January 19, 2020

Friday Update: Policy Issues, Ag Economy; Trade; and, Biofuels

Policy Issues

In addition to the House Ag Committee hearings next Wednesday and Thursday on food stamp issues, on Tuesday, the Senate Ag Committee will hold a hearing on Farm Bill implementation and Farm Credit Administration nominations.

Secretary of Agriculture Tom Vilsack is scheduled to address the Senate panel; however, the Committee will hear from producers first.

In a discussion this week on the Kansas Ag Network Online with Kelly Lenz, Senate Ag Committee Chairman Pat Roberts (R., Kan.) noted that, “I have concerns about the direction of the farm policy, but we’re not going to open up that bill. We are going to take a look at some of the glitches.”

He added that, “But after every farm bill you have a technical correction or you have some things that you can take care of with administrative action.”

With respect to crop insurance, Chairman Roberts indicated that, “I’m not for means testing crop insurance…[I]f you don’t have crop insurance today, your lender is not even going to lend you money.”

Chairman Roberts added that, “But crop insurance is the one item or the one issue that farmers told me all through the farm bill debate and are continuing to tell me, even in the South, that that’s the one key item in the tool box, the one tool in the tool box that the farmer has to really use with risk management.”

On nutrition issues, Chairman Roberts pointed out that, “We have the child nutrition bill, Kelly, and I’m eating lunch every time I’m back in Kansas, every day at a…either at an elementary school or a high school [related tweet and photo from Thursday], and we’re finding out the real need for flexibility in this child nutrition program with the dictates that are coming out of Washington on what you eat, and how much, and so on and so forth.”

Looking ahead at other Committee activity, Chairman Roberts noted that, “We’re going to have a hearing on Cuba.”

Meanwhile, in a letter this week to Senate and House Budget Committee leaders, a large number of environmental organizations urged lawmakers “to protect mandatory funding for farm bill conservation programs as you consider a budget for fiscal year 2016.”

In other policy related news, a government advisory committee yesterday released its Scientific Report of the 2015 Dietary Guidelines Advisory Committee (Advisory Report) to the Secretaries of the U.S. Department of Health and Human Services and the U.S. Department of Agriculture (USDA).

A very detailed update on this development is available here.

Also, Reuters writer Tom Miles reported today that, “Big developing countries such as China and India are routinely breaking international trade rules on agriculture and the U.S. government should take action to stop them, representatives of U.S. corn and rice growers said on Thursday.

“‘It’s time for action,’ Robert Cummings, chief operating officer of USA Rice Federation, told Reuters in Geneva, home of the World Trade Organization.

“‘We’ve had enough years of non-compliance and it’s time for that non-compliance to be made known here and also made known to the U.S. government, and that a response be forthcoming, if the WTO is going to remain viable.’”


Agricultural Economy

USDA Acting Chief Economist Robert Johansson presented an updated outlook for the U.S. farm economy yesterday at the Department’s annual outlook forum, details, highlights and updated forecasts from the presentation are available in this update from Thursday.

Christopher Doering reported yesterday at The Des Moines Register Online that, “Consumers across much of the United States could see cheaper egg prices as an animal welfare law that went into effect in California boosts supplies across the rest of the country, an agricultural economist said Thursday.”

The article noted that, “The law specifically requires eggs sold in the state to come from chickens raised in cages where birds have enough room to spread their wings. Many egg producers from other states such as Iowa do not meet these requirements and can’t sell their product in California.

“‘We do expect that while this may cause higher prices in California, prices elsewhere could actually face downward pressure if out-of-state egg producers choose to sell their eggs elsewhere, if they choose not to make these changes to their facilities,’ [Annemarie Kuhns with the Agriculture Department’s Economic Research Service] said at the USDA’s Agricultural Outlook Forum. ‘That could actually increase the supply of eggs for much of the U.S.’”

Also this week, Bloomberg news reported that, “McDonald’s Corp. is bringing chicken tenders back to its menu next month in a move that’s rippling through the poultry industry.”

And Drew Harwell reported yesterday at the Wonkblog (Washington Post) that, “Now, with the [epidemic diarrhea virus] outbreak under control and hogs back in heavy supply, pork prices have plummeted, leading analysts to make a new prediction: Americans can expect even more bacon debuts at big restaurants in the months ahead.”

Chuin-Wei Yap reported in today’s Wall Street Journal that, “Other farmers in China have been dumping milk and culling cows as a dairy boom has swung to a bust over the course of three years. The impact is being felt beyond China, too, as farmers from the U.S. to Australia to New Zealand brace for price wars, smaller herds and cuts to income this year. New Zealand’s central bank says the drop in dairy prices is one of the biggest economic risks for the country, a big milk exporter.”

Charley Grant reported in today’s Wall Street Journal that, “The U.S. Department of Agriculture on Tuesday said net farm income is expected to fall by 32% in 2015 to $73.5 billion. That would mark the second consecutive year of double-digit declines. Plunging receipts from corn, hogs, and dairy products are to blame.

“Since farm incomes correlate strongly with Deere’s bottom line, that is potentially bad news for shareholders. In fiscal 2014, more than 80% of the equipment maker’s revenue came from its agriculture-and-turf division.”

But today’s article added that, “But when it comes to Deere’s future, history may provide comfort. Since 1980, net farm income has fallen by 20% or more on six occasions, by an average of 31.7%. In the year immediately following those declines, income snapped back by an average of 51.25%. What’s more, net farm incomes haven’t fallen for three consecutive years since the 1970s. So there is some hope 2016 could see an improvement.”


West Coast Ports, Trade

Peter Jamison and Andrew Khouri reported yesterday evening at the Los Angeles Times Online that, “California political leaders voiced growing exasperation Thursday with a labor standoff that has clogged West Coast ports, as word spread that the main sticking point in negotiations has been the fate of a single, low-level official who rules on disputes involving Los Angeles and Long Beach dockworkers.”

More detailed coverage of the ongoing port issue, including lawmaker reaction, is available at Online.

In its Outlook for U.S. Agricultural Trade report yesterday, USDA indicated that, “Fiscal 2015 agricultural exports are forecast at $141.5 billion, down $2.0 billion from the November forecast and $11.0 billion from fiscal 2014.” The report added that, “The U.S. agricultural trade surplus is forecast at $22.5 billion, down from $43.3 billion in fiscal 2014, and the smallest surplus since fiscal 2007.”

Meanwhile, Reuters news reported yesterday that, “The chairman of a U.S. congressional committee responsible for trade said on Thursday he expects passage of legislation to fast-track trade deals soon, a vital step towards a Pacific trade pact covering a large chunk of the global economy.

“Negotiators from 12 Pacific nations hope to conclude talks on a Trans-Pacific Partnership (TPP) within months, and House Ways and Means Committee Chairman Paul Ryan said legislation known as trade promotion authority (TPA) should pass soon, easing a major hurdle.”

Mitsuru Obe reported yesterday at The Wall Street Journal Online that, “Rep. Paul Ryan (R-Wis.), chairman of the House Ways and Means Committee and the leader of the seven-member delegation, reassured Japan that the Democratic president will be given trade-promotion authority and that Japan should no longer feel worried about making bold concessions and having them overturned by the Republican-controlled Congress.

“‘We anticipate passing that legislation this spring, so that we can get down to completing TPP negotiations,’ Mr. Ryan said at a news conference at the Japan National Press Club.”

Vicki Needham reported yesterday at The Hill Online that, “[Commerce Secretary Penny Pritzker] is confident that a fast-track measure, despite widespread opposition from Democrats in Congress, will pass, most likely by a small margin.”

Ian Talley reported yesterday at The Wall Street Journal Online that, “The U.S. Treasury’s top financial diplomat on Thursday signaled the administration would oppose lawmaker efforts to include in trade legislation enforceable sanctions against countries that manipulate their currencies.”

Jacqui Fatka reported yesterday at Farm Futures Online that, “An ocean not only separates the United States and European Union physically but also philosophically over ag trade, environment and animal welfare issues.

“On Thursday, U.S. Secretary of Agriculture Tom Vilsack shared the stage with his counterpart Phil Hogan, European Union commissioner of agricultural and rural development at the U.S. Department of Agriculture’s annual Outlook Forum.”

The article noted that, “Hogan shared that the ‘moment is ripe to create a trade super highway between the EU and the U.S.’ but there’s no denying there’s several roadblocks and detours that lie ahead [a copy of Hogan’s speech from yesterday is available here].”



Reuters writer Chris Prentice reported yesterday that, “The U.S. Environmental Protection Agency plans to offer a proposal for Renewable Fuels Standards for 2014, 2015, and 2016 this spring, and will use actual production levels to determine last year’s mandated volumes, an official said on Thursday.”

See also this farmdoc daily update from yesterday, “What if the EPA Implements RFS Mandates for Renewable Fuels at Statutory Levels?

Keith Good

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