FarmPolicy

April 20, 2014

Farm Bill; Ag Economy; Food Safety; and, Financial Regulation

Farm Bill

Erik Wasson reported yesterday at The Hill’s On the Money Blog that, “Top House Republicans on Thursday pressed departing Health and Human Services Secretary Kathleen Sebelius to rein in what they see as food stamp cheating by state governments.

“GOP leaders have been angered that the deficit reduction from the new farm bill could be less than expected because states have found a way to thwart a new restriction on food stamp eligibility in the legislation.

“House Agriculture Committee Chairman Frank Lucas (R-Okla.) and Energy and Commerce Chairman Fred Upton (R-Mich.) wrote to Sebelius seeking answers about how the department administers the Low Income Energy Assistance Program (LIHEAP) and whether it can prevent states from ‘misusing’ the program to get more food stamp dollars.”

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Food Price Update (March CPI)

The Department of Labor noted this week, that food prices increased by 0.4% in March. Drought in Brazil and the U.S., particularly in California, have put a dent in output. Prices for producer products are set to increase as well. And on the East Coast, cold temperatures and rain have also negatively impacted spring crops.

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Ag Economy; Biotech; Regulations; and, Immigration

Agricultural Economy

Yesterday, the Federal Reserve Board released its Summary of Commentary on Current Economic Conditions. Commonly referred to as the “Beige Book,” the report included several observations with respect to the U.S. agricultural economy.

The Chicago District indicated that, “The slow arrival of spring-like weather delayed fieldwork. However, concerns about a delayed start to planting were muted, especially in Illinois and Indiana where 2013 crops performed well after being planted late. The mood among farmers improved as crop prices increased enough from winter lows that breakeven outcomes now seem possible. Hence, there has been more forward contracting of crops than a year ago to manage risk. Higher soybean prices still support a shift in planting intentions toward soybeans and away from corn, but not as much as earlier this year. Fertilizer costs decreased from a year ago, and seed costs were flat. The livestock sector moved further into the black, as milk, hog, and cattle prices increased. Given lower numbers of hogs and cattle available to market, animals were fed longer in order to gain additional weight. Although hog operations were still battling a virus that killed many piglets, there were signs that the worst had past.”

While the Kansas City District noted that, “Crop growing conditions remained dry in March, while livestock prices increased further since the last survey period. The winter wheat crop was in need of moisture and rated in mostly fair to poor condition. Spring fieldwork began, and District farmers followed national trends by intending to plant slightly more soybeans and less corn. With crop prices still lower than a year ago, farm operating loan demand rose this year as farmers financed a larger portion of crop input costs. However, global supply concerns supported strong exports, and crop prices rose to a six-month high during the reporting period. Low cow inventories kept feeder cattle prices elevated, and strong export demand supported higher fed cattle prices. In addition, hog prices surged as the on-going swine virus cut inventories further.”

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Federal Reserve Beige Book: Observations on the Ag Economy- April 2014

Today the Federal Reserve Board released its Summary of Commentary on Current Economic Conditions. Commonly referred to as the “Beige Book,” the report included the following observations with respect to the U.S. agricultural economy:

Fifth District- Richmond- “Persistent cold temperatures and wet field conditions delayed planting of row crops and in some locations, limited days out in the fields. There were reports of slower small grain growth and some freeze damage to fruit trees. An agribusiness located in South Carolina reported that winter weather pushed back some of their harvesting timelines, although demand levels remained solid. Beef prices remained high and pork prices increased due to a virus currently being found in pigs. A contact reported that the spreading virus decreased the number of pigs available to farmers and reduced the number maturing to hogs.”

Sixth District- Atlanta- “While sufficient rainfall left only small pockets of dry conditions in the District, some growers reported delaying spring planting due to too much precipitation. Florida’s citrus growers continued to seek ways to mitigate the effects of citrus greening and contacts were hopeful that new research funding included in the recently approved Farm Bill would help find a solution to this problem.”

Seventh District- Chicago- “The slow arrival of spring-like weather delayed fieldwork. However, concerns about a delayed start to planting were muted, especially in Illinois and Indiana where 2013 crops performed well after being planted late. The mood among farmers improved as crop prices increased enough from winter lows that breakeven outcomes now seem possible. Hence, there has been more forward contracting of crops than a year ago to manage risk. Higher soybean prices still support a shift in planting intentions toward soybeans and away from corn, but not as much as earlier this year. Fertilizer costs decreased from a year ago, and seed costs were flat. The livestock sector moved further into the black, as milk, hog, and cattle prices increased. Given lower numbers of hogs and cattle available to market, animals were fed longer in order to gain additional weight. Although hog operations were still battling a virus that killed many piglets, there were signs that the worst had past.”

Eighth District – St. Louis- “District farmers are expected to plant 1 million fewer acres of corn in 2014 (a decline of 4 percent) relative to 2013. In contrast, District farmers are expected to plant 570,000 and 511,000 more acres of soybeans and rice this year than in the previous year (an increase of 2 percent and 37.6 percent), respectively.”

Ninth District- Minneapolis- “District agricultural conditions were mixed, with livestock and dairy producers performing well, while crop producers were in worse shape. March prices received by farmers fell from a year earlier for corn, wheat, soybeans and chickens; prices increased for cattle, hogs, milk, eggs and turkeys. While crop prices increased slightly in March from the previous month, they remain significantly below the strong levels of recent years. A freight rail backlog led to significant shipping delays reported by dry bean producers and will also likely delay getting the winter wheat harvest to market. District farmers overall intend to plant fewer acres of corn and significantly more acres of soybeans and wheat in 2014 compared with last year.”

Tenth District- Kansas City- “Crop growing conditions remained dry in March, while livestock prices increased further since the last survey period. The winter wheat crop was in need of moisture and rated in mostly fair to poor condition. Spring fieldwork began, and District farmers followed national trends by intending to plant slightly more soybeans and less corn. With crop prices still lower than a year ago, farm operating loan demand rose this year as farmers financed a larger portion of crop input costs. However, global supply concerns supported strong exports, and crop prices rose to a six-month high during the reporting period. Low cow inventories kept feeder cattle prices elevated, and strong export demand supported higher fed cattle prices. In addition, hog prices surged as the on-going swine virus cut inventories further.”

Eleventh District- Dallas- “District drought conditions continued to worsen in March, particularly in the Texas panhandle which is where much of the state’s cotton is grown. Winter wheat crop conditions deteriorated somewhat. Agricultural commodity prices rose over the reporting period, with across-the-board increases in crop prices and particularly strong gains in livestock prices. Beef prices rose to record highs in March in light of strong exports and stable domestic demand coupled with tight cattle supplies. Dairy demand boomed, especially exports, and prices for dairy products moved to record highs. According to respondents, the rise in prices has allowed all segments of the livestock industry to be profitable, an occurrence not all too common.”

Twelfth District- San Francisco- “Demand for most agricultural and resource-related goods was largely stable, but the supply was somewhat constrained as several weather-related factors held back production. Demand was stable or up for assorted crop and livestock products and particularly robust for dairy items. However, storms in parts of the District disrupted transportation of winter vegetables. Contacts’ concerns about water costs and availability mounted, and limited water for irrigation contributed to decreased yields of annual crops, including tomatoes, greens, and onions, in California’s Central Valley. Water shortages led some farmers to reduce cattle herd sizes as well. Pork production fell as some hogs in the District contracted a fatal virus.”

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Farm Bill; Ag Economy; Biofuels; Regulations; and, Climate

Farm Bill

David Rogers reported yesterday at Politico that, “After the buckets of political blood spilled over food stamps this past year, the Congressional Budget Office has quietly lowered its cost estimate for the nutrition program by $24 billion over the next decade.

“The ‘technical’ adjustment is tucked into a report issued Monday and reflects revisions in how CBO calculates what the average beneficiary receives each month under food stamps, formally known as the Supplemental Nutrition Assistance Program.

It’s just a 3 percent change but more than a little ironic after the fighting over fewer SNAP dollars that dogged the recently enacted five-year farm bill. Indeed, having announced the adjustment, CBO’s report then goes out of its way to say as little as possible about the rest of the farm bill’s costs, even with the drop in grain prices.”

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Farm Bill- Policy; Ag Economy; Biofuels; and, CFTC Issues

Farm Bill- Policy

An update posted yesterday at fibre2fashion.com reported that, “The board of the Brazilian Association of Cotton Producers (ABRAPA) has called for a speedy implementation of the World Trade Organization (WTO) panel against the US farm bill, especially in view of the conflict with US regarding the cotton subsidies.

“According to a statement issued by ABRAPA, board members of ABRAPA recently met with Brazilian Ambassador to WTO Paulo Estivallet de Mesquita, also the director of the Economic Department of the Brazilian Ministry of Foreign Affairs (MFA), and requested him to seek for quick action from the WTO panel against the US farm bill [sic].”

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Ag Economy; Farm Bill- Policy Issues; Climate; and, Data

Agricultural Economy

Donnelle Eller reported in yesterday’s Des Moines Register that, “More than ever, Craig Boot says there’s little room for error this year as Iowa farmers prepare to plant this spring.

“Prices for corn and soybeans are improving, but depending on land and other expenses, they’re close to production costs for many farmers.”

The article indicated that, “‘We’ll take care of the things we need to take care of … but as far as buying something new and green, there won’t be any big-ticket items like there were in the last few years,’ said [Jerry Mohr, who farms in eastern Iowa near Davenport] recently as he applied fertilizer on fields where he will grow corn and seed corn.

“The federal government projects that U.S. farm income this year will drop 26.6 percent from last year, hurt by lower corn and soybean prices.”

“Add to farmer concerns: Drought conditions encompass about three-fourths of the state, and continued cool temperatures have meant lingering frost in much of Iowa,” yesterday’s article said.

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Farm Bill- Policy Issues; Ag Economy; Regs; Biofuels; and, Transportation

Farm Bill- Policy Issues: Nutrition, Title I

Earlier this week on The Rachel Maddow Show (MSNBC- television), Secretary of Agriculture Tom Vilsack was asked about the minimum wage and noted that, “When you raise the minimum wage, you raise wages for 28 million Americans. About 50 percent of those Americans make less than $35,000 a year. A substantial percentage of those folks live in rural communities that I care deeply about. You raise those wages, you are absolutely going to move people out of the need for SNAP or as much SNAP as they`ve been currently receiving, the food stamps.”

Elaborating on the SNAP program, Sec. Vilsack noted that, “[B]ecause the recent farm bill, there was a conversation about potentially reducing food stamps by $40 billion. That didn`t go anywhere and it ended up being a very small reduction and many governors around the country are figuring out ways to even avoid that reduction…[S]ixty-six percent of people receiving food stamps are one of three types of individual. You`re either a child, a person with a disability, or a senior citizen. Add the 7 percent that are veterans, and you have nearly three quarters of the people receiving food stamps, not any politician is going to want to cut support for children, for senior citizens, for people with disabilities and veterans.

And then when you realized that 42 percent of food stamp recipient families are earning some kind of wage, that only 8 percent of all food stamp recipients are receiving cash welfare, this is really about the working poor. That`s why raising the minimum wage will help move people out of SNAP and out of dependence on that food assistance program.”

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CFR Interview: A Conversation with Tom Vilsack

From the Council on Foreign Relations (CFR), April 9 – “Secretary Vilsack discusses the implementation of the Agricultural Act of 2014 (Farm Bill), food security, and immigration reform, as part of CFR’s Renewing America series.

“The Renewing America series examines how policies at home directly influence the economic and military strength of the United States and its ability to act in the world.”

Speaker:
Tom Vilsack, Secretary, U.S. Department of Agriculture

Presider:
Roger C. Altman, Founder and Chairman, Evercore Partners, Inc.

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Bloomberg Video: Why the World Is Looking for U.S. Crops

From Bloomberg News, April 9–- Bloomberg’s Alan Bjerga reports on commodity prices and the California drought’s impact on food prices. He speaks with Mark Crumpton on Bloomberg Television’s ‘Bottom Line.’”

See also, “Withered California Fruit Seen Raising Food Costs.”

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GMO Labeling; Ag Economy; Rural America; EPA; CFTC; and, FDA

GMO Labeling Bill Introduced in Congress

Reuters writer Carey Gillam reported yesterday that, “A Republican congressman from Kansas introduced legislation on Wednesday that would nullify efforts in multiple states to require labeling of genetically modified foods.

“The bill, dubbed the ‘Safe and Accurate Food Labeling Act,’ was drafted by U.S. Rep. Mike Pompeo and is aimed at overriding bills in about two dozen states that would require foods made with genetically engineered crops to be labeled as such.

“The bill specifically prohibits any mandatory labeling of foods developed using bioengineering.”

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Beef Prices-All Time High, Winter Takes Toll on U.S. Farms

The front page of today’s Los Angeles Times provided an in-depth look at variables associated with record high beef prices in the U.S. Meanwhile, The Wall Street Journal explained today that a harsh winter took a toll on farms throughout the U.S. and adversely impacted many crops.

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Farm Bill- Policy Issues; Ag Economy; Biofuels; Tax Extenders; and, CFTC

Farm Bill- Policy Issues

Yesterday, USDA Under Secretary for Farm and Foreign Agriculture Services Michael Scuse testified before the House Appropriations Agriculture Subcommittee.

In his prepared remarks to the Subcommittee, Under Sec. Scuse noted that, “The President’s Budget includes a proposal to consolidate 250 field offices. However, there are steps that need to be taken to reshape and restructure our county offices and workforce before we can begin actively planning any office consolidation plan. So far, the agency has not identified any specific offices for closure and implementation of these changes will carry over beyond FY 2015.  FSA is proposing to reduce non-federal staff by 815 FTEs, saving $61.6 million, and realigning approximately 300 federal headquarters and state office oversight staff to the county offices, saving $6.8 million.

To promote increased efficiency, the IT request includes base funding to continue contract services that support modernization, development and maintenance of applications systems, and deployment support (e.g. data and database administration, testing and certification, and security). These funds will enable FSA to maintain essential program delivery and operations in the field, as well as provide support for improvements. This funding includes 65.0 million for MIDAS.”

In his opening statement, Subcommittee Chairman Robert Aderholt (R., Ala.) indicated that, “We will explore two of the more controversial proposals from the Farm Service Agency that call for a reduction of 815 non-federal permanent full time staff years and the closure of 250 county offices. While all of us on the Subcommittee are proponents of efficiencies, many of us here are not convinced that FSA has fully developed these plans and the savings associated with the proposals.”

Chairman Aderholt inquired about proposed technological advancements at yesterday’s hearing.  He noted that proposed efficiencies from fewer FSA offices are contingent on successful implementation of necessary technological variables that are used in the field offices, including the FSA “MIDAS” software.  To listen to a portion of a discussion on this issue, including remarks about MIDAS between Chairman Aderholt and Under Sec. Scuse, just click here (MP3- 1:43).

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Uncertain Tax Policy Hurts Agriculture

In response to questions from Rep. Adrian Smith (R-NE), American Farm Bureau Federation President Bob Stallman explains how uncertain tax policy creates greater risk for agriculture producers. From today’s Ways and Means Committee hearing on the benefits of permanent tax policy.

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Farm Bill- Policy Issues; EPA; Ag Economy; and, CFTC- Tuesday

Farm Bill- Policy Issues

A news release yesterday from USDA indicated that, “The [USDA] announced today that farmers and ranchers can sign-up for disaster assistance programs, reestablished and strengthened by the 2014 Farm Bill, beginning Tuesday, April 15, 2014. Quick implementation of the programs has been a top priority for USDA.”

And Daniel Looker reported yesterday at Agriculture.com that, “Agriculture Secretary Tom Vilsack told members of North American Agricultural Journalists in Washington, DC, Monday that farmers should be able to begin comparing the farm bill’s new commodity programs this summer ‘so that producers will have a good three or four months to analyze and assess these programs to make the best possible decision for their particular operation.’

“Vilsack told Agriculture.com that he expects that farmers will be able to sign up for programs before the end of this calendar year.

“Vilsack said that online decision-making tools and materials for Extension educators should be available in a month or two.”

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Farm Bill- Policy Issues; Ag Economy; and, Immigration

Farm Bill- Policy Issues

Ron Hays, of The Oklahoma Farm Report and Radio Oklahoma Network, spoke on Saturday with House Ag Committee Chairman Frank Lucas (R., Okla.) about the Farm Bill and farm policy variables at an agriculture town hall during the Oklahoma City Farm Show.

An audio replay and summary of the Chairman’s remarks from Saturday can be found here , while an unofficial FarmPolicy.com transcript of a portion of Saturday’s conversation with Ron Hays and Chairman Lucas is available here.

Chairman Lucas walked the crowd through a brief overview of the development of the 2014 Farm Bill including some of the political realities that contributed to “a two and a half year process of passing a Farm Bill” that “should have taken six months.”

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