January 27, 2020

Sunday Afternoon Update: Policy Issues; Trade; Ag Economy; Biotech; and Regulations

Policy Issues

A news release on Friday from USDA’s Farm Service Agency stated that, “Agriculture Secretary Tom Vilsack announced today that a one-time extension will be provided to producers for the new safety-net programs established by the 2014 Farm Bill, known as Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC). The final day to update yield history or reallocate base acres has been extended one additional month, from Feb. 27, 2015 until March 31, 2015. The final day for farm owners and producers to choose ARC or PLC coverage also remains March 31, 2015.”

Also on Friday, Senate Ag Committee Chairman Pat Roberts (R., Kan.) stated that, “‘USDA heard the concerns directly from producers earlier this week at our first Committee hearing and took action as a result,’ Chairman Roberts said. ‘I would encourage all producers to visit their local FSA office as soon as possible to make sure they have enough time and information to make these important decisions.’”

Reuters writer Christine Stebbins reported on Friday that, “Crop insurance price guarantees for U.S. corn, soybeans and spring wheat in 2015 will fall 10 percent or more based on futures settlement prices for February, grain analysts said on Friday.

“The U.S. Department of Agriculture’s (USDA) Risk Management Agency (RMA), which oversees the multibillion-dollar crop insurance program, by law uses the average price in February for harvest-time grain futures contracts to set the ‘floor’ price that private insurers must guarantee farmers who sign up…[B]ased on Friday’s futures closes, the RMA is expected to set the floor price for corn at $4.15 a bushel, down 10 percent from last year’s $4.62, and for soybeans at $9.73 a bushel, down 14 percent from last year’s $11.36.”


A Closer Look at Beef Prices- Sunday’s Des Moines Register

Donnelle Eller reported on the front page of the Business Section in Sunday’s Des Moines Register that, “If the snow piled on your patio has you dreaming of firing up the summer grill, make sure to imagine doling out even more cash for the juicy steaks and hamburgers you’re flipping.

Beef prices climbed 19 percent in January over a year earlier, the federal government reported. And prices are expected to continue climbing this year, up 5-6 percent, according to the U.S. Department of Agriculture’s Economic Research Service.

“‘We’re in uncharted waters, given the level of prices,’ said Lee Schulz, an Iowa State University economist. ‘They can’t get too much higher before it will begin to impact demand.'”

Ms. Eller indicated that, “Prices will likely bump higher, too, for pork, chicken and turkey this year. But the increases are expected to be more modest, based on federal government estimates: Pork chops, ham and rib prices are expected to push 2-3 percent higher, and chicken breasts and ground turkey, 2.5-3.5 percent.

“That’s after a strong run-up last year for pork, climbing 7.4 percent in January compared to a year earlier, and poultry, a smaller 2 percent.”

The Register article noted that, “Despite higher prices for meat, demand for beef, pork and poultry will likely remain strong, even if consumers shift between them as they find better buys, economists say.

“Increasing incomes drive demand, whether it’s from higher pay or more people employed, said Schulz, the ISU economist. “We’ve seen demand improve as the economy has recovered,” he said.

“And falling gas prices help consumers, Kuhns said, with extra cash to cope with higher grocery bills and lower transportation costs to move food across the country.”

Persistent drought in the southwest and southern plains in recent years has curtailed livestock production; however, at USDA’s Outlook Conference earlier this month, the Department’s Chief Economist noted that, “Drought continues in the Southwest, but there have been some signs of recovery in the Southern Plains and elsewhere. Returns to cow-calf operators have been at levels that encourage herd retention which would point to a turnaround in the cattle cycle. Producers are now responding by increasing herds; the number of beef cows on January 1, 2015 was up 2 percent from 2014 and the number of heifers retained for addition to the cow herd was 4 percent higher. The latest NASS cattle inventory last month recorded the first increase in herd size since 2007.”

The latest monthly Agricultural Prices report from USDA noted that, “The January beef cattle price of $164 per cwt is unchanged from the previous month but is $26.00 higher than January 2014.”

Bloomberg writer Megan Durisin reported last week that, “There’s little relief ahead for record U.S. steak and burger prices. While cattle ranchers like Brenda Richards are expanding herds for the first time in almost a decade, it can take two years to get more meat on the plate.”

The USDA’s Economic Research Service is scheduled to update its Food Price Outlook on Tuesday morning.


USDA- Monthly Agricultural Prices

On Friday, USDA’s National Agricultural Statistics Service (NASS) released its monthly Agricultural Prices report, which stated that, “The corn price, at $3.81 per bushel, is up 3 cents from last month but is down 61 cents from January 2014.”

“The soybean price, at $10.30 per bushel, is unchanged from December but is $2.60 below January a year earlier.”

“At 58.6 cents per pound, the price for upland cotton is down 1.8 cents from December and 18.9 cents below January 2014.”

With respect to livestock, the NASS report indicated that, “The January beef cattle price of $164 per cwt is unchanged from the previous month but is $26.00 higher than January 2014.”

“At $57.40 per cwt, the January hog price is down $6.90 from December and $3.80 lower than a year earlier.”

“The January all milk price of $17.60 per cwt is down $2.80 from December and $5.90 lower from January 2014.”


Budget Issues Linger– Could Portend Problems with Trade

Categories: Budget /Trade

Siobhan Hughes and Kristina Peterson reported in Saturday’s Wall Street Journal that, “Congress temporarily avoided a partial shutdown of the Homeland Security Department Friday night, approving a one-week extension of the agency’s funding as its midnight deadline approached.

“Support for the one-week patch came together Friday night hours after a three-week short-term spending bill was defeated in the House in a blow to the chamber’s GOP leaders.

“After watching top House Republicans’ plan derail Friday afternoon, House Democrats helped GOP leaders find the votes to pass the one-week funding measure Friday night in a 357-60 vote. House Republican leaders brought the one-week bill to the floor under a fast-track procedure that required a two-thirds majority for passage.”

The Journal writers noted that, “The defection of more than 50 Republicans represented an embarrassment for [House Speaker John Boehner] and was also an early setback in Republican efforts to prove they can effectively govern the GOP-controlled Congress…[T]he struggle to pass even a short-term fix in the House highlighted the tightrope Mr. Boehner must walk, despite controlling the biggest House GOP majority in decades.

“Though Mr. Boehner currently leads a pack of 245 House Republicans, potential defections from either the conservative or centrist wing on tough bills leave him little room to maneuver on votes where Democrats withhold their support.”

Lisa Mascaro and Michael A. Memoli reported in Saturday’s Los Angeles Times that, “The legislative maneuvering left conservatives upset that they had been unable to stop Obama’s immigration plan and more pragmatic Republicans weary of dragging out the fight over Homeland Security funds at continued risk.”

Carl Hulse reported in Saturday’s New York Times that, “The tense meltdown in the House on Friday over funding for the Department of Homeland Security underscores how Congress has lost the ability to perform its most basic functions no matter which party is in charge.”

Mr. Hulse pointed out that, “But the dysfunction also worried lawmakers from both parties who want to make some bipartisan deals on issues like taxes.

“‘My hope is that this does not define the session,’ said Senator Ron Wyden of Oregon, the top Democrat on the Finance Committee. ‘We have to find some common ground.'”

Ashley Parker also writing in Saturday’s New York Times, reported that, “The funding stalemate bodes poorly for any larger policy accomplishments this year, leaving lawmakers pessimistic that the 114th Congress will be able to work in a bipartisan fashion on more complicated issues.

“The Office of Management and Budget has said that a vote to increase the nation’s debt limit will be necessary by mid-to late summer, and lawmakers were also hoping to take up trade policy, as well as at least a modest overhaul of the nation’s tax code — undertakings that now look increasingly imperiled.”

And The Washington Post editorial board opined on Sunday that, “The House has become an embarrassing spectacle, and the promises of Republican leaders in both houses to govern without hop-scotching from crisis to crisis have been shredded. Speaker John A. Boehner’s control of the tea party faction in his GOP caucus is so slight he couldn’t even manage a three-week funding extension for DHS, let alone approving a budget through the end of the fiscal year in September.

Now, instead of tackling major legislation, Congress will be paralyzed for more days — and perhaps even longer — as House Republicans continue to insist on measures to reverse Mr. Obama’s immigration moves that have no chance of passage in the Senate, no chance of being signed by the president and no chance of becoming law.”