FarmPolicy

January 19, 2020

Farm Bill; Ag Economy; Rural America; Regs; Immigration; Biofuels; WRDA; and, Food Labels

Farm Bill

Damian Paletta and Josh Zumbrun reported earlier this week at the Washington Wire Blog (Wall Street Journal) that, “The number of Americans receiving food stamps is now falling at a faster clip, with more than 1.2 million people moving out of the program between October and February, according to federal data.

“As of February, the most recent data available, 46.2 million Americans received Supplemental Nutrition Assistance Program benefits. That’s the lowest level since August 2011 and down from the March 2013 peak of 47.7 million people. The $5.8 billion in benefits paid out in February was the lowest level since at least 2010 [related graph].”

The update added that, “SNAP isn’t the only government-assistance program where persistent growth appears to have slowed. The number of people collecting benefits under a supplemental nutritional program for Women, Infants, and Children [WIC] fell to 8.1 million in February, the lowest level in several years.”

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Wall Street Journal Highlights Transportation Issues- Ag Impacts

Today’s Wall Street Journal (May 14, 2014) contained two interesting articles regarding transportation and the agricultural economy.

The first noted that rail snarls in the U.S. have created a backlog in fertilizer supplies, which is posing problems for farmers in the upper Midwest. While a separate article explained that grain shipments in Canada have been stalled due to increased rail traffic from other commodities like potash and crude oil.

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Ag Economy; Transportation Bill; Tax Extenders; Farm Bill; CFTC; Immigration; and, WRDA

Agricultural Economy

Steve Everly reported earlier this week at the Kansas City Star Online that, “It’s shaping up as another summer of discontent for Gary Millershaski.

The Kansas wheat farmer is in his third year of drought and things are not looking good this time around for his 3,500 acres of wheat. The question is not if but how much his harvest is going to get slammed. By one estimate, his harvest will be about half of his best ones.”

Mr. Everly pointed out that, “His concerns were confirmed Friday when the federal government said it expects the Kansas winter wheat crop will be the worst since 1996.”

Daniel O’Brien, extension agricultural economist for Kansas State University, calculates this year’s winter wheat crop could bring in $900 million less compared with good years. That figure doesn’t include any proceeds from crop insurance.”

The article added that, “More than half of Kansas is currently classified as being in a drought.”

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ERS: Market fundamentals have been the primary driver of recent wheat price spikes

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From USDA’s Economic Research Service (ERS), May 13- “U.S. wheat prices have spiked and then fallen along with prices for other commodities over the last 5 years, leading to questions about how factors such as market fundamentals, macroeconomic events, and increased commodity index trading have contributed to these price swings. Recent ERS research measures the relative contribution of different factors to observed price changes during 1991-2011. Findings show that market-specific shocks related to supply and demand for wheat, such as drought impacts on consecutive Australian wheat harvests in 2006-07 and a Russian ban on wheat exports in August 2010, were the dominant cause of price spikes in the three U.S. wheat futures markets. Fluctuations in the global economy associated with broadbased demand shocks such as the Lehman Brothers Holdings, Inc. bankruptcy, were relatively less significant, and there is little evidence to suggest that increased commodity index trading activity contributed to recent price spikes. Find this chart and more analysis in Deconstructing Wheat Price Spikes: A Model of Supply and Demand, Financial Speculation, and Commodity Price Comovement.”

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Ag Economy; Tax Extenders (Biofuels); Immigration; CFTC; and, Climate

Agricultural Economy

Yesterday, the Food and Agriculture Organization of the United Nations (FAO) released its biannual report on global food markets.

Titled, Food Outlook, the report stated that, “Early prospects for 2014 cereal crops point to a decline from the previous year’s record level, but output is nevertheless expected to be the second largest ever. Based on conditions of crops already in the ground and planting intentions for those to be sown later this year and assuming normal weather for the remainder of the season, FAO’s first forecast puts world cereal production in 2014 at around 2 458 million tonnes (including rice in milled terms), some 2.4 percent down from 2013. Wheat and coarse grains would account for the reduction. Total cereal utilization in the new season (2014/15) is forecast to increase by 1.9 percent, which compares with a 4.0 percent rise in 2013/14 [related graph].”

The UN update noted that, “Global wheat production in 2014 is forecast at some 702 million tonnes, 1.9 percent below last year’s record, but still the second largest ever. Much of the reduction is anticipated to be concentrated in Canada, but smaller harvests are also expected in Australia, Morocco, the Syrian Arab Republic, the Russian Federation, Ukraine and the United States, which would more than offset larger outputs in Argentina, Brazil, India, Mexico and Pakistan [related graph].”

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Endangered Species Act- FWS Listings Concern Western States, Ag Interests

Recent articles point to concerns over U.S. Fish and Wild Service decisions to consider listing the sage grouse and lesser prairie chicken as additions to the Endangered Species Act. Generally, environmental groups support listing the birds, while western states, agricultural interests and developers oppose the additions.

May 16 Update: Greg Akagi reported at the Kansas Ag Network that, “Kansas Attorney General Derek Schmidt has formally objected to an attempt by the U.S. Department of Justice to move a lawsuit challenging federal regulation of the lesser prairie chicken from Oklahoma to Washington, D.C.

“‘This is an issue of vital regional concern,’ Schmidt said. ‘It should be settled here, on the Great Plains, where people, economic activity and land use are affected, not removed to the East Coast simply to make the litigation more convenient for the federal government.’

“In March, the U.S. Fish & Wildlife Service announced it would list the lesser prairie chicken as a ‘threatened’ species under the Endangered Species Act, triggering additional federal requirements in the areas where the species lives, including much of southwest Kansas. Soon after the listing was announced, Schmidt and the attorneys general of the states of Oklahoma and North Dakota, along with affected private parties, filed suit in the federal district court for the Eastern District of Oklahoma challenging the process by which the listing decision was made. The State of Nebraska has recently filed pleadings seeking to join the litigation as a co-plaintiff.”

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Farm Bill; Biotech; Ag Economy; Regs; Biofuels; and, Data Issues

Farm Bill- Policy Issues

Reuters writer Chris Prentice reported on Friday that, “U.S. trade regulators ruled on Friday in favor of investigating allegations that Mexico is dumping cheap sugar in the United States, taking Washington closer to imposing penalties on sweetener imports.

“In a preliminary vote, U.S. International Trade Commission officials found that imports of sugar from Mexico could injure local sugar growers.”

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Bloomberg- DuPont’s Schickler: Vermont Law’s Impact Limited

Categories: Regulations

From Bloomberg News, May 8- “Vermont’s new law requiring labeling of genetically modified food products has been decried by agribusinesses as a gateway toward a confusing, commerce-slowing hodgepodge of state laws guaranteed to gum up supply chains and unnecessarily scare consumers. The financial impact of the Vermont law on seed-makers, which the governor plans to sign today ‘would be limited to none in the near-term,’ said Paul Schickler, president of DuPont Pioneer, the biggest maker of seeds after Monsanto Co., in an interview at Bloomberg’s offices Wednesday.”

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Trade; WRDA; Ag Economy; Farm Bill; Regs; and, Biotech Labels

Trade

The Senate Finance Committee considered five executive branch nominees yesterday, including Darci Vetter, who has been nominated to be Chief Agricultural Negotiator at the Office of the United States Trade Representative.

Finance Committee Chairman Ron Wyden (D., Ore.) indicated at yesterday’s hearing that, “If confirmed, Ms. Vetter will have the important task of being the lead trade negotiator to take on the tariff and non-tariff barriers that are imposed all over the world on American agriculture exports. The U.S. has an ambitious trade agenda with important agriculture negotiations taking place among the world’s biggest and most dynamic markets. It will be important for the United States to have a skilled hand in these negotiations, and Darci is the right person at the right time.

“Right now, for example, the U.S. is in the middle of important, yet difficult, negotiations with Japan and other Trans Pacific Partnership [TPP] participants regarding America’s most important agricultural crops: wheat, dairy, poultry. We will be relying on Darci to push for the comprehensive and ambitious outcome that our farmers and producers expect and our economy needs.”

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Farm Bill Hearing; Ag Economy; Biofuels; and, CFTC

Farm Bill: Senate Ag Committee Hearing with Sec. Vilsack- Policy Issues

Senate Ag Committee Chairwoman Debbie Stabenow (D., Mich.) convened a hearing yesterday to examine USDA’s ongoing implementation of the 2014 Farm Bill. Secretary of Agriculture Tom Vilsack provided testimony at yesterday’s hearing.

In light of this week’s executive branch report on climate change, and the noted emphasis on Farm Bill programs that will be key policy variables in protecting the soil from erosion, DTN Ag Policy Editor Chris Clayton reported yesterday that “emphasis on various conservation programs” was “one theme” at yesterday’s Ag Committee hearing.

More specifically, Mr. Clayton indicated that, “[Chairwoman Stabenow] asked Vilsack about the Regional Conservation Partnership Program. ‘This is probably one of the most understated policies in the 2014 farm bill. It has the potential really to transform the face and the future of agricultural stewardship,’ Stabenow said.

“The partnerships are expected to leverage local and private money to broaden conservation efforts. Vilsack said USDA has started a series of listening sessions about the regional partnerships program. The department plans to identify the critical areas that would be eligible for the regional partnerships. Vilsack also said USDA wants to get the program launched in time to highlight the issues of bringing investment capital to rural America as part of the White House Rural Council.”

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CNBC– “TPP negotiations have ‘good momentum’: US trade chief”

Categories: Trade

From CNBC, May 7- “U.S. trade representative Michael Froman, says the Trans-Pacific Partnership is gaining ‘good momentum‘ but negotiations are ‘complex‘ and take time.”

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Climate; Ag Economy; Policy Issues; and, Biotech

Climate Change- Agriculture

Justin Gillis reported in today’s New York Times that, “The effects of human-induced climate change are being felt in every corner of the United States, scientists reported Tuesday, with water growing scarcer in dry regions, torrential rains increasing in wet regions, heat waves becoming more common and more severe, wildfires growing worse, and forests dying under assault from heat-loving insects.

“Such sweeping changes have been caused by an average warming of less than 2 degrees Fahrenheit over most land areas of the country in the past century, the scientists found. If greenhouse gases like carbon dioxide and methane continue to escalate at a rapid pace, they said, the warming could conceivably exceed 10 degrees by the end of this century.”

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ERS: Positive grower returns have supported growth in U.S. corn area

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From USDA’s Economic Research Service (ERS), May 6- “Positive grower returns have supported the expansion of U.S. corn area since the late 2000s. Returns to corn production—the value above total economic costs that include opportunity costs of land, labor, and other owned resources—have been positive since 2007. Returns reached a high of $224 per planted acre in 2011 before declining to $48 in 2013. With economic profit available from corn production, planted corn acres increased nearly 25 percent nationally from about 78 million in 2006 to a record of more than 97 million in 2012. In 2013, however, lower corn price expectations pushed down planted area, and lower corn prices, along with higher land costs, reduced returns to corn production. From 1997 to 2006, economic returns to corn production had been negative, averaging -$74 per planted acre. During this time, planted corn acreage was relatively stable between about 75 and 80 million acres. This chart is based on data found in Commodity Costs and Returns and the Feed Grains Database.”

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Farm Bill; Ag Economy; Biotech; Egg Standards; and, Regulations

Farm Bill- Conservation, Crop Insurance, Commodity Programs

An Amber Waves update yesterday (USDA- Economic Research Service (ERS)) stated that, “The Agricultural Act of 2014, also known as the 2014 Farm Act or Farm Bill, continues a strong overall commitment to conservation. However, unlike the previous two Farm Acts passed by Congress in 2002 and 2008, the 2014 Farm Act does not include an increase in overall funding for conservation programs. Between 2014 and 2018, the Congressional Budget Office (CBO) estimates mandatory conservation spending of $28 billion, about $200 million less than CBO’s projection of 2014-18 spending if the programs and provisions of the 2008 Farm Act had been extended. Although most conservation programs receive ‘mandatory’ funding (funding that is required by law and does not require an annual appropriation), the funding levels are not guaranteed and could be revised in future years [related graph].”

The Amber Waves update noted that, “The trend toward greater funding for working land programs recognizes that agri-environmental problems cannot be addressed entirely through land retirement. Land retirement programs, even at peak acreage, included roughly 10 percent of U.S. cropland. Soil erosion, nutrient and pesticide runoff, and other resource concerns require a broader approach involving a larger share of agricultural land. USDA data shows that by the end of 2013, more than 280 million acres of agricultural land (including grazing land and other non-cropland) had been enrolled in a USDA working land program at some time. Policy-makers also recognized that conservation practices on working land could often address these issues at a lower cost when compared to land retirement [related graph].”

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Farm Bill; Ag Economy; Climate; Census; Tax Issues; and, Immigration

Farm Bill

Mikkel Pates reported on Friday at Agweek Online that, “The U.S. Department of Agriculture isn’t likely to announce the fine points of the farm bill commodity title any time soon, two key congressional staffers said.

“Because the payment options are decoupled from planting decisions, the programs farmers choose won’t have bearing for 2014 planting. Bart Fischer, chief economist for the Republican-led U.S. House Agriculture Committee, and Matt Schertz, senior professional staff member, spoke to about 150 people in a two-hour ‘farm bill implementation seminar’ in Fargo, N.D., on May 2. The seminar was organized by U.S. Rep. Kevin Cramer, R-N.D.

“The two largely discussed the evolution of the farm bill and spent the last 20 minutes of the meeting discussing implementation. Cramer said farmers and their advisers need to know how to make decisions with multi-year consequences under the farm bill, which took four years to create and was signed into law on Feb. 7.”

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ERS: PEDv outbreak sparks increase in hog prices

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From USDA’s Economic Research Service, May 2- “Piglet losses from Porcine Epidemic Diarrhea (PEDv) have reduced USDA’s forecast for 2014 pork production and sparked a recent increase in U.S. hog prices. The 2014 winter pig crop—which will be slaughtered in the summer of 2014—was almost 3 percent lower than a year ago due to pre-weaned piglet deaths associated with PEDv. The impact of the piglet losses on total 2014 pork production and prices is expected to be reduced as producers adjust to the changing market conditions. While fewer hogs will be available for slaughter this year, producers are expected to increase slaughter weights in response to the year-over-year rise in hog prices, lower feed costs, and the excess barn space resulting from fewer hogs moving through the production chain. Average dressed hog weights for 2014 are expected to rise by almost 5 pounds above those in 2013, partially offsetting lower slaughter numbers, limiting the annual production decline to about 2 percent compared with 2013, and leading to some easing of hog prices later in 2014. This chart is based on data in Livestock and Meat Domestic Data, with additional analysis in Livestock, Dairy, and Poultry Outlook: April 2014.”

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