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Tuesday Morning Update: Baseline Updates- Policy Issues; Animal Research; Trade; Iowa Ag Summit; and, the Ag Economy

Baseline Updates- Policy Issues

On Monday, the Congressional Budget Office (CBO) released its updated baseline Budget Projections for 2015 to 2025.

A brief overview of CBO’s January baseline projections can be found here.

Also on Monday, the Food and Agricultural Policy Research Institute (FAPRI) released its latest baseline-briefing book.

Both baseline updates showed a change in farm program spending projections from previous baseline reports.

Politico writer David Rogers, and Philip Brasher of Agri-Pulse, separately examined the numbers in greater detail on Monday- details of their reporting can be found at this FarmPolicy.com update from yesterday.

More broadly, yesterday’s FAPRI update stated that, “Lower prices have resulted in a large decline in crop producer income and could result in significant federal spending under new programs established by the 2014 farm bill. After reaching record levels in 2014, most livestock sector prices are also expected to decline in 2015. As a result, net farm income is projected to fall sharply.”

Average projected corn prices recover to $3.89 per bushel for the 2015/16 marketing year in response to reduced U.S. production. Wheat and soybean prices both fall in 2015/16, to $5.17 per bushel and $9.29 per bushel, respectively, given continued large global supplies,” FAPRI said.

In addition, CBO’s outlook for the SNAP program is available here, while the CBO’s outlook for child nutrition programs can be found here.

Meanwhile, Marcia Zarley Taylor reported yesterday at DTN (link requires subscription) that, “U.S. crop farmers have just weeks left to make their five-year farm program decision. For most, the March 31 choice will be narrowed between ARC-County and Production Loss Coverage (PLC). Many corn-soybean growers in the northern Corn Belt see good reason to go with what they call the ‘surer thing’ of ARC payments, DTN interviews have found.

“Even in counties that experienced bumper yields in 2014, growers may face little or no ARC payments in 2014 but still are banking that ARC will outpay PLC for 2015 and beyond. For example, McLean County, Illinois, averaged an amazing 217 bpa corn yield in 2014, so stands to collect no ARC payments, the University of Illinois estimates. However, with a return to average or below average yields in 2015, ARC-County payments could jump to $78/base acre in 2015.”

The DTN article noted that, “Illinois Economist Gary Schnitkey, a guest speaker in DTN’s free March 12 webinar on ARC-PLC choices, found a north-south divide in where ARC is likely to make corn payments in 2014, based on NASS county production data. Many major corn counties are expected to generate ARC-County payment above $40/base acre, except in a band from eastern Kansas to southern Indiana where growers experienced bumper 2014 corn yields, Schnitkey found (see county maps http://farmdocdaily.illinois.edu/…). Some Illinois counties averaged 220 bpa corn yields in 2014, so their revenue per acre effectively disqualified them for government payments that year. On the other hand, Minnesotans are likely to win the ARC lottery with 2014 payments close to $80/base acre.

Art Barnaby, a Kansas State University economist, found similar ARC-PLC patterns in his analysis of potential farm program payments nationwide.”

In other Farm Bill related news, Senate Ag Committee member Heidi Heitkamp (D., N.D.) yesterday “called on the U.S. Department of Agriculture (USDA) to clarify how it is making offsite wetland determinations on farmers’ land in North Dakota and across the country, and improve certainty for farmers and their operations for the upcoming growing season.”

Recall that on February 27, the House Appropriations Subcommittee on Agriculture held a budget hearing and heard testimony from USDA- Natural Resources Conservation Service (NRCS) Chief Jason Weller. During the discussion portion of that hearing, the issue of remote wetlands determination came up.

More details on this issue were posted yesterday at FarmPolicy.com.

Erica Goode reported in today’s New York Times that, “Neatly tilled fields have long been a hallmark of American agriculture and its farmers, by and large traditionalists who often distrust practices that diverge from time-honored methods.

But soil-conservation farming is gaining converts as growers increasingly face extreme weather, high production costs, a shortage of labor and the threat of government regulation of agricultural pollution.”

The Times article noted that, “‘It’s a massive paradigm shift,’ said Ray Archuleta, an agronomist at the Natural Resources Conservation Service, part of the federal Agriculture Department, which endorses the soil-conservation approach.

Government surveys suggest that the use of no-tillage farming has grown sharply over the last decade, accounting for about 35 percent of cropland in the United States.

For some crops, no-tillage acreage has nearly doubled in the last 15 years. For soybeans, for example, it rose to 30 million acres in 2012 from 16.5 million acres in 1996. The planting of cover crops — legumes and other species that are rotated with cash crops to blanket the soil year-round and act as green manure — has also risen in acreage about 30 percent a year, according to surveys, though the total remains small.”


Animal Research Facility

Recall that a recent New York Times article from January focused on animal production research procedures and operations at a federal facility in Nebraska.

On February 13, the House Appropriations Subcommittee on Agriculture held a budget hearing and heard testimony from USDA Inspector General Phyllis Fong. At the hearing, lawmakers inquired about The New York Times report and expressed support for the IG to investigate some of the issues raised in the Times article in more detail.

Yesterday, USDA released a draft report authored by a panel of outside researchers that examined current practices at the USDA’s Meat Animal Research Center and found no evidence of current animal abuse; nonetheless, USDA indicated that no new research would be undertaken at the facility until new procedures are implemented.

The USDA’s Inspector Generals office “plans to begin field work this month” in an inquiry at the Nebraska facility.

Details and reporting on this issue can be found here, at FarmPolicy.com.

Michael Moss, the reporter who penned the January New York Times article on the Nebraska research facility, indicated in today’s paper that, “Since the article was published, several members of Congress from both parties have pushed a bill to extend the federal Animal Welfare Act to shield cows, pigs, sheep and other animals used for agricultural research at federal facilities like the Nebraska center. The law, enacted in 1966, excluded those animals, focusing largely on cats and dogs used in laboratory research. Some animal-rights groups have urged that the center be closed.”



A news release yesterday from the Senate Ag Committee indicated that, “the Committee will hold a hearing on opportunities and challenges for agriculture trade with Cuba” on Tuesday, March 17.

For more background on Cuba trade issues, see this FarmPolicy.com update from last week.

Don Lee reported on the front page of yesterday’s Los Angeles Times that, “As the White House looks to wrap up years of negotiations on a highly contested Pacific Rim trade pact, administration officials are increasingly casting the agreement as vital to helping the U.S. face its most daunting economic rival: China.

“The proposed Trans-Pacific Partnership, or TPP, would be the largest trade deal in American history, involving the U.S., Japan and 10 other countries that combined make up 40% of the world economy. China isn’t among them.

“In recent weeks, one Obama official after another has hammered away at the same line of argument: It’s crucial that Congress supports the TPP — including passing a related trade-promotion bill that would strengthen the president’s negotiating hand — because the alternative is that China, not the U.S., will write the rules of global trade.”

A recent article at The Japan Times Online stated that, “Chief negotiators from countries involved in a Pacific Rim free trade initiative resumed talks Monday in Hawaii, as the 12 negotiating members attempt to reach a deal by the end of spring…Koji Tsuruoka, Japan’s chief TPP negotiator, told reporters before departing for Hawaii last week that prolonged U.S. debate on the so-called Trade Promotion Authority ‘cannot help but affect the overall negotiations,’ suggesting progress may be limited during the Hawaii meeting.”


Iowa Ag Summit

The Wall Street Journal editorial board indicated today that, “Some of our media friends gripe that Iowa is the wrong state to start the GOP presidential race because it’s full of social conservatives. The real reason it’s a bad place to start is because it’s the heartland of Republican corporate welfare.

“Witness this weekend’s pander fest known as the Ag Summit, in which the potential 2016 candidates competed to proclaim their devotion to the Renewable Fuel Standard and the 2.3-cent per kilowatt hour wind-production tax credit. The event was hosted by ethanol kingpin Bruce Rastetter, co-founder of Hawkeye Energy Holdings, who interviewed the candidates and made sure each one had a chance to light a votive candle to his cause.”

Chris Clayton reported earlier this week at the DTN Ag Policy Blog (“GOP Candidates Explain Views on Immigration Reform”) that, “While farm organizations may favor a comprehensive immigration overhaul, Republican presidential contenders offer some differing stances on how to deal with immigration, an issue that continues to divide the GOP given the battles with President Barack Obama over his executive actions.”

The update took a closer look at what the GOP presidential hopefuls said about immigration issues at the Iowa Ag Summit.

Also with respect to immigration, Noah Bierman reported last week at the Los Angeles Times that, “No GOP lawmaker worked harder than Rep. Devin Nunes to distance himself from the right flank of his party when it risked shutting down a crucial government agency this week to fight President Obama’s immigration policy.

“In rebuking ‘a small group of phony conservative members who have no credible policy proposals and no political strategy,’ the Tulare congressman epitomized a growing dilemma for Central Valley Republicans like him.”

The article added that, “Like most Republicans, these GOP congressmen publicly oppose Obama’s unilateral actions to loosen immigration enforcement. But the Central Valley lawmakers have resisted their colleagues’ efforts to wage a larger battle with the president that would highlight Republican opposition to broader immigration changes favored by many Latino voters and agricultural interests in their districts.

“In fact, two of Nunes’ Central Valley colleagues — Rep. Jeff Denham of Turlock and Rep. David Valadao of Hanford — have been among the most outspoken Republicans trying to push their party toward embracing broad immigration changes.

“Their districts have among the highest proportions of Latino residents and voters in the country. Yet their party has been striking an especially harsh tone on immigration that intensified during last year’s elections, a factor that has hurt the GOP’s efforts to rebuild a brand in California that began eroding two decades ago over the very same issue. The difficulty facing Central Valley Republicans may also offer a preview for other regions of the country that still see the nation’s changing demographics in more abstract terms.”


Agricultural Economy

Pilita Clark reported last week at The Financial Times that, “General Mills and Coca-Cola, makers of some of the world’s best known snacks and drinks, have called for bold measures to conserve California’s water supplies as the state enters its fourth year of drought.

“The pair is among a group of businesses in the US’s most populous state that are backing a plan to ensure the successful implementation of two water management strategies approved last year.”

Reuters writer Dominique Patton reported yesterday that, “China’s largest pig breeder will increase production by more than 20 percent this year, despite overcapacity in the sector, aiming to benefit from higher productivity over the country’s many small farmers, chairman Wen Pengcheng said.”

And a recent item by Google’s chief engineer indicated that, “‘The farm of the future will involve multiple lightweight, small, autonomous, energy-efficient machines (AgBots) operating collectively to weed, fertilize and control pest and diseases, while collecting vasts amount of data to enable better management decision making,” according to Queensland University of Technology (QUT) robotics Professor Tristan Perez.

“‘We are starting to see automation in agriculture for single processes such as animal and crop drone remote monitoring, robotic weed management, autonomous irrigation,’ he said. ‘There is enormous potential for AgBots to be combined with sensor networks and drones to provide a farmer with large amounts of data, which then can be combined with mathematical models and novel statistical techniques (big data analytics) to extract key information for management decisions — not only on when to apply herbicides, pesticides and fertilizers but how much to use.’”

Keith Good