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Immigration; Ag Economy; Trade; and, Regulations

Immigration

DTN Ag Policy Editor Chris Clayton reported yesterday (link requires subscription) that, “Virginia apple grower Phil Glaize joined U.S. Agriculture Secretary Tom Vilsack on Monday in demanding Congress finish its work on immigration reform.

“Glaize and his family have been in the apple-growing business for 70 years near Winchester, Va., and he has testified on Capitol Hill about the problems trying to find seasonal workers. Like a high percentage of fruit and vegetable growers, Glaize’s main working season is harvest time, when he needs 115 workers for about two-and-a-half months. Another 50 employees work nine months of the year in the packinghouse and another 15 people are employed year-round. About 75% of all people who apply for jobs are Latino, Glaize said. He noted his farm does I-9 verification on all applicants, ‘However, my suspicion is that some of the workers are here illegally.’

Glaize and Vilsack held a press call Monday as the Obama administration keeps pushing the House of Representatives to take up an immigration reform measure.”

Mr. Clayton indicated that, “The Senate passed an immigration-reform bill last summer that would legalize an estimated 11 million people and potentially put them on a pathway to citizenship. The bill also would create an expanded guest-worker program for agriculture to allow more people in the country and allow those workers to stay longer periods of time as well.”

The DTN article pointed out that, “Vilsack noted [House Speaker John Boehner], House Majority Leader Eric Cantor, R-Va., and Majority Whip Kevin McCarthy, R-Calif., have all stated their support recently for immigration reform. Yet, Republican leaders all back different variations of immigration legislation and all have drawn fire from conservative groups over those bills. The latest bill is called ‘ENLIST’ and would allow undocumented people brought to the country as children to receive legal status after serving in the military.

House leaders are held back by a ‘small and ever-shrinking minority’ of people who do not understand how critical immigration reform is to agriculture and the economy, Vilsack said.

Immigration reform is not on the House calendar laid out for this spring by Cantor. The House Judiciary Committee also has scaled back hearings or meetings about immigration since the end of last year. House Judiciary Committee Chairman Bob Goodlatte, R-Va., is focusing on other issues, such as holding hearings this week on the Origination Clause in the Constitution in relation to Obamacare.”

An audio news update yesterday from USDA’s Radio News Service provided a one-minute overview of yesterday’s press call with Sec. Vilsack, this summary can be heard here; while an additional clip in which Sec. Vilsack noted that comprehensive immigration reform would help more than just the agricultural sector, is available here.

In addition, Sec. Vilsack was on Bloomberg television yesterday where he discussed immigration, and other issues, with Alan Bjerga.

In part, Sec. Vilsack stated that, “American agriculture needs immigration reform.” He added that, “Comprehensive immigration reform is absolutely essential to American agriculture if we are to realize the fullest potential.”

And Rebecca Shabad reported yesterday at The Hill’s Briefing Room Blog that, “Rep. Aaron Schock (R-Ill.) says he doesn’t think Speaker John Boehner’s (R-Ohio) latest immigration comments indicate a comprehensive bill could pass this year.

“‘I don’t think there will be a single bill as the Speaker has mentioned. But a step-by-step approach. There have been those singular bills introduced,’ Schock said on MSNBC’s ‘Morning Joe’ on Monday.

“The Republican congressman recently revealed he supports a path to citizenship for people living in the United States illegally.”

 

Agricultural Economy

David Murray reported recently at the Great Falls Tribune (Mont.) Online that, “‘It’s a good time to own cows.’

“That simple statement made by Montana cattle buyer Mark Billmayer summarizes the optimism currently felt by stockgrowers from Florida to Hawaii. After a decade of hard luck ranging from import bans to persistent drought, ranchers across the United States now anticipate a profitable growing season of historic proportions.

A near-perfect nexus of record-setting cattle prices, declining feed costs and better-than-average precipitation places Montana at the center of the ‘ready to cash in’ map, with positive implications for the state’s entire economy. From auto dealerships to retail clothing outlets, merchants and wage earners are poised to take advantage of gold rush mentalities in booming cattle markets.”

Mr. Murray explained that, “Driving the explosive growth in cattle prices is a shortage of cattle and increasing demands for U.S. beef abroad.

“Cattle numbers hit their peak in the United States in the mid-1970s, when the total herd numbers exceeded 130 million animals. Since then there has been a steady decline in numbers related to changing consumer habits and declining availability of grazing lands. This trend was exacerbated following 2010, when severe drought conditions struck the southwest plains and corn producing areas of the Midwest, forcing many ranchers to sell their herds.

“According to statistics from the U.S. Department of Agriculture, the total number of cattle in the United States today is the lowest it has been since Harry Truman was president. Texas alone has reduced its herd size by more than 1.4 million animals in the past three years.”

In addition, the Tribune article pointed out that, ‘The conventional economic wisdom is that as demand for a product goes up, producers will rush in to take advantage of growing profitability, increasing supply and eventually dropping the product’s price. The cyclical nature of supply and demand is as true for the cattle industry as any, but given the current shortage of cows and the biology of beef, it’s likely stockgrowers will continue to enjoy record-setting prices for the next two or three years.

“Cows don’t have litters. The birth of twins is a notable event. It will be another year before a heifer calf born this spring will be ready to deliver a calf of its own. That second generation animal typically lives about eight months with its mother before it is weaned and then sold to a feedlot, where it spends another 240 days before growing large enough for slaughter.

Considering the immutable dictates of nature, it will be two more years before the nation’s cattle herd grows substantially — close to three years before consumers can expect to see a significant increase in the amount of beef in the food production pipeline.”

Reuters writers P.J. Huffstutter and Tom Polansek reported yesterday that, “For decades, ranchers from the east have brought their livestock to California, where mild winters and lush natural pastures created prime conditions for fattening beef cattle.

“No more. In the midst of the worst California drought in decades, the grass is stunted and some creeks are dry. Ranchers in the Golden State are loading tens of thousands of heifers and steers onto trucks and hauling them eastward to Nevada, Texas, Nebraska and beyond.”

Yesterday’s article noted that, “The exact headcount for livestock on this cattle drive is not known. But a Reuters review of state agriculture department records filed when livestock cross state borders indicates that up to 100,000 California cattle have left the state in the past four months alone.

“California has shipped out cattle before, but the current migration is far bigger and includes more of the state’s breeding stock, which give birth to new calves and keep operations running year after year, said Jack Cowley, a rancher and past president of the California Beef Cattle Improvement Association.”

The Reuters article stated that, “Beef prices already are at record highs, and increased transportation costs and rising uncertainty about where – and how many – future cattle will be raised and processed are adding upward pressure, industry analysts say.

The national cattle herd is at a 63-year low because high grain prices and drought during the past several years have encouraged producers to send animals to slaughter early and to reduce herd sizes.”

Earlier this week, Bloomberg writer Elizabeth Campbell reported that, “Dairy prices will slide over the next year amid increased supplies from exporting countries and weaker demand from China, according to Rabobank International.

“U.S. and European producers are responding to ‘exceptionally strong margins’ and increasing output after milk prices rose and feed costs dropped, said Tim Hunt, Rabobank’s global dairy strategist. Slower economic growth will limit Chinese demand, especially after many consumers ‘significantly bought forward’ supplies in the first three months of 2014, he said.

World dairy prices, tracked by the United Nations, reached an all-time high in February, and rose 29 percent in 2013, compared to a 3.8 decline in overall food costs. U.S. consumers may pay as much as 3.5 percent more for dairy products this year, the government has forecast.”

Meanwhile, Alexandra Wexler reported in today’s Wall Street Journal that, “The weather phenomenon known as El Niño is poised to return, a development that threatens to drive up prices for food and other staples, investors and analysts say.

“Temperatures in the Pacific Ocean are rising, prompting U.S. government forecasters to predict a more than 65% chance for an El Niño by the end of the year.”

Ms. Wexler explained that, “More extreme weather could further boost already rising prices of commodities such as coffee, sugar and soybeans, stretching consumer budgets and undermining economic recovery in developed nations. Higher commodities prices also could trigger unrest in poor countries that import much of their food supply, analysts say.

“‘These kinds of weather pressures, combined with El Niño, could create a nasty combination,’ said John Baffes, a senior economist at the World Bank. ‘Basically if we have an El Niño year and prices skyrocket, then we certainly are going to see some unrest.’

Global food prices—which at the start of 2014 were expected to be largely flat this year—could easily climb 15% to record highs in as a little as three months after an El Niño occurs, said Mr. Baffes, who co-wrote the World Bank’s quarterly commodities outlook released Thursday.”

With respect to current crop and growing conditions, Bloomberg writers Jeff Wilson and Megan Durisin reported yesterday that, “The waves of grain on David Schemm’s 5,000 acres planted in west-central Kansas are beginning to turn brown after the driest March in Kansas since 1997 hurt crops.

“‘If it doesn’t rain, I’m not even sure I’ll have wheat to harvest,’ said Schemm, 43, who farms near Sharon Springs. Without above-average precipitation in the next two months, he expects yields to fall as much as 36 percent below average after drought compounded damage from freezing temperatures earlier this month.”

Cheri Zagurski reported yesterday at DTN (link requires subscription) that, “Corn planting progress took its largest leap so far this growing season in the week ended April 27, logging in at 19%, according to USDA’s weekly Crop Progress Report. That compares to 6% last week and a five-year average of 28%.”

“Of the three ‘I’ states, Illinois is 32% planted and 2% emerged, Indiana 8% planted and Iowa 15% planted. Northern states are just starting field work with soil temps remaining frustratingly cool,” the DTN article said.

And University of Illinois agricultural economist Darrel Good indicated yesterday at the farmdoc daily blog (“Concerns about Corn Planting Progress”) that, “In general, acreage response to late corn planting since 1996 has been smaller than anticipated, with meaningful differences (but in opposite directions) in only two years.   In addition to the timeliness of planting, acreage decisions might be influenced by a change in the relationship of the prices of corn and competing crops. That is, more corn acres might be planted after the date for optimum yields if corn prices increase enough relative to other crops to offset the potential yield penalty. Compared to the ratio on March 31 when the USDA released the Prospective Plantings report, the ratio of November 2014 soybean futures to 2014 December corn futures now favors soybeans more than corn. It appears that the market is not yet concerned about the loss of corn acreage this year.

“The U.S average corn yield relative to trend yield has varied considerably in years of late planting. In the 43 years from 1971 through 2013, we calculate that the percentage of the corn acreage planted late (after May 30 before 1986 and after May 20 since 1986) was 20 percent or more in 13 years. Compared to the unconditional trend yield from 1960 through 2013, the U.S. average yield was at or above trend yield in eight of those years and below trend yield in five years. The largest negative deviation from trend yield occurred in 1993 when record flooding occurred in parts of the western Corn Belt. The largest positive deviation from trend yield occurred in 2009 under the influence of a cool, wet summer. These results tend to support the notion that summer weather, not timeliness of planting, is the major determinant of the U. S. average corn yield.

“Significant corn planting likely occurred in some areas last week, but prospects for a cool, rainy pattern over much of the northern Plains and Corn Belt over the next 10 days do not favor rapid corn planting. With over three weeks until corn planting is considered late by our definition, it is difficult to anticipate the potential impact of delayed planting on the magnitude of planted acreage. Without a more favorable corn price response, however, it would not be surprising for acreage to fall short of intentions, particularly in northern growing areas. Yield prospects will be up in the air until later in the season.”

 

Trade

Bloomberg writer Brian Wingfield reported yesterday that, “A Pacific-rim trade agreement may have to proceed without Japan if the Asian nation doesn’t open its agricultural markets to imports, Agriculture Secretary Tom Vilsack said.

“‘It is incumbent upon us to have market access, and if the Japanese are unwilling and unable to provide that market access, then the other alternative is that you have a less comprehensive agreement in which the Japanese are not part,’ Vilsack told reporters and editors at Bloomberg Government today in Washington. ‘We don’t want that. We think it’s really important for the benefit’ of the Trans-Pacific Partnership deal ‘that Japan be part of this.’

“Vilsack said the U.S. isn’t considering moving forward without Japan, and that it would be inappropriate to comment on the U.S. negotiating position in the talks because he’s not involved in the actual discussions.”

Yesterday’s article added that, “Vilsack said Congress could help U.S. negotiators by passing legislation known as trade-promotion authority, which lets lawmakers set some guidelines for trade deals while barring them from amending negotiated accords. A majority of Democrats oppose the legislation, saying they want more input to ensure that the Pacific deal doesn’t harm U.S. workers.”

Also, the USDA’s Economic Research Service released a report on Friday titled, “Prospects for China’s Corn Yield Growth and Imports,” which indicated that, “The pace of growth in China’s corn yield is a key determinant of its future corn imports. Yields are growing, but more slowly than U.S. yields. Trends suggest China’s corn consumption, driven by feed demand, will outpace production growth.”

 

Regulations- GMO Food Labels

A news release yesterday from the American Farm Bureau Federation indicated that, “Pennsylvania Farm Bureau voiced its opposition to a recently proposed rule jointly issued by the Environmental Protection Agency and Army Corps of Engineers that attempts to expand federal regulation of land areas as ‘waters of the U.S.,’ during a field hearing today before the House Committee on Transportation and Infrastructure.

“Speaking on behalf of Pennsylvania Farm Bureau, beef and grain farmer Tommy Nagle testified that farmers are concerned about the possible consequences of the proposal on farms and the future viability of family businesses, especially when you consider that land features identified in the proposal are found extensively on farms all across the nation.”

Tim Devaney reported yesterday at The Hill Online that, “The U.S. Department of Agriculture (USDA) is looking to standardize the scales that farmers use to weigh their livestock and poultry before they are sold in order to level the playing field across the industry.

“‘The purpose of these regulations is to ensure fairness and accuracy in the determination of prices the regulated entities pay for livestock and poultry,’ the agency wrote in the Federal Register.

And Chris Clayton reported yesterday at the DTN Ag Policy Blog that, “The Council on Agricultural Science and Technology released a report Monday questioning the value or need to label food produced with genetically-engineered crops.”

Keith Good