FarmPolicy

December 12, 2019

Saturday Update: Highlights on the U.S. Ag Economy

Donnelle Eller reported on the front page of the Business Section in Saturday’s Des Moines Register that, “Deere & Co., the maker of farm and construction equipment, said net income plummeted 43 percent in the first quarter with lower corn and soybean prices reducing demand for big green combines and tractors.

“The Moline, Ill.-based company warned its total farm equipment sales this year will tumble 23 percent, because of continued pressure from low commodity prices and falling farm incomes. The decline is expected to be sharper in the U.S. and Canada this year, falling 25 to 30 percent.”

The Register article added that, “In a conference call, Deere said large farm equipment sales would be hit hardest, pointing to an industry report that indicates U.S. and Canada demand for large tractors and combines will be half as much this year as 2013 levels.”

Also in Saturday’s Register, Christopher Doering reported that, “The amount of corn used to produce ethanol will drop slightly during the 2015-16 marketing year, as consumers drive less, the federal government said Friday.

“The Agriculture Department forecast corn used for ethanol production at 5.2 billion bushels during the marketing year that begins Sept. 1 — a decline of 25 million bushels from the current year. If realized, about 38 percent of the 13.6 billion-bushel corn crop expected to be harvested this fall would go to toward producing the renewable fuel.”

On Friday, USDA’s National Agricultural Statistics Service (NASS) released its monthly Cattle on Feed report, which stated in part that, “Cattle and calves on feed for slaughter market in the United States for feedlots with capacity of 1,000 or more head totaled 10.7 million head on February 1, 2015. The inventory was slightly above February 1, 2014.”

And with respect to U.S. milk production, NASS indicated in its monthly Milk Production report on Friday that, “Milk production in the 23 major States during January totaled 16.5 billion pounds, up 2.1 percent from January 2014.”

Meanwhile, AP writer Kourtney Liepelt reported on Saturday that, “The nation’s dairy goat herd climbed 2 percent in the past year to 365,000 animals, but producers said their annual sales are rising even faster — up by 15 percent or more. In Iowa, the number of goat farms has climbed from less than 20 a decade ago to about 200, behind only Wisconsin and California.

“Sheep and goat milk accrued $92.2 million in sales in 2012, according to the most recent figures available from the U.S. Agriculture Department’s census, with combined sales about a third higher than in the previous 2007 census…[M]uch of the new demand appears to be due to increased interest in artisan cheeses and populations that are more accustomed to goat milk, such as Hispanic and Jewish communities, Cornelius said. In much of the world, goat milk is more common than cow milk.”

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CBS News: Record West Coast drought shows no signs of easing

From CBS News on Friday, “The flip side to the frigid weather in much of the U.S. is record warmth in the West. Parts of Alaska hit the mid-50s this week.

“And it’s dry — 93 percent of California is in a severe drought that’s going on four years.”

The CBS update noted that, “And in Oregon, the snowpack on Mount Hood is so low, farmer Jon Laraway fears water rationing come spring.

“‘Growers may have to go on a schedule basis, where they can’t irrigate as much,’ Laraway says. ‘We’ve never had to do that on this side of the valley.'”

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Saturday Update: President Calls on Congress to Pass Trade Promotion Authority

From the White House, “In this week’s address, the President underscored the importance of continuing to grow our economy and support good-paying jobs for our workers by opening up new markets for American goods and services.

“While America’s businesses, ranchers, and farmers are already exporting goods at record levels, there’s more room for growth with 95 percent of the world’s customers living outside our borders. In order to pursue new trade agreements, the President called on Congress to pass trade promotion authority so that the U.S. — not China — can play a leading role in negotiating 21st century trade deals that protect our workers, support good wages, and help grow the middle class.”

A complete transcript of the President’s remarks can be found here.

Reuters news reported on Saturday that, “Congressional Republicans have been supportive of trade deals. Senator Orrin Hatch, the Republican chairman of the Senate Finance Committee, has said he hopes to introduce a ‘fast track’ bill in February.

“Senate Majority Leader Mitch McConnell said in a statement that Obama needed to ‘continue what must be a sustained effort to move his own party forward’ on working on trade legislation.

Labor and environmental groups allied with Democrats have been pushing hard against the idea. Even among the Obama-friendly crowd at the Democratic National Committee on Thursday, several people wore ‘Stop Fast Track’ stickers.”

William Mauldin reported in Saturday’s Wall Street Journal that, “House and Senate negotiators are converging on a deal to ease the passage of trade agreements, a key step in putting the divisive issue before the full Congress as the White House pursues a sweeping trade pact in Asia.

“The legislation, known as trade promotion authority or fast track, comes as the Obama administration is seeking to conclude negotiations on a 12-nation Pacific trade deal—the economic centerpiece of the president’s rebalancing of U.S. policy toward Asia.”

The Journal article stated that, “Aides to congressional committee leaders Sen. Orrin Hatch (R., Utah), Sen. Ron Wyden (D., Ore.) and Rep. Paul Ryan (R., Wis.) have settled most disagreements over the legislation, say people familiar with the talks.

“One remaining issue—a technical but crucial element—is how Congress would be able to remove an unacceptable trade deal from the fast track process, these people say. Complications on that issue or others could still delay or unravel any agreement, they say.

“A deal to introduce the legislation could be reached in days, observers say, after Mr. Ryan returns from a trade-focused trip to Asia.”

Mr. Mauldin noted that, “Mr. Hatch on Friday called a hearing next week of his Senate Finance Committee to discuss trade policy and potentially the new bill. But Mr. Wyden, the top Democrat on the panel, said a hearing is ‘premature’ because a final deal hasn’t been struck yet. Mr. Ryan said Thursday in Japan that a deal is ‘very close.’

“Many Democrats, labor unions and environmental groups oppose the legislation, saying it is a way for the administration to push a deal with unacceptable provisions through Congress.”

Meanwhile, Vicki Needham reported on Friday at The Hill Online that, “Negotiators of a massive trade deal spanning from Latin America to Asia are scheduled to meet next month in Hawaii.

“The U.S. Trade Representative’s office said Friday that the United States will host a chief negotiators meeting from March 9-15 to continue hammering out the details of the Trans-Pacific Partnership (TPP).”

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Saturday Update: West Coast Ports- Tentative Five-Year Agreement Reached

Laura Stevens reported on Friday night at The Wall Street Journal Online that, “West Coast port employers and their union came to a tentative five-year agreement on a new contract late Friday night, a union spokesman said, bringing an end to a nine-month negotiation process which resulted in significant slowdowns at the ports.”

Andrew Khouri, Chris Kirkham and Peter Jamison reported in Saturday’s Los Angeles Times that, “Shipping companies and dockworkers reached a tentative deal late Friday on a new labor contract, avoiding a shutdown of 29 ports that would have choked off trade through the West Coast.

“The agreement, which still needs approval from union members and individual employers, should start easing severe congestion that’s been building for months at the nation’s busiest ports, in Los Angeles and Long Beach, along with other major gateways.

“Details of the proposed five-year contract for about 20,000 West Coast dockworkers were not released. The dockworkers have been without a contract since July. The two sides had been negotiating since May.”

The article added that, “Trade experts cautioned that the new contract won’t immediately resolve the delays, particularly at L.A. and Long Beach, which together handle roughly 40% of the nation’s incoming container cargo.

It will take weeks, if not months, just to clear the current backlog, port officials said.

The congestion stems in part from issues unrelated to the labor dispute. Before slowdown accusations surfaced in early November, the L.A and Long Beach ports already were struggling with the worst freight backlog in a decade, in large part because of a truck trailer shortage and the increased use of mammoth container vessels that hold more cargo.”

A separate U.S. Department of Labor tweet indicated that:

Jack Healy reported in Saturday’s New York Times that, “But analysts said the deal would not immediately resolve the congestion that has cost businesses millions of dollars and left goods stranded on ships, waiting to be unloaded, or in warehouses, waiting to be shipped to Asian markets. Even as normal operations resume here at the ports of Long Beach and Los Angeles, the busiest in the nation, analysts said it would take months to clear the backlog.”

The Times article added that, “The disputes brought crippling delays that cascaded beyond the 29 West Coast ports that were affected and through the wider American economy. California broccoli, oranges and lemons bound for markets in China, Japan, South Korea or Australia began to rot in storage.”

House Majority Leader Kevin McCarthy (R., Calif.) tweeted on Friday:

And House Ag Committee Member Dan Newhouse (R., Wash.) indicated on Saturday that, “I am encouraged that a resolution to this devastating labor dispute may finally be in sight. For nine long months, the two parties held trade-dependent communities hostage by crippling the movement of goods at our ports. Even if an agreement is imminent, the domino economic effect of the port slowdown on businesses and agricultural producers will continue even after the backlog at the ports is cleared. The loss of market share and confidence of overseas trading partners will not be restored overnight, and it is appropriate to evaluate all options that would end the economic threat posed by such disputes in the future.”

“Last week, Rep. Newhouse, Rep. Dave Reichert (R-WA), Rep. Kurt Schrader (D-OR), and Rep. Jim Costa (D-CA) introduced a bipartisan resolution in the House urging an end to the contract negotiation between the PMA and the ILWU.”

House Ag Committee Member Rep. Pete Aguilar (D., Calif.) indicated on Saturday that, “I’m very pleased to hear the news that an agreement was reached between the International Longshoremen and Warehouse Union and the Pacific Maritime Association. I applaud both organizations for working together to see this through, as well as U.S. Labor Secretary Perez for assisting with negotiations. As our nation is just in the early stages of economic recovery, reaching an agreement was pivotal for the stability of California’s economy and the United States as a whole. Again, I commend both groups for their cooperation and look forward to getting our ports and trade operations back on track.”

Sen John Thune (R., S.D.) indicated on Saturday that, “Despite the unnecessary impacts of this prolonged labor dispute, I urge swift adoption so that agricultural producers and businesses can regain the full use of ports on the West Coast to ship goods overseas and receive necessary shipments of merchandise. There’s no question the slowdown has cost billions of dollars through unnecessary harm to American businesses and consumers.”

And American Soybean Association President Wade Cowan noted on Saturday that, “Disruptions like the one we saw out west have the potential to throw the country’s farm economy into disarray. A devastating impact like that isn’t a bargaining chip. It goes without saying that we are relieved to see a resolution to the dispute, and we encourage both parties to ratify this new contract and get back to work as quickly as possible.”

Previous developments from Friday below.

In the ongoing labor dispute that is disrupting the operation of several West Coast Ports, Laura Stevens and Melanie Trottman reported on Friday at The Wall Street Journal Online that, “Negotiations between West Coast port employers and workers came to a head on Friday as the U.S. Secretary of Labor threatened to force the parties to resume talks in Washington, D.C., if they didn’t reach a new contract agreement by day’s end.

“Secretary Thomas Perez told West Coast mayors on a conference call Thursday night said that if the two groups couldn’t come to a resolution within 24 hours, they would be invited to the nation’s capital.”

The Journal writers noted that, “The U.S. president doesn’t have legal authority to summon the parties to Washington and such meetings rarely occur, ‘but it would be extremely difficult for either party to refuse to go,’ said Seth Harris, a former acting labor secretary and former deputy labor secretary in the Obama administration who is now a lawyer in Washington for law firm Dentons. ‘To not go would be an acceptance of blame that neither party would want,’ Mr. Harris said.”

“As of Friday morning, 27 ships were at anchor outside the ports of Los Angeles and Long Beach, three fewer than Thursday. On a typical February day last year, no ships were in line,” the Journal article said.

Bloomberg Photo–Ships wait to unload cargo at the Port of Los Angeles in Los Angeles, California, on Feb. 18, 2015. Photographer: Patrick T. Fallon/Bloomberg

James Nash and Alison Vekshin indicated on Friday that, “The impasse in talks toward a five-year contract between the International Longshore and Warehouse Union and the Pacific Maritime Association threatens to close seaports responsible for more than 40 percent of U.S. trade. Perez arrived in San Francisco on Feb. 17, dispatched by President Barack Obama after a federal mediator failed to bridge the gap between the two sides.”

A news release Friday from House Ag Committee member Rep. Dan Newhouse (R., Wash.) stated that, “Last week U.S. Congressman [Newhouse], Congressman Reichert (R-WA), Congressmen Schrader (D-OR), and Congressman Costa (D-CA) introduced a bipartisan resolution in the House urging an end to the contract negotiation between the Pacific Maritime Association (PMA) and the International Longshore and Warehouse Union (ILWU). Now, just a week later, the resolution has been signed by 61 members of Congress.”

Rep. Newhouse discusses impact of ports dispute for local growers.

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