Agricultural Economy: USDA Reports
A news release yesterday from USDA’s National Agricultural Statistics Service (NASS) stated that, “Determined to make up for a crop that was adversely affected by historic drought last year, U.S. farmers intend to plant a record-high combined 174.4 million acres of corn and soybeans in 2013, according to the Prospective Plantings report released today by [NASS]. If realized, corn will represent the highest planted acreage in the United States since 1936 (102 million planted acres) and for soybeans the fourth highest acreage on record.”
The NASS update added that, “Corn growers intend to plant 97.3 million acres in 2013, up for the fifth consecutive year, slightly higher than last year and 6 percent higher than in 2011. With expected returns for corn historically high going into 2013, producers throughout the south and the northern Great Plains intend to plant more corn.”
The release noted that, “Farmers in some areas of the country remain challenged by persistent drought conditions which is limiting the amount of expected soybean acreage in some states. Therefore, nationally 77.1 million acres of soybeans are expected to be planted, down slightly from last year but up 3 percent from 2011” [related graph].
Yesterday’s NASS report indicated that producer are expected to plant 10.0 million acres of cotton this year, down 19 percent from last year.
AP writer David Pitts reported yesterday that, “[Corn] acreage in some states hit hardest by last year’s drought retreated, while Southern states such as Arkansas, Mississippi and Texas are shifting cotton acres to corn.
“Chad Hart, an agriculture economist at Iowa State University, said Texas is a prime example. The state is changing more than 1 million acres normally planted in cotton for corn. Farmers there are in desperate need of grain to feed livestock after two years of debilitating drought, and are betting on a corn crop to replenish feed, Hart said.”
Bloomberg writers Tony C. Dreibus and Alan Bjerga reported yesterday that, “Total wheat acreage will be 56.44 million, up from 55.736 million last year, the USDA said.”
The FT writers explained that, “The US Department of Agriculture counted 5.4bn bushels of corn parked in farmer bins and commercial silos across the country on March 1, more than the 5bn analyst estimates. Domestic corn stocks are needed to feed livestock, run ethanol plants and meet demand from importers until the 2013 harvest.”
Yesterday’s article pointed out that, “Chris Narayanan, agricultural analyst at Société Générale, said the quarterly corn stocks number indicated consumption was slowing down in the feed industry as it reacts to higher prices. The population of cattle being fed for slaughter has declined by 7 per cent year on year, USDA statistics show.
“‘All things being equal, if there are fewer animals, there’s less demand for feed, it’s a classic case of demand destruction,’ said Mr Narayanan.
“He added that for the next few quarters, poultry and hog numbers, which make up a combined 60 per cent of feed demand, will be key to consumption and inventory levels.”
With respect to market reaction to the NASS reports, Owen Fletcher reported yesterday at The Wall Street Journal Online that, “U.S. corn futures fell sharply Thursday after government reports showed higher-than-expected stockpiles, and forecast farmers would plant the largest crop seen in more than 75 years… Wheat futures on Thursday also fell dramatically on higher-than-expected supplies in the USDA report, which traders attributed to weaker demand than anticipated for wheat used in animal feed over the winter.”
“Soybeans also fell on greater supplies than expected,” the Journal article said.
Also yesterday, Dan Piller reported at The Des Moines Register Online that, “The quarterly U.S. Department of Agriculture hog report issued Thursday shows that as of March 1 Iowa was home to 20.3 million hogs, up three percent from a year ago but down from 20.8 million last September.
“Nationally, the U.S. hog herd rose by 1 percent from last year to 65.9 million head.”
The Register article noted that, “[Steve Meyer of Paragon Economics] said that the perennial problem of the hog industry, overproduction, is not on the horizon.
“‘We’re not producing that much more,’ Meyer said. ‘The litter size of sows was down a bit due to the heat last year. What we need are lower corn prices. We need a big corn crop.’”
Agricultural Economy: Drought Update
Mr. Rice indicated that, “The entire state of Colorado remained in a drought…the entire state of California is considered to be either abnormally dry or in a drought..[and]… as of this week, almost 99% of Texas is either abnormally dry or in a drought.”
Agricultural Economy: Bees
Michael Wines reported in today’s New York Times that, “A mysterious malady that has been killing honeybees en masse for several years appears to have expanded drastically in the last year, commercial beekeepers say, wiping out 40 percent or even 50 percent of the hives needed to pollinate many of the nation’s fruits and vegetables.
“A conclusive explanation so far has escaped scientists studying the ailment, colony collapse disorder, since it first surfaced around 2005. But beekeepers and some researchers say there is growing evidence that a powerful new class of pesticides known as neonicotinoids, incorporated into the plants themselves, could be an important factor.
“The pesticide industry disputes that. But its representatives also say they are open to further studies to clarify what, if anything, is happening.”
The Times article noted that, “Annual bee losses of 5 percent to 10 percent once were the norm for beekeepers. But after colony collapse disorder surfaced around 2005, the losses approached one-third of all bees, despite beekeepers’ best efforts to ensure their health.
“Nor is the impact limited to beekeepers. The Agriculture Department says a quarter of the American diet, from apples to cherries to watermelons to onions, depends on pollination by honeybees. Fewer bees means smaller harvests and higher food prices.”
Farm Bill Issues: SNAP- Sugar Program- Crop Insurance
USDA Undersecretary for Food, Nutrition and Consumer Services Kevin Concannon was a guest on yesterday’s AgriTalk radio program with Mike Adams where the conversation focused on issues associated with the SNAP program (food stamps).
In part, Mr. Concannon noted that, “Well, you know, fraud in the SNAP program, while by our own measures, and done by other federal agencies as well, tends to run in the 1% range, it’s now 1% of a much larger program, so we’re not satisfied with that fact. So the relationship, the responsibility to set up nationally so that the federal agency, our department, concerns itself with the stores that process SNAP benefits—there are 250,000 stores across the country, and in recent years we’ve taken out about in excess of 8,000 of those stores for trafficking, or for the sale of benefits.
“Our recent emphasis is to try to engage more states to, when we take a store out for being involved in trafficking, we want the consumer who is engaged in that as well to be penalized. And so we have been urging states, have been writing to states, convening meetings for states, and just last week we entered into memoranda of agreement with both the state of Virginia and the state of Maryland to share electronic data, to do data mining, because the way in which we find most trafficking is through these elaborate algorithms or these formulas that are used to track electronic benefit redemption, because now the food stamp program is wholly, right across the country, reliant on these electronic cards, cards that have the benefits loaded electronically.”
In reference to yesterday’s front page Wall Street Journal article on the SNAP program, Sen. Pat Roberts (R., Kans.) tweeted yesterday that, “@damianpaletta & @carolineporter great piece on food stamps. My bill, S 458, addresses these concerns & saves $36B over 10 yrs”
For more information on proposed SNAP related legislation from Sen. Roberts, see this FarmPolicy update from March 12.
And House Ag Committee Member Martha Roby (R., Ala.) tweeted yesterday that, “I look forward to exploring ways to eliminate fraud & abuse within the food stamp program to ensure the system works for those who need it.”
A news release yesterday from USDA stated that, “Agriculture Secretary Tom Vilsack today discussed USDA efforts to improve access to healthy foods, and outlined the need for a renewed commitment to improve childhood nutrition, which includes empowering parents to provide healthy meals for their families. In remarks at a Hy-Vee, Inc. grocery store, Secretary Vilsack noted that increasing access to healthy foods is one of USDA’s top priorities.”
In other news, The Washington Post editorial board indicated today that, “Despite the government’s elaborate efforts to prop up the U.S. sugar price, it has dropped below the USDA’s target. There’s a glut on the market – in part because of the aforementioned Mexican imports. Anticipating just such a situation, Congress added a sugar-support program in 2008. Under that program, the government may buy up sugar that producers could not profitably bring to market at prevailing prices — and sell it to ethanol refiners instead.
“Therefore, this year the USDA faces the prospect of purchasing 400,000 tons and shipping it to ethanol makers at an estimated loss of $80 million. Federal taxpayers, of course, would cover that. This puts Agriculture Secretary Tom Vilsack in a tight spot because federal law says that ‘to the maximum extent practicable, the Secretary shall operate the program . . . at no cost to the Federal Government.’ Mr. Vilsack has not yet said how he proposes to manage the situation.”
The opinion item added that, “Congress should liberate the sugar business. At a minimum, it should pass the bipartisan Sugar Reform Act of 2013, which would eliminate the sugar-for-ethanol program and make trade restrictions and price supports more flexible. Better still is the bipartisan Senate bill, co-sponsored by New Hampshire Democrat Jeanne Shaheen and Illinois Republican Mark Kirk, that would phase out the sugar program altogether. It’s time to let the market determine where candy, cake and soft drink makers — and those who consume such products — get their sugar, and how much they pay for it.”
Also, a recent update from National Crop Insurance Services indicated that, “As claims come in from one of the worst droughts in decades, farmers and ranchers across the country are receiving indemnity payments for the losses they have incurred. As of March 25, 2013, more than $16 billion has been sent to farmers who suffered losses.
“In 2012, farmers invested more than $4.1 billion to purchase more than 1.2 million crop insurance policies, protecting 128 different crops.”
The update also noted that over the past decade, producers have spent $28.6 billion “out of their own pockets to purchase the protection of crop insurance.”
The American Soybean Association (ASA) issued a news update yesterday titled, “ASA Details Impact of Continuing Resolution on Soybean Farmers,” which provided a closer look at budget issues and farm program spending.
Meanwhile, Jennifer Epstein reported yesterday at Politico that, “President Obama will release his budget on April 10, principal deputy White House press secretary Josh Earnest said Thursday.
“The president’s budget is formally due on the first Monday in February, but the White House has said that its two-month delay was in part due to the administration’s focus on sequestration.”
Meredith Shiner reported this week at Roll Call Online that, “President Barack Obama will dine with a dozen Republican senators on April 10 at a dinner organized by Sen. Johnny Isakson, the Georgia lawmaker’s office and a senior administration official confirmed.”
“‘The president called Sen. Isakson to say that he thought the March 6, 2013, dinner with 12 Republican senators was productive and that he would like to have a second dinner with a different group of Republican senators to continue the discussion. Johnny has invited a cross-section of Republican senators whom he thinks would be interested in sitting down with the president to discuss our deficit, debt, sequestration, and other critical issues facing the country,’ Isakson spokeswoman Lauren Culbertson said in a statement.”
And Erik Wasson reported yesterday at The Hill’s On the Money Blog that, “Speaker John Boehner (R-Ohio) hailed his conference’s success against President Obama in a memo issued to Republicans on Thursday.
“Boehner said the House GOP’s ‘new tactical plan’ to fight Obama and Democrats on spending had largely succeeded, and sought input from his rank-and-file on where to go from here.”
Ramsey Cox reported yesterday at The Hill’s Floor Action Blog that, “Sen. Jeff Sessions (R-Ala.) warned Senate Democrats not to rush comprehensive immigration reform through committee.
“On Wednesday, Sessions said that Senate Judiciary Committee Chairman Patrick Leahy (D-Vt.) intends to move legislation drafted by a bipartisan group of eight senators through committee and to the Senate floor for a vote within a few weeks.”
Meanwhile, Jake Sherman reported yesterday at Politico that, “The No. 2 House Republican said Thursday that comprehensive immigration reform would be a ‘tall order’ in Washington, but expressed optimism a deal is possible.
“House Majority Leader Eric Cantor, appearing on Fox News on Thursday, likened immigration to other contentious issues including Obamacare and the Middle East peace process.”
David Nakamura reported in today’s Washington Post that, “A worsening dispute over a new guest-worker program has emerged as the most serious obstacle to a bipartisan deal on immigration, threatening to delay the unveiling of a Senate bill early next month.
“The impasse has prompted a bitter round of name-calling between labor and business groups, which accuse each other of imperiling comprehensive immigration reform.
“The Obama administration has remained on the sidelines as the standoff has worsened, calculating that the president would risk alienating Republican senators crucial to the process. Obama said this week that the issue is ‘resolvable.’”
The Post article explained that, “The dispute centers on rules governing the ‘future flow’ of migrants who come to the United States for menial jobs. Republicans, citing business interests, want to give temporary work visas to up to 400,000 foreign workers a year at low wages. But unions and many Democrats, fearing the effect on U.S. workers, want fewer workers and higher pay under the program.
“Senators involved insist that they remain on schedule to complete a bill, including a path to citizenship for 11 million illegal immigrants, in early April. Obama also expressed confidence this week that the guest-worker disagreement could be solved.”