FarmPolicy

December 12, 2019

USDA- Economic Research Service- Food Price Outlook, 2015

On Tuesday, USDA’s Economic Research Service (ERS) updated its Food Price Outlook for 2015.

ERS stated that, “The all-items Consumer Price Index (CPI), a measure of economy-wide inflation, fell 0.5 percent from December to January and is 0.1 percent below the January 2014 level.”

More specifically, Tuesday’s update noted that, “Looking ahead to 2015, ERS predicts that supermarket (food-at-home) prices will see normal to slightly-lower-than-average food price inflation, increasing 2.0 to 3.0 percent. Meat prices will likely continue to experience the effects of the Texas/Oklahoma drought, as farmers’ decisions on calving and herd sizes are felt down the line due to the 6-to 18-month production process. Additionally, the effects of Porcine Epidemic Diarrhea virus (PEDv) on the hog industry will be transmitted to meat prices in the immediate future. This forecast is based on an assumption of normal weather conditions; however, severe weather events could potentially drive up food prices beyond the current forecasts. In particular, the ongoing drought in California could have large and lasting effects on fruit, vegetable, dairy, and egg prices. Conversely, if oil prices continue to fall or remain low throughout 2015, subsequent decreases in production and transportation costs may be passed on to the retail level.”

With respect to pork, ERS pointed out that, “However, there are some signs of industry expansion as the effects of PEDv are subsiding; hog prices in 2015 are expected to fall 26 percent below 2014 figures. ERS now predicts pork prices to rise 1.5 to 2.5 percent in 2015.”

In addition, ERS indicated that, “Beef and veal prices continued to rise, increasing 0.1 percent from December to January and 19 percent year-over-year. Prices remain high, as the U.S. cattle inventory recovers from historically low levels. While recent rains in the Southern Plains and Southwest have improved pasture conditions somewhat, the drought still continues throughout these regions. In addition, improved crop yields allow cattle producers to feed cattle longer and to hold cattle for herd expansion. Many producers are holding on to their inventory to increase live weights, as steer and heifer prices have hit record highs. Most retail beef prices, on average, are also at record highs, even after adjusting for inflation. ERS predicts beef and veal prices will increase 5.0 to 6.0 percent in 2015.”

Tuesday’s update also stated that, “Egg prices decreased 3.3 percent from December to January but are 8.2 percent above January 2014 levels. Retail egg prices are among the most volatile retail food prices. Additionally, prices typically fall in the first quarter of the year, after a spike in the fourth quarter due to increased demand for eggs in holiday baking. There is also concern that the new law affecting eggs sold in California (Proposition 2) will affect retail egg prices across the country. While this may cause higher prices in California, prices elsewhere may face downward pressure if out-of-State egg producers choose not to alter their facilities and look elsewhere within the U.S. to sell their eggs. ERS expects egg prices to increase 2.5 to 3.5 percent in 2015.”

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Front Page of Tuesday’s Des Moines Register- Iowa Ag Summit

Jennifer Jacobs reported on the front page of Tuesday’s Des Moines Register that, “The debut of Jeb Bush on the Iowa presidential landscape is one factor that marks Saturday’s Iowa Agriculture Summit (@IowaAgSummit), as an important milestone of the early 2016 campaign.

“It’s also the first big multi-contender GOP presidential forum that will attract business Republicans who are more interested in economic issues than social issues or God’s place in the civic arena.

“A crush of national media will be in Des Moines to cover the ag summit, which will audition a dozen GOP presidential contenders over a seven-hour period in front of a sold-out audience of 900.”

Ms. Jacobs explained that, “The assemblage of potential presidential candidates will be bigger than Iowa’s previous cattle-call forums, including Bob Vander Plaats’ Family Leadership Summit in August, which attracted religious conservatives, and Steve King’s Iowa Freedom Summit, a January event that also drew heavily from the Christian conservative and tea party factions of the GOP.

“Another key difference at this event will be the format. Rather than giving speeches, each contender will do a 20-minute question-and-answer session with host Bruce Rastetter, an agribusiness leader and GOP power player with close ties to [Iowa Gov. Terry Branstad].”

Today’s Register article added that, “All eyes will be on Wisconsin Gov. Scott Walker and former Florida Gov. Jeb Bush.

“‘Scott Walker is the runaway front-runner right now (in Iowa), so by default has the most to lose,’ said Tim Albrecht, an Iowa Republican operative who will likely support Bush if he runs for president.”

Note that the Register has a web page devoted to the summit, which can be found here.

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Tuesday Morning Update: Policy Issues; Trade; Ag Economy; Biotech; and Budget

Policy Issues

In a speech yesterday at the 2015 National Anti-Hunger Policy Conference in Washington, D.C., Secretary of Agriculture Tom Vilsack discussed the SNAP program and announced “more than $27 million in grants to fund innovative projects designed help end childhood hunger.”

Also yesterday, at the School Nutrition Association’s 2015 Legislative Action Conference, a separate venue in Washington, D.C., Sen. John Hoeven (R., N.D.) announced “that he plans to introduce the Healthy School Meals Flexibility Act later this week or early next week. The legislation would provide permanent flexibility to school districts in complying with the U.S. Department of Agriculture’s new school nutrition requirements.”

Additional details on these federal nutrition policy issues from yesterday, and on Sec. Vilsack’s remarks regarding the SNAP program, can be found here, at FarmPolicy.com.

On Monday, USDA’s Economic Research Service (ERS) updated its monthly Amber Waves publication; the March edition contained two particularly interesting articles on nutrition related policy. The first looked at the number of school districts serving “local” food, while the second addressed the potential of restricting sweetened beverages purchases through the SNAP program– an especially timely article considering the House Ag Committee’s ongoing top-to-bottom overview of the program (Committee SNAP hearing summaries here and here).

A summary overview of the two ERS articles is available here.

Arthur Delaney reported yesterday at the Huffington Post that, “The Republican Party’s new point man on food stamps, Rep. Mike Conaway (R-Texas), insists that he doesn’t want to cut nutrition assistance benefits. Instead, Conaway is leading a multiyear review of the program, just to make sure it’s the best it can be.

But it might not be up to Conaway. Republicans could push food stamp cuts this year through a parliamentary process known as ‘reconciliation.’

“The GOP has discussed using reconciliation as a way to repeal Obamacare or to do tax reform. Now, some Democrats and food stamp advocates are warning that the Republican-controlled Congress could use the obscure budget maneuver to reduce food stamp assistance.”

(more…)

USDA- ERS Amber Waves Nutriton Articles: Local Food Purchases; Potential SNAP Restrictions

Categories: Farm Bill /Nutrition

On Monday, USDA’s Economic Research Service (ERS) updated its monthly Amber Waves publication; the March edition contained two particularly interesting articles on nutrition related policy.

The first, which took a closer look at local food purchases made by school districts (“Many U.S. School Districts Serve Local Foods”), indicated that, “The Healthy Hunger-Free Kids Act of 2010 established the USDA Farm to School Program to encourage school districts to use locally produced food for meals served through the National School Lunch and School Breakfast Programs. USDA’s Food and Nutrition Service (FNS)—the agency responsible for administering school meal programs—partnered with ERS to conduct USDA’s Farm to School Census, the first attempt to ask every public school district in the United States about their involvement in farm to school activities and how much locally produced food they served in school meals. Schools reported how they defined ‘local foods,’ with two common definitions being foods produced within 50 miles or within the State. According to the census, 36 percent of U.S. school districts reported serving locally produced food in school meal programs during the 2011-12 or 2012-13 school years and an additional 9 percent planned to serve local foods in the future.”

The article added that, “The top food categories sourced locally were fruits and vegetables, cited by 94 and 91 percent, respectively, of the school districts that served local foods. Milk (45 percent), baked goods (27 percent), and other types of dairy products (22 percent) were also among the top food categories sourced locally. For districts that were able to provide food service expenditure data, local foods represented an average of 13 percent of reported expenditures on food.”

A separate Amber Waves item from Monday, which addressed the purchase of unhealthy items through the SNAP program (“Restricting Sugar-Sweetened Beverages From SNAP Purchases Not Likely To Lower Consumption”) stated that, “Americans now get an average of nearly 21 percent of their daily calories from beverages, up from 12 percent in 1965. Since calories from beverages may be less satiating than calories from food, consumers may not recognize how many calories they are consuming from beverages, potentially leading to higher total caloric intake. While some beverages—such as milk and 100-percent fruit and vegetable juices—provide important nutrients such as calcium and vitamin C, sugar-sweetened beverages (SSBs) provide few (if any) essential nutrients. As a result, some argue that SSBs have had a super-sized role in contributing to obesity in the United States.”

The article noted that, “Some policymakers and nutrition advocates have suggested that changes to SNAP, such as excluding SSBs from the set of allowable items that can be purchased using benefits, could directly address overconsumption of SSBs among low-income populations who receive program benefits…Underlying the argument to limit SNAP participants’ SSB purchases is the idea that SNAP participants consume more SSBs than nonparticipants, and that the SNAP benefit covers all of a household’s food spending so that any restrictions on purchases will have a direct effect on consumption in SNAP households.”

The ERS article included this graph:

However, the ERS update pointed out that, “Simply comparing average beverage intake across different SNAP participant and nonparticipant groups does not address the question of whether SNAP influences purchases and if restrictions on SNAP purchases will have any impact on individual intakes. Differences in the characteristics among the three lower income groups may explain differences in SSB and other beverage consumption…After accounting for these observable characteristics, SNAP participants are no more likely to consume SSBs than lower income nonparticipants. These findings are consistent with other ERS research on overall diet quality, which also found that SNAP participants’ diets do not differ greatly relative to otherwise similar nonparticipants. Along these lines, researchers in this analysis found no differences in alcohol consumption between SNAP and nonparticipating adults, even though alcoholic beverages cannot be purchased with SNAP benefits.”

The Amber Waves article also noted that, “On average, SNAP households received $257 from SNAP yet spent $490 on food each month. Over 85 percent of SNAP participants spent more than their monthly SNAP benefit level on food, purchasing an average of an additional $301 worth of groceries with their own money.”

With respect to implications of potential SNAP beverage restrictions, ERS explained that, “While SNAP participants could use their own resources to purchase SSBs, a restriction on SNAP purchases of SSBs would mean a slightly higher price of such beverages for participants in States that tax grocery store food purchases, since SNAP participants do not pay sales tax on SNAP purchases. Excluding SSBs from the allowable foods and beverages may mean SNAP participants who purchase them would have to pay the tax (State policies on how to tax mixed purchases—e.g., purchases using both SNAP and cash income—vary), effectively increasing the price of SSBs for SNAP participants and potentially lowering the quantity purchased. A previous ERS study estimated that a 20-percent tax-induced price increase on sweetened beverages would decrease total daily beverage intake a small amount—37 calories—for the average adult because SSBs make up a very small portion of household food budgets and consumers can substitute to nontaxed food or beverages that may contain added sugars and calories.”

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