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Ag Economy; Farm Bill; Regulations; and, Political Notes

Agricultural Economy

Reuters writer Naveen Thukral reported today that, “Chicago corn futures slid for a third consecutive session on Wednesday to their lowest in three weeks, while soybeans eased after a U.S. government report showed further improvement in crop conditions.”

The article pointed out that, “U.S. corn was rated 74 percent good-to-excellent, up from 73 percent a week ago and 56 percent at this time of last year, according to the U.S. Department of Agriculture.

Soybean conditions were 72 percent good-to-excellent, up from 70 percent a week ago and 54 percent last year.”

Today’s article also noted that, “Commodity brokerage INTL FCStone on Tuesday raised its forecast of U.S. 2014 corn production to 14.595 billion bushels, from 14.455 billion in its previous monthly report.

“The firm raised its corn yield estimate to 174.1 bushels per acre, from 172.4 last month.

“It raised its forecast of U.S. 2014 soybean production to 4.0 billion bushels, from its August forecast of 3.865 billion. The firm forecast the average soybean yield at 47.6 bushels per acre, up from its August estimate of 46.0 bushels.”

Bloomberg writer Phoebe Sedgman reported today that, “U.S. corn output is set to total a record 14.032 billion bushels this year [related graph] and farmers may harvest 3.816 billion bushels of soybeans [related graph], an all-time high, the USDA said Aug. 12.”

Note that an update yesterday from the Illinois State Climatologist Office provided a brief overview of key summer weather variables that impacted crops, “Wet August Wraps Up Cool, Wet Summer in Illinois,” and stated in part that, “The statewide average precipitation for summer was 14.96 inches, 3.09 inches above average and the 10th wettest summer on record. The wettest summer was 1993 with 18.51 inches.

“For the three summer months of June, July, and August, the statewide average temperature was 72.4 degrees, 1.2 degrees below average and the 30th coolest summer season on record. The milder August knocked this summer out of the running for one of the coolest on record. That is not necessarily bad from an agricultural point of view, the warmer August helped to keep crops on track for maturing this fall.”

And Bloomberg writer Megan Durisin reported yesterday that, “The investment binge in U.S. agriculture funds has ended as record crops and the promise of improving meat supplies send prices plunging.

“After taking in more money than precious metals or energy funds during the first five months of 2014, exchange-traded products backed by agriculture had a net outflow for the year of $57.7 million as of Aug. 29, down 2.9 percent, data compiled by Bloomberg show.”

Ms. Durisin stated that, “For now, the weather is primed to promote crop growth, and the USDA on Aug. 12 raised its estimates for U.S. beef and pork production this year, citing cheaper feed.”

Also with respect to livestock, an update yesterday from USDA’s Economic Research Service chart gallery stated that, “U.S. cattle and beef prices have moved into record territory since mid-2013 [related graph], primarily due to drought impacts on U.S. cattle inventories. In addition to the widespread U.S. drought in 2012, drought conditions have affected important U.S. cattle raising regions, particularly in the Plains and Southwest, since 2010. The dry weather degraded pasture conditions and forage supplies, leading cow-calf operators to liquidate herds. Increases in U.S. imports of feeder cattle from Mexico and Canada have been insufficient to maintain or build U.S. inventories, in part because Mexican producers are trying to build their herds to supply more beef to the U.S. market. U.S. feed and forage supplies have improved in 2014, but herd rebuilding, as indicated by retention of heifers for breeding, is progressing slowly because some growers are selling animals while prices are high, rather than retaining them for herd rebuilding.”

And Purdue University agricultural economist Chris Hurt indicated yesterday at the farmdoc daily blog (“Rebuilding U.S. Animal Industries”) that, “High feed and forage prices forced a national beef cow reduction of 12 percent from 2007 to 2014. In addition to high feed costs, Southern Plains producers had the additional problem of widespread drought. As a result of the double-whammy, producers liquidated 21 percent of the beef cows in that region, which is the largest production region.”

The farmdoc update noted that, “The next era for animal industries will be one of rebuilding herds and flocks. This will be a multiple-year process and will be characterized as a role reversal for the crops sector and the animal sector. If the years from 2007 to 2013 could be described as the ‘Grain Era’ in which crop sector incomes had an extraordinary run, the coming period may be described as the ‘Animal Era’ when producers of animal products have strong returns. During the ‘Grain Era’ some resources like pasture land and forage production were converted to cash crop production. In the coming ‘Animal Era’ there will be some incentive to convert cash crop land back to animal industry use. This will be most predominant for the marginal cash crop lands of the central and western Great Plains.”

Dr. Hurt added that, “The animal industries finally have a positive multiple-year outlook. The favorable income prospects will be based on feed prices re-setting to lower levels, continued reductions in drought affected pastures, and to strengthening domestic incomes. Animal industries are expected to be in a mini-boom phase in coming years lead by rising per capita consumption, continued small growth in U.S. population, and growing export demand. An important determining force of how big the boom will be will depend to what level feed prices re-set?

This mini-boom phase for animal agriculture will be economically supportive to rural communities with strong animal populations. It will also stimulate economic activity in industries that supply, market, and process animal products including animal buildings and equipment, animal feed, haying and forage equipment, animal pharmaceuticals, and lending for animal expansion.”

Meanwhile, Los Angeles Times writer Veronica Rocha reported recently that, “The chance of a ‘megadrought’ gripping the Southwest for more than 30 years has increased to 50%, scientists say, which means bad news for California’s already parched landscape.

The odds of a 10-year drought afflicting the southwestern U.S. have increased to 80%, according to a new study by Cornell University, the University of Arizona and the U.S. Geological Survey.”

Ms. Rocha explained that, “Whatever happens, California is likely to see prolonged drought and drier conditions, especially in the southern portion of the state, said Toby Ault, Cornell assistant professor of earth and atmospheric sciences and lead author of the study, which will be published next month in the American Meteorological Society’s Journal of Climate.

The current drought, he said, is a preview of what will ‘happen in the future in climate change.’”

In news related to transportation issues, an update yesterday from Rep. Kevin Cramer (R., N.D.) stated that, “Today [Rep. Cramer] announced BNSF Railway and Canadian Pacific Railway (CP) have publicly filed updated weekly status reports on the backlog in grain shipments. The figures from BNSF show a total of 1,016 past due rail cars in North Dakota averaging 10 days late as of August 28, compared to the report the previous week which indicated 1,336 past due cars were averaging 10.2 days late. The CP report shows a total of 7,535 open requests in North Dakota with an average age of 13.14 weeks. The previous report showed 10,266 open requests with an average age of 12.71 weeks. Congressman Cramer will speak Thursday in Fargo at a hearing of the Surface Transportation Board (STB) examining the backlog.”

The update noted that, “In June, the two companies were ordered by the STB to report their plans for resolving the backlog of grain car orders, and begin issuing weekly status reports until the problem is resolved. The BNSF report can be viewed here, and the CP report can be viewed here.”

And a news release yesterday from Sen. John Thune (R., S.D.) noted in part that, “Following months of rail service delays and backlogs [Sen. Thune], Ranking Member of the Senate Committee on Commerce, Science, and Transportation, today announced the committee will hold a hearing on U.S. rail service issues on Wednesday, September 10, 2014, entitled ‘Freight Rail Service – Improving the Performance of America’s Rail System.’ The hearing will examine rail service backlogs in South Dakota and throughout the region which have led to service disruptions for South Dakota farmers, ethanol producers, utilities, and other businesses.”

A news release yesterday from the National Farmers Union (NFU) indicated that, “[NFU] President Roger Johnson called the ongoing rail delays in the upper Midwest ‘staggering’ and ‘unacceptable’ and urged the federal government to press ‘the local railway monopoly’ for better results, in a recent Fargo Forum Op-ed.”

 

Farm Bill- Policy Issues

Ken Anderson reported yesterday at Brownfield that, “Ag Secretary Tom Vilsack says the USDA is on schedule with implementation of the crop-related commodity programs in the farm bill.

“‘We anticipate and expect very soon to be able to lay out some of the information on ARC and PLC,’ Vilsack tells Brownfield.”

Mr. Anderson noted that, “Vilsack says he is confident that those programs will help provide a strong safety net for crop farmers as they move into what some economists predict could be an extended period of lower prices.

“‘I’m confident this is a good, solid farm bill that’s going to provide the protection needed to ensure that folks can stay in business regardless of the size of the operation,’ he says, ‘and, hopefully, we’re going to see an expanded opportunity, particularly for young and beginning farmers.’”

In a separate Brownfield update yesterday, Ken Anderson reported that, “The World Trade Organization’s (WTO’s) latest decision on U.S. country-of-origin labeling (COOL) laws is expected to be made public in September.

Many in the livestock and meat industries anticipate that ruling will go against the U.S., which could lead to retaliatory trade measures by Canada and Mexico. Brownfield asked Ag Secretary Tom Vilsack if COOL is ruled out of compliance, if he’s willing to work with Congress at amend the COOL statue so that it complies.

“‘I’m not going to comment on the WTO case because it is still in the process and when the decision is ultimately public, we will deal with it at that point time—because we will have a definitive decision and a finite decision,’ says Vilsack.”

Note also that USDA’s Agricultural Marketing Service (AMS) will be holding a webinar on Thursday, September 25 titled, “Country of Origin Labeling — The Basics.”

Chris Clayton reported yesterday at the DTN Ag Policy Blog that, “Thirteen senators have written the leaders of the Senate Appropriations Committee asking that they eliminate policy riders on the funding bill for USDA over livestock and poultry marketing rules.

The House funding bill for USDA blocks the Grain Inspection, Packers and Stockyards Administration from finalizing livestock and poultry marketing rules stemming from the 2008 farm bill. As the senators wrote, ‘The legislative rider is attempting to thwart rules that, in part, allow farmers to request documents showing them how their pay is calculated, ensures that they are given adequate notice of a halt in animal deliveries, and ensure they can exercise their right to speak with their congressional representatives without fear of retaliation.’

“These provisions have been the subject of policy riders ever since GIPSA began trying to implement them. The 2014 farm bill did not change the provisions in the law. Yet, the policy riders continue to get slapped onto the appropriation bills for USDA, blocking GIPSA from implementing those rules.”

Meanwhile, an update yesterday from USDA noted that, “[USDA] is encouraging producers who have suffered eligible disaster-related losses to act to secure assistance by Sept. 30, 2014, as congressionally mandated payment reductions will take place for producers who have not acted before that date. Livestock producers that have experienced grazing losses since October 2011 and may be eligible for benefits but have not yet contacted their local Farm Service Agency (FSA) office should do so as soon as possible.”

And Pete Kasperowicz reported yesterday at The Blaze Online that, “The U.S. Department of Agriculture is trying once again to get kids to eat fruits and vegetables in school.

“USDA announced Tuesday that it will soon launch a new pilot program that will allow as many as eight states use USDA funding to buy local, unprocessed fruits and vegetables.”

 

Regulations

An update posted yesterday at the Rules Committee indicated that, “The Committee on Rules may meet the week of September 8th to grant a rule that could limit the amendment process for floor consideration of H.R. 5078, the Waters of the United States Regulatory Overreach Protection Act of 2014.”

 

Political Notes

William Petroski reported yesterday at The Des Moines Register Online that, “The Iowa Corn Growers Association, one of the state’s most influential farm groups, announced Tuesday its political action committee had endorsed Democrat Bruce Braley in his campaign for the U.S. Senate against Republican state Sen. Joni Ernst.

“A news release from the Corn Growers Association PAC said the decisions were made by a bipartisan committee of farmer-members who consider candidates based only on their support of ICGA policies.”

The Register article added that, “Ernst was previously endorsed by the Iowa Farm Bureau, another leading agricultural trade group in the state.”

AP writer Andrew Demillo reported yesterday that, “The top Democrat on the U.S. House Agriculture Committee on Tuesday said former Federal Emergency Management Agency Director James Lee Witt is assured a spot on the panel if he wins his bid for a south Arkansas congressional seat this fall.

“Speaking at a forum focusing on farming issues, U.S. Rep. Collin Peterson of Minnesota said Witt will serve on the panel if he’s elected to the 4th Congressional District. Witt is running against Republican state Rep. Bruce Westerman for the seat. The district is currently represented by Tom Cotton, a Republican who is challenging Democratic U.S. Sen. Mark Pryor.

“‘He will be somebody that will be at my right hand and that I listen to, and because of that, Arkansas will have a seat at the table, I guarantee you that,’ Peterson said.”

The AP article added that, “Peterson said he didn’t believe it would be possible to approve a Farm Bill that only dealt with agriculture funding given the number of members of Congress who represent urban districts.

“‘It’s kind of a marriage we have between the urban people and the rural people that’s worked pretty well,’ Peterson said.

Cotton has come under fire in his Senate bid for voting against the Farm Bill in January and for pushing for the food stamps provision to be considered separately. Westerman has praised Cotton’s push to have food stamps considered separately, but has stopped short of saying whether he would have voted for the combined legislation in January.”

Keith Good