Farm Bill- Policy Issues, Crop Insurance
David Shepardson reported yesterday at The Detroit News Online that, “Sen. Debbie Stabenow says she is optimistic Congress will pass disaster assistance for farmers facing a record drought if the House doesn’t approve a farm bill.
“The Lansing Democrat and chair of the Senate Agriculture Committee said she’s been working during the congressional recess to try to get the House to act on farm reform legislation.”
Yesterday’s article noted that, “[Sen. Stabenow] was in Washington in meetings on the farm bill before coming to Charlotte, N.C., to take part in an event honoring female senators Wednesday night at the Democratic National Convention.
“‘I am very hopeful that the House will act on the farm bill. If not, I am optimistic we’ll get a disaster assistance bill through,’ Stabenow said in interview after speaking at a meeting of Michigan delegates.
“Stabenow said she will take part in a rally Sept. 12 sponsored by farmers in Washington urging Congress to act called ‘Farm Bill Now.’”
The article added that, “With the exception of approving a bill to fund government operations, the House ‘has nothing of substance on their agenda for September. … It seems to me it is pretty hard not to take up the number one issue for the rural economy.’”
A news release yesterday from Chairwoman Stabenow indicated that, “[Sen. Stabenow] today applauded news that American agriculture exports are predicted to reach record highs this year. The U.S. Department of Agriculture (USDA) reports that agriculture exports for fiscal year 2013 are projected to be a record-breaking $143.5 billion, with a trade surplus of $26.5 billion. Agriculture supports 16 million jobs nationwide and nearly one-in-four jobs in Michigan.”
“While overall exports remain high, many individual farmers and livestock producers continue to struggle from extreme drought, spring deep freeze and other weather disasters across the country. Stabenow noted that passing a Farm Bill would provide much-needed disaster assistance to struggling farmers and ranchers,” yesterday’s release said.
Meanwhile, Secretary of Agriculture Tom Vilsack addressed the Democratic National Convention in Charlotte, N.C. yesterday evening where his remarks focused on Rural America.
An overview and transcript of Sec. Vilsack’s remarks can be found here, while an audio excerpt from his address is available here (MP3- 2:20). A video replay of the Secretary’s presentation can be viewed here.
Thomas Fitzgerald reported yesterday at The Big Tent Blog (Philadelphia Inquirer) that, “Here’s a stratagem for Pennsylvania you don’t hear every day (OK, basically never) from Democrats: do well in the rural center, win the whole state.
“‘Central Pennsylvania is where the battle is going to be won,’ U.S. Secretary of Agriculture Tom Vilsack said. ‘They can try to suppress the vote in the cities of Pennsylvania, and we can try to respond to that,’ he said, referring to the state’s new voter ID law, ‘But it’s important to do well in the rural areas. If we do, it takes a lot of pressure off Philadelphia and Pittsburgh.’”
Mr. Fitzgerald noted that, “Vilsack, a Pittsburgh native and the former governor of Iowa, said that farm production will be up this year despite widespread areas of drought. He noted that administration programs have poured money into farm country for rural housing and other benefits, and that the Affordable Care Act overhaul of health coverage is helping rural people.
“‘This president has invested more in rural America than any president since Franklin Roosevelt,’ Vilsack said. ‘And the result of this is we are now faced with a rural economy stronger than people realized.’”
Meanwhile, a news release yesterday from the United Fresh Produce Association indicated that, “With the presidential election just two months away, United Fresh Produce Association has released exclusive policy statements from the campaigns of President Obama and Governor Romney on top product industry priorities. United Fresh posed questions on behalf of the industry to both campaigns on immigration, regulation, the Farm Bill, taxes, food safety and nutrition. The campaigns’ responses to United’s questions can be viewed via a link at http://www.unitedfresh.org/programs/wppc or directly at http://bit.ly/UnitedCandidates.”
In other developments, a news release yesterday from Rep. Adrian Smith (R., Neb.) stated that, “[Rep. Smith] issued the following statement today after launching an official website of the bipartisan Congressional Rural Caucus, which he co-chairs with Congressman Jim Matheson (D-UT):
“‘The Congressional Rural Caucus is committed to representing the interests of rural Americans, regardless of party or geography. This new website will help raise awareness of rural America among other Members of Congress and the public, as well as the shared interests and challenges of rural communities.’”
And, California Agriculture Secretary Karen Ross indicated this week at the Planting Seeds Blog that, “Despite the perfect storm of economic challenges affecting our dairy industry, cooperation and strategic reform can provide a more sustainable marketplace for our dairy farmers. Many dairies suffered steep financial losses as a result of the economic collapse in 2008 and 2009. Before equity recovery was complete, a nationwide drought struck in 2012, driving up feed prices and causing significant new problems. This belies the encouraging news released late last week that California gross farm receipts reached an all-time record of $43.5 billion in 2011, including a 30 percent increase in dairy. This gross revenue does not account for dramatic increases in input costs such as feed – an area where dairies are really struggling to compete.”
The update added that, “I am committed to working with the dairy industry to find long-term solutions. That is why I am forming the California Dairy Future Task Force. Last week, invitations were issued to 32 dairy farmers, cooperatives and processors to serve on the task force. It is imperative that task force members begin work as soon as possible and strive to develop recommendations by the end of the year.”
In policy issues regarding nutrition, the USDA’s Economic Research Service (ERS) yesterday released a report titled, “Household Food Security in the United States in 2011.” An ERS summary of the report stated that, “An estimated 85.1 percent of American households were food secure throughout the entire year in 2011, meaning that they had access at all times to enough food for an active, healthy life for all household members. The remaining households (14.9 percent) were food insecure at least some time during the year, including 5.7 percent with very low food security—meaning that the food intake of one or more household members was reduced and their eating patterns were disrupted at times during the year because the household lacked money and other resources for food. The prevalence rate of very low food security increased from 5.4 percent in 2010, returning to the level observed in 2008 and 2009. The change in food insecurity overall (from 14.5 percent in 2010) was not statistically significant.”
Additional ERS statistical and graphical information relating to the Food Security report is available here.
Al Baker reported in yesterday’s New York Times that, “Worried that children were losing the war on obesity, New York City began to slim down its school lunch offerings several years ago, replacing fries with baked potato strips and introducing nonfat chocolate milk, whole grain pasta and salad bars, among other tweaks.
“In the process, the city also cut calories. So much so, city officials now acknowledge, that it often served children fewer calories than required by the federal government.”
The article pointed out that, “The Bloomberg administration has often found itself stymied by the powers of Albany or Washington in its policy goals, including enacting congestion pricing, erecting a stadium on the West Side of Manhattan, taxing soda or banning the use of food stamps for sugar-sweetened beverages.
“But in the case of the 860,000 school lunches served daily, it ignored a set of United States Department of Agriculture requirements written in 1994, without seeking permission. City health and education officials said their aim was not to lower calories, but rather to increase the nutritional value of the foods reaching students’ mouths. But as it slowly began re-engineering those foods, there was a ‘secondary response,’ said Cathy Nonas, a senior adviser in the city’s health department. ‘It dropped the calories and at sometimes below what the U.S.D.A. had as a minimum,’ she said.”
A separate article in yesterday’s Times noted that, “Like movie stars lining up to endorse the next big celebrity workout, the weight-loss specialists have all thrown their support behind Mayor Michael R. Bloomberg’s proposal to limit sales of big sugary drinks.”
And the Los Angeles Times editorial board indicated yesterday that, “So a new study from Stanford University shows that organic produce probably isn’t any more nutritious than the conventional variety. We doubt the folks at Whole Foods are trembling in their Birkenstocks. We’re not aware of too many people who thought otherwise — it doesn’t make a lot of sense to assume the application of pesticides would have much impact on a fruit’s vitamin content. But that doesn’t mean it isn’t safer to eat.”
Meanwhile, a recent update from National Crop Insurance Services (NCIS) indicated that, “Despite a record drought in 2012, which has come on the heels of a disastrous 2011 and nearly $30 billion in indemnity payouts since 2008, some critics of crop insurance contend crop insurers make too much money.
“Critics have pointed to an arbitrary ‘rate of return’ figure to make their case. Unfortunately, the figure they are promoting comes from an outdated, controversial study and is based on gross revenue, not net returns.”
The NCIS item explained that, “Revenues do not reflect business expenses and are certainly not profits. Confusing such basic business terminology is unacceptable and begs into question the validity of anything the critics say.
“The inflated figures being used to portray crop insurers’ rates of return do not accurately reflect company costs of delivering the crop insurance program, and do not reflect changes to the crop insurance program since 2008 that have increased delivery costs, lowered federal spending by $12 billion, and reduced company revenues. They certainly do not reflect the record indemnity payouts of 2011—a record that will be shattered again in 2012 (Read more here).”
Reuters news reported yesterday that, “Before the U.S. biofuels boom took off in 2007, the food versus fuel debate raged: can we afford to use corn for ethanol in a starving world?
“Five years later, farm bankers ask: can we afford not to?
“‘Ethanol demand is the linchpin of the current pricing model that we have,’ said Michael Swanson, agricultural economist at Wells Fargo, the largest commercial bank lender to U.S. farmers. ‘It’s a completely different question whether it’s right or wrong.’”
The article noted that, “‘Corn can be a national security issue for this country,’ said Curt Covington, senior vice president for agricultural and rural banking at Bank of the West, the second largest commercial lender to U.S. farmers. ‘That’s where we are right now.’
“Leland Strom, chief executive of the Farm Credit System and regulator of the largest single lender to farmers, was blunt about any sudden suspension of the ethanol mandate: ‘I think it definitely would have an immediate impact weakening ag and rural America, especially in the heartland.’”
Yesterday’s Reuters article indicated that, “Bankers say they realize biofuels have been a two-edge sword for U.S. agriculture, since higher corn prices cut livestock producer profits. That is not a minor effect, since receipts from dairy to poultry represent about half of farm income.
“But the steady rise in farmland prices based on higher returns from corn – and other crops competing for those acres – has overwhelmed the negatives, bankers and economists say… Aside from ethanol’s boost to land prices, bankers also cite two new industrial facts: oil refiners are now using ethanol by choice, not mandate; and ethanol plants are, as a byproduct, producing millions of tons of livestock feed called distiller’s dried grain (DDG) that has become a critical substitute for corn for cattle, hogs and poultry.”
Mark Steil reported this week at Minnesota Public Radio Online that, “‘Milk production is slowing down,’ said Bob Cropp, the University of Wisconsin’s dairy marketing professor emeritus.
“Cropp said milk production is dropping because high feed costs are forcing some farmers out of business.”
And William Pack reported this week at the San Antonio Express-News Online that, “Staggered by drought last year, the Texas cattle industry remains woozy and somewhat smaller this year despite a boost from storms that peppered the state.
“The problem is the rains were not widespread or heavy enough to replenish pastures and fill stock tanks so cattle herds could be rebuilt. High beef prices and rising feed costs also have encouraged ranchers to sell rather than restock their inventory.”
Creighton University Professor of Economics Ernie Goss was a guest on yesterday’s AgriTalk radio program with Mike Adams where their discussion focused on the 2012 drought and the potential impacts on the rural economy. To listen to a clip from Dr. Goss from yesterday’s AgriTalk program, just click here (MP3- 1:00).
In other news, DTN writer Todd Neeley reported yesterday that, “Despite warnings that this year’s drought-damaged corn crop could prove to be the perfect host for an aflatoxin infestation, DTN has found few reports of huge problems in harvested grain — so far. Only 10% of the nation’s corn crop was reported harvested as of Sept. 2. And those samples that are testing positive for the fungus vary widely, even within the same load of grain.
“Elevators contacted by DTN Tuesday said they’ve seen very little aflatoxin so far, in areas where harvest is in the early stages.”
Owen Fletcher reported yesterday at The Wall Street Journal Online that, “U.S. wheat futures slumped 2.3% to a three-week low, pressured by lackluster export demand and lower corn prices.”
The Journal article noted that, “The worst U.S. drought in decades has had little impact on U.S. wheat crops, even as it has decimated the nation’s corn crop this year and greatly reduced the soy crop’s potential harvest.”
Emiko Terazono reported yesterday at The Financial Times Online that, “Sugar fell to a three-month low, continuing its decline since hitting its recent high in July, as worries about a poor harvest due to adverse weather conditions receded to be replaced by oversupply concerns [related graph].”
More broadly, a news release yesterday from Oxfam indicated that, “Climate change will increasingly drive extreme weather shocks that will cause more dramatic spikes in future global food prices, according to international relief and development organization Oxfam America. Future extreme weather events, like the US drought, could spike prices drastically with devastating consequences for the poorest people in the world.
“In a new report, Extreme Weather, Extreme Prices, Oxfam shows that the full impact of climate change on future food prices is being underestimated. Current research only tends to consider these gradual impacts of climate change on food prices, such as increasing temperatures and changing rainfall patterns.”
Vicki Needham reported yesterday at The Hill’s On the Money Blog that, “A powerful Senate Democrat expressed support on Wednesday for the Japanese government’s efforts to reduce restrictions on U.S. beef, providing more opportunities for exporters.
“Senate Finance Committee Chairman Max Baucus (D-Mont.) acknowledged that Tokyo is considering expanding its imports of U.S. beef to animals up to 30 months old from the previous 20-month threshold.”
Steven Sloan reported earlier this week at Politico that, “Congress won’t return for a lame-duck session until after the election, but Sen. Chuck Schumer says top lawmakers are already holding talks about how to avoid falling off the fiscal cliff.
“‘There are conversations going on now about ways to avoid the fiscal cliff between Democrats and Republicans,’ Schumer said at a POLITICO event here [Charlotte, N.C.] Tuesday evening.”
And Jake Sherman reported yesterday at Politico that, “House Minority Leader Nancy Pelosi called on President Barack Obama and Mitt Romney to hash out an agreement on the so-called fiscal cliff in the heat of this election season, which she said would help instill certainty in the economy.
“Speaking at a breakfast sponsored by the Christian Science Monitor here [Charlotte, N.C.], Pelosi said Obama and Romney could help ‘narrow the number of days of uncertainty’ by coming to a deal on income tax rates, automatic cuts to Defense spending and business tax provisions. Pelosi said she thinks Obama ‘knows that’s what I think.’”
Joseph Checkler reported yesterday at The Wall Street Journal Online that, “A bankruptcy judge allowed the trustee unwinding MF Global Holdings Ltd.’s brokerage to combine his claims with those of individuals suing Jon S. Corzine and other former executives in U.S. district court.
“Judge Martin Glenn of U.S. Bankruptcy Court in Manhattan said he would approve the request by the trustee, James W. Giddens, to transfer his claims against Mr. Corzine and other executives and officers to former customers pursuing a civil case.”