February 28, 2020

Ag Economy; Farm Bill- Policy Issues; Climate; and, Data

Agricultural Economy

Donnelle Eller reported in yesterday’s Des Moines Register that, “More than ever, Craig Boot says there’s little room for error this year as Iowa farmers prepare to plant this spring.

“Prices for corn and soybeans are improving, but depending on land and other expenses, they’re close to production costs for many farmers.”

The article indicated that, “‘We’ll take care of the things we need to take care of … but as far as buying something new and green, there won’t be any big-ticket items like there were in the last few years,’ said [Jerry Mohr, who farms in eastern Iowa near Davenport] recently as he applied fertilizer on fields where he will grow corn and seed corn.

“The federal government projects that U.S. farm income this year will drop 26.6 percent from last year, hurt by lower corn and soybean prices.”

“Add to farmer concerns: Drought conditions encompass about three-fourths of the state, and continued cool temperatures have meant lingering frost in much of Iowa,” yesterday’s article said.

Meanwhile, AP writer Betsy Blaney reported late last week that, “The highest beef prices in almost three decades have arrived just before the start of grilling season, causing sticker shock for both consumers and restaurant owners — and relief isn’t likely anytime soon.

“A dwindling number of cattle and growing export demand from countries such as China and Japan have caused the average retail cost of fresh beef to climb to $5.28 a pound in February, up almost a quarter from January and the highest price since 1987.”

The article added that, “But even as ranchers breathe a sigh of relief, some worry lasting high prices will prompt consumers to permanently change their buying habits — switching to chicken or pork.”

And Jeffrey Sparshott reported on Friday that the Real Time Economics Blog (Wall Street Journal) that, “The prices businesses receive for sausage, deli meat and boxed meats rose a seasonally adjusted 4.9% in March, the fastest pace in nearly 34 years, the Labor Department said Friday. The jump reflects surging prices for a key ingredient: pork [related graph].

“The producer price index for pork is up 16.5% from a year ago. A category that includes beef and veal is 9.3% higher. (The overall price index rose 1.4% in March from a year earlier, the largest annual increase since last August.)”

The update noted that, “Demand may also be a factor. While pork prices are rising, beef prices are rising even faster after cattle herds were thinned by drought.

“‘High beef prices are inducing most consumers to alter their animal-product consumption patterns: less beef, more pork (at higher prices), and more poultry (at flat-to-lower prices),’ the USDA said in a monthly report.”

Isabella Steger, also writing on Friday at the Journal’s Real Time Economics Blog, reported that, “China’s voracious appetite for dairy products has pushed prices for milk up worldwide, impacting importers as far away as North Africa and Latin America.

“Countries like Algeria and Venezuela have cut back on dairy imports as prices have risen, raising the possibility of shortages.”

The update explained that, “Milk powder prices have been driven higher by China’s demand for infant formula. Chinese imports have soared after safety scandals in its homegrown dairy industry. Prices rose sharply in late 2013 due to global supply tightness but have come off since February.”

Also, Alexandra Wexler reported on Friday at The Wall Street Journal Online that, “Orange-juice prices rose to the highest level in two years on expectations of a limited crop from Florida, the source of most of the oranges used in U.S. juice.”

For more on commodity and food price issues, see this playlist from the YouTube channel.

Meanwhile, Leslie Joseph reported last week at the Money Beat Blog (Wall Street Journal) that, “The U.S. cotton market may be overheating.

“The U.S. Department of Agriculture reported Thursday that cancellations of cotton-export orders outnumbered new sales for the first time since June 2012.

“The cancellations signal weaker demand for cotton for the world’s largest exporter of the fiber amid high prices.”

In other news, the St. Louis Federal Reserve noted recently that the, “Price index on ag exports rose 2.7 percent in March, the biggest increase since August 2012” [related graph].

Jacob Bunge reported in Friday’s Wall Street Journal that, “China’s tougher stance on imports of genetically modified corn is roiling U.S. agribusiness, largely halting trade in the biggest U.S. crop in its fastest growing market. By one industry estimate, exports are down by 85% compared with last year.

“Since mid-November, China repeatedly has refused shipments of U.S. corn, saying officials detected that some contained a genetic modification developed by Syngenta AG that Beijing hasn’t approved.

“The rejections have hurt grain-trading companies such as Cargill Inc. and fueled frustration with what some U.S. executives say is Beijing’s opaque regulatory process when its clout as an importer is growing. China is the world’s fastest-growing market for corn.”

The Journal article, which included this interesting graphic, also pointed out that, “Industry executives say the issue has hobbled U.S. corn exporters as they face heightened competition from other countries, such as Ukraine and Brazil.”

In other international news, Grigori Gerenstein reported on Friday at The Wall Street Journal Online that, “Ukraine spring grain planting for this year’s harvest is picking up pace after a slow start, with 2.515 million hectares planted to April 11, which is 91% of the planned total planted area for early spring grains, the agriculture ministry said Friday.

“Last season, Ukraine planted spring grain on 1.317 million hectares to April 11, the ministry said.”

And Bloomberg writer Phoebe Sedgman reported yesterday that, “Wheat rebounded from a second weekly loss as clashes in eastern Ukraine prompted an emergency meeting of the United Nations Security Council, boosting concern that supply from the region may be disrupted.”

The article added that, “Russia sought the UN meeting as prospects for a negotiated end to the crisis were set back after camouflaged gunmen fired on government forces in eastern Ukraine. U.S. and Ukrainian officials accused Russia of being behind the violence, raising the potential for additional sanctions. Russia is the fifth-biggest exporter followed by Ukraine, according to the U.S. Department of Agriculture. Combined, they are set to account for about 17 percent of global shipments this year, USDA data show.”

With respect to transportation issues, DTN Ag Policy Editor Chris Clayton reported on Friday that, “Rail companies caught some heat Thursday as Northern Plains farmers and grain shippers complained to the federal Surface Transportation Board about protracted shipping delays due to perceived railroad favoritism for shipping oil versus grain.

“Those voicing complaints over rail issues were divided over whether the Surface Transportation Board should use its authority to force railroads to provide equal access or preference for agricultural products. Canadian officials have taken such steps to alleviate rail delays.”

The DTN update noted that, “Farmers and grain elevators blamed the railroads for dedicating more railcar space to booming oil production in North Dakota and intermodal shipping from Pacific Northwest terminals. Burlington Northern blamed the problem on higher volumes of both grain and oil shipments last fall, coupled with extreme winter weather.”

Reuters writer Michael Hirtzer reported late last week that, “Cargill Inc will close its soybean processing plant for deliveries of the beans next week in Bloomington, Illinois, because of a shortage of rail cars, a message on the company’s website said on Thursday.

“Gridlock on the country’s railroads amid a bitter winter and increased demand for railcars to ship oil, coal, ethanol and grains had already hit quarterly earnings for the Minneapolis-based company.”


Farm Bill- Policy Issues

Laura Sanders indicated in Saturday’s Wall Street Journal that, “Where do your tax dollars go?…[C]heck out the ‘tax receipt’ accompanying this column. It was prepared by Loren Adler, research director at the Committee for a Responsible Federal Budget, and it shows how $100 of revenue was allocated among spending programs in fiscal year 2013.”

When looking at the “tax receipt,” note that food stamps came in at 2.39, while agriculture came in at only 0.85.

A news release from USDA indicated on Friday that, “Today, USDA Secretary Tom Vilsack announced the availability of more than $19 million in grants to help train, educate and enhance the sustainability of the next generation of agricultural producers through the Beginning Farmer and Rancher Development Program (BFRDP).”

Jane Wells, of CNBC, elaborated on this issue in a report on Friday’s Squawk Box program, which included remarks from Sec. Vilsack.

Meanwhile, in a teleconference with reporters late last week, Sen. Mike Johanns (R., Neb.) indicated that, “[W]hile we’re on the topic of agriculture, let me add that I had the opportunity to speak with the EPA Administrator Gina McCarthy about aerial surveillance of ag operations. Congressionally mandated report on the detail of EPA’s aerial surveillance operations is due out this summer, and I reiterated to her the importance of shedding light on this program, because it has caused great friction and eroded confidence in the ag community.

“Another issue that we’re paying a lot of attention to again comes out of EPA is the new rule on waters of the United States, navigable waters. I brought up several concerns that we’ve heard from Nebraskans. It’s clear that there really needs to be clarification. I think they felt with this rule they were offering clarification. I’m not sure. The rule’s complicated. It goes on for a lot of pages. And in the end, they may have ended up muddying the waters.

EPA needs to literally step back, listen to the concerns of farmers and ranchers and landowners, and not just check the box and move the rule. They need to be patient with this one. This has — could have a sweeping impact on literally any water across the United States. It’s a major expansion of EPA activity, and like I said, it could affect nearly every waterway and beyond that in our state and across the country.”

In other regulatory news, Tim Devaney reported on Saturday at The Hill’s RegWatch Blog that, “Two heavyweight departments in the Obama administration are squabbling over controversial changes to the nation’s poultry inspection procedures.

“The U.S. Department of Agriculture (USDA) has been pushing new poultry inspection standards that would help industry boost production while subjecting it to less regulatory oversight, but critics say that move would come at the cost of worker and food safety.”

The Hill update noted that, “The USDA’s Food Safety and Inspection Service (FSIS) has faced criticism everywhere from Congress to public interest groups for the proposal. But a branch of the Department of Health and Human Services (HHS) is also complaining about the rule in a rare dispute between major branches of the administration.

The HHS agency this week accused the USDA of ‘misleading’ the public about its research at a poultry plant. The director of the National Institute for Occupation Safety and Health (NIOSH) raised his objections in a letter to the USDA.”

And Cheryl Anderson reported on Friday at DTN that, “American brewery and dairy industries are joining forces to ask the Food and Drug Administration to reconsider proposed livestock feed regulations they claim would be costly to comply with and would make the sale of brewers’ grains difficult.

“A number of industries are asking FDA to exempt American brewers from draft regulations issued under the Food Safety Modernization Act (FSMA). The groups believe the proposed regulations go too far and would make it difficult to use brewers’ or spent grains as animal feed.”

Andrew Siddons reported in Saturday’s New York Times that, “Senator Susan Collins wanted to talk about beer.

“It was a nothing-special hearing of a Senate appropriations subcommittee last week, and Ms. Collins, Republican of Maine, veered off topic to question Margaret A. Hamburg, the commissioner of the Food and Drug Administration, about why her agency was throwing up hurdles for small companies that brew craft beers.

Specifically, she wanted to know why the F.D.A. was going to make it harder for brewers to donate or sell their leftover grain to livestock farmers — a practice, she said, that ‘has been going on for literally centuries.’”

The article noted that, “Ms. Collins’s comments did not simply reflect a sudden interest in an obscure regulatory fight. It illustrated the rise in Washington of a narrowly focused special interest group: craft brewers. They include companies as large as Boston Beer Company, which makes Samuel Adams, and as small as Black Bear Microbrew, whose beer can be found only in Maine.

“The companies — under the umbrella of the Brewers Association lobbying group — have made a lot of friends. Dozens of lawmakers, eager to show support for the brewers back home, have signed on to help. They include Ms. Collins; Senator Mark Udall, Democrat of Colorado; and Senator Charles E. Schumer, Democrat of New York. That is pretty impressive for a small slice — worth about $14 billion — of a $100 billion industry.”

And in a tangential issue related to the 2008 Farm Bill, Marc Fisher reported on Friday at The Washington Post Online that, “The U.S. government should stop confiscating taxpayers’ refunds to pay off decades-old debts to Uncle Sam that their parents may have incurred, two senators said Friday.

“Sens. Barbara Boxer (D-Calif.) and Barbara A. Mikulski (D-Md.) asked the Social Security Administration to halt its three-year-old practice of intercepting taxpayers’ federal and state refunds to cover overpayments that the agency says it made to families more than 10 years ago. The practice, which affects about 400,000 families that once received Social Security benefits, was detailed in The Washington Post on Friday.”

The Post update explained that, “Following a one-line change in the farm bill in 2008, the Treasury rewrote regulations to allow the government to take tax refunds from citizens who owe the government debts that are more than 10 years old.”



Christopher Doering reported on Friday at The Des Moines Register Online that, “Greenhouse gas emissions from agriculture, forestry and fisheries have nearly doubled during the past half century and could increase another 30 percent by 2050 without additional efforts to reduce them, the UN’s Food and Agriculture Organization said Friday.

“The FAO said emissions from crop and livestock production grew from 4.7 billion metric tons of carbon dioxide equivalents in 2001 to over 5.3 billion metric tons in 2011, an increase of 13 percent. The increase occurred mainly in developing countries, due to an expansion of total agricultural production.”

And AP writer Karl Ritter reported yesterday that, “The cost of keeping global warming in check is ‘relatively modest,’ but only if the world acts quickly to reverse the buildup of heat-trapping gases in the atmosphere, the head of the U.N.’s expert panel on climate change said Sunday.”

The article added that, “The IPCC [Intergovernmental Panel of Climate Change] said the shift would entail a near-quadrupling of low-carbon energy — which in the panel’s projections included renewable sources as well as nuclear power and fossil fuel-fired plants equipped with technologies to capture some of the emissions.

“U.S. Secretary of State John Kerry called it a global economic opportunity.”



Reuters writers Karl Plume and Carey Gillam reported on Friday that, “The American Farm Bureau Federation (AFBF) said on Thursday it had more work to do to find consensus on a set of standards aimed at protecting farm data privacy, after meeting in Kansas City with a dozen leading U.S. agricultural industry players.

At stake is who will spearhead the drive toward a common standard for data produced on farms as the industry aims to turn information into profit and productivity, projected to be a multi-billion dollar industry in the coming years.”

The article pointed out that, “Thursday’s gathering, hosted by the AFBF and attended by executives from equipment maker John Deere, seed companies Monsanto and DuPont Pioneer and other farm products companies, and representatives from key U.S. crop producer groups, was the first of what could be several meetings aimed at securing industry standards on farm data.”

Keith Good

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