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Policy Issues; Ag Economy- Trade; and, Political Notes

Policy Issues

David Rogers noted yesterday at Politico that, “Congress holds the purse strings, but who holds Congress these days when it comes to farm policy: the meatpackers and Monsanto?”

Mr. Rogers explained that, “Alarmed that automatic spending cuts this month will slow plant operations, the meat lobby won a last-minute Senate amendment that cuts from a new White House-backed school breakfast program in order to ensure there will be enough money to keep food safety inspectors on the job this summer and avoid disruptions.

“At the same time the industry went in the opposite direction, denying funds in the Ag budget for implementing reforms sought in the 2008 farm bill to provide greater protection for less powerful ranchers and farmers who raise the animals for slaughter.

Money is again denied to proceed with rules favored by Western cow-calf operations in their battle with beef packers. In the case of poultry, the bill goes a big step further, literally ordering [Agriculture Secretary Tom Vilsack] in 60 days to rescind regulations adopted last year to protect growers under contract with the big chicken processors.”

Yesterday’s article noted that, “The orders to Vilsack on genetically modified seeds are more subtle but potentially far reaching.

“In no uncertain terms, the amendment tells the secretary how he must respond the next time a court order challenges one of Monsanto’s genetically modified seeds for which the St. Louis-based giant is a pioneer in commercializing.

“The real life impact is unclear as the underlying spending bill expires Sept. 30. But Monsanto gets a foot in the door toward mandating some type of stewardship program under which farmers can continue to plant its seeds as the court fight continues.”

In Farm Bill news regarding nutrition, Pete Kasperowicz reported yesterday at The Hill’s Floor Action Blog that, “Four House Democrats have proposed legislation that would expand school lunch programs to weekends and holidays.

“Rep. Dina Titus (D-Nev.) proposed the bill, which would amend the Richard Russell National School Lunch Act to set up weekend and holiday ‘feeding programs.’ The proposal is meant to help ensure that at-risk school children meet their nutritional needs, but it would only extend this help during the school year, not during the summer.

“Her bill, H.R. 1395, is co-sponsored by Reps. Marcia Fudge (D-Ohio), Zoe Lofgren (D-Calif.), and Terri Sewell (D-Ala.).”

The Hill article pointed to recent legislative proposals related to the school lunch program, including initiatives by Rep. Rick Crawford (R., Ark.) (“The Sensible School Lunch Act”), Rep. Marcia L. Fudge (D., Ohio) (“The School Nutrition Flexibility Act”) and Sen. Tom Harkin (D., Iowa) (“Healthy Lifestyles and Prevention America Act, S. 39”).

Mr. Kasperowicz added that, “Last year, Rep. Steve King (R-Iowa) proposed the No Hungry Kids Act, which would repeal the department’s calorie caps on meals served by schools.”

In other news, Ramsey Cox reported yesterday at The Hill’s Floor Action Blog that, “Sen. Mark Udall (D-Colo.) announced Sunday that the U.S. Department of Agriculture (USDA) extended a claims filing deadline for Hispanic and women farmers and ranchers who have been discriminated against.

“Udall said he had been working for weeks to get the USDA to extend its filing deadline from March 25 to May 1 so that Hispanic and women farmers would have more time to file discrimination claims related to a lawsuit against USDA.”

And, AP writer Meg Kinnard reported yesterday that, “U.S. officials are expanding a program intended to reduce poverty and improve life in rural areas through better access to federal funding.

“Secretary of Agriculture Tom Vilsack was expected in South Carolina on Tuesday to announce the expansion of the so-called StrikeForce initiative, which already operates in 10 states. The program will now also be available in the Carolinas, the Dakotas, Alabama and Virginia.

“The goal of StrikeForce is to help farmers, food producers and other businesses get access to money for projects such as new wells, greenhouses, community gardens, kitchen space, and summer meals for low-income school children. The money is often hard to access due to complicated grant applications, requirements for matching funds, and limited staffing.”

In news regarding food safety, Elise Viebeck reported yesterday at The Hill’s RegWatch Blog that, “Outbreaks from food-borne pathogens have markedly decreased in the last decade, possibly thanks to tighter food safety measures, advocates said Monday.

“The Center for Science in the Public Interest (CSPI) reported that the instance of food-borne illness outbreaks went down more than 40 percent between 2001 and 2010, with the sharpest declines seen among seafood, poultry and beef products.”

With respect to crop insurance, Tracy Moss reported yesterday at The News-Gazette Online (Champaign, IL) that, “Most likely, there will be an increase in the number of acres covered by crop insurance in 2013 after last year’s drought emphasized the importance of having such policies.

“Doug Yoder with the Illinois Farm Bureau said 80 percent of the planted acres of corn in Illinois and 79 percent of the acres of planted beans were covered by crop insurance last year.

It’s not a program free to farmers. In 2011 and ’12, Illinois farmers spent $743 million on crop insurance, according to Yoder.”

The article indicated that, “And last year’s drought drove home the fact that there really is no other safety net out there for farmers other than crop insurance, he [Yoder] said.”

The Wall Street Journal editorial board took a closer look at a “takings” issue involving a federal program and raisins in today’s paper.

In part, the Journal stated that, “U.S. raisin farmers have been required for nearly 80 years to turn over a share of their crops to the federal government every year, often at below-market prices. Last week the Supreme Court heard oral argument on whether, in the words of Justice Elena Kagan, this annual raisin heist is ‘a taking, or just the world’s most outdated law.’

Horne v. USDA turns on a Great Depression ‘price stabilization’ program that established a Raisin Administrative Committee to control raisin supply. The committee acts as a cartel, setting raisin prices and recommending through ‘marketing orders’ how many tons of raisins must be sold to the feds at a steep discount. The Department of Agriculture enforces the orders.”

After a closer look at the specifics of the case, the Journal editorial stated that, “For small businesses, these routine confiscations are a special burden because so few can afford to defend their property rights. Similar federal marketing orders cover produce including apricots, avocados, kiwis and olives. The effect is to impose a tax on farmers.”

 

Agricultural Economy- Trade

A news item yesterday from the University of Arkansas Extension Service stated that, “Early spring’s cold hand has made for a little nervousness among farmers who planted corn at the beginning of March, extension staff chairs in Chicot and Desha counties said Monday.

“The earliest corn planting reported this year was March 4 in Chicot County, with a very small percentage emerged. In 2012, an early warmup prompted farmers in that county to begin planting in late February.

“‘I have gotten a lot of calls this morning,’ said Gus Wilson, Chicot County extension staff chair for the University of Arkansas System Division of Agriculture. ‘Everyone is on pins and needles.’”

The update added that, “In neighboring Desha County, Extension Staff Chair Wes Kirkpatrick said although ‘corn is pretty resilient, the forecast cold temperatures make me a little nervous.’

‘The National Weather Service forecast shows a low of 28 for Monday night and a low of 31 for Tuesday night with a slow warming trend into the weekend.

“‘I have no doubt that we will have to replant some acres,’ he said. ‘How many is anyone’s guess.’”

University of Illinois Agricultural Economist Darrel Good noted yesterday at the farmdoc daily blog (“2013 Corn and Soybean Acreage and Yield Prospects”) that, “Corn and soybean production prospects in the U.S. in 2013 will hinge mostly on the nature of the growing season and yield prospects. The magnitude of planted acreage, however, will provide the basis for anticipating total production. Likely acreage has been the topic of discussion all winter, with projections in a fairly wide range.

“Anticipating planted acreage of the two crops is complicated by a number of factors. The first issue is the magnitude of acreage available for planting of all spring crops. Some additional cropland acreage has become available in 2013 due to fewer acres being enrolled in the Conservation Reserve Program. That acreage is reported at 27.04 million acres, 2.62 million fewer than enrolled last year. How much of that reduction will be planted to crops in 2013 is not known. Winter wheat seedings reported by the USDA in January were nearly 600,000 acres larger than seedings of a year ago. The acreage of soft red winter wheat is up about 1.3 million acres while seedings of other classes of wheat were less than those of a year earlier. Some of the increase in sort red winter wheat acreage may be double-cropped with soybeans. The condition of the hard red winter wheat crop going into dormancy this winter was generally quite poor. While ratings have improved somewhat, the poor condition suggests that more than the normal amount of that acreage may be abandoned. Depending on moisture conditions going forward, some abandoned acres may get replanted to other crops this spring.”

After additional analysis, yesterday’s update indicated that, “At this juncture the potential for U.S. average corn and soybean yields near trend value in 2013 are still in place. Still, the likelihood of some planting delays, along with lingering drought conditions in western areas, provides the basis for considerable yield uncertainty for corn in 2013. If these conditions persist, new crop corn futures could regain some of the losses occurred since late 2012. For those with crop revenue insurance, pricing opportunities for both corn and soybeans should probably be judged in context of the spring crop insurance prices, with prices well above those levels representing sales opportunities.”

In other developments, DTN Markets Editor Katie Micik reported yesterday that, “Farmers are feeling less optimistic about the ag economy than they did after last year’s harvest, according to the latest results of the DTN/The Progressive Farmer Agriculture Confidence Index.

“At 106.9, the index reflects an overall positive outlook, buoyed by last year’s strong farm income and bogged down by concerns about the future. Last December’s index was 109.1.

“The Agriculture Confidence Index asks farmers to assess their farms’ present situation and what they expect 12 months in the future. Farmers’ assessment of their present situation came in at 135.3, a strong positive reading. Their expectations for the year ahead came in at 88.2, a firmly negative perspective.”

The DTN update pointed out that, “Agribusinesses are more positive than they were after last year’s grain harvest with the overall index value increasing to 104.3 from 100.7. Their assessment of the present situation dropped by 3.5 points to 112.7, but their expectations for the future gained 8.4 points to 98.5, largely on expectations of higher sales and better profitability down the road.”

In an article posted yesterday at Vermont Today Online, Rutland Herald writer Bruce Edwards reported that, “It’s not getting any easier for farmers like Cash Ruane.

“Ruane, who milks 66 cows on his Clarendon farm, said at the current price of about $20 a hundredweight for his milk he can barely get by.

“‘The problem is our input costs with commodity prices and fuel and just the whole scenario of inputs,’ Ruane said.”

The article explained that, “Feed and fuel are the two biggest expenses for dairy farmers and both are pinching the bottom line for dairy farmers in the state.

Efforts to forge a new farm bill with dairy reforms remain stalled in Congress which adds to farmers’ frustration.

“The squeeze faced by dairy farmers is reflected in the 24 farms that went out of business last year.”

Meanwhile, an update yesterday regarding food prices from the USDA’s Economic Research Service indicated that, “The CPI [Consumer Price Index] for all food did not change from January to February 2013, increased 0.4 percent from December 2012 to January 2013, and is now 1.6 percent above the February 2012 level. The food-at-home CPI decreased 0.1 percent in February 2013 and is up 1.2 percent from last February, while the food-away-from-home (restaurant) index increased 0.1 percent in February and is up 2.3 percent from last February. The all-items CPI rose 0.8 percent in February and is 2 percent above the February 2012 level. While seasonality may be a factor, it appears that the effects of the Midwest drought are being reflected in retail food prices, and consumers are feeling the effects (despite mixed food price directions between January and February). Prices for all meats and animal-based products have increased more than overall food prices since October 2012, with the exception of pork.”

In trade news, Bloomberg writer Gregory Viscusi reported yesterday that, “Most French companies favor a proposed free-trade pact between the European Union and the U.S., with carmakers and some farm sectors opposed, French trade minister Nicole Bricq said.

“Any accord would require complicated negotiations, Bricq said in Paris as she presented results from a survey of 287 companies and trade associations and 122 other associations.”

However, Reuters news reported yesterday that, “France threatened on Monday to delay the swift start of EU-U.S. trade talks if its red lines on culture and farm produce are not respected…‘It is out of the question to work with a mandate that is hurriedly put together,’ Trade Minister Nicole Bricq told a news conference. ‘We want a deal but we shouldn’t rush into talks.’

“In particular, a European Commission proposal to further open up European culture markets was ‘not acceptable,’ said Bricq.”

The Reuters article added that, “Bricq said France would be as firm on its demand to exclude genetically modified products in food, and hormones in meat.”

And David Jolly reported in today’s New York Times that, “[French trade minister, Nicole Bricq] said other potential deal-breakers included Europe’s opposition to genetically modified crops and the use of hormones in meat, practices that are common in the United States.”

Today’s article noted that, “French farmers, she [Ms. Bricq] said, believed overwhelmingly that nontariff barriers were the primary concern and wanted to ensure that their American counterparts were bound by the same sanitation, environmental and animal welfare rules as Europeans.

Meat and egg producers, corn growers and ethanol producers want to be excluded from any tariff-reducing deal, she said, because they think Americans have unfair advantages in those areas.”

Meanwhile, Reuters writer Doug Palmer reported yesterday that, “The United States, New Zealand and nine other countries negotiating a free trade pact in the Asia-Pacific region could formally decide next month whether to allow Japan into the talks, New Zealand’s trade minister said on Monday.

“‘Look, I’m sure we will find a way to say yes. I don’t think that’s the issue. The issue is the terms and the timing’ and the method of proceeding with Japan in the talks, New Zealand Trade Minister Tim Groser said in an interview after a speech to a U.S. business group.”

 

Political Notes

Mario Trujillo and Peter Schroeder reported yesterday at The Hill’s Ballot Box Blog that, “Sen. Tim Johnson (D-S.D.) will not seek reelection in 2014, The Hill has confirmed, putting another red-state seat up for grabs in the battle for control of the Senate.

“Johnson, who is serving his third term, will announce the news on Tuesday at the University of South Dakota, his former school. Johnson will be the fifth Senate Democrat to retire this election cycle.”

Keith Good