FarmPolicy

September 18, 2019

Rep. McGovern Address Hunger Issues

Categories: Farm Bill /Nutrition

Rep. Jim McGovern (D., Mass.) addressed issues associated with hunger in America on the House floor yesterday.  A transcript of his remarks follows.

Mr. Speaker, thousands of people will gather in Washington, D.C., this weekend for Feeding the 5000, an event designed to bring awareness to the issue of food waste. Participants will be served a communal meal made entirely out of food that would otherwise have been discarded—in other words, wasted. Since 2009, Feedback, a global environmental organization working to end food waste, has hosted dozens of Feeding the 5000 events in cities across the globe.

I am pleased to see so many local partners—including government agencies, charitable organizations, NGOs, industry, and chefs—joining together to call attention to food waste, because the truth of the matter is we will need all of these partners working together to solve the issue of food waste.

Last year, the USDA announced their first ever food waste reduction goal, calling for a 50 percent reduction in food waste by 2030. USDA is working with charitable organizations, faith- based groups, and the private sector, and I believe this goal is 100 percent achievable.

American consumers, businesses, and farms spend an estimated $218 billion per year growing, processing, transporting, and disposing of food that is never eaten. Up to 40 percent of all food grown is never eaten; 40 to 50 million tons of food is sent to landfills each year, plus another 10 million tons is left unharvested on farms. This food waste translates into approximately 387 billion calories of food that went unconsumed. With 50 million Americans—including 16 million children— struggling with hunger every year, these are startling figures.

We know food waste occurs throughout the supply chain, from harvesting to manufacturing, to retail operations and consumer habits. But we must do more to reduce food waste at every stage, recover food that would otherwise have been wasted, and recycle unavoidable waste as animal feed, compost, or energy.

Thankfully, there is already a lot of great work being doing to raise awareness about the problem of food waste. Just last week, I attended a screening of the documentary film called ‘‘Just Eat It’’ at Amherst Cinema, organized by The Food Bank of Western Massachusetts. ‘‘Just Eat It’’ follows a cou- ple, Jen and Grant, as they stop going to the grocery store and live solely off of foods that would have been thrown away. Jen and Grant were able to find an abundance of perfectly safe and healthy food available for consumption that would have been thrown away.

It is exciting to see new partnerships forming to study food waste and find ways to use this perfectly good food to reduce hunger in our communities. One such private-public collaboration, ReFED, has brought together over 30 business, government, and NGO leaders committed to wide-scale solutions to U.S. food waste.

In March 2016, ReFED released a Roadmap that charts the course for a 20 percent reduction of food waste within a decade. The Roadmap calls for farmers to reduce unharvested food and create secondary markets for imperfect produce. It calls on manufacturers to reduce inefficiencies, make packaging adjustments, and standardize date labeling. It calls on food service companies to further implement waste tracking and incorporate imperfect produce and smaller plates into restaurants. It urges the Federal Government to strengthen tax incentives for food donations and consider standardized date labeling legislation.

The good news is that many in the industry are already taking steps to dramatically cut down on wasted food by implementing robust donation programs. For example, Starbucks recently announced it will soon scale up its successful food donation pilot program nationwide. In partnership with the Food Donation Connection and Feeding America, Starbucks will donate unsold food from more than 7,000 company-operated stores—salads, sand- wiches, and other refrigerated items— to the Feeding America food bank network. By 2021, that amounts to almost 50 million meals.

Our college campuses are also stepping up. Both the Campus Kitchens Project and the Food Recovery Net- work will work with college dining facilities and students to provide hunger relief in their local communities. In my congressional district, Becker College, Holy Cross College, Smith College, the University of Massachusetts Amherst, and Worcester Polytechnic Institute all have campus food recovery initiatives.

Over the past 35 years, Feeding America has demonstrated an outstanding commitment to ensuring food that would otherwise have been wasted makes its way to food banks across the country and into the homes of families in need. There are dozens of other in- dustry leaders also taking steps to reduce food waste by implementing manufacturing upgrades, maximizing harvests, and utilizing recycling initiatives.

I appreciate the efforts of the Food Waste Reduction Alliance in bringing together industry partners to reduce food waste, shrink the environmental footprint, and alleviate hunger in our communities.

Reducing food waste is one step we can take toward our goal of ending hunger in the United States and throughout the world. I am pleased to see so many partners at every level of the food supply chain taking action to reduce food waste, but there is still more that needs to be done. Let’s solve the problem of food waste, and let’s end hunger now.

Lackluster Farm Economy Could Impact Lenders

Reuters writer P.J. Huffstutter reported today that, “Leading U.S. agricultural lenders, including some commercial banks and the Farm Credit System (FCS), could be impacted by the souring farm economy, in part because growth in their loan portfolios in recent years has been heavily rooted in farmland appreciation, a report released on Tuesday by Fitch Ratings said.

“But while such institutions could see the quality of some of their assets deteriorate, the relative strength of the current Farm Credit System and a less volatile interest rate should ease any adverse impact on lenders, Bain Rumohr, director of Fitch Ratings, told Reuters.”

The article explained that, “While there are some parallels between this farm downturn and the agricultural crisis of the 1980s, the differences are significant enough that the result on the U.S. lending sector should be more benign, the report said.

“As a result, Fitch doesn’t expect the sector’s worsening conditions to affect the ratings of FCS or the individual banks in the system.”

Ms. Huffstutter added that, “Economic erosion continued to squeeze Midwest farmers’ capital expenditures and pressure farmland values and cash rents in the first quarter of 2016, according to quarterly reports on the agricultural economy released last week by the Federal Reserve Banks in St. Louis, Kansas City and Chicago. Repayment rates for non-real estate farm loans also continued to sour.”

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Federal Reserve Reports- Farmland Values- and Cash Rents- Decline

Wall Street Journal writer Jesse Newman reported last week that, “Real farmland values in parts of the Midwest fell at their fastest clip in almost 30 years during the first quarter, according to a regional Federal Reserve report on Thursday.

“Falling crop prices have weighed on land values from Kansas to Indiana over the past two years as farm income declined and investors who had piled into the asset at the start of the decade retrenched.

Three regional Federal Reserve banks all reported year-over-year declines in farmland values in their districts and said the drops would continue, though their forecasts were based on surveys taken before the recent rally in corn and soybean prices.”

Ms. Newman explained that, “The St. Louis Fed region that includes parts of the U.S. agricultural heartland in Illinois, Indiana and Missouri reported the steepest decline, with the average price of ‘quality’ farmland falling 6.4% in the quarter, the biggest decline since its survey began in 2012 [see related graph below].

The Chicago Fed said prices for similar land in its district fell 4% from a year ago, the seventh successive quarterly decline. Adjusted for inflation, prices in an area that includes parts of Illinois, Indiana, Iowa, Michigan and Wisconsin fell 5%, the biggest quarterly drop since 1987.

“Declines in the Kansas City Fed’s district, which includes Kansas and Nebraska, were less pronounced, but the bank said prices for nonirrigated cropland fell 4% in the quarter [see related graph below].”

The Journal article added that, “The drop in land values has been accompanied by deteriorating credit conditions, with more loans taken out to cover farm operations even as repayment rates fell on existing debt.”

Christopher Doering reported in Saturday’s Des Moines Register that, “Iowa was among the hardest hit states. Farmland prices as of April 1 dropped 5 percent compared with a year earlier, bringing the string of year-over-year declines in Iowa’s farmland to 10 quarters. During the first three months of 2016, land prices in Iowa declined 1 percent.

The decline is forecast to continue. David Oppedahl, senior business economist at the Chicago Fed, said nearly two-thirds of the 200 agricultural bankers surveyed expect values to drop in the second quarter, with the rest predicting them to remain stable.”

Cash Rents

With respect to cash rents (see additional background here and here), the St. Louis Fed noted that, “Table 2 indicates that cash rents for quality farmland and ranchland or pastureland also fell in the first quarter of 2016 compared with a year earlier. After falling by 9.5 percent in the fourth quarter of 2015, cash rents on quality farmland fell by an additional 7.5 percent in the first quarter (relative to a year earlier).”

The Chicago District noted that, “In 2016, the index of inflation-adjusted farmland cash rental rates was down more than the index of inflation- adjusted agricultural land values (see chart 2). Indeed, 2016’s real cash rental rates were 13 percent below their level in 1981, whereas real farmland values were still 38 percent above their 1981 level. Given the decrease in cash rental rates was larger than that in farmland values, the spread between their respective indexes widened for the seventh year in a row. This widening gap reflected relatively stronger demand to own farmland than to lease it, as land values did not fall as much as the earnings potential of farmland (represented by cash rental rates). Greater uncertainty about the profitability of crop production likely held down bids by farmers to rent farmland on a cash basis; there were reports of some farms coming up for lease again this year after initial rental arrangements fell through. Not surprisingly, the declines in crop prices of recent years seemed to lower farmers’ expectations for turning a profit on leased acres in 2016.”

And the Kansas City Fed stated that, “Although most costs associated with agricultural production have held firm, cash rents declined for all farmland types. After remaining positive through most of 2015, ranchland cash rents dropped in the first quarter, declining 10 percent from a year earlier (Chart 9).”

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U.S. Crop Prices Surge After Government Report

Christopher Doering reported in today’s Des Moines Register that, “Farmers in Iowa and across the Corn Belt struggling to reach profitability this year got some good news from the U.S. Department of Agriculture on Tuesday.

The USDA said producers are expected to grow a record 14.43 billion bushels of corn, and 3.8 billion bushes of soybeans, which would be the third best crop ever. While the bumper crops are likely to cap the possibility of a large rebound in prices anytime soon, the federal government surprised the market by increasing its estimates for feed usage and exports. Corn and soybean prices soared following the prospect of higher-than-expected demand.”

Mr. Doering added that, “USDA forecast average farm prices for corn and soybeans at $3.35 and $9.10 a bushel, respectively, in 2016. A year ago, cash prices for corn were $3.60 and soybeans $8.85. Iowa was the nation’s biggest producer of both crops in 2015.”

Today’s article noted that, “A prolonged slump in commodity prices has squeezed farm income, forcing some producers to cut spending or turn to their banks for help. Farm income this year is forecast to fall to $54.8 billion, its lowest level since 2002 and down 56 percent from the high of $123.3 billion just three years ago, according to the USDA.”

Jesse Newman reported in today’s Wall Street Journal that, “U.S. crop prices surged Tuesday, extending an unexpected run in agricultural prices that has drawn in big investors like hedge funds.

The gains promise much needed relief for a farm economy battered by the slump in prices for major row crops over the past three years.

“At the same time, they could mean higher prices for consumers going into the summer.”

Ms. Newman explained that, “The catalyst was a closely watched government report that said rising exports would eat into the glut in farm commodities by next year. The big surprise was a projection that U.S. soybean inventories would fall by a steep 24%.”

Corn futures rose 3.3% to $3.81 a bushel,” the Journal article said.

And Reuters writer Mark Weinraub reported yesterday that, “May 10 World and U.S. soybean supplies will be tighter than expected for the next two years due to reduced harvests in South America and rising global demand, the U.S. Agriculture Department said on Tuesday.

“The report jolted the soy market, with the most active Chicago Board of Trade futures soybean contract surging 4.5 percent and hitting its highest since August 2014. Soymeal futures rallied to a 16-1/2-month peak.”

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Iowa State University Survey- Cash Rents Down Slightly

A recent survey from Iowa State University (ISU) Extension indicated that cash rents in Iowa have decreased slightly in 2016.

More specifically, the ISU publication included the following table and map:

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Prices Received Improve, Slightly

USDA’s National Agricultural Statistics Service (NASS) indicated last month in its April Agricultural Prices report that, “The corn price, at $3.57 per bushel, is unchanged from last month but is down 24 cents from March 2015.”

The NASS update added that, “The soybean price, at $8.56 per bushel, increased 5 cents from February but is $1.29 below March a year earlier.”

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