November 19, 2019

Policy Issues; Ag Economy; Biotech; Biofuels; Climate; and, Regulations

Policy Issues

Jonathan Oosting reported yesterday at the MLive Media Group Online that, “Some 150,000 Michigan families are poised to lose an average of $76 in food stamp benefits this fall due to federal cuts that many other states have taken action to avoid.

“The latest farm bill, signed into law here in Michigan last winter, scaled back the Supplemental Nutrition Assistance Program, which includes a provision affording extra food benefits to families who also receive assistance with heating bills.

“Some families who rent don’t have utility bills, but states had been able to help them qualify for extra food stamps by providing just $1 in heating assistance. Under the new farm bill, the minimum ‘heat and eat’ payment is jumping to $21.”

The article explained that, “Of the 16 states directly impacted by the federal rule change, 12 have decided to pay the higher tab to help recipients avoid food stamp cuts. Many are redirecting additional federal dollars from a separate low-income heating program.

But not Michigan.

“‘We decided we couldn’t justify spending $21 per household for people that didn’t have any energy expenses, particularly in a year where the state had really cold temperatures,’ said Department of Human Services spokesperson Bob Wheaton.”

Yesterday’s article stated that, “Critics say Michigan is making a short-sighted mistake, however. They argue the state could invest additional resources — even general fund dollars, as California is doing — to avoid larger federal food stamp cuts affecting vulnerable residents.

Of the four states where recipients are poised to lose benefits, Michigan has the highest unemployment rate.”

Mr. Oosting added that, “Michigan U.S. Rep. Fred Upton, R-St. Joseph, who chairs the House Energy and Commerce Committee, has reportedly joined a colleague in asking the Obama administration to ‘hold states accountable’ for the workaround.

“Most effected Michigan families will see cuts kick in this November, but a small number have already started to see reductions, according to Wheaton. An average family of four will see their monthly benefits cut by about 15 percent.”

Meanwhile, Rep. Michael Conaway (R., Tex.), the Chairman of the House Ag Subcommittee on General Farm Commodities and Risk Management, tweeted yesterday that, “Great meeting with #MartinCounty #Texas #Cotton Growers. #USDA needs to implement #APH as directed in the #FarmBill”

Recall that in a recent interview, House Ag Committee Chairman Frank Lucas (R., Okla.) briefly discussed the APH issue (Average Production History) and noted that it is “one of the most important issues in the Southwest.”

And from an international perspective, Ruth Bender reported yesterday at The Wall Street Journal Online that, “The French government said Wednesday that it would provide aid for the country’s farmers, in a bid to appease fruit and vegetable producers whose frustration with falling revenues has culminated in violent protests.

“Over the weekend, French vegetable farmers set fire to two public buildings and dumped thousands of artichokes onto the streets in the Breton town of Morlaix to protest against a drop in living standards sparked by the falling prices of their products.”

The Journal article added that, “On top of falling prices caused by a strong harvest, French farmers have complained about the consequences of a Russian embargo on their products, which has deprived fruit and vegetable producers of a key export market and led to an oversupply of some of their products in Europe.”


Agricultural Economy

Alexandra Wexler reported in today’s Wall Street Journal that, “Cotton futures fell to their lowest level since October 2009 on Wednesday, as investors worried about a growing global glut.

“The cotton market was already under pressure after forecasters predicted a big U.S. harvest, which is expected to wrap up in December. But prices began plunging further Monday, when a Chinese official said the No. 1 cotton consumer would slash its imports of the fiber in 2015 [related graph].”

The article pointed out that, “Traders and investors expect record amounts of surplus cotton to end up in warehouses around the world over the next year, adding to stockpiles that are already at an all-time high. Some cotton traders are even worried the steep drop in prices could lead to contract defaults. After prices plunged from a post-Civil War high three years ago, a wave of defaults by mills hit balance sheets at some of the largest cotton traders, sparking legal battles.”

Bloomberg writers Claudia Carpenter and Luzi Ann Javier reported yesterday that, “China, the world’s largest importer and grower, said this week it will restrict shipments for 2015. Futures tumbled 27 percent this year as rains boosted prospects for crops in the U.S., the top exporter. Lower prices can help improve profit margins for Hanesbrands Inc. and Carter’s Inc., the maker of children’s apparel that said lower cotton costs will show up in next year’s clothing line.

“Slowing demand from China will leave more supplies with world inventories already at an all-time high. Global production will exceed consumption for a fifth straight year, boosting stockpiles by 6 percent to a record 106.3 million bales by July 31, 2015, according to the U.S. Department of Agriculture data.”

Meanwhile, Leslie Josephs and Alexandra Wexler, writing in a separate article in today’s Journal, reported that, “Prices of raw-sugar futures surged 3.3% on Wednesday, after an industry report showed a sharp decrease in output of the sweetener from top-producer Brazil.”

Jamie Smyth reported yesterday at The Financial Times Online that, “Fonterra, the world’s biggest milk supplier, has cut the amount it will pay farmers after a fall in global dairy prices that may take the shine off New Zealand’s surging economy.”

The FT article noted that, “Hayley Moynihan, an analyst at Rabobank, estimated Fonterra’s price forecast would knock NZ$5bn off of supplying farmers’ incomes. She said farmers would have to cut discretionary spending when the new prices began to kick in early next year.

Global milk prices have fallen more than 40 per cent in 2014 from record highs last year. Strong production globally, high inventory levels in China and a supply glut caused by Russia’s ban on milk imports from the EU have prompted the decline.”

Also yesterday, Bloomberg writer Brian K. Sullivan reported that, “The drought in the U.S. West is unlikely to end any time soon, and that makes the coming winter one of the most crucial in recent years.

“How the West gets its water is a delicate balancing act between what nature provides, mostly in the form of snow, and what humans can capture in reservoirs.

“‘All eyes will be turned to the winter because it is a really critical winter, not just for California but the rest of the West and the lower Great Plains as well,’ said Mark Svoboda of the National Drought Mitigation Center in Lincoln, Nebraska.”

The Bloomberg article added that, “‘For the majority of the West, the lifeline is the snow that falls in the Rockies, the snow that falls in the Cascades and the snow that falls in the Sierra,’ Svoboda said in a telephone interview.”

In the past three years, the mountains in Nevada, for instance, received only about 60 percent of the snow they normally would, said Douglas Boyle, the state’s climatologist, in Reno;” the article noted, “‘We have essentially lost an entire year of snowpack over the last three years,’ Boyle said by telephone.”

Louis Sahagun reported yesterday at the Los Angeles Times Online that, “Three years of drought have triggered an infestation of tumbleweeds across Southern California, raising the risk of wildfires, especially in the foothill areas.

“‘The Los Angeles basin is facing a tumbleweed problem that hasn’t happened in quite some time,’ said David Bracken, a deputy commissioner for the Los Angeles County Department of Agriculture. Bracken said tumbleweed infestations are largely cyclical and will diminish in the years ahead.”

With respect to weather conditions in portions of the Midwest this summer, which were generally favorable for corn and soybean development, Illinois state climatologist Jim Angel indicated yesterday that, “Based on the latest updates from the National Climatic Data Center, this summer in Illinois was the 29th coolest. Daytime highs were much cooler than average while the nighttime lows were near-average.

“The average maximum temperature in Illinois was 82.3 degrees Fahrenheit, 2.6 degrees below the 1900-2000 base period and the 14th coolest on record [related graph].”

More broadly, AP writer Jack Chang reported yesterday that, “The corn has grown to only half its normal height on Yan Shuqin’s ranch in the hills of Inner Mongolia this year, as a swath of northern China suffers its worst drought in 60 years…[A]lready, Chinese farmers have lost an estimated $1.2 billion this year due to drought, while China has slowed plans to tap its vast deposits of shale gas, which sit in areas with the greatest scarcity. The water crisis is also hitting China’s main energy source, coal, which requires large amounts of water to extract and convert into power.”

Also, Noah Wilson-Rich noted in a column in today’s New York Times (“Are Bees Back Up on Their Knees?”) that, “Behavioral economics can help us find solutions to the agricultural efficiency challenge by creating financial incentives for bee-friendly farming practices. Outdated monoculture farming subsidies like those that go to corn growers should be diverted to farmers and growers who are planting a diversity of crops, including wildflowers. Federal tax incentives should go to farmers, beekeepers and everyday citizens who opt for permanent pollinator sources.

“Bees are not the only ones that would benefit from these policy changes; many farmers would see an increase in sustainability and profitability. It’s a Band-Aid solution, but it can work.”

In trade related developments, Reuters News reported yesterday that, “Japan’s Trade Minister Akira Amari said he and his U.S. counterpart made no progress in bilateral talks that are key to an ambitious multilateral trade deal.

“‘Japan made a flexible proposal, but we weren’t able to make further progress,’ Amari told reporters on Wednesday evening in Washington. ‘Further negotiations are undecided.’”

An update yesterday from the U.S. Trade Representative’s Office indicated that, “Ambassador Froman, Minister Amari and their teams met on Tuesday and Wednesday to discuss the outstanding issues in our bilateral TPP negotiations, focusing on agriculture and autos. While there were constructive working level discussions over the weekend, we were unable to make further progress on the key outstanding issues. The United States continues to demonstrate a commitment to the level of ambition that all TPP countries agreed to attain when they entered negotiations. Both sides will consider next steps following consultations in both capitals.”

Bloomberg writer Jonathan Stearns reported yesterday that, “The European Union and Canada are poised to celebrate the end of five years of negotiations on a free-trade accord when both sides hold a summit later this week…[T]he deal, projected to take effect in 2016, would end 98 percent of tariffs on EU-Canada goods trade from the outset and 99 percent after seven years. Each side would dismantle all industrial tariffs and more than 90 percent of agricultural duties.”



David Pierson reported yesterday at the Los Angeles Times Online that, “General Mills Inc. has made strong commitments this year to natural and organic foods. It took genetically modified ingredients out of its signature cereal brand Cheerios and then doubled down on its organic lineup by striking an $820-million deal for Annie’s, a stalwart of the organic and natural foods industry.

But when the industrial food behemoth’s shareholders were presented with a proposal to dump all genetically modified ingredients from the company’s vast lineup of brands, they responded with a resounding ‘No.’

“The Minneapolis-based company said preliminary vote totals from Tuesday’s annual shareholder meeting showed that 97.8% of participants rejected the proposal.”



Christopher Doering reported yesterday at The Des Moines Register Online that, “Purdue University researchers said Wednesday they have discovered the structure of the enzyme that makes cellulose, a finding that could make it easier to break down plant materials used to make biofuels and other products.”



An update yesterday from USDA indicated that, “The Obama Administration today announced the launch of the Global Alliance for Climate Smart Agriculture, a new effort to promote greater international engagement on ways agriculture can help mitigate the impact of climate change. The announcement, during the United Nations Climate Summit in New York, demonstrates another key area in which the Obama Administration is leading efforts to collaborate with other nations and industry leaders to develop the next generation of solutions that will help agriculture adapt to modern climate challenges.”



Zach Kayser reported earlier this week at The Bemidji (Minn.) Pioneer Online, that on the issue of “a pending rule by the Environmental Protection Agency that may expand the definition of waters in the EPA’s jurisdiction,” House Ag Committee ranking member Collin Peterson (D., Minn.) “said he’s against the proposed rule, too.”

The article indicated that, “‘I’m on two bills to get rid of it,’ Peterson said. ‘I sent a letter over to… the EPA telling them to withdraw the rule, and I voted to get rid of it just the other day.’

“Although designed with good intentions, the possible rule will actually muddy the waters when it comes to conservation, Peterson said.”

The article added that, “‘It’s going to bring more confusion to the whole issue of wetlands than it’s going to bring clarity,’ Peterson said. ‘The EPA, I think their heart is in the right place, but they don’t know what they’re doing.’”

Ana Campoy reported yesterday at The Wall Street Journal Online that, “As eight states across the West hold what could be one of the last sage-grouse hunting seasons this month, many hunters are cutting back on the traditional pastime, either by choice or because they are being forced to do so by wildlife managers.

“Montana severely curtailed hunting this year because of low sage-grouse numbers, and several states, including Idaho and California, closed some hunting areas. The curbs come as states seek to demonstrate to federal officials that they can preserve the bird’s population without Washington interference [related graph].”

The Journal article explained that, “The tension over the hunts comes as the U.S. Fish and Wildlife Service is set to determine next year whether the sage grouse, the largest native grouse species in North America, should be considered threatened or endangered.”

Meanwhile, Bloomberg writer Silla Brush reported earlier this week that, “U.S. and European regulators risk a permanent breakdown in financial markets if they can’t end a dispute over transatlantic oversight of the $700 trillion swaps industry, a Commodity Futures Trading Commission member said.

J. Christopher Giancarlo, in his first speech since joining the CFTC in June, said the U.S. agency should retract some of its overseas policies to boost coordination with Europe and prevent a trade war that would imperil economic growth.”

Keith Good

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