FarmPolicy

March 2, 2015

Monday Quick Take: Ag Economy; Trade; Biofuels, and, the Budget

Agricultural Economy

As the ongoing drought in California persists, with resulting adverse water policy determinations for many Golden State farmers, Cindy Change and Matt Hamilton reported in Monday’s Los Angeles Times that, “A winter storm swept through Southern California on Sunday, bringing scattered showers, hail and thunder while higher elevations were expected to see a foot of snow overnight.

“The low-pressure system brought a smattering of storm cells, dumping rain throughout the region from San Luis Obispo to Orange counties.”

Monday’s article noted that, “After a morning lull in precipitation, a second, weaker storm is expected to pass through Monday afternoon. But the rain will not put much of a dent in the state’s lingering drought.

“‘Right now it’s enough to make my cactus smile and to green everything up,’ said Bill Patzert, a climatologist with the Jet Propulsion Laboratory in La Cañada Flintridge. ‘But we would need an inch a day for the next 30 days to make a dent in this drought…. Let’s get right down to it, this is puny.'”

Reuters news reported on Monday that, “Striking truck drivers resumed some roadblocks in Brazil on Monday even as the government cracked down on protesters and promised to implement a law to lower toll costs and give other benefits to the transport sector.

“In the southern state of Rio Grande do Sul, where police had cleared roads by detaining protesters and bringing in back-up troops on Sunday, protesters were stopping trucks at 10 points, the local highway police said. Police were working to clear them, a spokesman said.”

Monday’s article explained that, “The nearly 2-week-old movement has slowed grain deliveries, forced meat-processing plants to close and started to leave some grocery stores with bare shelves.

The country’s No. 2 and 3 soy-exporting ports of Paranagua and Rio Grande have warned that dwindling soy stocks at the ports could affect exports if roadblocks continue.”

Meanwhile, Alexandra Stevenson and Paul Mozur reported in today’s New York Times that, “The smartphone tells the story of a kiwi fruit in China.

With a quick scan of a code, shoppers can look up the fruit’s complete thousand-mile journey from a vine in a lush valley along the upper Yangtze River to a bin in a Beijing supermarket. The smartphone feature, which also details soil and water tests from the farm, is intended to ensure that the kiwi has not been contaminated anywhere along the way.”

Today’s article noted that, “Controlling China’s sprawling food supply chain has proved a frustrating endeavor. Government regulators and state-owned agriculture companies have tried to tackle the problem in a number of ways — increasing factory inspections, conducting mass laboratory tests, enhancing enforcement procedures, even with prosecutions and executions — but food safety scandals still emerge too often.

Chinese technology companies believe they can do it better. From the farm to the table, the country’s biggest players are looking to upgrade archaic systems with robust data collection, smartphone apps, online marketplaces and fancy gadgetry.”

Trade

The New York Times editorial board indicated on Monday that, “The Obama administration and the governments of 11 countries could conclude a sweeping trade agreement known as the Trans-Pacific Partnership in the coming months. Members of Congress should make sure that this and other deals being negotiated are good for America.”

The Times item, added that, “In recent years, trade agreements have become increasingly comprehensive, covering subjects that go far beyond familiar trade issues like tariffs and quotas. The T.P.P. negotiators, for instance, are discussing labor rights, environmental protection, patent and copyright law and how governments treat state-owned businesses. Done right, such deals can raise standards everywhere, protecting workers and opening new markets for American businesses. But there are potential downsides, too, including possible job losses.”

Biofuels

Dan Morgan, a retired reporter and editor with The Washington Post, noted in a column in yesterday’s Des Moines Register that, “Every day nearly a thousand railroad cars roll across the country carrying part of the soaring U.S. energy production that has shaken the global oil cartel and sent gasoline prices plummeting. The cargo is ethanol made from home-grown corn.

“This other American energy boom has been overshadowed by the stunning comeback of the domestic oil industry. President Barack Obama didn’t mention ethanol, biofuels, or agriculture in his State of the Union address, even as he boasted that the country was ‘number one in oil and gas.’ Yet a thriving renewable fuels industry also deserves a share of the credit for the energy renaissance.”

 

Mr. Morgan indicated that, “Based on numbers from the Department of Energy and the oil industry, the amount of ethanol used daily in the United States is now roughly equivalent to the gasoline from 1.2 million barrels of crude oil. That’s about the volume of oil from North Dakota’s Bakken shale, and only slightly less than Qatar’s daily output in 2014.

“Without ethanol, global stocks of oil would have been lower and crude oil prices would have been $10 a barrel higher at the end of 2013, according to a study last year by economist Philip K. Verleger Jr., an energy adviser to Presidents Gerald Ford and Jimmy Carter. Ethanol sold for less than gasoline for all but seven weeks between the start of 2011 and last November, according to data collected by Oil Price Information Service and New York Mercantile Exchange. ‘Blending ethanol with gasoline has been profitable to the refining industry and some of that has been passed on to consumers,’ said Scott Irwin, a University of Illinois agricultural economist.”

Yesterday’s column pointed out that, “Yet ethanol from corn is now out of favor in Washington. In 2011, Congress cancelled a 33-year-old tax credit for blending it with gasoline. For more than a year, the White House has been considering a proposal by the Environmental Protection Agency to scale back requirements for biofuels in gasoline and diesel fuel that were set in 2007 energy legislation. EPA has taken other actions as well that could slow or even end the growth of ethanol, based on the agency’s concern about the fuel market’s ability to absorb larger volumes.

“The just-released White House annual economic report to Congress does cite the growth of ethanol and biofuels along with other energy achievements. But President Obama, once an enthusiast, last mentioned ethanol publicly on Aug. 17, 2011, when he stressed the need to ‘figure out how we can make biofuels out of things that don’t involve our food chain.'”

Concluding, Mr. Morgan noted that, “With grain prices near lows of a few years ago and ethanol production at record levels, corn farmers insist they can grow more crops for energy without hurting consumers or the land. ‘No matter how you slice it, corn produces food and energy more efficiently than anything else,’ said Ron Alverson, a corn farmer and founding chairman of Dakota Ethanol, a 48 million gallon-a-year plant in Wentworth, S.D.

The administration may not see it that way. Even so, the biofuels industry deserves better than to be the orphan of President Obama’s energy policy. In an ‘all of the above’ energy strategy, it seems only fair to give the ‘corn patch’ a place alongside the ‘oil patch.'”

Budget

Mike DeBonis and Paul Kane reported on the front page of Monday’s Washington Post that, “House Republican leaders will face a familiar dilemma this week when they try again to approve funding to keep the Department of Homeland Security functioning through the end of September: They know their party is too divided to resolve the crisis on its own but fear the political fallout if they rely on Democrats to get them out of the jam.”

The Post article noted that, “By late Sunday, [Speaker John] Boehner’s House Republicans had no clear path to a solution other than retreating from their demands that the DHS funding measure include provisions that would block ­implementation of President Obama’s executive actions on immigration.”

Speaker Boehner addressed the DHS funding issue yesterday on “Face the Nation.”

Keith Good

Sunday Afternoon Update: Policy Issues; Trade; Ag Economy; Biotech; and Regulations

Policy Issues

A news release on Friday from USDA’s Farm Service Agency stated that, “Agriculture Secretary Tom Vilsack announced today that a one-time extension will be provided to producers for the new safety-net programs established by the 2014 Farm Bill, known as Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC). The final day to update yield history or reallocate base acres has been extended one additional month, from Feb. 27, 2015 until March 31, 2015. The final day for farm owners and producers to choose ARC or PLC coverage also remains March 31, 2015.”

Also on Friday, Senate Ag Committee Chairman Pat Roberts (R., Kan.) stated that, “‘USDA heard the concerns directly from producers earlier this week at our first Committee hearing and took action as a result,’ Chairman Roberts said. ‘I would encourage all producers to visit their local FSA office as soon as possible to make sure they have enough time and information to make these important decisions.’”

Reuters writer Christine Stebbins reported on Friday that, “Crop insurance price guarantees for U.S. corn, soybeans and spring wheat in 2015 will fall 10 percent or more based on futures settlement prices for February, grain analysts said on Friday.

“The U.S. Department of Agriculture’s (USDA) Risk Management Agency (RMA), which oversees the multibillion-dollar crop insurance program, by law uses the average price in February for harvest-time grain futures contracts to set the ‘floor’ price that private insurers must guarantee farmers who sign up…[B]ased on Friday’s futures closes, the RMA is expected to set the floor price for corn at $4.15 a bushel, down 10 percent from last year’s $4.62, and for soybeans at $9.73 a bushel, down 14 percent from last year’s $11.36.”

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A Closer Look at Beef Prices- Sunday’s Des Moines Register

Donnelle Eller reported on the front page of the Business Section in Sunday’s Des Moines Register that, “If the snow piled on your patio has you dreaming of firing up the summer grill, make sure to imagine doling out even more cash for the juicy steaks and hamburgers you’re flipping.

Beef prices climbed 19 percent in January over a year earlier, the federal government reported. And prices are expected to continue climbing this year, up 5-6 percent, according to the U.S. Department of Agriculture’s Economic Research Service.

“‘We’re in uncharted waters, given the level of prices,’ said Lee Schulz, an Iowa State University economist. ‘They can’t get too much higher before it will begin to impact demand.'”

Ms. Eller indicated that, “Prices will likely bump higher, too, for pork, chicken and turkey this year. But the increases are expected to be more modest, based on federal government estimates: Pork chops, ham and rib prices are expected to push 2-3 percent higher, and chicken breasts and ground turkey, 2.5-3.5 percent.

“That’s after a strong run-up last year for pork, climbing 7.4 percent in January compared to a year earlier, and poultry, a smaller 2 percent.”

The Register article noted that, “Despite higher prices for meat, demand for beef, pork and poultry will likely remain strong, even if consumers shift between them as they find better buys, economists say.

“Increasing incomes drive demand, whether it’s from higher pay or more people employed, said Schulz, the ISU economist. “We’ve seen demand improve as the economy has recovered,” he said.

“And falling gas prices help consumers, Kuhns said, with extra cash to cope with higher grocery bills and lower transportation costs to move food across the country.”

Persistent drought in the southwest and southern plains in recent years has curtailed livestock production; however, at USDA’s Outlook Conference earlier this month, the Department’s Chief Economist noted that, “Drought continues in the Southwest, but there have been some signs of recovery in the Southern Plains and elsewhere. Returns to cow-calf operators have been at levels that encourage herd retention which would point to a turnaround in the cattle cycle. Producers are now responding by increasing herds; the number of beef cows on January 1, 2015 was up 2 percent from 2014 and the number of heifers retained for addition to the cow herd was 4 percent higher. The latest NASS cattle inventory last month recorded the first increase in herd size since 2007.”

The latest monthly Agricultural Prices report from USDA noted that, “The January beef cattle price of $164 per cwt is unchanged from the previous month but is $26.00 higher than January 2014.”

Bloomberg writer Megan Durisin reported last week that, “There’s little relief ahead for record U.S. steak and burger prices. While cattle ranchers like Brenda Richards are expanding herds for the first time in almost a decade, it can take two years to get more meat on the plate.”

The USDA’s Economic Research Service is scheduled to update its Food Price Outlook on Tuesday morning.

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USDA- Monthly Agricultural Prices

On Friday, USDA’s National Agricultural Statistics Service (NASS) released its monthly Agricultural Prices report, which stated that, “The corn price, at $3.81 per bushel, is up 3 cents from last month but is down 61 cents from January 2014.”

“The soybean price, at $10.30 per bushel, is unchanged from December but is $2.60 below January a year earlier.”

“At 58.6 cents per pound, the price for upland cotton is down 1.8 cents from December and 18.9 cents below January 2014.”

With respect to livestock, the NASS report indicated that, “The January beef cattle price of $164 per cwt is unchanged from the previous month but is $26.00 higher than January 2014.”

“At $57.40 per cwt, the January hog price is down $6.90 from December and $3.80 lower than a year earlier.”

“The January all milk price of $17.60 per cwt is down $2.80 from December and $5.90 lower from January 2014.”

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Updated- California Drought Issues Persist- Most difficult year facing the San Joaquin Valley in 50 years

Bettina Boxall and David Pierson reported on the front page of Saturday’s Los Angeles Times that, “In another blow to California’s parched heartland, federal officials said Friday that for the second year in a row most Central Valley farmers are unlikely to receive water from the region’s major irrigation project this summer.

“The announcement, while expected, means growers will probably have to idle more land — and produce fewer crops — because there is simply not enough water for all of their fields.

“‘It’s frustrating that we’ll be fallowing the same or more land than last year,’ said Dan Errotabere, a vegetable and nut farmer in Riverdale, 25 miles southwest of Fresno. ‘That equates to lost revenue, lost taxes and less employee hours. The effect on communities is real.'”

Saturday’s article noted that, “The agency’s initial assessment of how much water they can send to growers is always conservative. There are still two months left in the rainy season and if conditions improve, so could the allocation.

“Moreover, the zero allocation doesn’t apply to farmers in the Sacramento and San Joaquin valleys who have historic water rights that the government must honor before they dole out supplies to everyone else. The bureau expects to send those farmers 75% of their sizable contract amounts, or a total of about 2.6 million acre-feet.”

Boxall and Pierson explained that, “But for many Central Valley growers, 2015 is looking worse than last year, when they left between 400,000 and 500,000 acres unplanted for lack of water, dealing a $2-billion blow to the state’s agricultural sector.

“‘Last year was a struggle, and now we’re dealing with the accumulative effect in year four of drought,’ said Ryan Jacobsen, executive director of the Fresno County Farm Bureau. ‘As we move forward, we’re predicting this will be the most difficult year facing the San Joaquin Valley in 50 years.'”

Jim Carlton reported on Friday at the Wall Street Journal Online that, “California farmers face being cut off from federal water imports for the second straight year, in an unprecedented move likely to worsen crop losses in the nation’s biggest agricultural state.”

Mr. Carlton noted that, “Farmers, meanwhile, say they will have to continue to fallow fields and take other cost-cutting measures as they try to wait out a drought they say has been worsened by federal regulatory restrictions on how water is allocated. Many get water from alternate sources, including wells or by buying it on the private market, but often at a much higher price than the federal supplies.

In 2014, the state’s agriculture economy lost more than $2.2 billion and more than 17,000 jobs as farmers fallowed nearly a half million acres of fields, according to estimates last year by the Center for Watershed Sciences at the University of California, Davis. Barring an unforeseen deluge, the losses this year are expected to be ‘a bit more’ than that, said Jay Lund, the center’s director.”

The Journal article added that, “Dan Errotabere, for example, said his family fallowed 1,200 of the 3,600 acres on their farm in the district last year, ‘and it will be that much or more this year.’ Mr. Errotabere said this year the Fresno County farm likely won’t plant vegetable crops like tomatoes and garlic so well water can be conserved to keep its almond orchards alive. As a result, he said, the farm likely will hire only ’20 to 30′ of the 80 seasonal workers it normally employs.

“‘This is as bad a drought as it comes,’ said Mr. Erratobere, 59, whose family has farmed there since the 1920s.”

House Ag Committee member Jim Costa (D., Calif.) indicated in a statement Friday that, ““Today’s announcement by the U.S. Bureau of Reclamation, while not unexpected, is another devastating blow to the farmers, the farmworkers and the communities of the San Joaquin Valley. In a year where rainfall in Northern California is normal for this time of year and storage in Shasta Reservoir is also near its historical average for this time of year, for Central Valley Project agriculture, for a second year in a row, to receive none of its contracted water is simply inexcusable. Today’s initial allocation only provides further evidence of how broken California’s water delivery system is for those who live and work south of the Delta and points to the need for Congress to intervene to provide direction to better balance the impacts of regulations. This four year drought and the inability to maximize the capture of the water in the system when it has been available have drastically stunted the Valley’s agriculture industry, and it seems this year will be no different. What has been devastating to this point will now become catastrophic.”

Meanwhile, the U.S. Monthly Drought Outlook on Saturday indicated that, “During late February, mostly dry weather returned to the Pacific Northwest and northern California, limiting any further drought improvements.”

Drought expansion is also possible across parts of far northwestern California and southwestern Oregon,” the update said.

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California Drought Update

Following a report earlier this week in the Los Angeles Times, which pointed to the persistent dry conditions in California, an update this week at the National Drought Monitor indicated that, “It was another dry week for much of the West, with parts of the Pacific Northwest, Northern California, Arizona, New Mexico, and the Intermountain Basin receiving no precipitation.”

Mountain snowpack remained well below normal, not just in California but all across the Cascades, Sierra Nevada, and Intermountain Basin,” the update said.

Bloomberg writer Craig Giammona reported this week that, “Carrot farming is proving to be a tough job for Campbell Soup Co.

“The soup giant, which acquired a carrot business as part of its 2012 purchase of Bolthouse Farms, is struggling with extreme weather in California, the crops’ main growing region. The conditions — first drought, then intense rains — contributed to a 28 percent decline in the division’s profit last quarter.

California’s record-setting drought has forced Campbell to shift harvesting to farms that weren’t as hard hit, as well as increasing land and water costs. In December, a series of rainstorms struck the state. While they didn’t end the drought, they damaged the crops.”

From a policy perspective, a news release on Thursday from Rep. John Garamendi (D., Calif.) stated that, “Rep. Doug LaMalfa (R-CA-01) and [Rep. Garamendi] today announced the introduction of HR 1060, which will accelerate the completion of a feasibility study of Sites Reservoir and authorize the project should it be found feasible. Located in Colusa and Glenn counties, Sites Reservoir is a proposed off-stream reservoir that would store as much as 1.8 million acre feet of water for cities, agriculture and the environment.”

The news release noted that, “The California Department of Water Resources recently reported that Sites Reservoir would generate an additional 900,000 acre feet of water during droughts, enough water to supply over seven million Californians for an entire year.”

“The Northern California Water Agency produced an infographic on Sites Reservoir,” the release said.

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Friday Morning Update: Policy; Trade; Ag Economy; Biofuels; Biotech; and, Budget

Policy Issues

On Thursday, the House Agriculture Nutrition Subcommittee met, “to review SNAP recipient characteristics and dynamics.” Yesterday’s hearing followed Wednesday’s full House Ag Committee meeting on SNAP and nutrition issues.

A FarmPolicy.com summary and overview of Thursday’s Subcommittee hearing is available here.

Over the past two days, the House Ag Committee has been presented with a large amount of detailed analysis and information on SNAP; it appears that Chairman Mike Conaway’s (R., Tex.) top-to-bottom review of the program is off to a substantive and serious start.

In remarks on the House floor Thursday, Ag Nutrition Subcommittee ranking member Jim McGovern (D., Mass.) indicated that, “Mr. Speaker, yesterday the House Agriculture Committee – where I am proud to serve – held the first hearing in its ‘top-to-bottom’ review of the Supplemental Nutrition Assistance Program, or SNAP.

“SNAP is the nation’s pre-eminent anti-hunger program that provides critical food assistance to more than 46 million Americans. Last year, 16 million children – or 1 in 5 American children – relied on SNAP. Unfortunately, every indication is that Republicans will once again try to cut this critical safety-net program.”

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Update on Regulatory Issues

In addition to the drop in corn and soybean values over the past three years, which has contributed to lower expected farm income and reduced rates of growth in the value of farmland, U.S. producers have also expressed concern about the burden of federal regulations.

 Timothy Cama reported at The Hill Online on Wednesday that, “House Republicans used a Wednesday hearing on the Environmental Protection Agency’s (EPA) budget to attack various regulations being pursued by the agency.”

The article noted that, “‘EPA seems intent on locking in a long list of new regulations that will bind future administrations,’ Rep. Fred Upton (R-Mich.), chairman of the Energy and Commerce Committee, said at the hearing of two subcommittees of the panel.”

“EPA Administrator Gina McCarthy defended her rulemaking agenda and the agency’s funding request for fiscal 2016, asking for $8.59 billion, a $452 million increase over what it received in the most recent year,” the article said.

A news release on Wednesday from Rep. Kevin Kramer (R., N.D.) indicated that, “Today, [Rep. Kramer] Congressman questioned EPA Administrator Gina McCarthy about the impact the Waters of the United States rulemaking will have on small businesses in North Dakota and across the United States.

“‘I was deeply disappointed EPA Administrator McCarthy did not think the negative impact the expanded Waters of the United States definition will have on small businesses and small entities in North Dakota and across the country was a big deal. I am committed to ensuring that North Dakotans are not harmed by Washington bureaucrats,’ said Cramer.”

The news update added that, “Congressman Cramer has been a leader in opposing overreach by the EPA and cosponsored The Waters of the United States Regulatory Overreach Protection Act of 2014 which would prohibit the EPA and the Corps from further developing or administering the proposed rule in any form, and reaffirm the authority of state and local officials to determine how non-jurisdictional waters should be regulated. Bicameral legislation in the new Congress is being developed as the EPA expects to finalize their rule in April.”

Meanwhile, the House Ag Committee will be taking a closer look at the Waters of the U.S. rule in a hearing schedule for next week:

Also, a news update Wednesday from Rep. Frank Lucas (R., Okla.) stated that, “[Rep. Lucas] Congressman Frank and Congressman Collin Peterson (D-Minn.) today introduced H.R. 1029, the EPA Science Advisory Board Reform Act of 2015, legislation to ensure the science guiding EPA’s regulatory policy is objective, independent and available for public review. The bipartisan bill establishes guidelines for membership to the Science Advisory Board, which advises the EPA’s regulatory decisions. Companion legislation was also introduced today in the Senate by Sens. John Boozman (R-Ark.) and Joe Manchin (D-W.Va.).”

The release added that, “‘The Science Advisory Board’s work is important to making sure the EPA considers all scientific information when writing regulations that will impact American farmers, families and small businesses. This legislation builds on the work done in the 2014 Farm Bill and is necessary to ensure the EPA takes into account the best information possible, with input from the public and independent stakeholders. A balanced and independent Science Advisory Board will help alleviate some of the unintended consequences surrounding EPA regulations,’ said Congressman Peterson.”

Meanwhile, AP writer Emery P. Dalesio reported on Wednesday that, “The U.S. Environmental Protection Agency will investigate whether North Carolina’s environmental agency lightly regulated the state’s industrial hog operations because their neighbors are minorities.

“The Waterkeeper Alliance and other groups released an EPA letter Wednesday stating the federal agency will launch a civil rights investigation of North Carolina’s Department of Environment and Natural Resources. The groups had asked the EPA last fall to investigate whether DENR would have been tougher on 2,000 North Carolina swine operations raising 10 million hogs if the neighbors were not black, Hispanic or Native American.”

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Thursday Morning Update: Policy Issues; Trade; Ag Economy; and, Budget Issues

Policy Issues

On Wednesday, the House Agriculture Committee met to discuss the SNAP program and nutrition issues, a FarmPolicy.com summary and overview of this Committee hearing is available here.

Also on the SNAP issue, a report yesterday by  Mathematica Policy Research presented “estimates that, for each state, measure the need for SNAP and the program’s effectiveness in each of the three years from 2010 to 2012.”

The Mathematica item stated that, “This report presents estimates that, for each state, measure the need for SNAP and the program’s effectiveness in each of the three fiscal years from 2010 to 2012. The estimated numbers of people eligible for SNAP measure the need for the program. The estimated SNAP participation rates measure, state by state, the program’s performance in reaching its target population. In addition to the participation rates that pertain to all eligible people, we derived estimates of participation rates for the ‘working poor,’ that is, people who were eligible for SNAP and lived in households in which someone earned income from a job.”

The report noted that, “Tables III.1  and III.2  present our final shrinkage estimates of SNAP participation rates and the number of people eligible, respectively, in each state for FY 2010 to FY 2012 for all eligible people and for the working poor.”

Recall that he House Agriculture Nutrition Subcommittee will hold a hearing today, “to review SNAP recipient characteristics and dynamics.”

Also on Wednesday, Secretary of Agriculture Tom Vilisack presented testimony at the House Appropriations Subcommittee on Agriculture.

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Wednesday Morning Update: Senate Ag Committee Farm Bill Hearing, Ag Economy; Trade; Budget; and, Biofuels

Policy Issues- Senate Ag Committee Hearing; House Ag Committee Hearing Today

In two separate panels, agricultural producers and Secretary of Agriculture Tom Vilsack testified before the Senate Agriculture Committee on the implementation of  last year’s Farm Bill Tuesday morning.

A FarmPolicy.com summary and overview of the hearing is available here.

AP writer Mary Clare Jalonick reported on Tuesday that, “Congressional Republicans are laying the groundwork for an overhaul of the nation’s food stamp program, trying again after an unsuccessful attempt two years ago.

“House Agriculture Chairman Mike Conaway, R-Texas, said Tuesday that his panel is starting a comprehensive, multiyear review of the program to see what’s working. He said ‘either huge reforms or small reforms’ could come from that, though he wouldn’t detail what those might be.

“Conaway says a 2013 GOP effort to cut food stamps ‘didn’t resonate well’ because Republicans didn’t spell out why it was important. House Republican leaders tried unsuccessfully to cut the program by 5 percent annually by passing a bill with broad new work requirements.”

The AP article noted that, “Some Democrats say they are wary of the review process. Agriculture Committee member James McGovern, a Massachusetts Democrat who is a longtime advocate for food stamps, said he wonders why the SNAP program is singled out for review and not expensive farm programs.

“‘I am deeply concerned about this,’ McGovern said. ‘This is a program that by and large works.’”

Meanwhile, David Pierson reported yesterday at the Los Angeles Times Online that, “An estimated 9 million people are sickened and 1,000 killed by food-borne illnesses in the U.S. each year, but until now officials were unable to pinpoint which foods were most likely to blame.

“In a report released Tuesday, the U.S. Centers for Disease Control and Prevention, the U.S. Food and Drug Administration and the U.S. Department of Food and Agriculture’s Food Safety and Inspection Service detailed the sources of the most common food-borne illnesses with the aim of improving food safety and policy.”

The LA Times article noted that, “Among the findings: More than 80% of E. coli O157 cases were attributed to beef or crops such as leafy vegetables.

“About 75% of campylobacter illnesses were linked to dairy (66%), particularly raw milk dairy, and chicken (8%).

“More than 80% of listeria illnesses were attributed to fruit (50%) and dairy (31%).”

 

Agricultural Economy

Also on Tuesday, USDA’s National Agricultural Statistics Service released its annual U.S. Crop Values Summary, a link to the complete report along with highlights regarding corn and soybeans can also be found at FarmPolicy.com.

Tuesday’s Los Angeles Times contained an article highlighting ongoing drought concerns California. The article included this quote from Bill Patzert, a climatologist with the Jet Propulsion Laboratory: “If you think we’ve turned around on the drought, stop smoking whatever you’re smoking.”

Details on this article, as well as Reuters news updates that focused on agricultural issues in Brazil, Ukraine, and Russia have been posted here.

And Jon Hilsenrath reported on the front page of today’s Wall Street Journal that, “Federal Reserve Chairwoman Janet Yellen, sounding upbeat about the economy, laid the groundwork for interest-rate increases later this year.

“‘The employment situation in the United States has been improving on many dimensions,’ Ms. Yellen told the Senate Banking Committee on Tuesday, her first of two days of semiannual testimony before lawmakers. Spending and production had increased at a ‘solid rate,’ she added, and should remain strong enough to keep bringing unemployment down.”

 

Trade Issues (TPA, TPP); West Coast Ports

And in trade related news, William Mauldin reported in Wednesday’s Wall Street Journal that, “Lawmakers from both parties are trying to strike a difficult balance as they wrangle over the final intricacies of a bill that would expedite consideration of trade deals.

“House and Senate leaders crafting the so-called fast-track bill want to include sweeteners to attract skeptical Democrats, including rules to allow lawmakers greater access to the details of continuing trade negotiations.

“But supporters fear too many provisions friendly to Democrats could alienate Republicans and the business community, or even put a major Pacific trade deal at risk when it comes up for a final vote. The U.S., Japan and 10 other Pacific Rim countries are hoping to agree to the final terms of the trade partnership in coming months.”

Mr. Mauldin explained that, “The bill’s authors—Sen. Orrin Hatch (R., Utah), Sen. Ron Wyden (D., Ore.) and Rep. Paul Ryan (R., Wis.)—are now fighting over how much leverage to give lawmakers to remove any coming trade deals from fast-track protection. That would subject the pacts to ordinary amendments and procedural delays.”

Reuters writer Krista Hughes reported on Tuesday that, “U.S. Federal Reserve Chair Janet Yellen warned Congress on Tuesday against a bid to crack down on currency cheats and said adding currency rules to trade deals could hobble monetary policy.

“Lawmakers have introduced legislation allowing firms to seek compensation for currency weakness overseas and some are also fighting to include a currency chapter in upcoming trade deals such as the 12-nation Trans-Pacific Partnership (TPP).”

Also on Tuesday, Reuters news indicated that, “A meeting aimed at sealing a Pacific trade deal has been called for April, Mexico’s economy minister said on Tuesday, adding he was optimistic it would be sealed in the first half of 2015.

“‘I am very optimistic that there will be good news for the TPP in the first half of this year,’ Ildefonso Guajardo told Reuters, referring to the Trans-Pacific Partnership.”

On the West Coast Port issue, Diana Marcum reported on Tuesday at the Los Angeles Times Online that, “An end to labor strife at West Coast ports should speed up cargo operations, but it may be too late to help California’s drought-weary nut and citrus farmers.

Citrus took the hardest hit. Oranges, many bound for Chinese New Year celebrations, sat decaying on ships, at docks and on the ground as a nine-month labor dispute snarled ports. Fieldworkers, packinghouse employees and truck drivers had their hours cut.”

The article added that, “Losses could reach as high as 50% of citrus exports, or $500 million, according to trade groups… [F]or California’s almond farmers and processors, the severe cargo backlogs have raised fears that foreign buyers could cancel contracts for almonds stuck in storage and buy from other countries.”

 

Budget

David Nakamura and Sean Sullivan reported on the front page of today’s Washington Post that, “The Senate moved closer Tuesday to a deal to avert a partial shutdown of the Department of Homeland Security, but the proposal faced an uncertain future in the House, where Republican leaders conspicuously refused to embrace it.

“Senate Majority Leader Mitch McConnell (R-Ky.) told reporters he was prepared to move swiftly to extend funding for DHS through the fiscal year in a bill that is not contingent on Republican demands to repeal President Obama’s executive actions on immigration.”

 

Biofuels

Bloomberg writer Mario Parker reported on Tuesday that, “Ethanol producers are cutting output after getting squeezed by the biggest drop in gasoline prices since 2008.

“Valero Energy Corp. and Green Plains Renewable Energy Inc., representing about 15 percent of U.S. capacity, have reduced operations as margins narrowed. At a typical mill in Illinois that makes ethanol from corn, profit margins have almost totally disappeared, compared with $1.33 a gallon a year ago, according to AgTrader Talk, a Clive, Iowa-based consulting company.”

Keith Good

Senate Ag Committee Farm Bill Hearing

At a Senate Agriculture Committee hearing on Tuesday, lawmakers reviewed the implementation of the Farm Bill after one year and heard testimony from farmers and Secretary of Agriculture Tom Vilsack.

In his opening remarks, Chairman Pat Roberts (R., Kan.) indicated that, “As our first order of business it’s only right that we recognize and appreciate our leader of the past four years and the tremendous amount of good work she accomplished during a very difficult time.

Senator Stabenow is a dedicated and fierce leader of agriculture policy whose tenacity successfully carried a farm bill across the goal line when many believed it wouldn’t get done.”

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USDA- NASS Report- Crop Values 2014 Summary

On Tuesday, USDA’s National Agricultural Statistics Service (NASS) released its Crop Values Summary report for 2014.

In part the NASS report included these two tables highlighting corn and soybean values:

(Click here for a larger view).

The table shows the average price of corn in the U.S.:

2012- $6.89
2013- $4.46

2014- $3.65

(Click here for a larger view).

The table shows the average price of soybeans in the U.S.:

2012- $14.40
2013- $13.00

2014- $10.20

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Ag Economy Update- Calif. Drought; International Issues

Joseph Serna reported in today’s Los Angeles Times that, “When it’s as dry as it has been for three years, a couple of weeks of sporadic rain or a big storm or two in Los Angeles can make it seem as though Southern California is getting a healthy dose of rainfall.

But in fact, the city’s rain totals since Oct. 1 — the beginning of a rain year that ends Sept. 30 — show that L.A. is still on pace for a below-average year.”

The article noted that, “About 3.88 inches of rain fell on downtown L.A. in December, the most in that month in four years. And the region has been doused by more rainfall just in the last few days. But between that December and this February there was January — the month that is the traditional portal to Southern California’s three wettest months.

“And that month was very dry, with just over an inch of rain. The average rainfall in January for downtown L.A. is over 3 inches.

When the Southland has been in an awful dry streak for several years, a middling rain year can come across as more substantial than it actually is.”

Today’s article added that, “‘It’s a lot compared to the last three years, but the last three years were the driest in the history of California,’ said Bill Patzert, a climatologist with the Jet Propulsion Laboratory. ‘If you think we’ve turned around on the drought, stop smoking whatever you’re smoking.'”

More broadly, Reuters writer Gustavo Bonato reported today that, “A growing protest by Brazilian truck drivers against high fuel prices entered a seventh day on Tuesday, interrupting supplies of diesel and food across several commodity-rich states at the start of harvest season.

“The protests are part of a reaction to the return of fuel taxes, one of several unpopular measures that President Dilma Rousseff is counting on to shore up government fiscal accounts.”

The article added that, “Truckers started restricting the flow of goods along BR 163, the main highway running through top soybean-producing state Mato Grosso, on Feb. 18 but the demonstrations quickly spread and spilled into as many as six states by Monday, including Minas Gerais, Parana, Goias and Rio Grande do Sul.”

And Reuters writers Polina Devitt and Pavel Polityuk reported that, “Officials in both Russia and Ukraine are considering tougher trade protections to keep food prices from spiralling as their currencies collapse, with Moscow taking more aggressive steps than Kiev to control exports.

“The two countries, on opposite sides of a war in eastern Ukraine that has killed more than 5,600 people, are both among the world’s biggest exporters of wheat, through Black Sea ports that help feed Africa and the Middle East.

“Both have seen their currencies collapse in the past year, making exports more valuable in local terms and driving up the politically sensitive domestic price of food.”

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Policy Issues; Trade; Ag Economy; and, Budget Issues Tuesday

Policy Issues

In a letter yesterday to Senate and House Budget Committee leaders, a large number of food, agriculture and policy organizations indicated that, “The undersigned 392 organizations, representing America’s agriculture, nutrition, conservation, rural development, finance, forestry, energy, trade, labor, equipment manufactures and crop insurance sectors, strongly urge you to reject calls for additional cuts to programs within the jurisdiction of the Senate and House Agriculture Committees.

Just over one year ago, Congress passed, and the President signed into law, sweeping changes to our nation’s food and farm policy that included significant deficit reduction. The 2014 Farm Bill required over three years of debate in both chambers of Congress and ultimately ended with the consolidation of over 100 programs and cuts to mandatory spending across many titles, including the elimination of the direct payment program. These cuts came in addition to those already in effect due to sequestration.”

After noting that the new measure saved an estimated $23 billion, the letter stated that, “We, therefore, oppose re-opening any title of the Farm Bill during the consideration of the 2016 Budget Resolution and strongly urge you to refrain from including reconciliation instructions for either the Senate Committee on Agriculture, Nutrition, and Forestry or for the House Committee on Agriculture.”

Recall that The House Ag Committee will hold hearings this week on Wednesday and Thursday regarding Farm Bill nutrition issues; while, this morning, the Senate Ag Committee will hold a hearing on Farm Bill implementation and hear testimony from Sec. of Ag. Tom Vilsack.

Sec. Vilsack is also scheduled to appear on Wednesday at the House Appropriations Subcommittee on Agriculture.

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FarmPolicy.com Monday News Update

Recall that earlier this month, USDA updated its U.S. Farm Sector Income Forecast and noted that, “Net farm income is forecast to be $73.6 billion in 2015, down nearly 32 percent from 2014’s forecast of $108 billion. The 2015 forecast would be the lowest since 2009.”

Scott Irwin, an agricultural economist at the University of Illinois at Urbana-Champaign, noted that, “It’s neither happy times nor is the sky falling in terms of agriculture incomes.”

However, Reuters news published a disconcerting article on Monday which stated that, “Across the U.S. Midwest, the plunge in grain prices to near four-year lows is pitting landowners determined to sustain rental incomes against farmer tenants worried about making rent payments because their revenues are squeezed.”

The article noted that, “Some grain farmers already see the burden as too big. They are taking an extreme step, one not widely seen since the 1980s: breaching lease contracts, reducing how much land they will sow this spring and risking years-long legal battles with landlords.”

Meanwhile, a separate Reuters article over the weekend focused on the issue of genetically modified crops in India.

Details on these two Reuters articles can be found at FarmPolicy.com.

The Wall Street Journal reported on Monday that it will “likely take months for the backlog to clear” at West Coast Ports after this weekends resolution of the labor dispute there.  Labor Secretary Tom Perez discussed his role in resolving the dispute Monday morning on MSNBC and CNBC television.

Monday’s papers also included a look at the ongoing budget showdown regarding the Department of Homeland Security. The impetus for the dispute stemmed from executive branch action on immigration policy.  Meanwhile, a subsequent federal court ruling temporarily stopping executive branch implementation of the that policy has added to the complexity of how to resolve the dispute.

An article on the front page of Monday’s Wall Street Journal noted that, “Senate Republicans, still mulling their options, are most likely to end up supporting a short-term extension of the agency’s current funding.” Also, Nathan Koppel reported today at The Wall Street Journal Online that, “The Obama administration on Monday asked a federal court to allow it to continue implementing the president’s immigration plan, which was temporarily blocked last week by a Texas judge.”

News with potentially negative implications for the Trans-Pacific Partnership trade negotiations and Japan unfolded on Monday.

Robin Harding reported today at The Financial Times Online that, “Shinzo Abe, the Japanese prime minister, has lost an important ally on the Trans-Pacific Partnership trade deal after his agriculture minster resigned in a scandal over political donations.”

The FT article added that, “The resignation matters because Mr Nishikawa is a longstanding member of the LDP’s ‘agricultural tribe’. He acted as a firewall for Mr Abe against internal party critics on trade deals and farm reform.

“Negotiators are near a deal on the huge TPP agreement, and agricultural reform is one of Mr Abe’s top priorities this year, so the loss of Mr Nishikawa is a blow to the prime minister’s agenda.”

Also today at FarmPolicy.com is a summary of a recent USDA- Economic Research Service report highlighting agricultural trade issues with China, as well as a look at an ERS publication on wetlands and the Farm Bill.

Keith Good

Recent USDA Updates: Trade with China, and Farm Bill Issues

A recent report from USDA’s Economic Research Service (ERS) (“China’s Growing Demand for Agricultural Imports” ) indicated that, “China’s 2001 accession to the World Trade Organization lowered barriers to agricultural imports, and its economic growth has generated new demands for agricultural commodities. An agricultural trading relationship of mutual importance is developing between the United States and China. The United States accounted for over 24 percent of the value of China’s agricultural imports during 2012-13, a larger share than any other country. U.S. agricultural sales to China doubled from 2008 to 2012, reaching nearly $26 billion in annual sales. China has overtaken Japan, Mexico, and Canada to become the leading export market for U.S. agricultural products.”

“All of China’s leading suppliers of agricultural imports are countries richly endowed with land resources: the United States, Brazil, Australia, Canada, New Zealand, and Argentina. China has been importing more agricultural products from many of these countries, but the United States remains the leader,” the ERS report said.

The ERS report stated that, “Soybeans, other oilseeds, and fats and oils represent nearly half of China’s agricultural import value. Soybeans and other oilseeds are processed to extract oils, and the residual meal is used as a high-protein animal feed ingredient. China also imports fats and oils that are refined and manufactured into consumer oil products. China produces most of its own meat and dairy products, but imports of these products are also significant. The mix of agricultural imports is diver- sifying as China’s purchases of fruits, nuts, cassava, sugar, wine, breeding stock, and processed food imports rise.”

With respect to livestock, the ERS report indicated that, “China’s imports of meat and animal offal rose to over 2.5 mmt during 2013. Pork meat and offal are the largest types of meat imported…China’s imports of dairy products grew more than fourfold from 2008 to 2013, reaching 1.6 mmt.”

Farm Bill

A separate ERS report this month (“Targeting Investments To Cost Effectively Restore and Protect Wetland Ecosystems: Some Economic Insights“) stated that, “USDA has spent more than $4.2 billion on wetland restoration and protection over the last two decades. One challenge in allocating these funds is the lack of information on variations in wetland benefits and costs across the Nation. This report discusses the biophysical impacts of new wetlands for eight benefit categories: duck hunting, carbon sequestration, flood protection, nitrogen removal, species protection, open space, sediment removal, and groundwater recharge, as well as the value of these impacts for some categories. In addition, it presents county-level estimates of the costs of restoring and preserving wetlands for some parts of the United States. Although the estimates range in precision and are not comprehensive, they call attention to some areas where the benefits of new wetlands are likely to exceed costs or perhaps may be insignificant. For example, the benefits of restoring and preserving wetlands near the Missouri River in central North and South Dakota are likely to exceed costs. Findings underscore the need for additional information that may increase the number, accuracy, and spatial resolution of wetland benefit estimates.”

Also, the U.S. Department of Agriculture’s Farm Service Agency indicated in a tweet on Monday that:

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