- FarmPolicy - http://farmpolicy.com -

Ag Economy; Appropriations; Policy Issues; Senate Hearing; and, Political Notes

Agricultural Economy

Reuters writer Lucia Mutikani reported yesterday that, “U.S. consumer prices recorded their largest increase in more than a year in May as costs for a range of goods and services rose, likely easing the Federal Reserve’s concerns that inflation was running too low.

“The Labor Department said on Tuesday its Consumer Price Index increased 0.4 percent last month, with food prices posting their biggest rise since August 2011.”

The article noted that, “Food prices increased 0.5 percent in May, the fifth consecutive monthly increase.”

More specifically, the CPI report indicated that, “The index for meats, poultry, fish, and eggs rose 1.4 percent in May after a 1.5 percent increase in April, with virtually all its major components increasing.”

Bloomberg writer Megan Durisin reported yesterday that, “U.S. ground-beef prices are up 76 percent since 2009 to the highest on record, after a seven-year decline in the herd left the fewest cattle in at least six decades, government data show. Meat costs are rising faster than any other food group, eroding profit margins at Hormel Foods Corp. and forcing Costco Wholesale Corp. and Chipotle Mexican Grill Inc. to raise prices.

Supply probably will remain tight. It can take three years to expand the herd, and a prolonged drought in Texas, the top producer, parched pastures needed to raise young animals. The government says the U.S. will become a net beef importer in 2015. Cattle futures already up 22 percent in the past year in Chicago may rally 8.3 percent to $1.578 a pound by the end of December, a Bloomberg survey of five analysts showed.”

Meanwhile, USDA indicated yesterday in a news release that, “Agriculture Secretary Tom Vilsack today announced that the United States and Hong Kong have agreed on new terms and conditions that pave the way for expanded exports of U.S. beef and beef products to Hong Kong.”

Also yesterday, Emily Unglesbee reported at DTN that, “The rain that Kansas and Oklahoma wheat farmers waited so long for has finally come, but only in time to delay harvest and jeopardize the quality of the struggling crop.

“Many of the farmers who have managed to get into their fields are faced with the complications of harvesting short, thin stands and deciding whether yields will justify the cost of harvesting, farmers and crop experts told DTN.”

The DTN article pointed out that, “On Monday, USDA crop progress scouts estimated that only 2% of Kansas‘ rather dismal wheat crop had been harvested, compared to a 19% five-year average for this week. Nearly two-thirds of the wheat was rated in very poor to poor condition.

“In Oklahoma, an estimated 47% of wheat had been harvested by Monday, down from the 56% average. More than three-quarters of the crop was rated in very poor to poor condition by crop progress scouts.”

More broadly, Reuters writer Colin Packham reported yesterday that, “Australia’s weather bureau said on Tuesday the chance of an El Nino forming over the next few months remains at 70 percent, though the agency said some key indicators associated with the weather pattern had eased in recent weeks.

“‘We still believe an El Nino is likely,’ Andrew Watkins, Supervisor Climate Prediction at the Australian Bureau of Meteorology, said.”

The Reuters article explained that, “El Nino – a warming of sea temperatures in the Pacific – affects wind patterns and can trigger both floods and drought in different parts of the globe, hitting crops and food supply.”

Jamil Anderlini reported yesterday at The Financial Times Online that, “China’s sovereign wealth fund is shifting its focus to invest in agriculture and global food supplies in a significant strategic move that reflects the priorities of the country’s new leadership.

“In an opinion piece in the Financial Times, Ding Xuedong, chairman of China Investment Corp [CIC], said the country’s $650bn sovereign wealth fund wants to invest more in agriculture around the world and ‘across the entire value chain.’”

The FT article added that, “CIC will pay particular attention to agricultural sectors that have been neglected by large institutional investors in the past, such as irrigation, land transformation and animal feed production, he said.

“The focus on agriculture has sharpened over the past year and marks the second major strategic shift for the fund since it was established in 2007.”

In trade developments, AP writer John-Thor Dahlburg reported yesterday that, “Agriculture Secretary Tom Vilsack has come to Europe to make the U.S. case on disputed issues in farm trade, as the Obama administration and European Union negotiate a new trade and investment agreement.

Agriculture is a perennial hot-button topic in trans-Atlantic relations, and Vilsack said Tuesday it’s hard to imagine any deal being approved by the U.S. or EU if it doesn’t include an agricultural component.”

The AP article noted that, “After talks with Vilsack on Tuesday, EU Agriculture Commissioner Dacian Ciolos said he was convinced that Europeans and Americans need ‘a better understanding of our realities’ if negotiations for the proposed Transatlantic Trade and Investment Partnership are to succeed.”

Also yesterday, Sen. Chuck Grassley (R., Iowa) tweeted that, “Appreciate Sec Vilsack keeping AG frnt&ctr in trade talks w EU Must have substantive progress on ag B4 approved…TPA KEY to everything”


Senate Ag Appropriations

Ramsey Cox reported yesterday at The Hill Online that, “The Senate advanced its first 2015 Appropriations bill in a procedural vote Tuesday.

“The Senate voted 95-3 to end debate on the motion to proceed to H.R. 4660, the House Commerce and Justice Appropriations bill. More than 30 Republicans voted with Democrats. GOP Sens. Dean Heller (Nev.), Mike Lee (Utah) and Rand Paul (Ky.) were the only ‘no’ votes.

The Hill update explained that, “The Senate is using the House-passed bill, but will amend it with a ‘minibus’ package of spending bills.

“The Senate’s $120 billion minibus includes funding for the departments of Agriculture, Commerce, Justice, Transportation and Housing and Urban Development.”

(Note that a summary of the agriculture portion of the minibus is available here).

The Senate is expected to spend the rest of the week debating the measure,” The Hill article said.

A Statement of Administration Policy on the measure from the executive branch yesterday indicated that, “The Administration appreciates the Committee’s continued support for science- based nutrition standards for children. School nutrition standards are developed by independent experts, over 90 percent of schools report that they are successfully implementing them, and studies show they are working to help improve children’s health. The Administration strongly opposes the inclusion of any language in the bill that would override science-based standards that improve child nutrition.”

The Statement added that, “The Administration understands that the objective of the language in the bill that would require the inclusion of white potatoes in the WIC food package, pending further scientific review, is intended to preserve the science-based review process used to determine which foods should be included in the WIC food package. The Administration strongly opposes the inclusion of any language in the bill that would override science-based standards that improve child nutrition.”

“The Administration appreciates the bill’s support for P.L. 480 Title II food aid and retention of the reforms passed in FY 2014, but is concerned that the bill excludes proposed food aid reforms that would help two million more people in crises without additional resources. At a time when major food crises are increasing, including those in South Sudan and Syria, the proposed reforms to allow more cost-effective, flexible emergency food aid are critical,” the Statement said.


Policy Issues

University of Illinois agricultural economist Gary Schnitkey indicated yesterday at the farmdoc daily blog (“Availability of County Crop Insurance in 2014: Implications for SCO”) that, “The Supplemental Coverage Option (SCO) will be made available beginning in the 2015 crop year for those individuals who choose the Price Loss Coverage (PLC) option for receiving commodity payments under the 2014 Farm Bill.  SCO is a county crop insurance product providing coverage from an 86% coverage level down to the coverage level of the Combo product (see here and here here for more detail).  The Risk Management Agency (RMA) will administer SCO.  As of yet, RMA has not released counties for which SCO will be available in 2015.  Since SCO is somewhat similar to Area Risk Protection Insurance (ARPI), showing available of ARPI policies may give some guidance for SCO availability.  This article shows maps of 2014 availability of ARPI polices for corn, soybeans, wheat, cotton, and grain sorghum, the five traditional program crops for which ARPI policies exist.”

Former Congressman Jerry Weller noted yesterday at Roll Call Online that, “First and the most importantly, it’s clear now that bee populations world wide have been growing in contradiction to anti-pesticide campaigner’s predictions. Some predicted extinction in Europe and North America but numbers are now actually increasing. Populations grew 11 percent in the U.S. and 15 percent in Canada from 2008 to 2013. Bee numbers grew 11 percent among the European Union’s original 15 members and up 48.4 percent globally between 1960 and 2012. Last month, the Department of Agriculture reported that over-winter, bee losses were at the lowest level in a decade. Moreover, according to University of Maryland Professor Dennis vanEngelsdorp, who collects data for USDA via his Bee Informed Partnership, Colony Collapse Disorder has not been observed in the field for three years.”

Mr. Weller added that, “Recently, well-meaning Members of Congress introduced legislation for an EU style ban on neonic pesticides with a goal of helping bees. With all the unresolved challenges facing bees and beekeepers, Congress needs to avoid the EU’s mistakes. Legislation can only be effective in helping bees if it takes aim at the right targets based on credible research.”

Marina Koren pointed out yesterday at National Journal Online that, “In a good year, California produces more honey than any other state. But the Golden State hasn’t seen a good year in almost four years.

In that time, a drought has parched natural forage lands—and the wild flowers that provide honeybees with nectar. So California beekeepers have started feeding their bees artificial nectar to keep them from starving, according to KQED radio.”

Also, former Congressman Richard Pombo indicated yesterday at Roll Call Online that, “Deceptive marketing supported by the government funded National Organic Program costs American consumers hundreds of billions of dollars and harms non-organic family farmers. It is time to end rampant abuses of the USDA Organic Seal and taxpayer-funded organic marketing program.”

Mr. Pombo stated that, “If the Department of Agriculture cannot ensure the USDA Organic Seal is not abused, if the U.S. Food and Drug Administration will not enforce truthful and non-misleading food labeling laws, and if the U.S. Federal Trade Commission will not address rampant deceptive marketing practices, then it’s time for Congress to put an end to US taxpayer dollars being used to mislead consumers into spending billions of dollars based on false claims that damage the 95 percent of America’s farming community producing the bulk of our safe and affordable food.”

In other news, Brianna Sacks reported yesterday at the Los Angeles Times Online that, “Wal-Mart Stores Inc. said Tuesday it will triple its spending on food safety in China by the end of 2015 after criticism of its operating procedures and a reported mislabeling of donkey meat.

“The world’s largest retailer said it will shell out $48.2 million on food safety between 2013 and 2015. That’s nearly three times the $16.1 million it had previously earmarked.

“The extra spending will go toward food testing, permits, DNA testing of meat sold in China and supplier audits, said Paul Gallemore, Wal-Mart’s chief compliance officer in China.”


Senate Ag Committee Hearing

Marisa Schultz reported yesterday at The Detroit News Online that, “Michigan companies specializing in bio-based manufacturing flocked to Capitol Hill Tuesday to shine a spotlight on new financial incentives for businesses to go green.

“Among the companies displaying their technologies were Lansing’s KTM Industries, which specializes in a corn-based biodegradable version of Styrofoam, and Southfield’s Lear Corp. that launched soybean-based foam seating for the 2008 Ford Mustang.

“The effort was led by Michigan’s U.S. Sen. Debbie Stabenow, chairwoman of the Senate Agriculture Committee and author of new farm bill provisions that financially recognize manufacturers of eco-friendly products — an effort Stabenow dubbed ‘Grow It Here, Make it Here.’”

Stephen Rapundalo and Pete Pellerito indicated yesterday an a column at The Hill Online that, “The Senate Agriculture Committee is today hosting a showcase of homegrown biobased products and the companies that make them. The Committee is also holding a hearing on policies that foster growth of the biobased economy, with companies such as Coca-Cola and Cargill testifying about their plans for producing sustainable, renewable consumer products.”


Political Notes

Richard Fausset reported in today’s New York Times that, “Yet [Sen. Thad Cochran (R., Miss.)] is currently fighting for his political life after being trounced here in DeSoto County by a ratio of nearly 2 to 1 by the Tea Party favorite Chris McDaniel in the June 3 Republican primary. At issue for many Republicans is the idea that what Mr. Cochran does best is also what he does worst — spend federal dollars.

“The result is a race that is raising a question at the heart of American politics, and especially the politics of the South: Do voters hate spending even when it is spending that comes home to them?

Allison Sherry reported yesterday at the Hot Dish Politics Blog (Minneapolis Star-Tribune) that, “The National Republican Congressional Committee will spend $3.2 million in Twin Cities television this fall on behalf of Stewart Mills and Torrey Westrom, both of whom are trying to unseat Democratic incumbent Reps. Rick Nolan and Collin Peterson.”

And Daniel Newhauser reported yesterday at Roll Call Online that, “Candidates for House GOP majority whip are pushing their cases hard in the last hours of the race, each promising to heal a party scarred by infighting and at the same time wrangle the conference into a united voting bloc.”

Keith Good