, lamb, chicken, and catfish for federal food nutrition assistance programs, including food banks, which will help relieve pressure on American livestock producers and bring the nation’s meat supply in line with demand.”
An updated map of the 2012 Secretarial Drought Designations can be viewed here.