February 28, 2020

Farm Bill; Ag Economy; Food Safety; and, Financial Regulation

Farm Bill

Erik Wasson reported yesterday at The Hill’s On the Money Blog that, “Top House Republicans on Thursday pressed departing Health and Human Services Secretary Kathleen Sebelius to rein in what they see as food stamp cheating by state governments.

“GOP leaders have been angered that the deficit reduction from the new farm bill could be less than expected because states have found a way to thwart a new restriction on food stamp eligibility in the legislation.

“House Agriculture Committee Chairman Frank Lucas (R-Okla.) and Energy and Commerce Chairman Fred Upton (R-Mich.) wrote to Sebelius seeking answers about how the department administers the Low Income Energy Assistance Program (LIHEAP) and whether it can prevent states from ‘misusing’ the program to get more food stamp dollars.”

Yesterday’s update added that, “The letter seeks a response from Sebelius by May 1. Speaker John Boehner (R-Ohio) has said the House will take up legislation to make more food stamp reforms this year.

“A leading Senate Democrat on hunger issues denounced the GOP moves.

“Sen. Kirsten Gillibrand (D-N.Y.), said the GOP should realize that the government needs to do more, not less, to combat hunger.”

Also yesterday, a news release from USDA indicated that, “The [USDA] today announced the availability of approximately $66 million in Specialty Crop Block Grants to state departments of agriculture for projects that help support specialty crop growers, including locally grown fruits and vegetables, through research, programs to increase demand, and more.”

And Todd Kuethe and Jonathan Coppess, from the University of Illinois,  indicated yesterday at the farmdoc daily blog (“Mapping the Farm Bill: Voting in the House of Representatives”) that, “Previous posts in this series looked at issues shaping the fate of the farm bill (see here and here) prior to passage, including shifts in the political landscape and the debate over the Supplemental Nutrition Assistance Program (SNAP).  On January 29, 2014, the House of Representatives agreed to the conference report for the farm bill.  It passed the Senate on February 4th and was signed by President Obama on February 7th.  Ink from the President’s pen propelled the Agricultural Act of 2014 into law and much attention now focuses on understanding the bill’s provisions and on its implementation (more on the farm bill can be found here).  This post revisits the use of mapping technology to gain a better understanding of this farm bill’s dynamics by comparing specific farm bill votes in the House of Representatives.”

Also yesterday, an update at Yahoo! Online, which included a video replay of an interview with Secretary of Agriculture Tom Vilsack and Jeff Zeleny, indicated that, “From his current position leading the Department of Agriculture, Vilsack said one of the biggest challenges facing the nation’s agriculture industry is the fact that political leaders haven’t been able to reach an agreement on overhauling the nation’s immigration system.

“‘We are not realizing our fullest potential in American agriculture because there is not the certainty of workforce that a lot of producers need,’ he said. ‘It’s an unfortunate and tragic circumstance. It’s costing jobs; it’s costing income; and it’s really the kind of situation that’s totally preventable.’

“‘There are actually folks moving operations outside the United States that could continue to be in the United States if they were guaranteed a workforce,’ he added. ‘And the cost of vegetables is slightly higher in part, I think, because of that instability.’”


Agricultural Economy

A map update yesterday (“U.S. Seasonal Drought Outlook”) from the Climate Prediction Center (National Oceanic and Atmospheric Administration) indicated that drought is expected to persist in the western and southwestern U.S. through the summer.

An update this week at the U.S. Drought Monitor stated that, “Portions of Nebraska and eastern Kansas saw a mix of thunderstorms, rain, and wet snow, but this was not enough to show improvements. The drought intensity increased to D3 over central Kansas while D2 was expanded into more of eastern Kansas.”

And in the western U.S., the Drought Monitor noted that, “Drought conditions worsened as D2 was expanded in eastern New Mexico and southwestern Colorado. In southwestern Colorado, D1 was also expanded” [see the updated U.S. Drought Monitor map here].

Note also that the University of California at Davis is providing drought information updates at this online location, “California Drought Watch.”

Reuters writers Lisa Baertlein and P.J. Huffstutter reported yesterday that, “Retail beef and pork prices reached all-time highs last month, according to Bill Hahn, agricultural economist at the U.S. Department of Agriculture’s Economic Research Service. That’s prompting some consumers to pivot to less expensive protein sources and driving the grocery, packaged food and restaurant industries to adjust portion sizes, tweak their menus and roll out new products in a bid to address higher food costs without driving customers away.

Beef prices are higher because of rising feed costs and the decline of the U.S. domestic cattle herd, now the smallest since 1951. Pork prices have been rising in part because of a deadly piglet virus that began in Ohio last year and whose causes are still unknown.”

The Reuters article explained that, “Prices for beef and poultry destined for home consumption are forecast to rise as much as 4 percent in 2014, while pork prices may gain 3 percent, according to the USDA. The retail price for beef was $5.72 a pound in March, passing the previous record of $5.58 in February. A year ago the beef price was $5.26.

“Pork retailed for $3.83 a pound in March, beating the former record high of $3.81 set last October. A year ago, pork was selling for $3.52, the USDA said.”

For a closer look at food prices and this week’s Bureau of Labor Statistics updated Consumer Price Index, see this one-minute recap.

Meanwhile, Bloomberg writer Leslie Patton reported this week that, “Burger King Worldwide Inc. will introduce the Chicken Big King — a double-decker fried-chicken patty sandwich with lettuce and pickles — across the U.S. on April 19, Alex Macedo, president of the Miami-based company’s North American unit, said in a phone interview.

“The new sandwich, essentially a chicken version of the Big King hamburger, was tested in markets, including Indiana, earlier this year where it sold ‘extremely well,’ Macedo said.

“‘As beef prices have increased significantly over the last 20 years or so consumption has gone down,’ he said. ‘Chicken is growing in consumption quite a lot.’”

Julie Jargon and Ben Fox Rubin reported yesterday at The Wall Street Journal Online that, “To compensate for the high costs for ingredients like beef and avocados, Chipotle Mexican Grill Inc. said it would raise menu prices companywide for the first time in three years.”

And Mike Esterl, also writing yesterday at The Wall Street Journal Online, reported that, “PepsiCo Inc. said its net income rose 13% in the first quarter as cost cuts, price increases and one-time benefits offset softer volumes and foreign exchange headwinds at the snack and beverage giant.”

In other developments, Josh Chin and Brian Spegele reported yesterday at The Wall Street Journal Online that, “The extent of China’s soil pollution, long guarded as a state secret, was laid out in an official report that confirmed deep-seated fears about contaminated farmland and the viability of the country’s food supply.

Nearly one-fifth of the country’s arable land is polluted, officials said in the report, shedding unexpected light on the scale of the problem—a legacy of China’s three decades of breakneck economic growth and industrial expansion” [related graph].

And with respect to trade issues, Reuters writers Niu Shuping and Fayen Wong reported yesterday that, “Chinese buyers may default on a further 1.2 million metric tons (1.32 million tons) of soybeans worth about $900 million being shipped from the United States and South America, to avoid incurring huge losses in a depressed local market, the country’s top soy buyer said.

“The hard-line approach taken by Chinese buyers raises the possibility that more cargoes could be dumped into the market, after buyers walked away from at least 500,000 tonnes of shipments in recent weeks.”

Bloomberg writers Brian Wingfield and Alan Bjerga reported yesterday that, “The U.S. will announce today whether it will investigate allegations that Mexico unfairly subsidized its sugar exports, a step that may lead to penalties on trade that was valued at $1.1 billion last year.

“A probe, requested by U.S. sugar producers, would examine whether sugar cane and sugar beets from Mexico are being sold at below cost, a practice known as ‘dumping.’”

And an update yesterday from the National Chicken Council indicated that, “Five meat and poultry organizations thanked President Barack Obama for the Administration’s efforts in the ongoing Trans-Pacific Partnership (TPP) negotiations.”

In transportation related news, AP writer James MacPherson reported yesterday that, “BNSF Railway Co. will add trains in the Dakotas, Minnesota and Montana solely for transporting fertilizer for spring crop planting, the railroad has told a federal oversight board.

“‘Simply put, we are working to deliver high volumes of fertilizer into the marketplace as quickly as we can,’ the railroad said in a mandated response to the Surface Transportation Board that was released Thursday.”

House Ag Committee Ranking Member Collin Peterson (D., Minn.) discussed transportation issues on yesterday’s Agriculture Today radio program (Red River Farm Network); to listen to a clip from yesterday’s program with Don Wick, just click here (MP3-1:30).


Food Safety

Betsy McKay reported in today’s Wall Street Journal that, “Infection from salmonella bacteria, the most common form of food poisoning in the U.S., declined last year but the overall rate of foodborne illness is holding stubbornly steady despite new measures intended to curb it, according to data released Thursday by the federal Centers for Disease Control and Prevention.”


Financial Regulation

Peter Schroeder reported yesterday at The Hill’s On the Money Blog that, “Financial trade groups are pushing back against a growing call to bar banks from actually owning physical commodities.

“Five of the nation’s biggest financial groups sent a joint letter to the Federal Reserve Wednesday, defending the controversial practice of banks owning physical commodities like oil, gas and metals. The groups argued banks’ presence in the commodities market is a boon for the economy, and should not be restricted by regulators.”

The Hill update noted that, “The industry pushback comes as the Fed is facing increasing pressure from the left to crack down on banks that invest directly in commodities, a practice generally barred but becoming increasingly active in buying up metal warehouses, oil tankers and power plants.

“The practice has come under scrutiny on Capitol Hill amid questions banks could manipulate the costs of commodities for profit, driving up the price tag for average Americans.”

Keith Good

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