FarmPolicy

June 25, 2019

Canada- Mad Cow Update

Recall that last Friday, a case of mad cow disease was confirmed in Canada.

Chester Dawson reported today at The Wall Street Journal Online that, “Canada said Wednesday a beef cow confirmed to have bovine spongiform encephalopathy was born in March 2009, two years after the country enacted a ban on cattle feed containing animal proteins in a bid to prevent the spread of the disease.”

The article explained that, “Officials said the cause is under investigation and no other diseased cattle have been detected.

“The case is being watched closely by Canada’s beef industry, which plays a large economic role in Western Canada and was severely affected by a trio of BSE infections first detected in 2003. That decade-old outbreak led the U.S. and other countries to temporarily close their borders to live cattle and beef from Canada.”

Mr. Dawson noted that, “Dr. Harpreet S. Kochhar, Canada’s chief veterinary officer, said the investigation will focus on tracking down the feed that the recently infected cow was fed.

“As a precaution, the Canadian Food Inspection Agency said it has quarantined both the farm where the infected animal was found and the birth farm, both of which are located in northern Alberta near the provincial capital of Edmonton.”

“A representative for the U.S. Department of Agriculture said the U.S. isn’t expected to alter its trade policy with Canada,” today’s article said.

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Next Week in the House Ag Committee—Public Hearing: Review of the SNAP Program

Categories: Farm Bill

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White House Video: The Trans-Pacific Partnership is Good for American Businesses & American Workers

From The White House, Feb. 18- “Americans are selling more goods and services abroad than ever before, but we can’t afford to sit on the sidelines. It’s time to help our businesses grow and create jobs by expanding their exports.”

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FarmPolicy Recap: Trade and the Ag Economy

Trade Developments

News reports continue to document the negative implications for some segments of the U.S. agricultural sector as a result of the ongoing labor dispute effecting the operation of some West Coast Ports.

While more details regarding the dispute were highlighted on the front page of Wednesday’s Los Angeles Times, Shan Li and Diana Marcum focused on the impacts of the dispute in an article in the Business section of Wednesday’s paper.

The writers stated that, “The port stalemate is devastating for some farmers, particularly in California’s $2.4-billion citrus industry.

This time of the year, more than 25% of the crop is meant for export. But delayed shipping has left navel oranges and lemons rotting on ships. Chinese officials have started refusing all citrus from Tulare County because they received decayed fruit, said Joel Nelsen, president of California Citrus Mutual.

“‘This is one of the most challenging seasons we’ve faced in a quarter of a century,’ he said, noting that exports are down 60% from the same time two years ago, when growers exported $385 million worth of oranges and $109 million of lemons.”

The LA Times article indicated that, “Packers have cut worker hours, and picking has slowed or stopped. Stranded fruit may flood the U.S. market, dragging down prices. Other countries are moving into foreign markets that U.S. growers can’t reach because of the port logjam; Egypt, for example, is shipping oranges to South Korea.

“‘When we lose customers, it takes us years to get them back. We’ve seen that after the freezes,’ said Bob Blakely, vice president of the citrus trade group. ‘This is a train wreck.’”

And Bloomberg writer James Nash reported on Tuesday that, “Bottlenecks related to the labor dispute that began last May are creating headaches for scores of U.S. companies, including McDonald’s Corp., Macy’s Inc., ConAgra Foods Inc. and Levi Strauss & Co. The loading and unloading of cargo has been suspended on six weekend and holiday days this month. The congestion may cost retailers as much as $7 billion this year, according to the consulting firm Kurt Salmon.”

In other trade news, Jennifer Steinhauer reported in today’s New York Times that, “The 40,000 chickens — a few short weeks from becoming Valu-Paks at the supermarket — scratched their way toward the rows of water drips, eager for a little midday sip. Eyeing an open door, one bird made a vague attempt to wander away, before it was gently returned to the brood.

Such prancing poultry rests at the center of a major trade dispute between the United States and South Africa, with large economic stakes, especially in states like Delaware, the birthplace of the American chicken industry.”

Wednesday’s article explained that, “But one of the industry’s potentially most lucrative importers, South Africa, has been placing tariffs on American chickens for years, essentially shutting them out, frustrating farmers, trade officials and members of Congress from the unfortunately named Chicken Caucus.

“‘There are 14,000 people in my state whose lives depend on chicken,’ said Senator Chris Coons, Democrat of Delaware. ‘Chicken here is not just a product; it’s a way of life.’

“American officials, led by Mr. Coons and Senator Johnny Isakson, Republican of Georgia, a huge chicken-producing state, are now threatening South Africa’s continued inclusion in a trade partnership that has been particularly beneficial for that nation.”

Ms. Steinhauer noted that, “If South Africa continues to shun the chickens of America to protect its own, officials say, then perhaps that nation should be removed from the trade agreement that allows it to send its wines, luxury automobiles and other goods here.

“‘You want unlimited access to American market to sell autos, yet you won’t let my state send its biggest agriculture export into your country?’ fumed Mr. Coons, who has long been involved in African affairs.

“The dispute over chickens comes just as President Obama is pushing an aggressive trade agenda in Congress. But for some lawmakers the rejection of American chicken is emblematic of other disputes, and evidence that trade agreements often do not live up to their billing for the United States.”

Meanwhile, Sen. Amy Klobuchar (D., Minn.) recently concluded a trip to Cuba with other lawmakers, while Rep. Collin Peterson (D., Minn.) is also in Cuba this week with a group of Democratic House Members- see this FarmPolicy update for more details.

The Politico Morning Agriculture newsletter indicated on Wednesday that, “Add Senate Agriculture Committee Chairman Pat Roberts to the long list of lawmakers headed to Cuba. The Kansas Republican told POLITICO recently that he would be traveling with Sen. Jeff Flake (R-Ariz.) and other members of Congress to the island nation, though a date for the trip has not yet been published.

But that doesn’t necessarily mean Roberts supports The Freedom to Export to Cuba Act, legislation that would lift the embargo against Cuba co-sponsored by Republicans Flake and Mike Enzi (Wyo.) and Democrats Debbie Stabenow (Mich.) Amy Klobuchar (Minn.), Patrick Leahy (Vt.) and Dick Durbin (Ill.). When asked about the bill, Roberts responded: ‘At this time I’m keeping my powder dry … There are a lot of things that have to be worked out. We have to have a much more realistic approach. You really have to sit down and work things out and that hasn’t been done. That kind of hard work has to be done before we introduce legislation.’”

And House Ag Committee Chairman Mike Conaway (R., Tex.) was on KWEL radio (Midland, Tex.) this morning and took phone calls from listeners. Chairman Conaway briefly discussed Trade Promotion Authority with one caller; to hear this discussion, just click here (MP3- 2:00).

Live on the air with Craig Anderson on KWEL, tune in now to listen!

A photo posted by Mike Conaway (@mikeconawaytx11) on

Agricultural Economy

Bloomberg writer Jeff Wilson reported on Tuesday that, “U.S. farmers from Louisiana to North Dakota are preparing to switch more land to soybeans as they seek to limit losses from a slumping corn market.

“While corn remains the biggest domestic crop, prices have tumbled so much after two years of record harvests that the grain fetches less than it costs some farmers to produce. For the first time since the 1970s, corn planting will decline for a third straight season, while soybean acreage expands to the most ever, a Bloomberg survey of analysts showed.

“Look no further than the 3,100 acres Dan Anderson farms in Illinois. From 2007 to 2013, corn generated $150 more cash per acre, Anderson said. Now, there’s no revenue difference. Even though soybean prices also have dropped, they cost about half as much to grow and are better for the soil. The 62-year-old plans to sow more of the oilseed than corn for the first time ever.”

The Bloomberg article noted that, “Perry Vieth, the founder of Ceres Partners LLC, which manages more than 59,000 acres in five Midwest states for investors, says farmers will plant less corn because there is less capital at risk growing soybeans. Tenant farmers are planning to sow 45 percent of their land to soybeans, up from 35 percent, while corn planting drops to 55 percent from 65 percent, he said.

“‘Corn and soybeans margins are thin,’ Vieth said from Granger, Indiana. ‘Farmers will continue to plant corn on the best acres, but will shift to soybeans on more marginal land.’”

The USDA’s Economic Research Service indicated yesterday in its Livestock, Dairy, and Poultry Outlook that, “Accelerating production of competing proteins—in broiler and poultry production in particular, along with slowing pork exports and smaller declines in 2015 beef production—are likely to drag hog prices down this year. For 2015, hog prices are expected to average $54-58 per cwt, over 26 percent below prices last year.”

The ERS update noted that, “The all-milk price for 2015 is forecast at $17.40-$18.10 per cwt, a reduction from last month’s forecast of $17.75-$18.55 per cwt.”

And with respect to cattle, ERS stated that, “USDA National Agricultural Statistics Service (NASS) released its Cattle report January 30, which included a number of revisions to the January 1, 2014 inventory. Total cattle and calf inventories for January 1, 2014, were almost 800 thousand head larger than the prior estimate for 2014. Included in the new higher numbers were 42 thousand additional beef cows and about 80 thousand heifers retained for beef cow replacement. The 2014 calf crop was also revised upward by 300 thousand head. In addition to generally revising January 1, 2014 cattle numbers upward, NASS also reported higher January 1, 2015 inventory numbers for many categories. The total cattle and calf inventory increased about 1 percent from 2014, with about 2 percent more beef cows and 4 percent more heifers for beef cow replacement. Producers indicated that they expect 7 percent more heifers to calve during 2015. States with the largest increases in all cattle and calves include Oklahoma and Texas, with a 6- and 7-percent increase, respectively. Overall, the total cattle and calf inventory is still historically low, but coupled with revisions to 2014, the report shows a faster than anticipated herd expansion, with more beef cows and a large retention of heifers.”

Reuters writer Karl Plume reported recently that, “Craig Uden, who fattens cattle for beef on his Nebraska feedlot, expects to cut his energy costs by as much as a quarter this year because of falling oil prices – a silver lining in an otherwise tough rural economy.”

Keith Good

West Coast Port Issues

Tim Logan and Andrew Khouri reported on the front page of Wednesday’s Los Angeles Times that, “The dispute that has snarled West Coast shipping revolves around a rarity in American business — a small but mighty union.

“The International Longshore and Warehouse Union represents 20,000 dockworkers, a fraction of the organized ranks of teachers, truck drivers or healthcare workers. But the port workers — who still queue up at hiring halls daily for work and spend years earning full membership — stand guard over a crucial chokepoint in the global economy.

“For decades these ‘lords of the docks‘ have been paid like blue-collar royalty. Their current contract pays $26 to $41 an hour, with free healthcare for members. Some earn six figures with overtime. Even as a growing chorus of business groups clamor for a resolution to their months-long contract talks with the Pacific Maritime Assn., which represents shipping companies, the union sees little need to back down.”

Wednesday’s article noted that, “‘They have unique skills that aren’t easily replaced,’ said Goetz Wolff, who teaches about labor and economics at the UCLA Luskin School of Public Affairs. ‘They’re not going to roll over and play dead.”

“They went back to work Tuesday, after a holiday weekend port shutdown that left dozens of ships parked off the Southern California coast. They also returned to the negotiating table, where U.S. Labor Secretary Thomas Perez is now trying to broker a deal.'”

The LA Times article pointed out that, “Still, the ILWU shouldn’t overplay its hand, [Marc Levinson, an economist and author] said.

“‘The employers and the union both have a common interest in the success of L.A.-Long Beach and in keeping the port as efficient as possible,’ he said.

“As the dispute drags on, the union’s solidarity could be a key factor.”

The ILWU is known as an aggressive union — forged in violent strikes on San Francisco’s Embarcadero in the 1930s, booted from national labor groups in the McCarthy-era 1950s for being “too red,” and willing to shut down the docks several times in recent years in solidarity with smaller unions. That’s what happened in 2012, when clerical workers at the L.A.-Long Beach docks went on strike and clogged the ports for several days.”

Laura Stevens and Melanie Trottman reported in Wednesday’s Wall Street Journal that, “Both sides in the labor dispute at the West Coast ports met with the U.S. secretary of labor on Tuesday, as fresh data showed just how sharply business fell at one of the main ports in January.

“The Port of Oakland said that January imports fell 39% to 44,171 containers, compared with the same month last year. Exports fell 26% to 57,581.”

The Journal writers explained that, “Secretary of Labor Thomas Perez traveled to San Francisco to ‘urge the parties to resolve their dispute quickly at the bargaining table,’ his press secretary said.

“In the meetings, Mr. Perez ‘made clear that the dispute has led to a very negative impact on the U.S. economy’ and that ‘further delay risks tens of thousands of jobs and will cost American businesses hundreds of millions of dollars,’ a Labor Department official said.

“Mr. Perez also spoke by phone with various state and local officials about the economic impact of the continuing dispute on their local economies, including with Washington Gov. Jay Inslee, California Gov. Jerry Brown, and the mayors of Los Angeles; Seattle; Long Beach, Calif.; Oakland; San Francisco; and Tacoma, Wash.”

Sarah Halzack reported in yesterday at The Wonk Blog (Washington Post) that, “Meanwhile, meat producers who export their goods overseas are running short on cold storage facilities because of the backup. The North American Meat Institute estimates the industry is losing $85 million a week in sales of meat, poultry, hides and skins.”

Keith Good