FarmPolicy

January 16, 2019

Ag Economy; Biotech; Regulations; Policy Issues; and, Immigration

Agricultural Economy

Gregory Meyer reported yesterday at The Financial Times Online that, “The chances of finding a bull in a maize field are near zero right now. With each passing week, a blockbuster harvest of corn in the US – the world’s largest producer – is looking more and more likely.

“Spot corn prices have responded. They are down a third in the past year and weighing on commodity indices. On Monday the market for the most widely traded grain will face a further test when the government issues a pair of crucial supply and demand reports.”

The FT article noted that, “It is too early to make precise harvest forecasts with confidence. Two years ago, a complacent market caught fire as extreme heat descended on the Midwest and lingered throughout corn’s sensitive pollination stage. The end result: a decimated crop and prices above $8 per bushel.

“Joel Widenor, meteorologist at Commodity Weather Group, says a similar heatwave this year would cause problems. But soils now are more moist than in 2012, making plants more resilient and damping the hottest daytime temperatures, he adds. For now, excessive heat is not predicted.”

Mr. Meyer added that, “The department has rated nearly three-quarters of the US corn crop ‘good’ or ‘excellent’, the best condition for this time of year since 1999.

“Elsewhere, China is also projected to reap a record crop this year. The world’s second largest corn producer has been cancelling corn imports from the US since shipments appeared containing an unapproved genetically modified trait, pressuring Chicago’s futures markets. Ample crops are also expected from Brazil and Ukraine, which together with the US comprise the three top corn exporters.”

Bloomberg writer Jeff Wilson reported today that, “A bumper harvest in 2013 means stockpiles in the U.S., the world’s biggest grower, are rising at the fastest pace in nine years, according to traders and analysts surveyed by Bloomberg. Ample rains and warm weather boosted early crop development for this season and allowed farmers to plant more than the government estimated in March, a separate survey showed. Prices will fall about 9 percent in six months, Goldman Sachs Group Inc. forecasts.

“Corn futures on the Chicago Board of Trade fell 15 percent since the end of April to $4.425 a bushel.”

Matthew Patane reported in yesterday’s Des Moines Register that, “Iowa farm income fell $3.3 billion during the first quarter compared with a year ago, according to a federal report released Tuesday.

“That decline brings farm earnings in Iowa down to about $6.5 billion for the quarter. The drop continues a trend of decreased farm income due to lower corn and soybean prices.

“The U.S. Department of Agriculture has said it expects farm income across the nation to drop about 27 percent in 2014.”

Meanwhile, a news release yesterday from the House Ag Committee indicated that, “Today, Rep. Eric A. ‘Rick’ Crawford, Chairman of the House Agriculture Committee’s Subcommittee on Livestock, Rural Development, and Credit held a public hearing to review credit availability in rural America. Several institutions provide credit to our nation’s farmers, ranchers, and rural constituents. It is important to ensure credit is readily available through fundamentally sound institutions.”

In prepared testimony, Nathan S. Kauffman, Assistant Vice President at the Federal Reserve Bank of Kansas City, noted that, “Since last fall’s crop harvest, sharp changes in agricultural commodity prices have led to corresponding changes in the outlook for the farm sector and agricultural finance. Current corn prices are about 40 percent less than last year. Conversely, average fed cattle prices are approximately 25 percent higher than a year ago and, overall, higher livestock prices and lower feed costs have contributed to a rebound in livestock sector profitability.

Lower crop prices and persistently high input costs have reduced profit margins for U.S. crop producers and have affected recent trends in agricultural lending. Toward the end of 2013, declining profit margins reduced farm cash flow, and as a result, demand for operating and other agricultural loans began to rise and lending activity jumped considerably in the first quarter of 2014.”

Also yesterday, USDA’s Economic Research Service (ERS) updated its Food Price Outlook and noted that, “The all-items Consumer Price Index (CPI), a measure of economy-wide inflation, rose 0.3 percent from April to May and is 2.1 percent above the May 2013 level. The CPI for all food increased 0.4 percent from April to May, increased 0.4 percent from March to April, and is now 2.5 percent above the May 2013 level.

ERS pointed out that, “The dairy CPI increased 0.6 percent last month and is up 4.2 percent from this time last year. The recent increases in dairy are partially driven by milk prices, which have risen significantly over the past 6 months…The CPI for pork increased 3.2 percent in May, following a 3.2-percent increase in April. Pork prices are up 12.2 percent since a year ago…Prices for other meats (including lunch meats, deli meats, and hot dogs) rose 0.3 percent last month and are up 3.3 percent on the year.”

Brianna Sacks reported yesterday at the Los Angeles Times Online that, “Fresh fruits and vegetable prices will go up an estimated 6% in the coming months, the federal government said Wednesday, as California’s ongoing drought continues to hit price tags in grocery stores across the country.”

The article added that, “Drought conditions in states like Texas and Oklahoma have also driven up beef prices 9% this year, and the department expects that hike to continue.”

Also, an update this week from Rabobank indicated that, “This Fourth of July, Americans will pay more for their backyard barbecues than ever before. The inaugural 2014 Rabobank BBQ Index examines the composition of a ten- person barbecue and how rising commodity prices have impacted the cost over the years, showing an overall price increase from $51.90 in 2004 to $55.62 during the financial crisis in 2007, to a total of $66.82 in 2014 [related graphics].”

On a separate issue, AP writer M.L. Johnson reported yesterday that, “The federal government has given conditional approval to the first vaccine licensed to fight a deadly pig virus, and warmer weather appears to be slowing the spread of the disease that has been blamed in part for making bacon more expensive.

“Porcine epidemic diarrhea has killed millions of baby pigs since it showed up in the United States last year, and pork prices have been rising for months. Bacon averaged more than $6 per pound in May, nearly 19 percent more than it did 12 months earlier, according to the U.S. Bureau of Labor Statistics.”

Also, Kelsey Gee reported in today’s Wall Street Journal that, “Changing views of nutrition are turning butter into one of the great comeback stories in U.S. food history…Americans in 2013 for the third straight year bought more butter than margarine, spending $2 billion on products from Land O’Lakes Inc., Organic Valley and others, compared with $1.8 billion on spreads and margarines, according to IRI, a market-research firm [related graph].”

And news regarding bees, Marianne Levine reported yesterday at the Los Angeles Times Online that, “Many plants being marketed in nurseries and garden centers as beneficial to bees have been treated with an insecticide some scientists believe to be harmful to bee colonies, according to a study made public Wednesday by an environmental group.

“The study by Friends of the Earth found that plants sprayed with so-called neonicotinoid insecticides may actually be contributing to the decline in bee populations seen in recent years.”

An update yesterday from Rep. John Conyers, Jr. (D., Mich.) noted in part that, “‘Representative Blumenaeur of Oregon and I introduced, H.R. 2692, the ‘Saving America’s Pollinators Act,’ directing the EPA Administrator to immediately suspend the registration of certain neonicotinoids until experts have determined that these insecticides will not cause adverse effects on pollinators. Rather than rely on industry talking points, my legislation will direct the EPA to evaluate peer-reviewed scientific evidence and complete a thorough field study,’ said Conyers.”

In trade related developments, the Senate Finance Committee held a hearing yesterday titled, “Trade Enforcement: Using Trade Rules to Level the Playing Field for U.S. Companies and Workers.”

Committee Chairman Ron Wyden (D., Ore.) noted yesterday that, “If enforcement falls short for the agreements already in place, it will call into question America’s ability to enforce future agreements, too. And our international competitors will see an opening to break the rules at the expense of American jobs and exports.

“So the challenge today is to build a strong enforcement system that befits the modern, global economy – one that ensures trade agreements respond to today’s challenges to deliver jobs and economic growth to more Americans.”

A news update yesterday from the American Soybean Association noted that, “Wilkins [farmer Richard Wilkins, who testified at yesterday’s hearing] addressed the need for a more consistent regulatory framework in our various partner nations, citing specifically the inconsistent and unreliable frameworks in China and the European Union.

“‘Other countries have adopted systems for approving biotech traits, but these decisions are subject to differing regulations or are overtly political, which can result in lengthy delays between approvals in importing and exporting countries,’ he testified. ‘This is a concern because, until an importer approves a new trait, even a trace amount of that trait detected in a cargo can result in its rejection and major losses for the shipper.’

“Wilkins pointed to ASA’s advocacy for a global Low Level Presence (LLP) policy to tackle this challenge. ‘An LLP would allow a shipment containing a small amount of an exporting country’s approved trait without resulting in rejection by an importer,’ he said.”

In testimony on behalf of the National Chicken Council, Kevin Brosch noted at yesterday’s hearing that, “With respect to TPP, our major goals are to get a strong commitment on enforcement, in particular in the area of sanitary and phytosanitary measures…Our second major ambition in TPP is to see that the long-protected Canadian market is finally opened to trade. In our view, the Canadian market should have been opened to free trade as a result of NAFTA. If TPP is truly a free trade agreement, then there should be free trade in poultry between the United States and Canada, not just one-way market access for Canada.

We are frankly, less sanguine about the prospects for poultry under the proposed TTIP free trade agreement with Europe. The ban currently imposed by EU regulations on importation of U.S. chicken is not based on sound science and is inconsistent with WTO rules.”

 

Biotech

Reuters news reported yesterday that, “Germany’s agriculture minister will propose a draft law regulating cultivation of crops with genetically modified organisms, he said in a newspaper interview published on Wednesday.

“Minister Christian Schmidt had supported a European Union initiative approved on June 12 giving member states the freedom to prohibit GMO crops, saying this opened the way for a ban in Germany even if crops had been approved by the bloc for EU-wide cultivation.

“‘We have pushed through a cultivation ban for genetically modified organisms at the EU level,’ Schmidt told the daily Handelsblatt. ‘As the next step I will present a draft law for the German regulation.’”

 

Regulations

DTN writer Todd Neeley reported yesterday that, “As if an appearance before the House Oversight Committee Wednesday to answer questions about a rogue EPA employee/wannabe CIA agent wasn’t enough of a pressure cooker, EPA Administrator Gina McCarthy was pressed further on the agency’s proposed Clean Water Act rule.

“McCarthy said based on recent public outcry, her agency has ‘a lot of work to do’ to close the gap between ‘EPA’s intent’ to clarify Clean Water Act jurisdiction and an agriculture and public perspective of the rule as a so-called land grab. EPA maintains the rule will provide clarity about the agency’s jurisdiction and would actually lead to fewer waters covered — a claim disputed by agriculture industry and other groups.”

The DTN article added that, “Rep. Doug Collins, R-Ga., told McCarthy that farmers in his northeast Georgia district are concerned about the rule.

“‘There is a gentleman with 100 acres that is dry most of the year,’ he said, ‘but this would make his land unsellable. There is an overreach here and it goes back to Congress not giving you direction. We forget the end result is not about a building in Washington that makes rules; it is about people who get up every day.’”

A news release yesterday from Sen. Pat Roberts (R., Kans.) stated that, “[Sen. Roberts] today joined Senators John Barrasso (R-Wyo), John Hoeven (R-ND) and John Thune (R-SD) on the Senate floor in a colloquy to oppose the Environmental Protection Agency’s proposed expansion of rules regulating ditches, dry creek beds, farm ponds and other water on private lands. The Senators called for a vote on The Protecting Water and Property Rights Act of 2014.”

 

Policy Issues: Food Safety, Nutrition

Tim Devaney reported yesterday at The Hill Online that, “The U.S. Department of Agriculture (USDA) would receive more authority to recall meat, poultry, and eggs products that are contaminated with pathogens like Salmonella under new legislation introduced Wednesday by Reps. Rosa DeLauro (D-Conn.) and Louise Slaughter (D-N.Y.).

“The congresswomen introduced the Pathogens Reduction and Testing Reform Act, after Agriculture Secretary Tom Vilsack and other USDA officials said they do not have the authority to issue many such recalls.”

Also yesterday, a news release from Sen. Kirsten Gillibrand (D., N.Y.) stated that, “U.S. [Gillibrand] and Lisa Murkowski today introduced the bipartisan Summer Meals Act, which would enhance the U.S. Department of Agriculture (USDA) Summer Food Service Program. The legislation would help improve nutrition and enhance learning in underserved areas by better integrating summer education and meals programs, making it easier for public-private partner organizations to participate in the summer meals program, and by providing a third meal for children who attend evening enrichment programs.”

 

Immigration

Laura Meckler reported in today’s Wall Street Journal that, “A leading advocate for immigration legislation declared the long-moribund effort dead for the year, publicly voicing what many others have said privately.

“Rep. Luis Gutierrez (D., Ill.), who was part of a bipartisan group who tried to craft a House immigration bill, said Wednesday he was giving up on winning needed support from Republicans. The GOP hasn’t brought an immigration measure to the House floor since the Senate passed its own bipartisan legislation a year ago.”

Meanwhile, Seung Min Kim reported yesterday at Politico that, “Vice President Joe Biden is convening a private meeting Thursday with immigration reform advocates, according to two people familiar with the invitations.

“Those planning to assemble for the afternoon discussion with Biden at the Eisenhower Executive Office Building include Jim Wallis, the president and founder of Sojourners; representatives from the agriculture industry such as the Western Growers Association and the Farm Bureau; law enforcement officials; and the National Immigration Forum.”

Keith Good

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