FarmPolicy

December 18, 2018

Ag Economy; Farm Bill; Biotech; Biofuels; Regulations; and, Immigration

Agricultural Economy

Reuters News reported yesterday that, “World food prices fell to their lowest since August 2010 in September as prices of all major food groups except meat dropped, led by a sharp decline in dairy prices, the UN’s food agency said on Thursday.

“The Food and Agriculture Organisation’s (FAO) price index, which measures monthly price changes for a basket of cereals, oilseeds, dairy, meat and sugar, averaged 191.5 points in September, down 5.2 points or 2.6 percent from August.

“The figure was 12.2 points or 6.0 percent below September 2013 [related graph].”

Yesterday’s article stated that, “It was the sixth consecutive slip in the index, which FAO said was the longest period of continuous falls since the late 1990s. Affecting all international commodity prices is ‘the US dollar’s broad appreciation,’ FAO said.

“The Russian ban on dairy imports from countries that have imposed sanctions on Moscow over the conflict in Ukraine continues to weigh on dairy prices, FAO said.”

Bloomberg writer Rudy Ruitenberg noted yesterday that, “Soybeans and corn are trading near the lowest in four years in Chicago amid an outlook for record U.S. harvests. In the past two years, all agricultural products on the Bloomberg Commodity Index other than cattle, hogs and coffee have declined, with the slide led by corn, wheat and soybeans.”

Nicholas Bariyo and Patrick McGroarty reported yesterday at The Wall Street Journal Online that, “Food prices are rising in Africa, defying a global trend as the Ebola epidemic and other disturbances push some staples to five-year highs. As a result, millions of Africans are struggling to feed themselves, raising concerns about malnutrition and even social unrest.

“In 2011, residents of big cities in Mozambique, Senegal and other African countries rioted to protest price increases of as much as a third for some staple grains amid rising fuel prices. This year, from Ebola-ravaged West Africa to South Africa, prices for corn, rice and beans have risen more than 20%.”

Meanwhile, Bloomberg writers Gerson Freitas Jr. and Anna Edgerton reported yesterday that, “Soybean output in top exporter Brazil is poised to reach a record high as farmers expand planting over other crops, the government forecaster said.

“Growers may reap 88.8 million to 92.4 million metric tons of the oilseed used in everything from animal feed to fruit beverages in the 2014-2015 season, exceeding last season’s 86.1 million tons, Conab said today in its first forecast for the crop. The U.S. Department of Agriculture had estimated a 91 million-ton crop in a Sept. 11 report.”

With respect to weather variables, the U.S. Drought Monitor indicated this week that, “A large, slow-moving storm system brought heavy rains (3 to 6 inches) and flooding to eastern Nebraska, eastern Kansas, southwestern Iowa, northern Missouri, central Illinois and extreme western Indiana.”

Further west, the report noted that, “Hot temperatures (6-10 degrees above normal) and dry conditions were widespread across coastal California all the way up to Washington [related map].”

More broadly, Reuters writer Chris Prentice reported yesterday that, “The El Niño weather phenomenon is expected to occur in the next 1-2 months and last into next spring in the Northern Hemisphere, though it will likely be weak, the Climate Prediction Center (CPC) agency of the National Weather Service said on Thursday.

“While the forecast marks the strongest prediction yet from the U.S. weather forecaster after going on watch earlier this year, the call for a weak El Niño means the pattern will have less of an impact on global crops than previously expected.”

Also yesterday, USDA’s Agricultural Marketing Service indicated in its weekly Grain Transportation Report that, “For the week ending October 5, the corn and soybean harvest has been delayed by above-average rains in the Corn Belt. Illinois and Missouri had rain events that produced more than 4 inches for the week. The National Weather Service has issued forecasts for showers and thunderstorms across the southern Plains and Mississippi River Valley over the next several days. This will likely further delay the harvest progress and lessen the demand for barge services.”

The report noted that, “As of October 7, widespread rains delayed harvest in the Midwest and caused barge rates for export grain to drop 10 to 19 percent at principle inland origins. Lower Illinois River barge rates (fig 8) dropped 16 percent from the previous week, but rates are still 57 percent above the 3-year average.”

Bloomberg writer Jeff Wilson reported yesterday that, “As U.S. farmers begin the biggest corn and soybean harvests ever, the bins at Elburn Cooperative Co. in Illinois remain almost empty. It simply costs too much to send Midwest crops by barge to New Orleans export terminals.

Shipping fees along the Mississippi River, the world’s busiest inland waterway, have more than doubled to a record in the past year as an avalanche of new crops compete with oil, coal and chemicals for limited space, government data show. The cost surge is more than normal for harvest season and may strand more grain during the busiest time of year for handlers in the U.S., the biggest global exporter.”

Note that the World Agricultural Outlook Board will update crop production variables in its monthly report later today.

 

Farm Bill

Corey Paul reported earlier this week at The Odessa (Tex.) American Newspaper Online that, “U.S. Rep. Mike Conaway said he would pitch a review of the country’s Supplemental Nutrition Assistance Program, or food stamps, before Republican leaders in his effort to win appointment to chairmanship of the House Committee on Agriculture in January.

“‘We spend $80 billion a year on food stamps and the nutrition program — and no oversight,’ Conaway said. ‘We don’t know what works, what doesn’t. We don’t know the moral hazards that are created by the good-hearted folks that we are. And so I would like to spend the next two years going through that program soup-to-nuts.’”

In his article, Mr. Paul pointed out that, “The Ag Committee has jurisdiction over the federal government’s agricultural policy but also some oversight of agencies. And Conaway framed his review of the food stamp program as exactly that.

“‘It may or may not save money,’ Conaway said. ‘It may show that we needed to spend more money. So I am not going to start the conversation about the money. I’m going to start the conversation about the policy.’

“The second-tier effort Conaway foresaw was monitoring the US Department of Agriculture’s implementation of the farm bill.

“Another agency the he would wield greater influence over if appointed chairman is the U.S. Commodity Futures Trading Commission, which oversees complex but important derivatives markets and aims to protect them fraud and manipulation.”

Silas Allen reported yesterday at The Oklahoman (Oklahoma City) Online that, “Oklahoma wheat farmers are calling on the U.S. Department of Agriculture to roll out a policy they say would help ease the pain of several years of drought.

“A part of the 2014 Farm Bill, the new policy would keep farmers from losing crop insurance coverage when their crops are lost to drought. But USDA officials have said they don’t expect to implement the change until 2016.

The new policy allows farmers more flexibility when they report their actual production history, a record of the grower’s annual crop yield. Under the new policy, farmers would be able to omit records for years in which their crop yields are less than 50 percent of their county’s 10-year average.”

The article explained that, “Tim Bartram, executive director of the Oklahoma Wheat Growers Association, said the change would help protect farmers in years when their crops are affected by drought.

The amount of crop insurance a farmer is eligible for depends on his or her reported actual production history. Under the current policy, growers who lose crops to drought several years in a row have to report lower crop yields, meaning they would watch their insurance coverage dwindle with each passing year.

But with the new change, farmers would be allowed to not report crop yields for those years, meaning their insurance coverage wouldn’t be affected. That would give growers more protection during multiyear droughts like the one Oklahoma is facing, Bartram said.”

The article added that, “U.S. Rep. Frank Lucas, R-Cheyenne, called the adjustment ‘a critical provision that means everything to farm families suffering from a string of withering droughts or other natural disasters.’

“Lucas, chairman of the House Agriculture Committee and a key author of the 2014 Farm Bill, acknowledged that implementing the bill is ‘a tall order,’ but urged USDA officials to enact the actual production history adjustment quickly.

“‘This has been characterized as an issue unique to Oklahoma and Texas, but the farmers we hear from and the USDA drought monitor map tell a different story,’ Lucas said. ‘Farm families all across the country are struggling with this problem and are counting on USDA to get this provision done for the 2015 crop.’”

 

Biotech

Chuin-Wei Yap reported yesterday at the China Real Time blog (Wall Street Journal) that, “Recently published remarks by President Xi Jinping on genetically modified food have renewed debate on whether China should be more accepting of GMO crops. But scientists and analysts say Mr. Xi’s comments are more a reiteration of Beijing’s cautious embrace of biotechnology than a signal for looser GMO restrictions.

“Mr. Xi’s comments were published by the Communist Party’s Literature Research Office in late September in a compendium of his pronouncements on a wide range of policy matters. Local media picked up on a seven-sentence excerpt in the 70-page document in which Mr. Xi addressed the GMO issue at China’s central rural work conference, a key agricultural policy conclave, in late December.”

The Journal update noted that, “As Mr. Xi was making those remarks in December, Chinese authorities were turning away hundreds of thousands of tons of U.S. GMO corn from Chinese ports. The unprecedented volume of rejected cargoes continued into April, eventually totaling about 1.5 million tons according to the Chinese government. China complained the shipments contained a GMO strain not yet permitted for import. U.S. growers said they suspect China was shielding its homegrown croppers from overreliance on the U.S.

China’s imports of corn – much of which are genetically modified strains destined only for animal feed – have remained flat in the first eight months this year from a year ago, according to customs data. Corn imports from the U.S., China’s biggest supplier, are down 36% in the period.”

Yesterday’s update added that, “But China is equally adamant that it control its own fate in developing GMO technology. It encourages research in GMO grains, and allows imports of GMO crops for animal feed though not for human consumption. Domestic sales of GMO grains aren’t allowed, but the government allows GMO foods in a few other areas, such as fruit.

“‘What Xi Jinping said doesn’t amount to a policy change, which has been quite consistent since the 1980s, if in fact a little slower now,’ said Huang Dafang, senior researcher and professor at the Biotechnology Research Institute, a unit of the Chinese Academy of Agricultural Sciences charged with developing the technology. ‘Other people may take various angles on it because they’ve never heard Xi make such comments before. We have, so it’s not a surprise to us.’”

 

Biofuels

DTN writer Todd Neeley reported yesterday that, “A pair of Democratic senators concerned that cutting the mandated production of biofuels in the Renewable Fuel Standard would lead to increased carbon pollution, have asked President Barack Obama to leave the 2014 RFS volumes in place. Their concerns are based on a recent analysis that said cutting biofuels production would lead to increased carbon emissions from gasoline.

“In a letter to the president Wednesday Sens. Barbara Boxer, D-Calif., and Edward J. Markey, D-Mass., said the administration’s proposal to cut the RFS would have far-reaching consequences on the climate change front.

“‘The RFS is a critical piece of our nation’s climate mitigation policies,’ the letter said. ‘It is helping to break the oil sector’s monopoly over our nation’s liquid fuel supply by opening the market to competition from America’s growing renewable fuel industry, bringing low carbon cellulosic, advanced biofuels and biomass-based diesel to market. Just this month, two new cellulosic biorefineries came online producing the lowest carbon motor fuel in the world.’”

 

Regulations

Ken Kopocis, the Deputy Assistant Administrator for Water at the EPA, was a guest on yesterday’s AgriTalk radio program with Mike Adams where the discussion focused on the Agency’s controversial Waters of the U.S. rule.

Recall that earlier this week, EPA extended the comment period on the rule through November 14.

During yesterday’s AgriTalk discussion, Mr. Adams asked Mr. Kopocis about this EPA decision- related audio here (MP3- 1:00).

 

Immigration

Cristina Marcos reported yesterday at The Hill Online that, “Speaker John Boehner (R-Ohio) and House Judiciary Committee Chairman Bob Goodlatte (R-Va.) accused President Obama of ‘raw politics’ for delaying executive action on immigration until after the elections.

“The two seized on a recent comment from White House press secretary Josh Earnest that the decision to delay action until after November’s midterms was because of concerns Republicans would use the issue to make political hay.”

The Hill update added that, “Capitol Hill sources have indicated that the president will wait until after Congress has cleared a new appropriations bill, or potentially until after Congress adjourns for the holidays, to issue the executive action. The current stopgap funding bill expires on Dec. 11.”

Keith Good

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