December 15, 2019

Policy Issues; Ag Economy; and, Biofuels

Policy Issues: Ag Appropriations, Nutrition, CFTC

Emmarie Huetteman and Ron Nixon reported late last week at The New York Times Online that, “A House vote on an Agriculture Department spending bill containing a provision that would allow schools to opt out of the Obama administration’s nutrition standards for school meals has been delayed until sometime next week, a senior Republican aide said Thursday.”

The article noted that, “Representative Robert B. Aderholt, Republican of Alabama and chairman of a House subcommittee on agriculture appropriations, has said that delaying the rules would give schools 12 months to help them comply.

“Senator Debbie Stabenow, Democrat of Michigan and chairwoman of the Senate Agriculture Committee, said that she recognized that some schools might have problems complying with the nutritional standards and the added cost.

“But Ms. Stabenow said that paying for healthier foods in schools costs less than treating conditions like Type 2 diabetes and hypertension in children, on which $14 billion is spent a year. She said she would work with other lawmakers to help schools but opposed any effort to delay the nutritional standards.”

Kyung M. Song reported on Friday at The Seattle Times Online that, “House Republicans this week punted on a vote on the 2015 agriculture spending bill containing a controversial provision to allow money-losing school cafeterias to opt out of federal standards for healthful meals. That delayed a showdown until the next few weeks, when the appropriations bill is expected on the floor.

“If the measure passes, the nation’s schools will be ‘going back to old ways of doing business that will result in more fat, more sugar and more sodium,’ Agriculture Secretary Tom Vilsack said in an interview Friday.

“Vilsack’s media outreach was part of the Obama administration’s push back against giving one-year waivers on the meal standards. Some districts have complained that revamping menus to include more fruits and vegetables and whole grains and to lower calories has been difficult and turned off picky eaters.”

The article pointed out that, “Vilsack said an even bigger fight over nutritional standards will come next year, when the Healthy, Hunger-Free Kids Act is up for reauthorization.”

David Hawkings reported yesterday at Roll Call Online that, “The Agriculture spending bill, which the House started debating last week, would permit school districts to opt out of the federal nutrition standards for their cafeteria food — if administrators could prove that providing the requisite healthy meals would create a financial burden. Republicans who wrote the bill say there’s no point insisting that schools boost their taxpayer spending on lunches that kids can’t stand and just throw away. Democrats expect they’ll lose a floor vote to delete the opt-out language when debate resumes later this summer.

The companion Senate bill wouldn’t allow similar waivers. Democrats say the school nutrition rules are essential for combating childhood obesity — and they wonder aloud whether the GOP effort is really about making first lady Michelle Obama an emblem of ‘big brother’ government gone too far. President Barack Obama is threatening to veto the whole bill if the waivers language survives.”

More specifically on Senate appropriations action, Billy House reported yesterday at National Journal Online that, “Spending bills for the upcoming fiscal year will make their Senate floor debut with votes as early as Tuesday. Majority Leader Harry Reid and Appropriations Committee Chairwoman Barbara Mikulski have agreed on a package that combines three measures into one, known as a minibus—a miniature omnibus. The spending package is expected to include funding for Agriculture, Commerce, Justice, HUD, and Transportation.”

And with respect to the Commodity Futures Trading Commission (CFTC), Mr. House indicated that, “On Wednesday, the House Rules Committee is to meet to set up procedures for a floor vote on reauthorization of the [CFTC- H.R. 4413], and floor action could become controversial over efforts by Republicans to scale back what they say are its too-broad powers.”

Under the heading, “Wednesday, June 18th and the Balance of the Week,” the Majority Leader’s Weekly Schedule included the following: “H.R. 4413 -­‐ Customer Protection and End User Relief Act, Rules Committee Print (Subject to a Rule) (Sponsored by Rep. Frank Lucas / Agriculture Committee).”

In other developments regarding the CFTC, Peter Schroeder reported on Friday at The Hill Online that, “The top Democrat on the House Financial Services Committee is pushing the Commodity Futures Trading Commission to examine whether U.S. banks are trying to skirt new curbs on derivatives trading.

“In a letter to the new head of the regulator, Timothy Massad, Rep. Maxine Waters (D-Calif.) said she was worried American institutions were trying to avoid new rules on derivatives trading by isolating the activity within foreign subsidiaries. While the foreign branches do the activity, the risk is still there for a U.S. bank, she argued.”

Also this week, the House Ag Subcommittee on Conservation, Energy, and Forestry will hold a hearing on Thursday titled, “A review of the Interpretive Rule regarding the applicability of Clean Water Act agricultural exemptions.”

The Senate Ag Committee will hold a hearing tomorrow morning (“Grow it Here, Make it Here: Creating Jobs through Bio-Based Manufacturing) to “examine the role that bio-based products are playing in helping to revitalize and re-energize American manufacturing, and how that is helping to grow the economy and create jobs.”

In other policy developments, Rachel Nania reported yesterday at the Sacramento Bee Online that, “For a lot of kids, the sound of school’s final bell signals fun and freedom. But it leaves many students wondering from where their next meal will come.

“‘It’s counterintuitive for most Americans. We think of summertime as a carefree time for most of us and our kids. But summertime is the time of year when a child within the borders of the U.S. is much more likely to go hungry than any other time year,’ says Kevin Concannon, undersecretary for food nutrition and consumer services at the U.S. Department of Agriculture.

Of the 21 million kids in the U.S. who receive free and reduced-price lunches at school, only 3.5 million participate in a summer meal program. That leaves a gap of 15 million or 16 million children who most likely don’t have access to regular meals in June, July and August, the USDA reports.”

Julie Cart reported yesterday at the Los Angeles Times Online that, “Years-long drought has pummeled millions of acres of federal rangeland in the West into dust, leaving a devastating swath from the Rockies to the Pacific.

“Add to that climate change, invasive plants and wildfire seasons that are longer and more severe, and conditions have reached a breaking point in many Western regions. The land can no longer support both livestock and wildlife.

“‘All these issues — it’s changing the landscape of the West, dramatically,’ said Ken Wixom, who grazes 4,000 ewes and lambs on BLM land in the Snake River Plain. For public lands ranchers like him who depend on federal acreage to sustain their animals, the mood ranges from brooding to surrender.”

The L.A. Times article explained that, “The situation was spelled out in stark terms in two recent letters from the federal Bureau of Land Management. They told the ranchers what they already knew: Unless something changes, the days of business as usual on the 154 million acres of federal grazing land are over.

This drought-stressed range in Idaho can no longer sustain livestock, the letter warned. Better plan to reduce herd numbers by at least 30% for the spring turnout.”

The article also pointed out that, “Livestock shares the range with wildlife, including the greater sage grouse, a species dependent on sagebrush and native grasslands to survive. The grouse population has plummeted by 93% in the last 50 years, and its habitat has shrunk to one-quarter of its former 240,000-square-mile range.

“If the federal government grants endangered species protection to the grouse sometime next year, ranching on federal land will be cut back even more, federal officials say. In some regions, public lands ranching might end altogether.

“The problem for livestock and wildlife alike is that the drought has been merciless on all plants in the West. Last week 60% of the 11 Western states were experiencing some degree of serious drought.”

Agricultural economists John Newton (University of Illinois), Cameron Thraen (Ohio State University), Brian W. Gould (University of Wisconsin) and Marin Bozic (University of Minnesota) indicated on Friday at the farmdoc daily blog (“Livestock Gross Margin Insurance for Dairy: The Other Dairy Safety Net Solution”) that, “With all the attention on the new Margin Protection Program for Dairy Producers (MPP) let us not forget about Livestock Gross Margin Insurance for Dairy Cattle (LGM-Dairy). Similar to MPP, LGM-Dairy is also a USDA risk management instrument which offers protection against declines in average dairyincome-over-feed-cost (IOFC) margins. Introduced in 2008, LGM-Dairy is an insurance product overseen by USDA’s Risk Management Agency. Like crop insurance, LGM-Dairy is sold by private insurance agents and underwritten by the Federal Crop Insurance Corporation (for a complete description of LGM-Dairy rules see here).

As both LGM-Dairy and MPP are USDA programs, the 2014 Farm Bill allows dairy farmers to participate in either MPP or LGM-Dairy but they may not simultaneously use both programs. Given this one-or-the-other feature it is important to consider the benefits of each risk management instrument before making a participation decision. The features of MPP have been covered comprehensively here on farmdoc daily (see here and here). Today’s post will complement previous posts on the dairy title and assist producers by reviewing the provisions and risk management opportunities under LGM-Dairy.”


Agricultural Economy

Bloomberg writers Megan Durisin and Fareeha Ali reported on Friday that, “Cattle futures surged to an all-time high in Chicago on signs of tight supplies heading into the peak U.S. summer grilling demand.

The cattle herd in the U.S. started the year at a 63-year low, and as of June 7 the number of cattle slaughtered slid 6.3 percent this year from 2013, U.S. Department of Agriculture data show. The drop comes a month before the Fourth of July holiday, the most popular day for Americans to grill outdoors, according to the Hearth, Patio and Barbecue Association.

Consumers will pay as much as 4 percent more for pork this year, and costs for beef and veal will rise as much as 6.5 percent, the most of any food group, the USDA forecasts. There’s ‘no relief’ for protein eaters, and record prices for beef probably won’t let up for the next 18 months, Ricky Volpe, an economist with the USDA’s Economic Research Service in Washington, said May 23. Higher costs have forced companies including Chipotle Mexican Grill Inc. to boost menu prices.”

Tony C. Dreibus reported in today’s Wall Street Journal that, “Corn prices got a respite from a recent slide as investors bet that the favorable weather that has led to the best crop conditions in four years won’t last.

“Corn for July delivery rose three cents, or 0.7%, to $4.47 a bushel on the Chicago Board of Trade on Friday, two days after rolling to an almost four-month low.”

Meanwhile, Reuters writer Ros Krasny reported on Friday that, “Incidents ranging from Chinese dog treats pulled from U.S. pet stores to the virus that has killed millions of American piglets has raised concerns about the safety of food and feed imports from China, lawmakers said on Friday.

“The problems ‘have highlighted concerns over the effectiveness of China’s food safety regulation, the effectiveness of U.S. government regulation of imported foods from China, and the overall safety of such foods,’ said Democratic Senator Sherrod Brown of Ohio and Republican Representative Christopher Smith of New Jersey.

“The U.S. Congressional-Executive Commission on China has scheduled a hearing for Tuesday, ‘Pet Treats and Processed Chicken from China: Concerns for American Consumers and Pets,’ to consider those issues.”

The article added that, “The commission noted that researchers are exploring a possible link between China and the domestic outbreak of Porcine Epidemic Diarrhea Virus (PEDv), which has killed over 7 million piglets across the United States.”



Tim Devaney reported on Friday at The Hill Online that, “Petroleum companies will get a breather from latest round of renewable fuel standard, as the Environmental Protection Agency (EPA) is once again delaying the deadline for compliance with the 2013 standards.”

The article noted that, “But the EPA said Friday it is delaying last year’s compliance deadline for a second time. The original deadline for was set for Feb. 28 for petroleum companies to show their gas and diesel fuels met the previous year’s standards. But the agency pushed it back to June 30.

“The EPA delayed the rules again Friday in a Federal Register announcement, pushing the new deadline to Sept. 30.”

A news release on Friday from Rep. James Lankford (R., Okla.) stated that, “[Rep. Lankford], Chairman of the House Oversight Committee’s Subcommittee on Energy Policy, Health Care and Entitlements, today introduced H.R. 4849, the Phantom Fuels Elimination Act. The legislation would repeal the corn ethanol mandate and require the remaining mandates within the Renewable Fuel Standard (RFS) of the Clean Air Act to be fulfilled with domestic production.”

Meanwhile, DTN writer Cheryl Anderson reported on Friday that, “A recent announcement by China that it would stop issuing permits for imports of U.S.-produced dried distillers grains has wreaked havoc on the market, sending DDG prices on an unprecedented downward spiral.

“China’s move came as a result of the country’s long-standing reluctance to approve the MIR 162 trait in corn, more commonly known as Agrisure Viptera, produced by Syngenta Ag.

Merchandising companies contacted weekly by DTN reported drops in spot prices between $10 and $45 per ton in the past week.”

The DTN article noted that, “The U.S. Grains Council and the National Grain and Feed Association both told DTN on Thursday that they still have no official information on the situation in China.”

Keith Good

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