FarmPolicy

August 18, 2019

Last Report: Personal Note; Ag Economy; Trade; and, Regulations

Personal Note

I remember the time in 2002 I tried to explain to my wife an idea I had about summarizing newspaper articles relating to farm policy issues for busy people at work who didn’t have time to read as much as they wanted to.

Now the time has come to stop writing the daily reports.

Thanks so much to the over 200 individuals who took time the past couple of weeks to share with me their appreciation for the reports; here are reflective examples of what these very thoughtful notes from readers said:

“Everyone always says ‘make sure you get the farm policy update’ because everyone knows it’s the best.”

You’ve been a must-read for thousands.”

“I’ve shared your site with dozens of people over the years, always saying ‘sign up for Farmpolicy.com. It is the very best source for ag news anywhere.’ This is one of the few places where information is gathered and shared without commentary.”

“Your willingness to provide this early-morning update day after day, without fail, has been a wonderful contribution.”

“I have marveled at the discipline and effort required to bring ‘farm policy’ to my east coast desk early in the day.”

“Your daily surveys are the best-written, most comprehensive, and most objective news source that I have seen for a long time.”

“In addition, your integrity in reporting is deeply appreciated. There is a lot that gets said in ag circles, and you screened out the chaff. Your accuracy in reporting was always highly valued as well. Only you could have provided that unique combination of an ag economist, an ag attorney, and a journalist. The ag community has richly benefited from your dedication and commitment to FarmPolicy.com.”

“Distilling the information from numerous sources, sites, and newspapers is an overwhelming task that you accomplished with great professionalism. What you provided was accurate, complete, and extremely valuable.”

And Rep. Adrian Smith (R., Neb.) tweeted yesterday: “Thank you to Keith Good for his years of ‪#ag reporting. Sad to see ‪@FarmPolicy end, but I wish him all the best in his new chapter.”

Thanks to all for reading FarmPolicy.com.

 

Agricultural Economy

Sarah Mishkin reported yesterday at The Financial Times Online that, “The rainy season in California is nearly over with barely anything to show for it, and city dwellers and farmers across California are bracing themselves for a fourth straight year of crippling drought.

“Many are having to change how they run their homes and businesses to save water — although water experts and state officials say the reduction in water usage is not happening fast enough.”

The FT article explained that, “The state’s $50bn agricultural industry has been hard hit as some farmers ran out of water. Last year a quarter of the rice fields in the Sacramento Valley were left fallow as farmers ran out of water or realised they could make more by selling it than by growing crops, said Mike Wade, executive director of the California Farm Water Coalition. Some citrus farmers in the San Joaquin Valley ripped out their groves, as did some almond farmers whose trees require constant watering to stay alive.

“For many farmers, that trend will continue. ‘You got farmers last year on the very, very ragged edge,’ said Mr Wade, ‘though some with high-value water transfers [purchases] could squeak by.’”

Bloomberg writer Randall Hackley reported yesterday that, “A day after California imposed mandatory water restrictions to battle a four-year drought, a new study on global warming suggests the worst is yet to come.

The average number of days with temperatures higher than 95 degrees Fahrenheit (35 degrees Celsius) may double or even triple by the end of the century, threatening one of the world’s richest agricultural regions. At the same time, $19 billion in coastal property will likely disappear as sea levels rise, the study found.”

And the Los Angeles Times editorial board noted in yesterday’s paper that, “Residents of large urban areas have weathered California’s current drought, well into its fourth year, without making many substantial changes. Los Angeles was shielded from the full impact by water stored in reservoirs. Many Sacramento residents still have no water meters.

It’s different now, and good for Gov. Jerry Brown for saying so — and for doing something about it. The governor used Wednesday’s survey of the shockingly paltry Sierra snowpack to underscore the urgent need for water conservation and to impose the first-ever statewide mandatory water cutbacks.”

Meanwhile, Todd C. Frankel reported in today’s Washington Post that, “Most signs of California’s unrelenting drought are easy to spot, with mountaintops that should be snow-peaked this time of year stained brown and reservoirs in the heart of the state already half-empty.

But the most alarming feature of the state’s water shortage remains hidden from view, scientists say. California is running low on groundwater, the vast pools of water stored in underground aquifers that took thousands of years to fill up but are now being drained to irrigate farm fields and run sink taps.

Groundwater usage has surged as the state’s drought has dragged on, jumping to an estimated 65 percent of the fresh water used in 2014, from under 40 percent in normal years. This year, that number could hit 75 percent.”

The Post article noted that, “Already, the state is showing signs of groundwater exhaustion. The water table is dropping two feet a year in parts of the thirsty, agricultural Central Valley.”

Veronica Rocha reported yesterday at the Los Angeles Times Online that, “Downtown Los Angeles and 13 other Southern California cities just went through their warmest March since record-keeping began in 1877, according to the National Weather Service…The latest records come as California enters its fourth year of drought…”

In other news, University of Illinois agricultural economists Darrel Good and Scott Irwin indicated yesterday at the farmdoc daily blog (“The Acreage Puzzle”) that, “The release of the USDA’s Prospective Plantings report on March 31 initiated the annual ritual of trying to account for all the U.S. crop acreage. The primary purpose of that exercise is to anticipate potential differences between planting intentions and actual plantings, both for all crops and for individual crops. We outlined the acreage accounting process in two previous farmdoc daily articles last spring (April 4, 2014; April 9, 2014). Our analysis showed that it is very difficult to explain the variation in total acreage of crop land from year-to-year. Even so, acreage accounting based on planting intentions estimates may provide some insight into how the final estimate of crop acreage may differ from intentions, at least directionally. Last year, for example, we concluded that planted acreage of principal crops might turn out to be 2 to 4 million acres larger than intentions. The final estimate of planted acreage was only 0.9 million larger than intentions. The increase may have been larger if not for more than expected prevented plantings. In this article, we expand and update the acreage accounting process of last year.”

After additional analysis, yesterday’s farmdoc update concluded by stating that: “There was not much reaction to the USDA’s March estimates for 2015 showing intentions to plant two million fewer acres of principal crops than were planted in 2014. Some decline was expected due to lower commodity prices than experienced a year earlier. However, the calculation of likely total crop land in 2015 based on March planting intentions, current CRP enrollment, zero prevented plantings, and small double-cropped acres of soybeans is surprisingly low. The total is 6.4 million less than the average of the previous eight years and 4.2 million acres below the lowest total during that period. This analysis suggests that one might anticipate slightly larger estimates of planted acreage in June, particularly if conditions point to minimal prevented planted acreage. One needs to be cautious in reaching such a conclusion, however, primarily due to the sampling variability that is inherent in the planted acreage estimates. If acreage estimates for principal crops do increase in the future, we expect the magnitude to be relatively small, in the range of 1 to 3 million acres, with the increase likely to be for soybean acreage.”

Also, Chuin-Wei Yap, Jess Newman and Jacob Bunge reported in today’s Wall Street Journal that, “Chinese food company Cofco Corp. is on a determined shopping spree.

“In a few short years, Cofco has spent a couple billion dollars quietly buying up Australian cane fields, French vineyards and soybean pastures in Brazil, helping it become one of the world’s largest food companies. Now, Cofco is exploring deals in the world’s biggest exporter of agricultural commodities: the U.S.

“Little known globally but pervasive in China, Cofco is bulking up to become the Chinese answer to U.S. grain and meat giant Cargill Inc.”

The article noted that, “Once the government arm for importing food staples when China was poor and isolated, the state-run company rode the country’s rise to a nation with middle-class consumers. Cofco—the officially adopted abbreviation of China National Cereals, Oils and Foodstuffs Corp.—now owns food-producing assets on five continents. Last year, it spent $2.7 billion to acquire Dutch grain trader Nidera BV and 51% of Noble Group’s agriculture unit, gaining footholds in the breadbasket regions of South America and central Europe.

“‘We want to get more involved in other parts of the world, especially in the Americas, where a lot of the grain is grown, shipped and exported to other markets like China,’ said Paul Liu, Cofco’s head of North America.”

 

Trade

Adam Behsudi reported yesterday at Politico that, “Senate aides have circulated a tentative date of mid-April for advancing ‘fast-track’ trade legislation in the recognition that Sens. Orrin Hatch and Ron Wyden have to move quickly to finalize a deal on the bill or risk losing their chance to get it passed by the end of the spring session, several lobbyists and congressional sources have told POLITICO.

Under the proposed schedule, the senators would introduce the trade promotion authority bill on April 13, the day lawmakers return from their two-week recess, followed by a Senate Finance Committee hearing April 15 and a markup on April 21, the sources said.”

The Politico article added that, “Quick movement on the bill, which the White House is seeking to expedite congressional consideration of a sprawling Asia-Pacific trade deal, could send Senate Majority Leader Mitch McConnell the signal to carve out floor time in the upcoming six-week legislative period — a session that will be jammed with major issues ranging from the budget reconciliation process to political fallout over the nuclear energy deal with Iran, and from cybersecurity legislation — a priority of the Kentucky Republican — to the highway funding bill.

“Meanwhile, the fate of Trans-Pacific Partnership with Japan and 10 other Asia-Pacific countries hangs in the balance. The legislation is considered vital for easing congressional passage of the deal, which would be the biggest in world history, because it would shield it from amendments and put it to a simple up-or-down vote. Before countries put their final offers on the table, they’ve said they want assurance through the legislation that lawmakers won’t be able to tear the agreement apart during congressional debate — and their trade ministers have been growing more vocal about the need for the bill as a TPP gathering meant to wrap up the deal approaches in late-May.”

 

Regulations

Donnelle Eller reported in yesterday’s Des Moines Register that, “Three northwest Iowa counties that Des Moines Water Works is targeting with legal action could get some help in the battle. So, too, could the Des Moines utility.

“The Iowa Drainage District Association is asking about 40 counties and 20 corporations to join the counties’ fight, and the Iowa Farm Bureau says it’s assessing how it can best help in the battle.”

The article noted that, “In January, Des Moines utility leaders decided to sue drainage districts in Sac, Calhoun and Buena Vista counties, claiming a system of underground tiles provides a conduit for high levels of nitrates to enter the Raccoon River, a source of drinking water for 500,000 residents in central Iowa.

“On the other side, the Sierra Club in Iowa said it will seek to intervene in the case. And several farm, environmental and consumer groups, both in Iowa and the nation, are closely watching the high-profile case.”

Timothy Cama reported yesterday at The Hill Online that, “The Environmental Protection Agency (EPA) is restricting new products and uses of neonicotinoid pesticides that have been blamed for declines in bee populations.

“The agency sent letters Thursday to companies that have applied to use neonicotinoids outdoors to say that it is not likely to issue new use permits until it has a better understanding of the threat the pesticides pose to young and developing bees.”

Lydia Wheeler reported yesterday at The Hill Online that, “Environmentalists are outraged that the Environmental Protection Agency is allowing an herbicide that contains glyphosate to be used in nine more states, despite growing concerns that the chemical probably causes cancer.

“Last week, the United Nations World Health Organization’s International Agency for Research on Cancer elevated its risk assessment of glyphosate to ‘probably carcinogenic to humans.’

“On Tuesday, the EPA approved the glyphosate-containing herbicide Enlist Duo for agricultural use in nine states ­— Arkansas, Kansas, Louisiana, Minnesota, Missouri, Mississippi, Nebraska, Oklahoma and North Dakota — in addition to the six states in which it had previously been approved for use on genetically engineered crops.”

An update yesterday at FoodMarket stated that, “The National Association of Egg Farmers (NAEF), representing egg farmers nationwide, says the media has been misinformed about egg production practices. This has led some food companies to source their eggs from cage-free farmers believing it is more humane or better from a food safety perspective. Today’s modern conventional cages used in producing eggs provide:

“A humane way of producing eggs as evidenced by extensive scientific research, provide a safe and wholesome egg, and provide a lower cost for a high quality protein product.”

Ed Silverman reported in today’s Wall Street Journal that, “Imagine a world where medical procedures are derailed regularly because patients are resistant to antibiotics. And that day may be growing nearer—thanks, in part, to increasing use of these medicines for bulking up or preventing disease in food-producing livestock.”

The Journal article stated that, “Antibiotic resistance has been blamed for at least two million human illnesses and 23,000 deaths annually in the U.S. alone, according to the Centers for Disease Control and Prevention. And about 70% of antibiotics used to treat Americans are also used in livestock, says the Natural Resources Defense Council.

“Meanwhile, the amount of antibiotics consumed by food-producing animals in the U.S. is expected to rise by about 20% between 2010 and 2030, according a recent study in the Proceedings of the National Academy of Sciences.

“Mindful of the problem, the Obama administration last week issued an action plan to thwart antibiotic resistance. The goal is to control the spread of so-called superbugs by 2020, and the plan outlines five goals to help accomplish this.”

Today’s article added that, “But critics say details for combating antibiotic usage in livestock are largely insufficient. ‘We’re facing a crisis,’ says U.S. Rep. Louise Slaughter (D-N.Y.), who has repeatedly introduced legislation to curb antibiotic use in livestock. ‘But we’re largely facing government inaction.’

“For its part, the White House points to an FDA plan in which drug makers have agreed to voluntarily curtail antibiotic use for promoting weight gain in animals, starting the end of next year. The companies are supposed to remove language from product labeling saying their antibiotics can be used for this purpose.

“This is an important point. Weight gain makes animals better suited for increased food production, but can also encourage unnecessary antibiotic use. Meanwhile, the medicines will still be allowed for preventing disease and experts worry that this is, effectively, a loophole that may perpetuate overuse.”

Keith Good

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