FarmPolicy

August 17, 2019

Ag Economy; Trade; Policy; Biotech; and, Regulations

Agricultural Economy

Reuters writer Christine Stebbins reported yesterday that, “U.S. grain farmers are boosting demand for loans from farm banks as five-year lows in crop prices squeeze operating budgets ahead of spring planting, according to a national survey of farm bankers issued by the Federal Reserve Bank of Kansas City on Wednesday.

“‘Reduced profits in the crop sector persisted in the fourth quarter of 2014, leading to a sharp rise in farm-sector borrowing and a slight decline in cropland values,’ the bank said. ‘Should low crop prices [related graph] and high input costs [related graph] persist, crop sector profit margins may weaken further and strain loan repayment capacity in the coming year.’”

The Reuters article indicated that, “The Fed survey, which covered the Midwest, Plains and Mountain states, said farm loan debt outstanding as of Sept. 30 was 6.7 percent higher than a year earlier. Loan-to-deposit ratios at farm banks have risen to the highest since 2010. Sales of combines and large tractors were 26 percent lower in 2014 than the year before [related graph]. Collateral requirements showed ‘a slight rise,’ the Fed said.

Livestock producers, aided by the sharp drop in feed costs, continued to regain profits in 2014, the Fed said. But lending to livestock producers also ‘rose significantly’ last year as cow-calf operators expanded to rebuild beef herds. ‘Looking ahead, the supply of feeder cattle may contract further if a reduction in calf slaughter signals that more animals are being retained to rebuild herds,’ the Fed said.

“Pressure on farm land values from lower crop revenues had been countered to some extent by demand for grazing land from resurgent livestock farmers.”

Yesterday’s Fed report also indicated that, “Agricultural bankers reported that nonirrigated cropland values have edged down from recent peaks in several states while year-over-year value gains have moderated in others (Map).”

Meanwhile, Reuters writers Niu Shuping and David Stanway reported yesterday that, “China’s state corn stockpiles are expected to climb by a record volume this year, as Beijing’s efforts to boost demand with a tax rebate for corn starch exports struggle to stimulate sales, industry officials said.”

And Dow Jones News reported yesterday that, “Just about every major crop grown in the Canadian Prairies is forecast to come out a winner in the annual fight for acres this year, with unseeded area the only place where reductions are forecast, according to early estimates.

“‘Most crops are likely to increase this year, just because we’ll get the flooded area back in,’ said CWB analyst Bruce Burnett. He noted that up to 2 million acres of cropland in Saskatchewan and western Manitoba were unseeded in 2014 because of adverse spring conditions.

“Agriculture and Agri-Food Canada released their first projections for the 2015/16 (August/July) on Jan. 23, pegging total seeded area to all principal field crops across the country at 75.34 million acres. That compares with the 72.14 million acres seeded to annual crops the previous year.”

With respect to transportation issues, an update yesterday from Sen. John Thune (R., S.D.) indicated that, “[Sen. Thune], chairman of the Senate Committee on Commerce, Science, and Transportation, today held his second hearing as chairman entitled, ‘Freight Rail Transportation: Enhancing Safety, Efficiency, and Commerce.’ The hearing focused on challenges facing our nation’s freight rail network created by higher demand, pending and proposed rules and regulations, and infrastructure needs.”

In part, Sen. Thune stated that, “As 2013 and 2014’s freight rail delays and service challenges highlighted, rail service is absolutely critical to our nation’s economy. South Dakota farmers scrambled to find rail cars and watched as rail turn times worsened, delaying shipments and creating grain storage challenges for the record breaking wheat, corn, and soybean crops…Thankfully, this winter’s relatively mild weather and better service have provided some improvements, but there’s still work to be done.”

 

Trade

Reuters writer David Lawder reported yesterday that, “U.S. House Democratic leader Nancy Pelosi said on Wednesday she would like to find a way to grant the Obama administration ‘fast-track’ trade negotiating authority while meeting the concerns of many Democrats about major new free-trade deals.

“Speaking to reporters at a retreat for House Democrats in Philadelphia, Pelosi said her standard for evaluating such authority would be the effect that trade deals would have on the paychecks of American workers.

“‘We’d like to see a path to yes,’ Pelosi said of fast-track trade authority.”

Vicki Needham reported yesterday at The Hill Online that, “A group of House Democrats who stand ready to support President Obama’s trade agenda are asking Senate Democrats and the White House to take the lead on a historically difficult issue for their party.

“The 46-member New Democrat Coalition is likely key to the Obama administration’s efforts to round up enough votes so Congress can pass a trade promotion authority bill.”

The Hill article noted that, “To that end, New Democrats want the Senate to be the first to consider a trade promotion authority bill, also known as fast-track, which would give Congress up-or-down votes on any trade agreements, such as the Trans-Pacific Partnership (TPP), that reach Capitol Hill.

“A vote in support is much easier when their senators also are backing trade, the aide said.”

An update yesterday from the National Pork Producers Council (NPPC) stated in part that, “The [NPPC] and 92 other food, agricultural and allied industry groups today urged the parties involved in a labor dispute that’s affecting food exports that ship out of West Coast ports to resolve their differences as soon as possible. The organizations also called on the federal government to consider all remedies to bring the dispute to a swift end.”

The American Soybean Association (ASA) noted yesterday that, “In an open letter, ASA and its fellow organizations urged both the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) to take into account the impact the dispute is having on consumers and to resolve their differences as quickly as possible. The groups also urged the federal government to consider all available remedies to bring the dispute to a rapid end, noting the potentially dire consequences of not reaching an agreement that gets each port back up and running quickly.”

And Vicki Needham reported yesterday at The Hill Online that, “Two senators said Wednesday that duties imposed by South Africa on chicken exports could jeopardize that nation’s place in a trade deal with the continent.

“Sens. Johnny Isakson (R-Ga.) and Chris Coons (D-Del.) wrote to U.S. Trade Representative Michael Froman on Tuesday night and urged him to press South Africa to drop anti-dumping duties on U.S. chicken imports or risk their loss of tariff benefits in the reauthorization of the African Growth and Opportunity Act (AGOA).”

 

Policy Issues

AP writer Mary Clare Jalonick reported yesterday that, “Sixteen million children were on food stamps as of last year, the highest number since the nation’s economy tumbled in 2008.

“Numbers released by the Census Bureau Wednesday as part of its annual look at children and families show that one in five children were on food stamp assistance in 2014. The survey was taken last spring.”

The AP article noted that, “The SNAP program will still be under scrutiny in the new Republican Congress. The new chairman of the House Agriculture Committee, Texas Rep. Mike Conaway, and the new chairman of the Senate Agriculture Committee, Kansas Sen. Pat Roberts, are both expected to take a look at food stamp spending in the coming year.”

The USDA’s Economic Research Service indicated yesterday at its Charts of Note webpage (“New cage size regulations contribute to widening egg price gap”) that, “Over the last 2 months of 2014, egg prices in most markets experienced a brief and very sharp price spike. Egg prices traditionally are strong in the fourth quarter, but the spike in 2014 was larger than usual, considering that table egg production increased in November 2014. The high prices nationwide in the fourth quarter of 2014 are likely the result of both strong exports of table eggs to Mexico in November and uncertainties about the future of the table egg market in California due to new cage size regulations that went into effect on January 1, 2015. In the short term, the new regulations have widened the price difference between the California market and other parts of the United States. At the end of October 2014, the difference between the wholesale prices of Grade A large eggs in the Southern California market and the New York City market was around 12 cents per dozen. Prices in Southern California rose to average $2.68 per dozen by the middle of December [related graph].”

Note also that this topic will be covered on today’s Diane Rehm radio program (“The Debate Over State Laws Requiring Bigger Cages for Hens And Livestock”).

And a news release yesterday from Rep. Rosa DeLauro (D., Conn.) stated that, “[Rep. DeLauro] and Senator Richard Durbin (D-IL) today introduced the Safe Food Act of 2015, which would create a single, independent food safety agency. Currently food safety oversight is split up among 15 different agencies, resulting in a patchwork where no single voice guides industry, retailers and consumers. DeLauro and Durbin introduced similar legislation in 1999, 2004, 2005 and 2007.”

An update yesterday from the House Ag Committee indicated that, “Today, Agriculture Committee Chairman, K. Michael Conaway (TX-11), announced subcommittee assignments for the 114th Congress.” The list of assignments can be viewed here.

And an update yesterday from the House Ag Committee Democrats noted that, “U.S. House Agriculture Committee Ranking Member Collin C. Peterson, D-Minn., today announced the Democratic Ranking Members and Subcommittee membership for the House Agriculture Committee’s six Subcommittees. Peterson will serve as an ex officio member of all subcommittees.” The list of Democrat member assignments can be viewed here.

Likewise, an update yesterday from the Senate Ag Committee noted that, “U.S. Senator Pat Roberts (R-Kan.), Chairman of the U.S. Senate Committee on Agriculture, Nutrition and Forestry today announced the new Subcommittee assignments for the 114th Congress.” The subcommittee assignments can be viewed here.

 

Biotech

Christopher Doering reported yesterday at The Des Moines Register Online that, “Biotech crops were grown on a record 448 million acres in 2014, a group that promotes the use of these crops reports Wednesday.

“The International Service for the Acquisition of Agri-biotech Applications said genetically modified seeds, which contain DNA that’s been modified to express a trait such as resistance to a pest, an environmental condition or a chemical, were grown by 28 countries last year. The 448 million acres planted worldwide in 2014 was up 15 million acres from the previous year.”

 

Regulations

Elizabeth Williamson reported yesterday at The Wall Street Journal Online that, “Strutting, proud, and given to noisy, chest-puffing displays, Plains-states legislators in the U.S. Senate on Wednesday considered the fate of the Lesser Prairie Chicken, one of their most controversial constituents… On Wednesday, the Lesser Prairie Chicken was on the Senate floor, nesting in an amendment to Senate legislation allowing for completion of the Keystone XL pipeline.”

The Journal article stated that, “Wednesday’s amendment, sponsored by Republican Sens. Jerry Moran of Kansas and Ted Cruz of Texas, would set aside the U.S. Fish and Wildlife Service’s rule listing the Lesser Prairie Chicken as threatened.”

“The amendment narrowly failed, so the hunting ban continues for now. But Mr. Moran and his allies are in the majority, and they’ve got that little chicken in the cross hairs,” the Journal article said.

An update yesterday from Sen. Moran noted that, “Sen. Moran worked to avoid the lesser prairie chicken’s listing. He remains committed to reversing the decision to protect rural Kansas from rules and regulations from the federal government that infringe on private property rights and hinder economic development.”

Reuters writer Laura Zuckerman reported earlier this week that, “A tally of monarch butterflies wintering in Mexico rose to 56. 5 million this year from a record low of 34 million last year but conservationists said on Tuesday the increase was too slight to reduce the threat of extinction facing the insect.

The U.S. Fish and Wildlife Service said last month the popular orange-and-black butterfly may warrant federal Endangered Species Act protections tied to declines in cross-country migrations because of farm-related habitat loss.”

AP writer David Pitt reported yesterday that, “A coalition of environmental, animal rights and citizen action groups filed two lawsuits Wednesday alleging the U.S. Environmental Protection Agency is failing to address air pollution problems from large-scale livestock farms.

“The lawsuits, filed in federal court in the District of Columbia, say the EPA has not responded to petitions filed in 2009 and 2011 by the Environmental Integrity Project and the Humane Society of the United States. Those petitions asked the agency to categorize large-scale livestock farms as sources of pollution under the Clean Air Act, set air quality standards for new and existing facilities and set health-based standards for ammonia.”

And Tom Steever reported yesterday at Brownfield that, “The American Farm Bureau Federation (AFBF) is disappointed over the dismissal of its lawsuit to block EPA from releasing personal information of livestock and poultry farmers.

“The information, released by the EPA in response to Freedom of Information Act (FOIA) requests, includes names, addresses, GPS locations and telephone numbers. The court says the farmer’s personal information can be found on the Internet so there’s no injury from the EPA’s distribution of the information.”

Keith Good

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