December 15, 2019

Ag Economy; Farm Bill; Regulations; and, Immigration

Agricultural Economy

Gregory Meyer reported yesterday at The Financial Times Online that, “The prospect of a colossal 1bn-tonne global corn crop has sent the price of the grain below $4 per bushel for the first time in almost four years.

“Reports of near-perfect conditions in the US corn belt and favourable weather from Ukraine to China have pounded bulls in agricultural markets in recent weeks. Farmers’ incomes, tractor sales and land prices could be hit.

“Analysts expect the US Department of Agriculture to raise its forecast of how much corn the average US farmer will harvest per acre when it updates official estimates on Friday. The agency’s current estimate, of 165.3 bushels per acre, would already be a record.”

The FT article indicated that, “On Thursday, CBOT July corn – the benchmark for stocks left over from last autumn’s record crop – fell as low as $3.99¼ per bushel, down 1.2 per cent on the day and the lowest price for a front-month contract since August 2010.”

Mr. Meyer explained that, “Falling corn and soyabean prices will be a main factor in driving down farm incomes to the lowest levels since at least 2005, Gary Schnitkey of the University of Illinois has estimated.

Cheaper corn may also spell the end of a boom in US farmland. Agricultural land values in the central US corn belt are up a modest 1 per cent annually, compared with double digit rises in recent years.”

Bloomberg writer Lydia Mulvany reported yesterday that, “Soybean futures fell, capping the longest slump in 33 years, as mild temperatures forecast for growing regions bolster the outlook for a projected record-high crop in the U.S., the world’s top grower.”

And Bloomberg writer Ranjeetha Pakiam reported today that, “Soybeans dropped for the ninth straight session yesterday, the longest slump since June 1981. The USDA may raise its forecast for domestic production to 3.789 billion bushels from 3.635 billion estimated last month, according to the Bloomberg survey. Citigroup Inc. said soybeans may drop to $10.50 in the fourth quarter, while corn was seen at $3.70 a bushel, according to a report e-mailed yesterday.”

Meanwhile, Reuters news reported yesterday that, “The U.S. weather forecaster maintained its outlook for the El Nino weather phenomenon in its monthly update on Thursday, pegging the chances of the weather pattern striking during the Northern Hemisphere summer at 70 percent.

“The agency downplayed the likelihood of a strong El Nino, which can wreak havoc on crops, predicting it will peak at ‘weak-to-moderate’ strength during the late fall and early winter and last until spring of 2015.”

Also, the U.S. Drought Monitor was updated this week- related graph.

In news regarding transportation, AP writer Steve Karnowski reported yesterday that, “Delays in railroad shipping have cost Minnesota corn, soybean and wheat farmers nearly $100 million and cut deeply into the value of grain still in storage at farms across the state, according to a University of Minnesota report released at an agricultural freight conference Thursday.”

And in trade news, DTN Tokyo Correspondent Richard Smith reported yesterday (link requires subscription) that, “While discussing the difficulty of completing the agricultural trade portions of the Trans-Pacific Partnership at a press conference this week, Yoshimasa Hayashi, Japan minister of agriculture, forestry and fisheries, compared the effort to climbing a mountain.

“Saying that current trade negotiations had made it up 80% of the climb, Hayashi added, ‘But when we get to the altitude of 80%, the oxygen becomes rarefied, and the remaining climb to the summit will be even more challenging, and that is where we are today.’”

The DTN article noted that, “In negotiating to join the TPP, the Japanese government is constrained by domestic demand expressed a year ago in a resolution adopted by the Diet, or Japanese parliament. The resolution stated that a number of sensitive agricultural products — rice, wheat and barley, sugar, dairy products, and beef and pork — need to be excluded or subject to renegotiations…[W]hen pressed on to what extent the Japanese side is willing to give way over the country’s sensitive agricultural items in the negotiations, Hayashi said, ‘I am sorry, I do not have the authority to make any comments over the substance of the negotiations.’”

Looking ahead, the Ways and Means Committee indicated this week that, “House Ways and Means Trade Subcommittee Chairman Devin Nunes (R-CA) today announced that the Subcommittee will hold a hearing on the U.S. trade agenda and the World Trade Organization with Deputy U.S. Trade Representative Michael Punke. The hearing will take place on Wednesday, July 16, 2014, in 1100 Longworth House Office Building, beginning at 10:00 A.M.”


Farm Bill

A news release yesterday from the House Ag Committee stated that, “Today, Rep. K. Michael Conaway, Chairman of the House Agriculture Committee’s Subcommittee on General Farm Commodities and Risk Management, held a hearing to examine the efforts of the U.S. Department of Agriculture (USDA) as it implements the new commodity and crop insurance titles of the Agricultural Act of 2014, otherwise known as the farm bill.”

“Members of the Subcommittee questioned USDA Under Secretary Michael Scuse on the status of implementing key provisions.”

A news release yesterday from Chairman Conaway stated that, “[Chairman Conaway] called on the Agriculture Department to implement the Actual Production History adjustment in 2015. The adjustment was part of the 2014 Farm Bill and allows farmers to prevent harvest years that are affected by severe weather from having a negative impact on the calculations determining their crop insurance coverage. ‘There are farmers and ranchers who have experienced severe drought for three years,’ Congressman Conaway said. ‘Many remain in severe drought this year. A good many of these areas are in D-4 drought condition. Despite all of this, we understand the department intends to administratively delay APH relief until 2016, the THIRD year of a FIVE year farm bill. I respectfully urge the department to respond to this natural disaster in states like Texas, Oklahoma, New Mexico, Colorado and other states around the country with the same speed and determination as one would expect in the case of a wildfire or a hurricane.’

“While Under Secretary Scuse did not commit to implement the provision earlier than the fall of 2015, he did commit to go back and investigate and provide the committee with detail about potential timelines, and even consider a partial implementation for areas and crops most impacted by drought and losses in the farm bill.”

During yesterday’s hearing, Chairman Conaway stated that, “Talking about the APH, and we’ve had some back and forth with your staff. I need some help understanding why this is going to be so difficult we can’t get it done in 2015.”

Under Sec. Scuse noted in part that, “[O]ne of the reasons why the Risk Management Agency is able to roll out this many programs for 2015, Risk Management Agency looked at the bills that had been passed by the House and Senate previous to the bill that was ultimately passed by both and signed by the President. We anticipated these programs, so we started to work on these programs long before the final bill was passed and signed into law. The APH was not in any of those previous forms of legislation. And it was a last minute addition to the final farm bill, and one that we did not anticipate having to implement.

“Having said that, it’s not just about going back and getting 20 years of data for every single county, but it’s 20 years of data for every single county for every single crop that is grown in that county. And on top of that, we also have to work with our approved insurance providers, the 18 companies out there that are responsible for writing the crop insurance. It’s no small effort to do the IT programs for all the commodities that are grown in all of the counties in the entire United States. So what I am going to offer up, Mr. Chairman, to the committee, if you will, I will offer up a detailed written explanation of the issues that we are facing in trying to implement APH.”

Rep. Collin Peterson (D., Minn.), the ranking member of the full Committee, expressed concern about Farm Service Agency (FSA) outreach efforts to producers with respect to the new dairy program: “I just think you need to get your FSA people up to speed as soon as you can. You need to get something out to the dairy farmers that this is coming, you know, and you need to do it now instead of in September, I believe.”

Rep. Peterson added: “So from what I understand, you’re kind of holding things up until you figure out the answers on the base and the new producers and so forth. You’re wanting to have everything done before you roll this out. Is that what I understand?

Under Sec. Scuse noted that, “Yeah, we would like to have it completed before we roll everything out and answer as many of the questions as we possibly can to eliminate any of the confusion that may exist if we roll it out piecemeal.”

Rep. Peterson indicated that, “I don’t agree that there’s going to be confusion because, you know, the decision that people are going to make is not going to be, in most cases, based on what their base isSo you’re holding up the whole situation over things that are, I don’t think, central to making this decisionSo why couldn’t the FSA office or somebody send a letter to these dairy farmers saying that there’s a margin insurance program coming, you know, these are the rates that are in the statute, you know, we’re going to be finalizing the base issues and so forth later on, but just so they start…they get…they understand this is coming.”

Under Sec. Scuse stated that, “Congressman, I’ll take that under consideration. I will go back and look at it and see if we can do something about getting notification out to the dairy producers, just notifying them that this is coming and the time frames. I will go back and take a look at it, Congressman.”

Rep. Kristi Noem (R., S.D.) explored the issue of crop insurance and conservation compliance with Mr. Scuse during yesterday’s hearing- audio (MP3- 3:26); that topic also came up in brief exchange with Chairman Conaway and Mr. Scuse- audio (MP3- 0:35).

In a statement yesterday, Rep. Randy Neugebauer (R., Tex.) indicated that: “I want to thank Chairman Conaway for convening this important hearing and Undersecretary Scuse for appearing before the Subcommittee this morning to update us on where FSA and RMA are in implementing the Farm Bill. It has been 5 months since we passed the Farm Bill and I was pleased to hear of the work that has already been completed and learn more about the timeline moving forward. While this hearing did not alleviate my concerns that certain reforms in the crop insurance title will not be ready as expected, I appreciate Undersecretary Scuse’s commitment to work with Congress to ensure that RMA and FSA implement the Farm Bill in a timely manner and create the programs as Congress intended.”

Meanwhile, Jonathan Coppess, Nick Paulson and Gary Schnitkey from the University of Illinois, indicated yesterday at the farmdoc daily blog (“Introducing the Farm Bill Toolbox”) that, “Previously, articles on farmdoc Daily have provided details regarding the efforts to inform readers about the 2014 Farm Bill, particularly with regard to farm program decisions that will have to be made (those articles are available here and here).  As the next step in that project, today we introduce the Farm Bill Toolbox as the one-stop resource for farm program decisions, information and analysis, as well as providing further information regarding the ongoing efforts for the Farm Bill.

“On July 1, 2014, the University of Illinois as the lead university for the National Coalition for Producer Education (NCPE) entered into a cooperative agreement with the Farm Service Agency for development of web-based decision tools to help producers and farm owners with the decisions and programs in the Farm Bill.  This effort will involve the development of three different tools by the Illinois-led NCPE, as well as training, education, outreach and analysis on the tools and programs:  (1) a tool for the ARC/PLC program decision, including base acre reallocation, payment yield updating and SCO/STAX; (2) a tool for the new dairy Margin Protection Program and Livestock Gross Margin-Dairy insurance policy; and (3) a tool for the new Noninsured Crop Disaster Assistance Program (NAP) provisions regarding buy-up coverage.

“The University of Illinois-NCPE proposal envisioned using the farmdoc platform as a user-friendly, one-stop resource for all aspects of the Farm Bill program decisions.  To that end, we introduce the Farm Bill Toolbox (available here) as the dedicated site for producers, landowners and others interested in the programs.”


Regulations- EPA Water Issues

EPA Administrator Gina McCarthy was a guest on yesterday’s AgriTalk radio program with Mike Adams where the discussion focused on regulatory issues associated with water and EPA rules.

An unofficial transcript of yesterday’s AgriTalk conversation is available here.

In part, Admin. McCarthy explained that, “We actually have not changed the definition of navigable water. I think there’s a little bit of a confusion about what the current rule actually says and does and has been consistently applied. And one of the most important things to remember is that the proposed rule that we put out there does not change that definition. All it’s talking about is how do we properly protect the waters that actually flow into these navigable waters, the waters that actually could have a significant impact on water quality.”

We have not expanded the jurisdiction of the Clean Water Act. We’re simply trying to make sure that everybody understands it and it’s as clear as it can be so everybody can go about their business with as little contact in between to ask about permits, to ask about whether something’s jurisdictional. If you didn’t need a permit before, under the current rule, you don’t need one under this proposal. So it’s really important that people understand that,” Admin. McCarthy said.

Ms. McCarthy added that, “And I think one of the reasons why I’m outside of D.C. is because I want people to know that EPA cares about the farming community and the ranching community. I know how vital it is, not just to our communities here in the heartland, but across the U.S. and to all of us, because they produce the food, fuel and fiber that all of us rely on. And so we need to get beyond the distrust so that I can develop a rule that doesn’t need trust to implement it, that’s as clear as possible.”

DTN writer Todd Neeley reported yesterday (link requires subscription) that, “EPA Administrator Gina McCarthy knows she has a lot of damage to repair in the agency’s relationship with agriculture — a relationship that continues to be strained by a gap between what she said was the intent of the proposed Clean Water Act rule and the outcry coming from rural America.

“McCarthy wrapped up a two-day tour across Missouri, first talking to farmers near Columbia and ending with a speech before the Agricultural Business Council of Kansas City Thursday. The EPA head looked weary as she sat down for an interview with DTN prior to the Kansas City speech” (Note that a transcript of her prepared remarks can be found here).

Mr. Neeley stated that, “[McCarthy] said the outcry from across farm country caught her by surprise. The U.S. Soybean Federation, in a statement earlier in the day, requested that EPA ‘demonstrate some agricultural common sense and goodwill,’ and throw out the CWA interpretive rule entirely.

“‘We really didn’t see the changes we’re making in this proposal as having a significant impact on the agriculture community,’ McCarthy said. ‘We have kept the exemptions and the exceptions that are currently in the law that allow farmers to keep performing those farm practices that they’ve always been doing.’”

Yesterday’s DTN article added that, “McCarthy told a luncheon crowd of more than 150 representatives of agribusinesses and non-profit groups that she recognizes not all farms are the same. ‘I’m beginning to understand the kind of conversations we need to have between EPA and the ag community,’ she said. ‘Nothing is easy. I know that no one understands the importance of water quality better than the agriculture community.’

“She said the time has come to change the notion that EPA and the agriculture community can’t ‘come to an agreement.’”



A news release yesterday from the Agriculture Workforce Coalition (AWC) stated that, “The [AWC] appreciates the courage, hard work and leadership that Congressman Mario Diaz-Balart has shown in the last several years in seeking to fix this country’s broken immigration system. In particular, he has shown a true understanding of and appreciation for the labor crisis being faced by agricultural producers across the country and across different commodities. The legislation that he has developed with his colleagues on both sides of the aisle would represent a significant step towards achieving meaningful immigration reform.

“We echo the disappointment he expressed today that his immigration bill will not be taken up in 2014.  The AWC agrees that it is imperative that the House pass an immigration bill that addresses agriculture’s current workforce, creates a viable agricultural guest worker program and bolsters border and domestic security as soon as possible.

“Make no mistake—the workforce crisis being faced by America’s farmers and ranchers is real and must be solved legislatively.  The AWC will continue urging Congress to act on the long-term solution to this problem that America’s farmers, ranchers and growers so desperately need and deserve.”

Lastly today, Reuters writer Jonathan Stempel reported earlier this week that, “A federal judge on Wednesday rejected PricewaterhouseCoopers’ request to dismiss a $1 billion lawsuit accusing the auditor of providing bad accounting advice that contributed to the October 2011 collapse of MF Global Holdings Ltd, a brokerage run by former New Jersey Governor Jon Corzine.”

Keith Good

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